IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TEXAS AUSTIN DIVISION FUNDSXPRESS FINANCIAL NETWORK, § INC. § PLAINTIFF, § § V. § NO. A-02-CA-141SS § DIGITAL INSIGHT CORPORATION, § RONALD GOFFMAN, ERIC EDWARDS, § AND DOES 1 THRU 10, INCLUSIVE AND § EACH OF THEM § § DEFENDANTS. § FIRST AMENDED complaint Comes now Plaintiff, FundsXpress Financial Network, Inc., and files this its First Amended Complaint against Defendants, Digital Insight Corporation, Ronald Goffman, Eric Edwards, and DOES 1 thru 10 and alleges as follows: I. PARTIES 1. Plaintiff, FundsXpress Financial Network, Inc. ("FundsXpress") is a Texas corporation and maintains its principal place of business at 11950 Jollyville Road, Austin, Travis County, Texas 78759. 2. Defendant, Digital Insight Corporation ("Digital") is a Delaware corporation, and has been served. 3. Ronald Goffman is an individual who may be served at his home address of 4043 Ojibwa Road N., Brainerd, MN 56401. 4. Eric Edwards is an individual and no service is necessary at this time. 5. The true names and capacities of the defendants DOES 1 thru 10, inclusive, whether individual, corporate, associate, or otherwise, are not known to FundsXpress, which therefore sues said defendants by fictitious names and FundsXpress will ask leave of court to amend this complaint to show their true names and capacities when the same have been ascertained. FundsXpress is informed and believes and thereon alleges that each of the defendants designated herein as a DOE are responsible in some manner for the events and happenings herein referred to and caused the damages to FundsXpress as herein alleged. II. JURISDICTION AND VENUE 6. This Complaint is for trade secret misappropriation, conversion, interference with contractual relationships, unfair competition and copyright infringement. Plaintiff is a corporation incorporated under the laws of the State of Texas having its principal place of business in the State of Texas. Digital is a corporation incorporated under the laws of the State of Delaware, having its principal place of business in a state other than Texas, and all of the individual Defendants reside in a state other than Texas. The matter in controversy exceeds, exclusive of interests and costs, the sum specified by 28 U.S.C. § 1332. Further, the copyright action arises under the Federal Copyright Act, 17 U.S.C. § 101 et seq. This court has jurisdiction pursuant to 28 U.S.C. §§ 1331, 1332 and 1338. 7. Venue is proper in the Western District of Texas pursuant to 28 U.S.C. § 1391, as a substantial part of the events giving rise to this claim occurred in this district and the property that is the subject of this action was situated in this district when it was misappropriated and improperly copied. III. BRIEF OVERVIEW 8. FundsXpress and Digital are competitors in the provision of Internet banking services to independent and community banks, credit unions and other smaller financial institutions ("Financial Institutions"). Digital was the largest provider of such services to Financial Institutions in the beginning of 2001. 9. Beginning in 2001, Digital conspired with ex-employees of FundsXpress to steal trade secrets and other confidential proprietary information of FundsXpress for the purposes of destroying or severely damaging FundsXpress' ability to compete with Digital. The resulting thefts of FundsXpress' trade secrets have improperly allowed Digital to acquire contracts from Financial Institutions which it could not otherwise have acquired without the use of the trade secrets and other confidential proprietary information of FundsXpress. FundsXpress has been greatly damaged by this conspiracy and the multiple thefts resulting from this conspiracy. Because Digital has violated not only state but federal criminal statutes in carrying out its conspiracy, FundsXpress seeks actual damages in excess of $25,000,000, punitive damages of at least $50,000,000 and injunctive relief to prohibit Digital from disclosing, using or retaining the trade secrets or confidential information of FundsXpress. IV. FACTUAL BACKGROUND 10. FundsXpress has developed a proprietary, integrated system of computers, computer programs, security systems, databases and communication network interconnections through which it provides various products and services to financial institutions from FundsXpress' data center or service bureau located in Austin, Texas. FundsXpress' proprietary service bureau and products/services allow contracting financial institutions to provide Internet banking, commercial cash management, bill payment, account aggregation and dynamic portal services for their authorized customers. A service bureau or application service provider ("ASP") solution means that, rather than a financial institution installing computers and software on its own premises to provide various financial services, the financial institution utilizes FundsXpress' proprietary system, maintained at FundsXpress' secure premises, to provide these capabilities. For example, an Internet banking account holder can "click" into the Internet at a home computer, access his or her bank account, and then transfer funds, pay bills, inquire about loan balances, and conduct virtually any other banking business. Further, a financial institution customer can use a version of the FundsXpress Dynamic Website portal product branded to the contracting financial institution as his home page for initially accessing the Internet so that he or she can quickly access (i) other banking services provided by his financial institution through tabs on the home page, (ii) personalized stock quotes, (iii) local weather and community event news, and (iv) Internet shopping from the same web page. All of these types of transactions are routed through the FundsXpress Austin data center. Currently, FundsXpress' system performs hundreds of thousands of "Clicks" over the Internet every day on behalf of its member financial institutions. 