IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF TEXAS AUSTIN DIVISION FUNDSXPRESS FINANCIAL NETWORK, INC. PLAINTIFF, V. DIGITAL INSIGHT CORPORATION DEFENDANT. APPLICATION FOR PRELIMINARY INJUNCTION Comes now Plaintiff, FundsXpress Financial Network, Inc., and files this its Original Complaint against Defendant, Digital Insight Corporation, 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 may be served by serving its Registered Agent, CSC - Lawyers Incorporating Service, 2730 Gateway Oaks Dr., Suite 100, Sacramento, California 95833. II. JURISDICTION AND VENUE 3. This Complaint is for trade secret misappropriation 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, and Defendant is a corporation incorporated under the laws of the State of Delaware, having its principal place of business 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. 4. 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. FACTUAL BACKGROUND 5. FundsXpress has developed a proprietary, integrated system of computers, computer programs, databases and communication network interconnections through which it provides various products and services to financial institutions from FundsXpress' data center or service bureau. FundsXpress' proprietary service bureau and products/services allow financial institutions to provide Internet banking, commercial cash management, account aggregation and dynamic portal services for their authorized customers. A service bureau or application service provider ("ASP") solution means that, rather than a bank installing computers and software on its own premises to provide various financial services, the bank utilizes FundsXpress' proprietary system, maintained at FundsXpress' 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 bank 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 bank 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. 6. FundsXpress has expended tens of million dollars and devoted over five 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 customizable portal in a service bureau environment gives FundsXpress a competitive edge over its competitors in the market place, including Digital Insight Corporation of Calabasas, California. Digital does not presently offer a dynamic portal product similar to FundsXpress' Dynamic Website. 7. 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, 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 solution, the software programs utilized to run the ASP, the architecture of such systems, and the technical know-how to support the ASP provided by such a solution constitute confidential information and trade secrets of FundsXpress. 8. FundsXpress markets its Internet banking, dynamic portal and other products and services to independent and community banks and credit unions, allowing them to provide Internet Banking and other financial services to their customers and thereby compete with large, banks 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, not only in Texas but throughout the United States, for its products and services and has developed a substantial amount of good will with its financial institution customers. FundsXpress also serves the needs of its customers by compiling extensive information relating to them, including the name, address and phone number of each bank or financial institution, the service contact there, and the special product preferences for a particular financial institution. FundsXpress, through its Marketing and Sales Department, also helps each 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 for each particular financial institution also constitutes trade secrets of FundsXpress. 9. 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." Such strategies provide FundsXpress with competitive advantages over its competitors, including Digital. Such proprietary strategies also constitute trade secrets and confidential information of FundsXpress. 10. 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 lock and key. A person cannot access the source code without a key and the proper passcode to enter the room where the source code is stored. The 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. 11. FundsXpress requires each employee to sign a nondisclosure agreement. When an employee quits working at FundsXpress, the employee must sign a certification 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. 12. In December of 1998, FundsXpress initially 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 community banks and credit unions. In this role, he was also instrumental in developing the national sales strategy for all FundsXpress products. After the downsizing of the FundsXpress sales force 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, 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 pipeline * was the primary contact to perform marketing and sales demonstrations to many prospective customers. 13. 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. 14. Dunn also signed an Employee Intellectual Property Assignment and Nondisclosure Agreement ("Nondisclosure Agreement"). In it, he acknowledges his obligations (i) to 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. 15. Upon information and belief, in August of 2001, Dunn first began discussing going to work for Digital with Stephen Crain, a Digital sales representative and former FundsXpress employee. He continued the employment discussions with Digital's Regional Sales Manager, Eric Edwards in August and September. Eric 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 but Dunn did not return the acceptance letter until October 26, 2001. Dunn commenced working for Digital on October 31, 2001 while still an employee of FundsXpress. 16. 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. 17. Upon information and belief, 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. Upon information and belief, 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. 18. 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. 19. During November of 2001, Dunn did not show up for any sales presentations that he had previously scheduled with prospective financial institution customers. 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' Dynamic Website Tutorial and Documentation "Tutorial") for its new Dynamic Website portal product. This unauthorized action by Dunn occurred only three days before Dunn announced he was leaving FundsXpress. Again on November 3O, 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 information and belief, on or about December 3, 2001, Dunn sent Eric Edwards a copy of the Dynamic Website Tutorial as an attachment to an email. The Tutorial is used by FundsXpress' Implementations Department to assist an already contracting financial institution on how to use the Dynamic Website product. This document is FundsXpress' confidential information accessible by only those who have executed confidentiality agreements with FundsXpress. 20. On November 30, 2001, Dunn's last day of work for FundsXpress, he signed an Acknowledgment Regarding Employee Intellectual Property and Nondisclosure Agreement ("Nondisclosure Acknowledgment"). In the Nondisclosure Acknowledgement, Dunn once again states 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 his downloading of the Tutorial and made no effort to return his copies of the Tutorial to FundsXpress as he was obligated to do by the terms of both his original Nondisclosure Agreement and the just executed Nondisclosure Acknowledgment. 21. With Dunn in the role of working as a salesman for Digital, Dunn informed Digital of FundsXpress' trade secrets and other confidential information and utilized his knowledge of FundsXpress' sales and marketing strategy, prospective and existing customer lists, and proprietary knowledge of FundsXpress products and services, all of which constitutes trade secrets and other confidential information of FundsXpress. 22. Disclosure to Digital of FundsXpress' trade secrets or use of FundsXpress' trade secrets by Digital has 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, 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 is there is no adequate remedy at law, in that Digital will continue to use the pirated 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 Preliminary Injuntion 23. FundsXpress realleges and incorporates by reference the allegations made in paragraphs 1 through 22 above as though written in full and further alleges for its Count III as follows. 24. The Plaintiff has and will continue to be damaged and injured by the Defendant's conduct by loss of customers, loss of goodwill and loss of and permanent injury to the value of the trade secrets amassed by the Plaintiff over the years. 25. 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 Defendant's conduct. 26. In order to preserve the status quo and the property and rights of the Plaintiff during the pendency of this action, Digital should be preliminarily enjoined from possessing or using any trade secrets, proprietary information or work subject to the copyright of FundsXpress, and must return all such information to FundsXpress. WHEREFORE, Plaintiff requests: 1. That Defendant, its agents, and servants be preliminarily enjoined during the pendency of this action from retaining, accessing or using the trade secrets of Plaintiff or infringing the copyright of Plaintiff in any manner, and from publishing, selling, marketing or otherwise disclosing of any copies of the trade secrets or the Tutorial; and 2. That Defendant returns all such trade secrets and copyrightable works to Plaintiff during the pendency of this action; and 3. That Plaintiff have such other and further relief as is just. 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