IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TEXAS - AUSTIN DIVISION

FUNDSXPRESS FINANCIAL NETWORK,
Plaintiff,

v.

DIGITAL INSIGHT CORPORATION, ET AL.
Defendants.

DEFENDANT DIGITAL INSIGHT CORPORATION, ERIC EDWARDS AND RONALD
GOFFMAN'S MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM FOR RELIEF
AND MOTION TO STRIKE

TO THE HONORABLE SAM SPARKS, UNITED STATES DISTRICT JUDGE:

Defendants file their Motion to dismiss, respectfully showing the
following:

INTRODUCTION

In its First Amended Complaint ("Complaint"), plaintiff FundsXpress
Financial Networks, Inc. purports to assert various claims against
defendants Digital Insight Corporation ("DI"), Eric Edwards[1] and
Ronald Goffman arising out of the alleged misappropriation of
plaintiff's trade secrets and infringement of plaintiffs copyrighted
materials. Count V of the Complaint (for unfair competition) should be
dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6) because
Texas law does not recognize an independent cause of action for unfair
competition. Further, the Complaint's reference to the Economic
Espionage Act, 18 U.S.C. SS 1831-1839, must be stricken under Federal
Rule of Civil Procedure 12(f). That allegation is immaterial, since
the Act does not provide for a private right of action.

STATEMENT OF FACTS

DI and plaintiff are competitors in the field of internet
banking. Complaint at P8. They both provide internet banking and
related services to financial institutions throughout the country. Id.

In 2001, DI hired defendant Ronald Goffman, and non-party Steven
Crain, both of whom who had been previously terminated by
plaintiff. In October 2001, DI hired another of plaintiff's former
employees, non-party Gifford Dunn.[2]

Plaintiff alleges that its former employees -- Goffman, Crain and Dunn
-- provided Edwards and DI with certain documents and information they
received while employed by plaintiff. This conduct, plaintiff alleges,
render Goffman, Edwards and DI liable for misappropriation of trade
secrets (Count I), conversion (Count II), interference with contract
(Count III), copyright infringement (Count IV) and unfair competition
(Count V). The Complaint also seeks exemplary damages, and in support
of such request, alleges that defendants' conduct violates the United
States Economic Espionage Act. Complaint at P73.

As discussed below, Count V should be dismissed because "unfair
competition," as pled by plaintiff, is not an independent cause of
action in Texas. Further, plaintiff's reference to the Economic
Espionage Act should be stricken, as that statute does not provide for
a private right of action.

ARGUMENT

I. PLAINTIFF'S UNFAIR COMPETITION CLAIM (COUNT V) SHOULD BE DISMISSED
   BECAUSE SUCH A CLAIM, AS PLED BY PLAINTIFF, IS NOT ACTIONABLE IN
   TEXAS AND IS PREEMPTED BY THE COPYRIGHT ACT.

Count V of the complaint purports to assert a claim for "unfair
competition." This claim should be dismissed because Texas law does
not recognize a separate claim for unfair competition, and because, to
the extent it seeks redress for copyright infringement, it is
preempted by federal law.

In Texas, "the law of unfair competition is the umbrella for all
statutory and nonstatutory causes of action arising out of business
conduct which is contrary to honest practice in industrial or
commercial matters." United States Sporting Products v. Johnny Stewart
Game Calls, 865 S.W. 2d 214, 217 (Tex. App. 1993), quoting, American
Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3,14 (5th
Cir. 1974). "Unfair competition" is just a particular category of
separate causes of action relating to unfair business conduct. The
unfair competition causes of action include misappropriation of trade
secrets and "palming off," among others. Id. Because unfair
competition is category of separate causes of action, it is not a
cause of action by itself. Samsung Elecs. Co. v. Texas Instruments,
1996 U.S. Dist. LEXIS 15111, *22-23 (N.D. Tex. 1996) ("A claim for
unfair competition under Texas law requires the commission of an
independent tort or other illegal conduct that interfered with the
plaintiffs ability to do business; liability cannot be premised on the
tort of unfair competition.")

Count V of the complaint alleges that defendants committed unfair
competition by misappropriating plaintiff's trade secrets and
infringing plaintiff's copyrights. Complaint at P65. But, Count I
already alleges one of the unfair competition torts, misappropriation
of trade secrets. Thus, because unfair competition is not a separate
claim and plaintiff has already alleged a claim for misappropriation
of trade secrets, the trade secret aspect of Count V is subject to
dismissal.

The copyright aspect of Count V must also be dismissed because state
laws governing copyright infringement are preempted by the United
States Copyright Act. Barbour v. Head, 178 F. Supp. 2d 758, 766
(S.D. Tex. 2001). In Barbour, the district court dismissed the
plaintiff's unfair competition claims that were based upon copyright
infringement because the claims were "preempted by federal law." The
court noted, "[t]he Copyright Act stipulates that it exclusively
governs all legal and equitable rights falling within the general
scope and subject matter of copyright, such that 'no person is
entitled to any such right or equivalent right in any such work under
the common law or statutes of any State.'" Id. (quoting, 17
U.S.C. §301(a)). Thus, Count V cannot be based upon copyright
infringement.

Accordingly, Count V should be dismissed.

II. THE REFERENCES TO THE ECONOMIC ESPIONAGE ACT SHOULD BE STRICKEN
    FROM THE COMPLAINT.

Paragraph 73 of the complaint alleges "[t]he wrongful conduct
complained of herein also violates . . . the United States Economic
Espionage Act of 1996, see 18 U.S.C. S1832." This sentence's reference
to the Economic Espionage Act should be stricken from the complaint as
it is immaterial. The Act, 18 U.S.C. SS1831-1839, specifies that
certain types of trade secret theft can be a federal crime. See 18
U.S.C. S1832(b). Nothing in the Act suggests that a party, other than
the government, can maintain a private cause of action
thereunder. See Harvard Apparatus. Inc. v. Cohen, 130 F.Supp. 2d 161,
164 (D.Mass. 2001) (ordering dismissal of private claim under Economic
Espionage Act unless plaintiff demonstrates that the act supports a
private right of action).

Because the Act does not allow for a private right of action,
plaintiff's allegation that defendants' conduct violates the Act is
immaterial and should be stricken from the Complaint under Federal
Rule of Civil Procedure 12(f).

CONCLUSION

For the forgoing reasons, defendants' motion should be granted. Count
V of the Complaint should be dismissed and the Complaint's reference
to the Economic Espionage Act should be stricken.

[1] Defendant Edwards has also moved this Court to dismiss him from this
action for lack of personal jurisdiction.
[2] Plaintiff previously sued Gifford Dunn in Kansas City, where he
resides. Complaint at P34. That action was settled.

Respectfully submitted,

CLARK, THOMAS & WINTERS,
A Professional Corporation

By BARRY K. BISHOP
State Bar No. 02346000
P. O. Box 1148
Austin, Texas 78767-1148
(512) 472-8800
(512) 474-1129 fax
ATTORNEYS FOR DEFENDANTS DIGITAL INSIGHT CORPORATION, ERIC EDWARDS AND
RONALD GOFFMAN

CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing
document has been served on all counsel of record via ( )
hand-delivery, (*)facsimile and/or ( ) certified mail, return receipt
requested, on this 6th day of June, 2002:

Peter Nolan
Winstead Sechrest & Minick, P.C.
100 Congress Avenue, Suite 800
Austin, Texas 78701
(512) 370-2850 fax

Barry K. Bishop