11. FundsXpress has expended tens of millions of dollars and devoted over six years developing its proprietary system to provide Internet banking, Dynamic Website portal, and other products and services in a secure service bureau environment. The service bureau solution developed by FundsXpress uses proprietary software, encryption techniques, interfaces, and proprietary integration and implementation processes that assure secure transactions over the Internet, all of which constitute FundsXpress' trade secrets. FundsXpress' ability to provide secure Internet banking transactions and other financial services through a user customizable portal in a service bureau environment gives FundsXpress a distinctive edge over its competitors in the market place, including Digital. Digital does not presently offer a dynamic portal product similar to FundsXpress' Dynamic Website. 12. FundsXpress can service a large number of individual financial institutions through the computer servers located at FundsXpress' secure data center, rather than having to set up a separate computer server at each financial institution that wants to offer its customers Internet banking and other secure Internet-based services. In this fashion, FundsXpress not only enhances security measures, but it also lowers the cost that FundsXpress can offer its products and services to participating financial institutions and their customers. Hence, FundsXpress is able to provide a competitive, secure Internet banking, cash management, bill payment, account aggregation, and portal-based products based upon the proprietary know-how and trade secrets utilized in its ASP solution. The technical know-how and configuration of FundsXpress' proprietary service bureau, including but not limited to the various products provided by the ASP solution, the software programs and SAS70 Level II procedures utilized to run its data center, the architecture of such systems, and the technical know-how to support the service bureau provided by such a solution constitute confidential information and trade secrets of FundsXpress. 13. FundsXpress markets its Internet banking, dynamic portal and other products and services to Financial Institutions, allowing them to provide Internet Banking and other financial services to their customers and thereby compete with large financial institutions, such as Bank of America and Citibank, for customers desiring Internet banking services. The FundsXpress system has received the exclusive endorsement of numerous state banking associations. FundsXpress has developed an outstanding reputation among financial institutions throughout the United States for its products and services and has developed a substantial amount of goodwill with its over 500 financial institution customers. 14. FundsXpress maintains a competitive advantage in serving the needs of its customers and potential customers by compiling extensive information relating to them in its Goldmine Sales Management Contact Database ("Goldmine"), including the name, address and phone number of every financial institution in the country, the service contact there, the decision maker, their current service providers for a vast array of products, the expiration date of service contracts, and the special product preferences for a particular financial institution. FundsXpress, through its Marketing and Sales Department, also helps each contracting financial institution develop its own customized marketing campaigns for its Internet banking portal and other products. The cost and details for providing such marketing campaigns on a cost effective basis for each particular contracting financial institution also constitutes trade secrets of FundsXpress. 15. FundsXpress also has developed proprietary marketing and sales strategies (including strategies relating to pricing and developing leads through association endorsements) for marketing its various products and services to financial institutions. These strategies are reflected in FundsXpress' comprehensive pricing spreadsheet for all of its products and services commonly called the "Pricing Suite" and in its Goldmine database. Such strategies, if kept confidential, provide FundsXpress with distinctive advantages over its competitors, including Digital. The Pricing Suite and the proprietary strategies reflected therein also constitute trade secrets and confidential information of FundsXpress. 16. FundsXpress has put into place various safeguards to maintain the secrecy of its confidential information and trade secrets. The premises of FundsXpress are secure. Doors are kept locked at all times. Employees utilize a personalized card key to open doors to the offices. No one is allowed to enter any part of FundsXpress' premises outside of the reception area without signing in, receiving a badge identifying the person, and without an employee escort. The room housing the data center computers is also kept locked at all times, and access is limited to a few individuals who not only need their personalized card key, but also a separate passcode. The source code for the software utilized in FundsXpress' service bureau is kept under strict control. A person cannot access the computer server where the source code is stored without being subjected to a specialized authentication and encryption system in addition to entering the proper passcode. The specialized authentication and encryption system with passcode is provided only to a few, select employees on a "need to know" basis. Every employee's computer is equipped with a password that must be used by that employee to log on. Should an employee leave his desk with his computer on, the employee's computer is equipped with a password-protected screen saver that will automatically come on after a few minutes, thus preventing someone from viewing what the employee had on his or her screen. FundsXpress notifies every employee of the importance of its confidential information and trade secrets and limits the dissemination of such information. 