Free Motion for Miscellaneous Relief - District Court of Arizona - Arizona

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LAW OFFICES

RONAN & FIRESTONE, PLC
9300 E. RAINTREE DRIVE, SUITE 120 SCOTTSDALE, ARIZONA 85260 (480) 222-9100

Merrick B. Firestone, SB #012138 Veronica L. Manolio, SB #020230 Attorneys for the Nelcela Defendants

UNITED STATES DISTRICT COURT IN AND FOR THE DISTRICT OF ARIZONA Merchant Transaction Systems, Inc., Plaintiff, vs. Nelcela, Inc., an Arizona corporation; Len Campagna, an Arizona resident; Alec Dollarhide, an Arizona resident; Ebocom, Inc., a Delaware Corporation; POST Integrations, Inc., an Illinois Corp., Defendants. And Related Counterclaims, Cross-Claims and Third-Party Claims. I. INTRODUCTION Based on the arguments made by the Joint Parties during the Final Pretrial Conference held before this Court on Monday, March 26, 2007, Nelcela, Inc., Len Campagna and Alec Dollarhide (collectively "Nelcela") hereby ask the Court to clarify two (2) issues that are absolutely essential to the Phase I trial on "Ownership" in this case: 1. Does the Court's prior finding that the Lexcel 2001 software, MTSI software and Nelcela software are "substantially similar" and copied, "as a matter of law" mean that the Court finds copying in both the Authorization and Merchant systems? 2. Is the Court going to make Lexcel prove ownership of each of its five (5) separatelypled copyrights, or does the Court intend to allow Lexcel to categorize all of its separate system copyrights as one "Lexcel software" as it has done so far? NELCELA, INC., LEN CAMPAGNA AND ALEC DOLLARHIDE'S MOTION FOR CLARIFICATION OF TRIABLE ISSUE(S) (The Honorable Mary H. Murguia) (Oral Argument Requested during the Continued Final Pretrial Conference set for April 3, 2007) No. 02-CV-1954 - PHX-MHM

Case 2:02-cv-01954-MHM

Document 461

Filed 04/02/2007

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II.

DISCUSSION OF THE ISSUES A. The Court Did Not Blanketly Find, "Copying as a Matter of Law."

During the Final Pretrial Conference ("PTC") on March 26, 2007, the Joint Parties repeatedly told the Court that it had already ruled there is, "copying as a matter of law," and consequently the Joint Parties no longer needed to bring expert(s) to trial nor prove copying to win on "ownership."1 First of all, Nelcela disagrees that this Court found copying as a matter of law on all systems.

Secondly, this Court's prior ruling on "copying" relied on an Addendum Report by Post's expert, Robert Zeidman, which was disclosed after the close of discovery and which Nelcela was mpt permitted to rebut. Thus, Mr. Zeidman must appear at trial to be cross-examined on the late findings, or his Addendum Report must be disregarded and the Court's prior ruling of "copying" reversed. The Court's original ruling on summary judgment was filed on September 30, 2006. While the Court did provide that "substantial similarity" existed between the Lexcel 2001 code, the Nelcela code, and the MTSI code, the ruling specifically stated numerous times that the Joint Parties had failed to show a relationship between the Lexcel 2001 CD and the 1994/1995 Lexcel floppy disks. The failure to demonstrate a relationship is simple: the 1994/1995 Lexcel floppy disks only contain authorization code, not a Merchant System. Thus, when the Joint Parties attempted to re-urge summary judgment in their "Motion to Appoint a Technical Advisor," this Court identified the flaw in the Joint Parties' shell game and defined the triable issues on Phase I Ownership: "Well, it seems like we would have to, in light of Nelcela's response, go deeper and determine whether or not this [similarity in codes] affects the authorization code or the merchant code." See, Hearing Transcript from November 20, 2006 at p. 22, ll. 12-15, a copy of which is attached here as Exhibit A and incorporated by this reference. (Emphasis added.)

