Robert Ambrogi Blog
Two docketing technology companies will be battling each other in federal court, as New York based CourtAlert.com has filed a lawsuit against California based American LegalNet alleging theft of trade secrets.
In a complaint filed Sept. 19 in the U.S. District Court for the Southern District of New York, CourtAlert.com alleges that American LegalNet (ALN), its CEO Erez Bustan, and its regional sales manager Robert Loeb, conspired to steal CourtAlert’s confidential and proprietary information, including client lists, product offerings, pricing, marketing opportunities, and sales and revenue data.
The complaint alleges:
“For years, Defendant ALN has built a business out of attempting to copy CourtAlert product offerings and aggressively marketing those copycat products. Frustrated by its inability to compete merely through stealing CourtAlert’s ideas, ALN eventually turned to more untoward strategies, trying to steal away CourtAlert’s employees as well. But even poaching CourtAlert’s primary salesperson did little to improve ALN’s ability to compete against CourtAlert.”
Although ALN has yet to respond to the lawsuit, Bustan, in an email, called the lawsuit frivolous.
“We’re not surprised that a competitor has filed a frivolous lawsuit as a business tactic,” Bustan said. “While we find a competitor’s attempt to interfere with someone’s ability to earn a living distasteful, that is especially so in the current COVID-19 crisis. Although meritless I will leave it to our attorneys to respond at the appropriate time and in the appropriate way.”
The lawsuit focuses on ALN’s recruitment and hiring of Loeb, who was formerly CourtAlert’s head of sales and who joined ALN in June as sales manager for the Northeast region. The complaint alleges that ALN induced Loeb to violate his confidentiality and non-compete agreements with CourtAlert and then directed him to download CourtAlert’s proprietary information and provide it to ALN.
The lawsuit further alleges that ever since ALN began offering docketing-related software in 2007 (after formerly operating primarily as a legal forms supplier), its products have been “typically copied or derived from product offerings CourtAlert was already offering its clients.”
As examples of allegedly copied products, the complaint cites:
- ALN’s Docket Direct, introduced in 2011, which the complaint says “attempts to replicate” CourtAlert’s case monitoring service.
- ALN’s ECF Verify, introduced in 2015, which CourtAlert asserts was copied from its product ECF Assurance, introduced in 2014.
- ALN’s AutoDocket Pro, which CourtAlert says copies details of its ECF Inform service and that ALN announced just weeks after CourtAlert launched its service.
ALN’s recruitment of Loeb was in furtherance of this effort to gain proprietary information about CourtAlert, the complaint alleges. The complaint says that forensic analysis of the laptop Loeb used while working for CourtAlert proved that, immediately before he resigned, he downloaded “significant volumes” of company information and shared it with ALN.
Based on these allegations, the complaint alleges that the three defendants unlawfully misappropriated trade secrets and engaged in unfair competition, that Loeb violated his employment agreement with CourtAlert and his fiduciary duty to his employer, and that ALN and Bustan tortiously interfered with the contract between CourtAlert and Loeb.
For relief, the complaint seeks an injunction barring ALN inducing any current or former employees of CourtAlert to disclose trade secrets and from making any use of CourtAlert’s trade secrets. It also seeks compensatory and punitive damages.
Founded in 1999 by Izzy Schiller, CourtAlert provides case monitoring and management services to law firms and legal departments. Its products and services primarily cover New York state courts, New Jersey superior courts, certain California courts, and the federal courts through PACER.
ALN, founded in 1996, provides a suite of what it calls “Desktop to Courthouse” workflow products for law firms that include eDockets, Docket Direct, Forms Workflow, Smart Dockets and Docket Alerts.