17. FundsXpress requires each employee to sign a nondisclosure agreement entitled Employee Intellectual Property Assignment and Nondisclosure Agreement ("Nondisclosure Agreement"). When an employee quits working at FundsXpress, the employee must sign a certification ("Nondisclosure Acknowledgement") acknowledging that the employee is aware of and will uphold the employee's obligation not to utilize or disclose any trade secrets or confidential information of FundsXpress. 18. FundsXpress also requires each financial institution to which FundsXpress submits a bid to sign a nondisclosure agreement prohibiting the financial institution from revealing any of the information contained within the bid to any third party. This is a standard practice in the industry, and Digital has the same practice. FundsXpress does not reveal its pricing formulas or strategies in a bid to a financial institution, but only that pricing information necessary for that particular bid. The entire "Pricing Suite" is not available to financial institutions. It is only available to a very limited number of FundsXpress employees who are all subject to a nondisclosure agreement, and Digital knew this. 19. In December of 1998, FundsXpress hired Gifford A. Dunn ("Dunn") as a sales Account Executive in its Marketing and Sales Department. Initially, Dunn served as a salesman of FundsXpress' Internet Banking product in Kansas, Missouri, and Arkansas. In April 2000, he was promoted to National Sales Manager. Subsequently, in August 2000, his position was renamed National Sales Director. As National Sales Manager and National Sales Director, Dunn was responsible for hiring, training and supervising FundsXpress' other account executives who sold FundsXpress' products and services to Financial Institutions. In this role he was also instrumental in developing the national sales and pricing strategy for all FundsXpress products. In 2001, Dunn was named Senior Account Executive. In this position, Dunn continued to have access to all product pricing, pricing strategies, marketing and sales materials for all FundsXpress products and services, the Goldmine database, and other previously described trade secrets and other confidential proprietary information of FundsXpress and its strategic partners. In short, Dunn was one of the key employees at FundsXpress, who: * was the lead sales contact with many of FundsXpress existing customers * knows the nonpublished pricing of FundsXpress products and services * knows the plan for future product offerings * knows the products in the development pipeline * knows the information contained within the Goldmine sales database * was the primary contact to perform marketing and sales demonstrations to many prospective customers. 20. As a key employee, Dunn understood and acknowledged that FundsXpress expected Dunn to maintain as confidential the proprietary information Dunn learned regarding the technical aspects of FundsXpress' ASP solution, information regarding FundsXpress' customers, FundsXpress' marketing and sales plans, its existing and future products, its financial information, and all other information about FundsXpress that is not made known to the public or to FundsXpress' competitors. Because Dunn held a significant position of authority and trust in FundsXpress, Dunn was provided with access to much of FundsXpress' proprietary and confidential information. 21. Dunn also signed a Nondisclosure Agreement. In it, he acknowledged his obligations (i) not to engage in any activities that constitute a conflict of interest and (ii) to maintain as confidential all of FundsXpress' trade secrets and other confidential information. The Nondisclosure Agreement provides in paragraph 3: Except for the business activities specifically disclosed in writing and approved in writing by an authorized representative of the Company, the Employee shall not during the term of their employment by the Company engage in any other business activity for gain, profit, or other pecuniary advantage if such activity interferes with the Employee's duties and responsibilities to the Company. The Nondisclosure Agreement also provides in paragraph 4: (a) The Employee recognizes and acknowledges that he will have access to confidential information and trade secrets of the Company, and other entities doing business with the Company relating to research, development, manufacturing, marketing, financial and other business-related activities or may discover, conceive, perfect or develop, solely or jointly with others, inventions, discoveries, improvements, know-how, computer programs, or other technical, manufacturing, marketing, customer, and/or financial data and information (hereinafter "CONFIDENTIAL INFORMATION"). Such CONFIDENTIAL INFORMATION constitutes valuable, special, and unique property of the Company, and/or other entities doing business with the Company. (b) The Employee will not during or after the term of his employment by the Company, make any use of, or disclose any of such CONFIDENTIAL INFORMATION to any person or firm, corporation, association, or other entity for any reason or purpose whatsoever, except as is generally available to the public or as specifically allowed in writing by an authorized representative of the Company. (c) The Employee agrees not to make use of or disclose any confidential information, including trade secrets, of prior employers in carrying out Employee's duties for Company. (d) In the event of a breach or threatened breach by the employee of the provisions of this Section 4, Company shall be entitled to an injunction restraining Employee from disclosing and/or using, in whole or in part, such CONFIDENTIAL INFORMATION. Nothing herein shall be construed as prohibiting Company from pursuing other remedies available to Company for such breach or threatened breach, including the recovery of damages from the Employee. 22. In October of 1999, FundsXpress hired G. Stephen Crain ("Crain") as a sales Account Executive. Initially, Crain was responsible for financial institution sales for the territory of South Carolina, Georgia, Florida and Alabama. Crain's duties also involved assisting FundsXpress sales efforts in other states. Crain was recommended by Dunn for this position. In this position, Crain had access to all product pricing, pricing strategies, marketing and sales materials for FundsXpress products and services, the Goldmine database, and other previously described trade secrets and other confidential proprietary information of FundsXpress and its strategic partners. 