Free Statement - District Court of Arizona - Arizona

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Peter D. Baird (001978) [email protected] Robert H. McKirgan (011636) [email protected] Richard A. Halloran (013858) [email protected] Kimberly A. Demarchi (020428) [email protected] Lewis and Roca LLP 40 North Central Avenue Phoenix, Arizona 85004-4429 Facsimile (602) 734-3746 Telephone (602) 262-5311 Attorneys for POST Integrations, Inc., et al. George C. Chen (019704) [email protected] Bryan Cave LLP Two North Central Avenue, Suite 2200 Phoenix, AZ 85004-4406 Tel: (602) 364-7367 Fax: (602) 364-7070 Attorneys for Lexcel, Inc. and Lexcel Solutions, Inc.

William McKinnon [email protected] 800 East Ocean Boulevard, Unit 501 Long Beach, California 90802-5449 Nicholas J. DiCarlo (016457) [email protected] DiCarlo Caserta & Phelps PLLC 6750 East Camelback Road, Suite 100-A Scottsdale, Arizona 85251 Attorneys for Plaintiff MTSI and Third Party Defendant Gene Clothier

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA Merchant Transaction Systems, Inc., ) ) Plaintiff, ) vs. ) ) Nelcela, Inc., et al., ) Defendants. ) ) And Related Counterclaims, Cross-Claims, ) ) and Third-Party Claims. )

No. CIV 02-1954-PHX-MHM SEPARATE STATEMENT OF FACTS IN SUPPORT OF THE JOINT PARTIES' MOTION FOR PARTIAL SUMMARY JUDGMENT ON NELCELA'S CLAIMS OF COPYRIGHT INFRINGEMENT AND CONVERSION

Pursuant to LRCiv 56.1(a), the Lexcel, POST, and MTSI Parties jointly submit

20 this statement of facts in support of their motion for summary judgment against Nelcela, 21 Inc., Alec Dollarhide, and Len Campagna (collectively "Nelcela") on the issue of 22 copyright infringement and conversion of the so-called Nelcela Merchant System. 23 1. On September 30, 2006, this Court ruled that "Based upon the undisputed

24 similarities between the Lexcel 2001 software, MTSI software and Nelcela software the 25 Court finds that as a matter of law that they are substantially similar beyond the 26 possibility of random chance and that copying took place." Order at 28 lns.14-16 27 (Dckt. 383.) 28
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2.

In that same Order, the Court found that Nelcela has identified only a single

file ­ named "bnkmerch.pbl" ­ containing code which is allegedly common between the Nelcela and POST softwares. Id. at 29 ln.11 ­ 30 ln.7. 3. Following a two week trial, on April 24, 2007, the jury determined that

Lexcel, Inc., not Nelcela, is the owner of both the authorization system and the merchant system that are at issue in this case. (Verdict Form (Dckt. 501).) 4. As a result of the jury's verdict, Nelcela does not own the so-called

"Nelcela Authorization System." 5. As a result of the jury's verdict, Nelcela does not own the so-called

"Nelcela Merchant System." 6. 7. 8. As a result of the jury's verdict, Nelcela does not own the Lexcel Software. As a result of the jury's verdict, Nelcela does not own the MTSI Software. The file "bnkmerch.pbl" is part of the so-called "Nelcela Merchant

System." (Trial Exhibit 551 (CD containing the "Nelcela Merchant System" source code)); Trial Exhibit 600 p.3 (directory listing of Trial Exhibit 551, showing that the file "bnkmerch.pbl" is part of the "Nelcela Merchant System") (attached hereto as Exhibit 1). Accordingly, Nelcela does not own the file "bnkmerch.pbl." 9. Nelcela possesses a copy of the "Nelcela Merchant System" source code.

(E.g., Trial Exhibit 551 (CD produced by Nelcela containing "Nelcela "Merchant System" source code.) 10. Nelcela alleges in its conversion counterclaim against MTSI that MTSI:

(a) licensed software to POST "without properly paying Nelcela and/or compensating Nelcela in any way for the copyrighted software it legally owns"; (b) "MTSI has modified the Nelcela copyrighted software"; and (c) MTSI has "use[d] the software to process credit card transactions." (Nelcela, Inc., Len Campagna and Alec Dollarhide's First Amended Answer, Counterclaims, Cross-Claims and Third-Party Claims at p.18-19, ¶¶ 63-64 (Dckt. 83).) 2

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11.

Likewise, Nelcela alleges in its conversion cross-claim against POST that

POST: (a) licensed software from MTSI "without properly paying Nelcela and/or compensating it for the copyrighted software it legally owns"; (b) "modified the Nelcela copyrighted software"; and (c) has "use[d] the software to process credit card transactions." (Id. at p.38, ¶¶ 109-110.) 12. Nelcela alleges in its conversion claim against the Lexcel Parties that

Lexcel "`licensed' Nelcela's copyrighted software to others, including Post, without paying and/or compensating Nelcela for the copyrighted software." (Nelcela, Inc., Len Campagna and Alec Dollarhide's Answer, Counterclaim Against Lexcel, Inc. and Lexcel Solutions, Inc., and Third-Party Complaint Against Carl Kubitz and Flore "Pete" Kubitz at p.11, ¶ 64 (Dckt. 399).) RESPECTFULLY SUBMITTED May 17, 2007. BRYAN CAVE LLP By s/ George C. Chen George C. Chen Attorneys for Lexcel, Inc. and Lexcel Solutions, Inc. DICARLO CASERTA & PHELPS PLLC Nicholas J. DiCarlo and LAW OFFICES OF WILLIAM McKINNON By s/ William McKinnon William McKinnon Attorneys for Merchant Transaction Systems, Inc., Gene Clothier, and Tone Clothier LEWIS AND ROCA LLP By s/ Richard A. Halloran Peter D. Baird Robert H. McKirgan Richard A. Halloran Kimberly A. Demarchi Attorneys for POST Integrations, Inc., Ebocom, Inc., Mary L. Gerdts, and Douglas McKinney

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CERTIFICATE OF SERVICE I hereby certify that on May 17, 2007, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: Merrick B. Firestone, Esq. [email protected] Veronica L. Manolio, Esq. [email protected] RONAN & FIRESTONE, PLC 9300 East Raintree Drive, Suite 120 Scottsdale, Arizona 85260 Attorneys for Defendants Nelcela Incorporated, Alec & Diane Dollarhide, and Len & Helga Terry Campagna

s/

Diana Clauser

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