Undersigned counsel has ordered the Hearing Transcript from the Monday, March 26th conference. At the time of filing this motion, however, that transcript has not yet been completed or provided. Undersigned is unable to quote the Joint Parties' arguments verbatim, and the phrases used herein are simply the understandings of what the Joint Parties told this Court they intend to do at trial. Undersigned will gladly supplement this motion with the actual, quoted statement(s) when they are available if this Court deems that necessary.

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The Joint Parties now ask the Court to ignore this ruling and understandings made at the November 20, 2006 hearing. See, fn. 1, supra. The Joint Parties want this Court to ignore that there is a factual dispute between the Authorization System and the Merchant System that has to be tried. Over objection, Nelcela fully understands that this Court has now ruled that both systems will be at issue at trial, but Nelcela requests clarification that the Court's earlier ruling (at summary judgment) did not find copying in both systems "as a matter of law" as the Joint Parties continually and falsely contend.2

B.

Lexcel Must Prove Ownership of Each of its Five (5) Copyrights at Trial.

The Court made it very clear on March 26, 2007 that Lexcel had pled ownership of 5 separate copyrights in its First Amended Complaint, and that Lexcel was entitled to present evidence of ownership of any one of those 5 copyrights at the Phase I trial on Ownership. However, the Court has never ruled (and cannot as a matter of law) that ownership of one copyright would give Lexcel a blanket ownership of each of its 5 separate copyrights. More specifically, even if Lexcel were granted ownership of the Authorization System(s) at issue, it cannot be granted ownership of the Nelcela Merchant System if it fails to demonstrate copying or derivation of the Merchant System(s). Because Lexcel and the Joint Parties repeatedly try to "lump" all of the 5 separate and independent copyrights as one "Lexcel code," Nelcela very specifically asks the Court to clarify that Lexcel will have to prove ownership of each copyright at trial.

As briefly stated above, the Joint Parties told this Court on Monday, March 26, 2007 that they did not intend to bring any expert(s) to trial because this Court already ruled that there was, "copying as a matter of law." However, this Court's September 30, 2006 ruling on Summary Judgment clearly relied on an Addendum Report done by expert Robert Zeidman after the close of discovery, and that Nelcela has never been permitted to rebut. If this Court maintains its position that copying occurred as a matter of law, Nelcela must be permitted to cross-examine Robert Zeidman on the Addendum Report on which this Court relied. See, Order on Summary Judgment dated September 30, 2006 at pp. 27-28, on file with this Court. (The Court relied on Mr. Zeidman's Report and Addendum Report to rule that copying occurred; Nelcela has never been permitted to either rebut or crossexamine Mr. Zeidman regarding the Addendum Report.)

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III.

CONCLUSION For the reasons listed herein, Nelcela respectfully asks the Court to clarify the issues for trial

so that Nelcela will not be irreparably prejudiced by the Joint Parties continued mis-statements of the Court's findings and the relevant law on Copyright Ownership. RESPECTFULLY SUBMITTED this 2nd day of April, 2007. RONAN & FIRESTONE, PLC

/s/ Veronica L. Manolio Merrick B. Firestone Veronica L. Manolio 9300 E. Raintree Drive, Suite 120 Scottsdale, Arizona 85260 Attorneys for the Nelcela Defendants ORIGINAL filed electronically with the Clerk's Office and COPIES electronically transmitted to the following CM/ECF registrants this same date to: Nicholas J. DiCarlo [email protected] Local Counsel for Merchant Transaction Systems William McKinnon [email protected] Attorney for Merchant Transaction Systems Peter D. Baird [email protected] Robert H. McKirgan [email protected] Richard A. Halloran [email protected] Kimberly Demarchi [email protected] Attorneys for POST and Ebocom George C. Chen [email protected] or [email protected] Attorneys for Lexcel, Inc. By: /s/ Diana Renteria

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