23. In August of 2000, FundsXpress hired Ronald Goffman as a sales Account Executive. He was initially responsible for credit union sales. Goffman reported directly to Dunn. Goffman was responsible for Michigan, Wisconsin and other states. Goffman had access to all product pricing, pricing strategies, marketing and sales materials for all FundsXpress products and services, the Goldmine database, and other previously described trade secrets and other confidential proprietary information of FundsXpress and its strategic partners. 24. Crain and Goffman understood and acknowledged that FundsXpress expected them to maintain as confidential the proprietary information they learned regarding the technical aspects of FundsXpress' ASP solution, information regarding FundsXpress customers, the Goldmine database, FundsXpress marketing and sales plans, its existing and future products, its financial information, and all other information about FundsXpress that is not made known to the public or to FundsXpress competitors. Because they held significant positions of authority and trust in FundsXpress, they were provided with access to much of FundsXpress' trade secrets and confidential proprietary information. They also signed Nondisclosure Agreements substantially the same as Dunn's Nondisclosure Agreement. In their respective Nondisclosure Agreements, they acknowledge the same obligations as acknowledged by Dunn above. 25. FundsXpress experienced a strong string of seven consecutive quarters of sales through the first quarter of 2001. From what FundsXpress knew at that time concerning the market's reception of its products and services, FundsXpress anticipated a ten percent increase in the number of new client Financial Institution sales for each quarter for 2001. FundsXpress fell substantially short of that goal in the second, third and fourth quarters of 2001. Upon discovery of the acts of conspiracy, trade secret misappropriation and other unlawful conduct described herein and after taking immediate steps to end the conspiracy, FundsXpress' sales to prospective Financial Institutions have begun to rebound. 26. Goffman left FundsXpress on May 2, 2001 and was subsequently hired by Digital. Goffman represented to FundsXpress by his execution of a Nondisclosure Acknowledgement dated May 2, 2001, that he had delivered to FundsXpress all tangible and intangible materials containing confidential information of FundsXpress in his possession and that he knew he could not use nor disclose FundsXpress confidential information. Instead of returning his FundsXpress notebook computer and the FundsXpress proprietary information (including the Goldmine sales database) stored thereon as he was required to do as evidenced by the Nondisclosure Acknowledgment, Goffman unlawfully converted the notebook computer and FundsXpress' trade secrets and other confidential proprietary information contained therein. Digital was apprised of the obligations of Goffman to FundsXpress but nevertheless conspired with Goffman to convert not only the notebook computer, but also misappropriate all of the FundsXpress trade secrets and proprietary information that was stored thereon for use by Digital. In particular, Goffman delivered copies of FundsXpress sales pipeline reports for all its prospective sales to financial institutions generated by FundsXpress' Goldmine sales database software to Digital employees. This enabled Digital to target pre-qualified sales leads of FundsXpress to FundsXpress' detriment and use the confidential information gathered by FundsXpress about each lead to sell Digital's products and services. 27. Goffman was initially hired as a salesperson at Digital. Because Goffman was much better at generating leads than he was at closing sales, Goffman was moved from salesperson to "lead generator". FundsXpress alleges that Goffman was better at generating leads because of the trade secrets and confidential information contained in the Goldmine sales database which he took from FundsXpress. 28. Crain left FundsXpress on July 9, 2001, approximately two months after Goffman's departure. He joined Digital shortly thereafter. Crain also executed a Nondisclosure Acknowledgement with FundsXpress that was substantially the same as the one signed by Goffman. Crain also disclosed FundsXpress trade secrets and confidential information to Digital which was used by Digital to acquire contracts of financial institutions for which both FundsXpress and Digital competed. As recently as February 20, 2002, Crain sent an email concerning a potential contract between FundsXpress and a credit union to a third party core processor where he stated "I just received pricing that I know would match or beat FX if she [the credit union representative] would give me a chance." He further stated, " . . . I don't know what your relationship is with her, but if she would just give me a chance I could change her mind . . ." 29. In August of 2001, Dunn first began discussing going to work for Digital with Crain, who had just left FundsXpress. Dunn continued the employment discussions with Digital's Regional Sales Manager, Eric Edwards, in August and September. Edwards orally offered Dunn a position as a Digital sales representative in late September and Dunn orally accepted it two days later. Digital sent Dunn a formal offer letter memorializing the job offer on October 3, 2001 and Dunn returned the executed acceptance letter on October 26, 2001. Dunn commenced working for Digital on October 31, 2001 while still an employee of FundsXpress. 30. Although already working for Digital, Dunn did not announce to FundsXpress that he intended to terminate his employment with FundsXpress until November 16, 2001. At that time, Dunn represented to FundsXpress in an email that he was accepting a position as Vice President with a local Kansas City-based company but would continue to work for FundsXpress during the remaining two weeks of November to ensure a smooth transition of his duties to another FundsXpress employee. He did not disclose to anyone at FundsXpress that he had already gone to work for a competitor, Digital. 