Free Motion to Appoint - District Court of Arizona - Arizona

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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

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.

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA ) ) Plaintiff, ) vs. ) ) Nelcela, Inc., et al., ) Defendants. ) ) ) And Related Counterclaims, Cross-Claims, ) and Third-Party Claims. ) Merchant Transaction Systems, Inc., No. CIV 02-1954-PHX-MHM LEXCEL, POST, AND MTSI'S MOTION FOR COURT APPOINTMENT OF TECHNICAL ADVISOR (Assigned to the Honorable Mary M. Murguia)

The Court's ruling on the parties' motions for summary judgment established a very narrow issue for trial on Lexcel's claim to ownership of the so-called "Nelcela Software": "At trial, if it is determined that the Lexcel 2001 software is substantially similar, derivative of or is an update of Lexcel's 94/95 software then it appears that a conclusion can be made; Lexcel, Inc., is the owner of the software as its software predates any other version." Order at 28, lns.24-27 (Dckt. # 383). The Lexcel, POST, and MTSI Parties (collectively "Movants") believe there is no genuine dispute as to any material fact on this issue, and that ownership of the "Nelcela Software" should be summarily adjudicated in Lexcel's favor without the need for a trial.
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At the September 11, 2006 hearing, counsel for Nelcela represented to the Court: "The '94-'95 Lexcel code bears no resemblance to the 2001 CD that they produced in this litigation." (Trans. at 80:4-6 (Dckt. 382)). Such representations by Nelcela and its counsel are insufficient to warrant a trial because a comparison of the computer source code on the floppy disks containing the 94/95 Lexcel software and the CD containing the 2001 Lexcel software shows, without question, that the Lexcel 2001 software is substantially similar to, and derivative of, Lexcel's 94/95 software. Submitted under seal herewith as Exhibit 1 is a redline comparison showing the minimal changes to the Lexcel source code files from the 94/95 floppy disks to the 2001 CD.1 The comparison shows that 41 source code files appear on both the 94/95 floppy disks and the 2001 CD with no changes other than an update to the confidentiality notice at the beginning of the files. For example, pages 230-231 of Exhibit 1 show that the file "Interchange.h" (which was copied by Nelcela)2 appears verbatim in both the Lexcel 94/95 floppy disks and the Lexcel 2001 CD with the exception of the confidentiality notice added to the CD version of the file. The comparison further shows that four other source code files appear on both the 94/95 floppy disks and the 2001 CD, with changes showing that the 2001 CD versions of the files are updated versions of the earlier files found on the floppy disks. (See, e.g., Exhibit 1 at p.139). In short, a comparison of the source code on the Lexcel 94/95 floppy disks and the Lexcel 2001 CD establishes ­ without room for legitimate dispute ­ that the 2001 Lexcel software was derived from the 94/95 Lexcel software. The comparison of the two sets of Lexcel software is a matter of undisputable fact and can be made by this Court through a visual inspection of Exhibit 1. Movants request that the Court review Exhibit 1; confirm that the Lexcel 2001 software is substantially
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The source code that appears identically in both the 94/95 Lexcel floppy disks and the 2001 Lexcel CD is shown in Exhibit 1 in black, the source code that appears in the 94/95 floppy disks but not the 2001 CD is shown in red, and the source code that appears in the 2001 CD but not the 94/95 floppy disks is shown in blue.
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See Lexcel's, POST's, and MTSI's Reply in Support of their Motion for Summary Judgment re Ownership of Software at 4-5 (describing Nelcela's copying of this file) (Dckt. 358).
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similar, derivative of or an update of Lexcel's 94/95 software; and enter partial summary judgment declaring Lexcel to be the owner of the "Nelcela Software." Alternatively, Movants request that the Court appoint a technical advisor to advise the Court whether there is any genuine factual dispute regarding whether the Lexcel 2001 software is substantially similar, derivative of or is an update of Lexcel's 94/95 software. See FTC v. Enforma Natural Prods., Inc., 362 F.3d 1204, 1213 (9th Cir. 2004) (discussing role of court-appointed technical advisor); see also Fed. R. Evid. 706 (authorizing court-appointed experts). Movants believe review of the software by a court-appointed technical advisor will result in tremendous efficiency and savings to both the Court and the parties because if there is no genuine factual dispute regarding the remaining issue as to ownership of the "Nelcela Software," the issue can and should be resolved through summary judgment, thereby relieving the Court, the parties, and the judicial system of the expense and burden of a trial. See, e.g., Domingo ex rel. Domingo v. T.K., 289 F.3d 600, 606 (9th Cir. 2002) (affirming district court's entry of summary judgment based, in part, upon reliance on advice of court-appointed technical advisor). RESPECTFULLY SUBMITTED: October 20, 2006. BRYAN CAVE LLP By __s/ George C. Chen______ ____ George C. Chen Attorneys for Lexcel, Inc. and Lexcel Solutions, Inc. 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

LAW OFFICES OF WILLIAM McKINNON William McKinnon and DICARLO CASERTA & PHELPS PLLC By __s/ Nicholas J. DiCarlo__________ Nicholas J. DiCarlo Attorneys for Merchant Transaction Systems, Inc., Gene Clothier, and Tone Clothier
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Case 2:02-cv-01954-MHM

CERTIFICATE OF SERVICE I hereby certify that on October 20, 2006, 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] Attorneys for Defendants Nelcela Incorporated, Alec Dollarhide, and Len Campagna I further certify that on October 20, 2006, I send by hand-delivery a copy of the attached document along with a CD containing Exhibit 1 to this document to the following recipients: Merrick B. Firestone Veronica L. Manolio 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

Document 387

Filed 10/20/2006

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