Free Response to Motion - 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., ) ) ) ) ) ) ) ) ) ) ) ) No. CIV 02-1954-PHX-MHM LEXCEL, MTSI AND POST PARTIES' RESPONSE TO THE NELCELA PARTIES' MOTION IN LIMINE NO. 1 RE TESTIMONY BY ROBERT ZEIDMAN (Assigned to The Honorable Mary M. Murguia)

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Robert Zeidman is the POST Parties' expert witness on the issue of copying. Mr. Zeidman compared the parties' computer software, and is prepared to testify that both the Nelcela authorization system and the Nelcela merchant system were derived from the Lexcel Software. Mr. Zeidman's opinions are based on his personal examination of the parties' actual computer source code, and easily meet the standard of reliability mandated by Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786 (1993). Accordingly, the motion in limine should be denied.
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MEMORANDUM OF POINTS AND AUTHORITIES I. ROBERT ZEIDMAN Robert Zeidman is a computer software analyst with an extensive background in the computer industry. He has a Masters Degree in Electrical Engineering from Stanford, and Bachelors' Degrees in Electrical Engineering and Physics from Cornell. He has written multiple articles on detecting plagiarism of computer software, which have been published in prominent computer industry publications including the Proceedings of the 5th IEEE/ACIS International Conference on Computer and Information Science. 1 And, Mr. Zeidman is regularly employed by the nation's leading law firms as an expert witness to evaluate claims of copyright infringement involving computer software. (See Ex. 1 ­ Resume at 2-3). By any measure, Mr. Zeidman possesses specialized knowledge, skill, and experience that qualify him as an expert witness regarding the detection of plagiarized computer software. II. CODEMATCH CodeMatch is a patent-pending computer program developed by Mr. Zeidman which uses five different algorithms to compare two works of computer software to determine the amount of similarities between them and to pinpoint specific locations that are similar. (See Ex. 2 - Patent Application). Essentially, CodeMatch creates an index of all the similar passages it locates in the two works of software. Mr. Zeidman uses the CodeMatch results (the index) to point him to portions of the two works which he then personally examines to determine whether or not one work was derived from the other. Importantly, CodeMatch does not determine whether plagiarism occurred. Rather, CodeMatch is used as an analytical search tool to identify areas of similarity in the software. The analyst must then personally examine those portions of the actual computer software to determine whether or not copying occurred. Mr. Zeidman explained this in his deposition:

The IEEE ("Institute of Electrical and Electronics Engineers") is one of the most prominent organizations in the world for the advancement of computer technology.
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A. CodeMatch, just like any other software tool for this kind of analysis, cannot do a, cannot perform conclusive results. That's why it takes someone with experience to look over the results and determine what is the reason for this match, this correlation. Q. So the CodeMatch does not determine conclusively, using your words, whether or not there's plagiarism or copying, that's what the expert does? A. The expert uses the results of CodeMatch to guide him or her towards places where plagiarism may have taken place. (Ex. 3 ­ Dep. of R.Zeidman at 28:6-16). Mr. Zeidman used his CodeMatch software in the present case to compare the Lexcel and Nelcela Software. The CodeMatch results directed him to portions of the parties' voluminous computer software which he then personally examined. Mr. Zeidman then offered his opinions of copying based on his personal examination of the parties' computer software. 2 III. APPLICATION OF DAUBERT The Supreme Court held in Daubert that district courts have "a general `gatekeeping' duty to ensure that proffered expert testimony `both rests on a reliable foundation and is relevant to the task at hand.'" U.S. v. Jawara, 462 F.3d 1173, 1189 (9th Cir. 2006) (quoting Daubert, 509 U.S. at 597), amended on other points, 2007 WL 121297 (9th Cir. Jan 19, 2007).3 The purpose of the gatekeeping duty is to ensure that all "testimony or evidence admitted is not only relevant, but reliable." Daubert, 509 U.S. at 589. Mr. Zeidman used his CodeMatch program as a search tool to assist him in his analysis. CodeMatch pointed Mr. Zeidman where to look. He then personally compared those portions of the parties' software. His opinions are based on his own personal examination of the Lexcel and Nelcela Software. His findings of similarities between the softwares are not only reliable, they are readily verifiable by a comparison of the Lexcel

The "pure text files" Nelcela refers to in its motion are text files exported from Nelcela's own software. We produced those files to Nelcela in September 2005 along with the complete CodeMatch results used by Mr. Zeidman in his analysis.
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The Court need not hold a separate Daubert hearing. Jawara, 462 F.3d at 1189.
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and Nelcela source codes. That is, the source code itself confirms Mr. Zeidman's findings of similarities. Mr. Zeidman's testimony is thus reliable, and therefore admissible under Daubert. IV. THE RELEVANCE OF MR. ZEIDMAN'S TESTIMONY Mr. Zeidman is prepared to testify about the similarities between the Nelcela Software and the Lexcel Software. However, this issue has already been resolved in the Court's summary judgment Order, in which the Court ruled that "[t]here is significant evidence demonstrating the existence of a substantial overlap of features and characteristics between [the Lexcel, MTSI, and Nelcela software]," and that "[b]ased upon the undisputed similarities between the Lexcel 2001 software, MTSI software and Nelcela software the Court finds that as a matter of law that they are substantially similar beyond the possibility of random chance and that copying took place." Summary Judgment Order at 27:1-2, 28:14-16 (Dckt. 383). Accordingly, the issue left for trial is not whether copying occurred, but rather who copied from whom. As stated in the Court's summary judgment ruling, if the Joint Parties (Lexcel, MTSI, and POST) can show that the software Lexcel produced in this lawsuit "is substantially similar, derivative of or is an update of" the Lexcel software provided to Alec Dollarhide in 1995 for delivery to CCS, Ltd., then the Joint Parties should prevail. Id. at 28:25-27. Alternatively, if the jury finds that the two versions of Lexcel's software are distinct, then the issue of ownership will "boil down to a determination of whose software was created first." Id. at 29:2-3. Thus, while Mr. Zeidman's testimony is admissible, we expect that much of Zeidman's expected testimony will be unnecessary if the Court instructs the jury that copying took place and the only issue is who copied from whom. V. CONCLUSION Mr. Zeidman's testimony is reliable, and his findings are verifiable. Accordingly, his testimony is admissible under Daubert. Therefore, Nelcela's motion in limine should be denied.
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RESPECTFULLY SUBMITTED February 2, 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 February 2, 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 [email protected] Veronica L. Manolio [email protected] RONAN & FIRESTONE, PLC 9300 East Raintree Drive, Suite 120 Scottsdale, Arizona 85260 Attorneys for Defendants Nelcela Incorporated, Alec Dollarhide, and Len Campagna

s/ Diana Clauser

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