31. Digital hired Dunn to market and sell Digital's products and services that are directly competitive with FundsXpress' products and services to FundsXpress' existing and prospective financial institution customers in an area that covers Oklahoma, Arkansas and Missouri. Digital hired Dunn because of Dunn's intimate knowledge of FundsXpress' business, including its proprietary marketing and sales strategy and FundsXpress' existing and prospective customer lists and with the understanding that Dunn would use such FundsXpress confidential information to enhance his ability to sell Digital's products against FundsXpress' products. 32. Dunn's actions in joining Digital prior to his departure from FundsXpress gave Dunn a unique opportunity to assist Digital because of his continuing responsibility for FundsXpress customers and his continued access to FundsXpress trade secrets and other confidential information. Digital was aware that Dunn continued his employment at FundsXpress without the knowledge of FundsXpress. 33. In an email dated November 12, 2001, Dunn sent Eric Edwards, the Regional Sales Manager for Digital, a copy of FundsXpress' proprietary Pricing Suite for all of FundsXpress' products and services. On November 13, 2001, Dunn also sent an email message from his FundsXpress computer to his home email address that contained a copy of FundsXpress' proprietary Dynamic Website Tutorial and Documentation ("Tutorial") for its new Dynamic Website portal product. On November 14, Edwards, in a series of e-mails and with full knowledge of Dunn's continued employment at FundsXpress, solicited additional FundsXpress trade secrets from Dunn regarding FundsXpress' pricing discounts and bill pay product so that he could more clearly understand the pricing strategies of FundsXpress revealed by FundsXpress' Pricing Suite. These unauthorized actions by Dunn and Digital occurred before Dunn announced he was leaving FundsXpress. Again on November 30, 2001, Dunn sent an email message from his FundsXpress computer to his home email address that contained another copy of the Tutorial. This unauthorized action occurred on the last day of Dunn's employment at FundsXpress and immediately prior to FundsXpress denying Dunn further access to the FundsXpress computer network. On or about December 3, 2001, Dunn sent Digital a copy of the proprietary Dynamic Website Tutorial as an attachment to an email to Edwards. The Tutorial is used by FundsXpress' Implementations Department to assist an already contracting financial institution on how to use and implement the Dynamic Website product. This document is FundsXpress' confidential information accessible by only those who have executed confidentiality agreements with FundsXpress. 34. On November 30, 2001, Dunn's last day of work for FundsXpress, he also signed a Nondisclosure Acknowledgment with FundsXpress. In the Nondisclosure Acknowledgement, Dunn once again stated that he understands that he is bound by the Nondisclosure Agreement even after his employment ends and that he would make no use of nor disclose any of FundsXpress' confidential information to any other person or company. Paragraph 1 of the Nondisclosure Acknowledgment also required Dunn to acknowledge that he has delivered to FundsXpress representatives all confidential information of the company (including copies thereof) in his possession or under his control. Dunn therefore knowingly decided not to disclose (i) his transmission of the Pricing Suite to Digital or (ii) his downloading of the Tutorial. He also made no effort to return his copies of the Pricing Suite or Tutorial to FundsXpress as he was obligated to do by the terms of both his original Nondisclosure Agreement and the just executed Nondisclosure Acknowledgment. Instead, Dunn sent the Pricing Suite to Edwards who made it available to all Digital employees via the Digital Intranet site. FundsXpress became aware of Dunn's dual employment at Digital and FundsXpress in late December 2001. FundsXpress immediately filed suit against Dunn on December 28, 2001. Facts discovered in that cause of action prompted the initial filing of a Complaint against Digital on March 8, 2002, and additional facts discovered since that filing have given rise to the filing of this Amended Complaint. 35. Digital and Edwards requested and encouraged Goffman, Crain and Dunn to inform Digital of FundsXpress' trade secrets and other confidential information knowing that this would violate the nondisclosure agreements that Goffman, Crain and Dunn had with FundsXpress. The Defendants conspired to utilize the FundsXpress' sales and marketing strategy, prospective and existing customer lists contained within the Goldmine sales database, pricing information and proprietary knowledge of FundsXpress products and services, all of which constitute trade secrets and other confidential information of FundsXpress, to attempt to destroy FundsXpress as a competitor and secure additional contracts for Digital. 36. Edwards informed Digital's executive management team that Digital was securing trade secrets and other confidential information of FundsXpress. In one email dated November 9, 2001, Edwards wrote: "I will forward their [FundsXpress's] latest pricing info to all of you next week for IB, BP, CM (probably not the Cash Tech pricing) Portal and Umonitor Aggregation. Hope this helps. Thanks. Eric" 37. Using the trade secrets and confidential proprietary information of FundsXpress, Edwards had a very successful 2001 at Digital and was promoted from a regional sales manager to a vice president at Digital. 