Adaptec Wins First Round: Preliminary Injunction Freezes Prassi's CD Right! and CD Rep

Emedia Professional,  Feb, 1999  by Stephen F. Nathans

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In CD-Recordable software's reigning ongoing intellectual property dispute, Adaptec Inc. has secured a preliminary injunction barring Prassi Software from distributing its CD Rep and CD Right! software products. A court order dated December 3, 1998, and submitted by the U.S. District Court of San Jose, California, prohibits Prassi from distributing or selling the software until the subsequent trial, which was scheduled take place no earlier than January 18, 1999.

In Adaptec's motion, heard on October 26, the company alleged that Prassi principals Umberto Bassignani, Paolo Barettoni, and Jeff Stenehjem--all former Adaptec employees--had violated their employment agreement by using code developed by Bassignani and Barettoni (when they were working for Adaptec] in the CD Rep and CO Right! software released by Prassi in 1997. Adaptec also alleged in the motion that the products' releases violated a non-competition agreement signed by the two developers when they left Adaptec in August 1996. The agreement prohibited Bassignani and Barettoni from developing or releasing products before August 31, 1997, that would compete directly with Adaptec's popular Easy CD Creator premastering tool. Prassi's first product, CD Rep, released in April 1997, was promoted as a "professional" CD recording tool, and thereby determined (in an earlier agreement between the two companies) as not being in competition with Adaptec's more consumer-oriented software. Prassi's subsequent product releases, two consumer-market tools called CD Right! and CD Right! Plus, are positioned in direct competition with Easy CD Creator, but the products' October 1997 release date seemed to place them outside the restrictions imposed by the non-competition agreement.

Acting within the agreements terms, Adaptec insisted on receiving source code for all three Prassi products (which Prassi willingly provided) to compare them for similarities that might indicate that CD Right! had been developed in violation of the companies' non-aggression pact. In the motion heard October 26, an "Adaptec expert" testified that the source codes in CD Rep (released during the non-competition period) and CD Right! (released subsequently) were similar enough to indicate that CD Right! had indeed been developed in violation of the agreement.

Also introduced into evidence by Adaptec were the "declarations" of Mirco Caramori, a longtime colleague of Bassignani and Barretoni. Caramori--now CEO of Padus Software, whose DiscJuggler software competes directly with Prassi's CD Rep--testified that in 1996, then-Adaptec employee Bassignani had revealed to him at a dinner party that he had been "working independently on a CD premastering engine that was much faster and more reliable than `Easy CD Pro,'" the Easy CD Creator antecedent developed by Bassignani, Barretoni, and Caramori while the three were employed at inCat Systems (which Adaptec had acquired in July 1995). At the party in question, Caramori claimed, Bassignani had in fact demonstrated a "fully functioning prototype." That engine, Caramori and Adaptec have asserted, is the basis of CD Rep and CD Right! The U.S. District Court order granting the preliminary injunction states, "Prassi categorically denies that Bassignani or Barettoni ever developed or demonstrated a CD premastering engine in July 1996 and claims that Adaptec has provided false evidence."

Prassi in particular takes exception to the "Adaptec expert's" findings in the code comparison. According to Jeff Stenehjem, Prassi's vice president of sales and marketing, "Our expert has compared the code in CD Right! with CD Rep and has concluded that CD Right! was independently developed and not derivative of the source code in CD Rep."

However, presentation of evidence of this type is not part of a preliminary hearing, nor is such corroboration necessary to support such a ruling. In the "Discussion" segment of the order, the judge stated that, in meeting the criteria for a preliminary injunction, the party filing the motion must demonstrate "(1) a likelihood of success on the merits and the possibility of irreparable injury or (2) the existence of serious questions going to the merits and the balance of hardships tipping in the movant's favor."

Bob Stephens, Adaptec's president and chief operating officer, says, "[The injunction] not only vindicates the stand we took back in April," when the lawsuit was first introduced. "It serves as a warning that Adaptec will not tolerate violation of its contractual and intellectual property rights," he continued. "We are gratified by the Judge's decision, and will continue to prosecute this case vigorously."

In a press release dated December 11 and titled, "The Reports of Prassi's Demise Have Been Greatly Exaggerated," Prassi conveyed its "disappointment and regret" at its products' suspension from sale, and stated that Adaptec's allegations were "made by certain individuals without benefit of cross-examination." The press release also stated that an anti-trust countersuit filed shortly after Adaptec's claim was first presented in April 1998 is continuing to move forward, with allowances for amendments "to provide additional factual allegations against Adaptec." The suit names in particular Adaptec's Thomas Shea and David Ulmer. At press time, Prassi's attorneys were in the process of preparing a Second Amended Counter-Claim pursuant to the court's directive, according to Stenehjem. No specific damage amount had been named.