Minneapolis, Minnesota - March 29, 2004

United States District Judge John Tunheim today issued his ruling on the Motions for Summary Judgment brought forward by defendants Softwares/Quantum/CHOF.

In July, 2002, iSystems filed charges against Softwares, LLC (the former distributor of TQT), and later expanded the suit to include Quantum Management Systems, LLC, and Christ's Household Of Faith, Inc. (CHOF), the parent company of both Softwares and Quantum.

In his ruling, Judge Tunheim found that:

COUNT 1 - Breach of Contract
There is ample evidence that Softwares/Quantum/CHOF agreed to the TQT end user license (something that the defendants have denied)... a jury could conclude that Softwares was aware of and accepted all three of the licenses, and the defendants are therefore liable for any breach of the license terms. iSystems has "sufficient facts to permit a jury to find that defendants, in bad faith, acted to prevent plaintiffs [iSystems] from collecting the fruits of the Agreement".

COUNT 2 - Copyright Infringement
Jeremy Kahn held a valid copyright for TQT and that Softwares/Quantum/CHOF had significant access to the inner workings of TQT to infringe that copyright. "Plaintiffs contend that there is sufficient evidence to establish that defendants had access to TQT, and that Quantum MIS is substantially similar to TQT. The court agrees."

COUNT 3 - Breach of Implied Covenant
In this case, plaintiffs allege that Softwares violated the "spirit and letter of the Development Agreement" by secretly developing Quantum MIS, using TQT customers to do so, and then converting TQT customers to Quantum MIS by making disparaging comments about TQT. Plaintiffs have adequately established the existence of a contract between themselves and Softwares. Further, plaintiffs have submitted evidence demonstrating that TQT users were involved in the Quantum MIS focus group, that Softwares misrepresented Quantum MIS as an "upgrade" of TQT.

COUNT 5 - Trade Secret Misappropriation
As the sole distributors defendants had a confidential relationship with plaintiffs that permitted defendants access to plaintiffs' alleged trade secrets. Plaintiffs assert that defendants used their secrets in the development and the marketing of Quantum MIS. Plaintiffs have presented sufficient evidence for a jury to conclude that defendants used their knowledge of TQT and their experience marketing TQT to create and market Quantum MIS.

COUNT 8 - Disregard of Corporate Entity
By "allowing CHOF and Quantum to escape liability because each is technically a separate business from Softwares would permit them an advantage they do not merit". There "is sufficient evidence from which to conclude that plaintiffs were harmed by defendants' statements to current and potential TQT customers". In addition, "Plaintiffs have adequately pled and supported their claim for [defendants] violation of the Minnesota Deceptive Trade Practices Act".

"This has confirmed our position on each of the issues of this case and cleared the smoke offered by our opponents. We look forward to bringing this to the jury", said Jeremy Kahn of iSystems.

Trial for this case has been scheduled for May, 2004.

Full text of the summary judgment ruling is available in PDF format by clicking the link below:

Summary Judgement Opinion



For more information about this lawsuit see:

November 15, 2002 - iSystems Expands Copyright Infringment Lawsuit to Quantum Management Systems, LLC and Christ's Household of Faith, Inc.

July 29, 2002 - iSystems Files Copyright Infringement Lawsuit Against Softwares