38. Edwards was informed that the information he was receiving from ex-employees of FundsXpress contained trade secrets and proprietary information of FundsXpress. Digital knew, or should have known, that the "latest pricing info . . . for IB, BP, CM, Portal and Umonitor Aggregation" could only be obtained by inappropriate means. Digital knew, or should have known, that the information could only come from employees at FundsXpress or, on a much more limited basis, from individual financial institutions which had extended Non-Disclosure Sales Agreements with FundsXpress. Financial Institutions are normally only given a bid which contains the price for their particular needs. 39. In addition to the trade secrets and proprietary information identified above, Digital took possession of the following trade secrets and proprietary information: (a) FundsXpress Account Aggregation images, which contained screen shots of the product screens under development that a customer would view once the product was released; (b) A brochure entitled "FX Lending," which contains product information and screen shots of the FundsXpress Lending System under development; (c) A document called the "Shazam/FundsXpress Memorandum of Agreement." FundsXpress enters into this agreement with financial institutions that belong to the Shazam EFT network. The document contains the essential contract details including pricing, timeframes; feature/functionally, schedules and the financial institution contacts; (d) A detailed list of core processors supported by FundsXpress including pricing and feature/functionally detailing real-time, batch and multi-batch capabilities. (e) The schedule to the standard FundsXpress Memorandum of Agreement for flat pricing for providing Internet banking through specific real-time core processing interfaces. The document contains service level commitments, pricing, features/functionally and installation timeframes. (f) A document called "the FundsXpress Memorandum of Agreement" that FundsXpress executes with financial institutions to begin the relationship. (g) A document called "Cash Management Outline" which contains feature/functionally and delivery timeframes for FundsXpress' new cash management system under development. (h) An internal development document called "CM Projected Completion Dates" which outlines the completion timeframes and phasing of different modules of the new FundsXpress cash management system under development. (i) A document called "Functional Overview" that is used by the FundsXpress development teams to develop functional specifications for new products and features. (j) A static screen shot of FundsXpress's online banking "Welcome-register" page that is under development for release later this year. (k) A spreadsheet from the FundsXpress Goldmine database that contains key information such as information gathered by FundsXpress over the last five years from virtually every financial institution in the country concerning who they use as their Internet banking vendor (or when they plan to implement Internet Banking) and their current core processor. (l) A CD-Rom titled "Guide to Internet Banking" which is a complete guide to help financial institutions determine their level of desired feature/functionally of the FundsXpress Internet banking system. (m) A CD-Rom titled "Client Executive Website 10-2-00" which contains a vast amount of proprietary performance-related data from financial institutions. (n) A FundsXpress marketing folder containing miscellaneous promotional literature. (o) An updated detailed list of FundsXpress client financial institutions. 40. From at least 1999, Digital agreed and acknowledged that the confidential information of FundsXpress would not lose its confidentiality merely because it was disclosed to Digital by a third party who had received the information under a nondisclosure or other secrecy agreement. Digital required financial institutions to sign confidentiality agreements prohibiting them from disclosing pricing information provided by Digital. Digital knew that FundsXpress followed the same practice. Defendants knew, or should have known, that the confidential information which they solicited could only come from a breach of a FundsXpress' nondisclosure agreement either by an existing or former FundsXpress employee or by a financial institution that had entered into such an agreement with FundsXpress. 41. Once Defendants had been informed that Digital's efforts to secure these trade secrets and confidential information had been successful, they knew, or should have known that they were in possession of trade secrets or confidential proprietary information that had been obtained improperly. 42. After receiving reports from concerned FundsXpress field salespersons, FundsXpress copied Digital on a letter FundsXpress wrote to Crain on October 10, 2001, complaining that Crain was using and revealing trade secrets of FundsXpress to help Digital, and reminding Digital of Crain's Nondisclosure Agreement with FundsXpress. 43. The various thefts and disclosure to Digital of FundsXpress' trade secrets and the unlawful use of FundsXpress' trade secrets by Digital have already caused great harm to FundsXpress. FundsXpress has spent several years and tens of millions of dollars in the development of its proprietary service bureau, its Internet-based products, its product development plans, and its marketing and sales strategy. The continued use or disclosure of FundsXpress' trade secrets and other confidential information will cause irreparable harm to FundsXpress, for which there is no adequate remedy at law, in that Digital will continue to use the pirated FundsXpress confidential information and trade secrets for its own gain. The monetary value for such actions is incalculable. The net effect of Digital's continued use of these trade secrets and confidential information is that many years of hard work and substantial investment by FundsXpress in developing its products, service bureau, and its marketing and sales program would be seriously compromised, unjustly enriching Digital, who has obtained and is utilizing FundsXpress' trade secrets and confidential information to assist it in the sales of competing products and services to FundsXpress existing and prospective customers. COUNT I Misappropriation of Trade Secrets 44. FundsXpress realleges and incorporates by reference the allegations made in paragraphs 1 through 43 above. 45. The unlawful acquisition, knowing receipt and use of FundsXpress' trade secrets and confidential information by Defendants constitutes misappropriation of FundsXpress' trade secrets and confidential information. 46. FundsXpress has been substantially damaged by the Defendants' misappropriation, which actual damages are not subject to precise calculation at this time, but are in excess of $25,000,000. 47. Defendants' misappropriation, as alleged above, was malicious in that Defendants specifically intended to cause substantial injury to Plaintiff. Accordingly, Plaintiff asks that exemplary damages of at least $50,000,000 be awarded to FundsXpress. COUNT II Conversion 48. FundsXpress realleges and incorporates by reference the allegations made in paragraphs 1 through 47 above. 49. At all relevant times, Plaintiff was and still is the owner of all of the trade secrets and confidential information which are the subject of this lawsuit. 50. From at least May 2001 through November 2001 Defendants unlawfully and without authority assumed dominion and control over Plaintiff's trade secrets and proprietary information inconsistent with Plaintiff's rights in this property. The value of the property to Defendants was in excess of $25,000,000, for which sum Plaintiff sues. Plaintiff is also entitled to interest on the sum on the value of the converted property from the date of conversion, at the prejudgment rate of interest. 51. Defendants' conversion of the property, as alleged above, was malicious in that Defendants specifically intended to cause substantial injury to Plaintiff. Accordingly, Plaintiff asks that exemplary damages of at least $50,000,000 be awarded to FundsXpress. COUNT III Tortious Interference with Contract 52. FundsXpress realleges and incorporates by reference the allegations made in paragraphs 1 through 51 above. 53. Defendants were well aware of the Nondisclosure Agreement entered into by each of the FundsXpress ex-employees. Digital's own employees are covered by similar agreements, and such agreements are standard in this industry. Moreover, the ex-employees of FundsXpress informed Edwards of their confidentiality agreements and FundsXpress reminded Digital of the agreements in the letter of October 10, 2001 to Crain and copied to Digital. 54. Digital, Edwards, and DOES 1 thru 10 willfully and intentionally induced Dunn, Crain and Goffman to breach the terms of their Nondisclosure Agreements by misappropriating as much confidential information and trade secrets from FundsXpress as possible and delivering the confidential information and trade secrets of FundsXpress to Digital for its use. Digital, Edwards, and DOES 1 thru 10's purpose in hiring Dunn, Crain and Goffman was to take advantage of their knowledge of this confidential information. Without the inducement from Digital, Edwards, and DOES 1 thru 10, neither Dunn, Goffman nor Crain would have breached the Nondisclosure Agreement and would have had no reason to disclose the confidential information and trade secrets of FundsXpress. 55. FundsXpress has been substantially damaged by this tortious interference, which actual damages are not subject to precise calculation at this time, but are in excess of $25,000,000. 56. Plaintiff will show that Digital, Edwards, and DOES 1 thru 10 acted with malicious intent for the reason that they persuaded Dunn, Crain and Goffman to breach their contracts for the purpose of causing severe economic injury to the Plaintiff by removing it as a competitor and to allow Digital to improperly acquire financial institution contracts. Accordingly, Plaintiff asks that exemplary damages of at least $50,000,000 be awarded to FundsXpress. COUNT IV Copyright Infringement 57. FundsXpress realleges and incorporates by reference the allegations made in paragraphs 1 through 56 above. 58. FundsXpress' Tutorial and Pricing Suite are original works of authorship belonging to FundsXpress. The Tutorial and Pricing Suite contain a large amount of material wholly original with Plaintiff and is copyrightable subject matter under the laws of the United States. 59. Plaintiff has complied in all respects with the Copyright Act of 1976 and all other laws governing copyright, and has obtained from the Copyright Office registrations of its copyrights in said Tutorial and Pricing Suite, such registrations are attached hereto as Exhibits A and B. 60. Plaintiff has been and is still the sole proprietor of all rights, title and interest in and to the copyrights in said Tutorial and Pricing Suite. 61. On or about December 3, 2001, Dunn distributed his pirated copy of the Tutorial to Digital via e-mail. Since at least December 3, 2001, Digital has also infringed FundsXpress' copyright by copying the Tutorial to its intranet site thereby publishing the entire Tutorial for internal copying and use by Digital's employees. Various employees of Digital have also made copies of the Tutorial by viewing and/or downloading copies of the Tutorial accessible through the Digital intranet site. 62. Since at least December 2001, Digital has also infringed FundsXpress' copyright in its Pricing Suite by copying the Pricing Suite to its intranet site, thereby publishing the entire Pricing Suite for internal copying and use by Digital's employees. Various employees of Digital have also made copies of the Pricing Suite by viewing and/or downloading copies of the Pricing suite accessible through the Digital intranet site. 63. Plaintiff has notified Digital that Digital has infringed the copyrights of Plaintiff, and although Digital has represented as of mid-February 2002 that it is no longer infringing the copyrights, Plaintiff has not been able to determine whether this accurate. Nevertheless, Plaintiff has been substantially damaged by the Defendants' infringement of Plaintiff's copyrights, which actual damages are not subject to precise calculation at this time. COUNT V. Unfair Competition 64. FundsXpress re-alleges and incorporates by reference the allegations made in paragraphs 1 through 63 above. 65. From at least June of 2001, Defendants have been using the misappropriated trade secrets and other confidential proprietary information of FundsXpress in unfair competition with FundsXpress for FundsXpress' clients and potential clients. From at least December 3, 2001, Defendants have been publishing and otherwise distributing copies of the copyrighted Tutorial and the Pricing Suite via its intranet for use by its salesmen in unfair competition with FundsXpress for FundsXpress' clients or potential clients. Defendants have thereby been engaging in unfair trade practices and unfair competition against Plaintiff to Plaintiff's irreparable damage. 66. FundsXpress has been substantially damaged by Defendants' unfair competition, which actual damages are not subject to precise calculation at this time, but are in excess of $25,000,000. 67. Defendants acted knowingly or wantonly, in complete disregard of the harm they would cause FundsXpress, and FundsXpress is entitled to recover exemplary damages of at least $50,000,000 from Defendants. COUNT VI Permanent Injunction 68. FundsXpress realleges and incorporates by reference the allegations made in paragraphs 1 through 67 above as though written in full. 69. The Plaintiff has and will continue to be damaged and injured by the Defendants' conduct by loss of customers, loss of goodwill and permanent injury to the value of the infringed copyrights and the trade secrets amassed by the Plaintiff over the years. 70. The Plaintiff has no adequate remedy at law for the injuries just described. The injuries and losses are continuing. The property and rights involved are unique and irreplaceable, so that it will be impossible to accurately measure, in monetary terms, the damages caused by the Defendants' conduct. 71. Defendants should be permanently enjoined from possessing, using, or disclosing any FundsXpress trade secrets or other confidential proprietary information and from publishing, distributing, or copying or otherwise infringing any of FundsXpress' exclusive rights in any copyrightable works of FundsXpress. Defendants should also be permanently enjoined to return all copies of FundsXpress' trade secrets, confidential information and copyrighted works to FundsXpress. V. EXEMPLARY DAMAGES 72. FundsXpress re-alleges and incorporates by reference the allegations made in paragraphs 1 through 71 above. 73. The wrongs done by the Defendants were aggravated by the kinds of conduct for which the law allows the imposition of exemplary damages. Defendants' conduct was willful and malicious and Defendants were actually, subjectively aware of the harm that they intended to cause the Plaintiff, but nevertheless proceeded with conscious indifference to the rights, safety and welfare of Plaintiff. The wrongful conduct set forth herein constitutes malice, willful acts or omissions, or gross neglect within the meaning of Section 41.003 Tex. Civ. Prac & Rem. Code. The wrongful conduct complained of herein also violates Chapter 31 of the Texas Penal Code and the United States Economic Espionage Act of 1996, see 18 U.S.C. § 1832. Each Defendant is responsible for the conduct of the others under Chapter 7 of the Texas Penal Code. VI. JURY DEMAND 74. Plaintiff demands a trial by jury. VII. PRAYER WHEREFORE, Plaintiff demands: 1. That Defendants, their agents, servants, and all those persons in active concert or participation with them be enjoined during the pendency of this action and permanently from accessing or using the trade secrets or other confidential proprietary information of Plaintiff or otherwise disclosing the trade secrets or other confidential proprietary information of Plaintiff in any manner. 2. That Defendants, their agents, servants, and all those persons in active concert or participation with them be enjoined during the pendency of this action and permanently from directly, indirectly or by any contributory manner infringing any of FundsXpress' exclusive rights in the copyrights of Plaintiff, including copying, publishing, or distributing any copies of the Tutorial and Pricing Suite. 3. That Defendants be required to pay to Plaintiff such damages as Plaintiff has sustained in consequence of Defendants' misappropriation of trade secrets, conversion and tortious interference with contract, or in the alternative, account for and pay to Plaintiff all gains, profits and advantages derived by Defendants from their misappropriation of trade secrets, conversion and tortious interference with contract, or such damages as to the Court shall appear proper. 4. That Defendants be required to pay to Plaintiff such damages as Plaintiff has sustained in consequence of Defendants' infringement of FundsXpress' copyrights and account for all gains, profits and advantages derived by Defendants by their infringement of Plaintiff's copyrights or such damages as to the Court shall appear proper within the provisions of the copyright statutes. 5. That Defendants be required to pay to Plaintiff such damages as Plaintiff has sustained in consequence of Defendants' acts of unfair competition and account for all gains, profits, and advantages derived by Defendants by their acts of unfair competition or such damages as to the Court shall appear proper. 6. That Defendants be required to pay exemplary damages. 7. That Defendants be required to deliver to Plaintiff during the pendency of this action all copies of documents containing any misappropriated trade secrets and all copies of the Tutorial, Pricing Suite and other copyrightable works of FundsXpress in its possession or under its control. 8. That Defendants pay the Plaintiff the costs of this action and reasonable attorneys' fees to be allowed to the Plaintiff by the Court. 9. That Plaintiff have such other and further relief as is just or appropriate. Respectfully submitted, WINSTEAD SECHREST & MINICK P.C. 100 Congress Avenue Suite 800 Austin, Texas 78701 (512) 370-2885 telephone (512) 370-2850 fax By: ____________________________________ Peter A. Nolan SBN 15062600 ATTORNEYS FOR PLAINTIFF