permission from Source of Title
Is Your Clerk's Imaging Software Pirated?
Jarrod A. Clabaugh , Source of Title
County clerks throughout the United States utilize various software systems to
image their documents. Most assume that when they negotiate the contracts with
the software company, or a software reseller, that they have chosen to use a
legitimate system that will best serve their needs. They often overlook issues
such as who will have access to the imaged documents and in what country the
work is outsourced. A recent United States District Court decision in
Michigan, however, sheds light on a troubling aspect of imaging software –
where it originates and who maintains it.
In a default judgment by the U.S. District Court Eastern
Division in Michigan, the court found that Akhilesh Argawal and Aditya
International of India infringed on a copyright held by Digital Filing Systems
of Novi, Michigan, in its development of DigiFile, DigiCourt, and DigiRecord.
Argawal’s software contained an imaging component belonging to Digital.
Digital has been in the document management business
since the 1980s when some of the first scanners were introduced in the U.S.
market. Under the leadership of company founder, Harish Verma, the
company, then known as ImageTech, became among the first to provide document
management software. The product Verma and his team designed, ProFile,
provided the ability to scan, index and archive documents alone, or as an
added component in any other product. Through the use of programmers in India,
Digital continued to further develop its product for several years.
In the late 1990s, Digital hired Origin Technology, an
Indian firm, to help it enhance its software capabilities. Argawal was a
software programmer for Origin and was involved in the development and testing
of ProFile’s updated version. Upon being released from employment at Origin,
Argawal founded Aditya International and began working with Digital under an
exclusive one-year contract with the company on August 1, 1999.
“The agreement had the standard language that his work, materials, etc.
belonged to Digital and prohibited him from marketing, developing, etc.
document management software using any aspect of imaging technology and
prohibited him from copyrighting anything he was working on,” said Holforty,
the owner and a long-time investor in Digital.
Shortly thereafter, Digital signed a contract with the
State of Washington Public Disclosure Commission to customize its ProFile
software to make data available on the state’s Website. Argawal played a
critical role in adapting the program, according to Holforty. Unbeknownst to
Digital, however, Argawal began negotiating directly with the state according
to conversations that Holforty had with the state’s assistant attorney
general. While providing the state with ProFile, Argawal attempted to
negotiate an arrangement to work directly with them, offering them DigiFile –
at a lesser rate.
Although Washington’s state offices and Argawal did not
strike a deal, Argawal continued to search for clients for his products.
Holforty believes that Argawal then began contacting Digital’s resellers and
customers through a list maintained on her company’s Website. He expressed to
these various individuals and counties that he maintained the source code for
ProFile, that Digital was unable to update its software, and that his products
One of the resellers approached by Argawal was Michael Mims, the
president of O.D.S., a reseller with whom Digital held a long-established
relationship. According to Holforty, while Digital was working with Ector
County to identify enhancements and modifications to its county’s system,
Argawal approached Mims, the reseller to Ector County, with the renamed
product – DigiFile.
“When we realized what Akhilesh did, we informed all the parties listed on his
Website… that they were dealing with fraudulent software,” Holforty said. “By
that time, Akhilesh had copyrighted it and everyone apparently dismissed our
accusation. But one person knew what was going on – Mike Mims.”
When contacted by Source of Title, Mims was adamant in
stating that he had no knowledge about the copyright infringement prior to the
court’s judgment. He stated that while Aditya’s various programs were being
used in several Texas counties, only 10 percent of those counties were using
the software for imaging purposes, while the other 90 percent utilized the
software’s other properties. Mims was eager to defend the products that Aditya
provided and believes that Digital had utilized language that was too broad in
its filings against the Indian company.
“I’m in the middle of it (the suit),” said Mims when asked about the judgment.
“I’m nothing but a person selling the software to county governments here in
Texas. I was trying to upgrade four customers and ImageTech (Digital) couldn’t
get their system to work… Akhilesh fixed the software and we went forward.”
Mims also stated that he had sold the DigiFile product to
approximately 24 customers in 14 different Texas counties prior to finding out
about the lawsuit. But, he expressed that only about one third of the systems
he installed had Digital’s imaging software embedded.
On April 22, 2005, default judgment was awarded to
Digital. The court found that Argawal, and his company, had delayed the matter
repeatedly and intentionally avoided prosecution by refusing to accept
interrogatories, request for admissions, and requests for documents. Due to
Argawal’s lack of attention to the matter, the court awarded the default
judgment citing copyright infringement; awarded Digital the right to issue
cease and desist orders to anyone using DigiCourt, DigiFile, DigiRecord, or
any similar software obtained from Argawal; and granted them restitution for
damages and court costs. To date, Digital has not received any payment from
Argawal or his company.
Digital has been addressing this issue with Argawal for
the past three years and the issue remains undecided in India’s High Court of
Delhi, where Argawal filed his countersuit against Digital.
“It took until the court passed the judgment against him
before he started doing any answering of questions,” said Holforty. “We got
that default judgment because he refused to respond… so the judge finally said
to our attorney ‘file a motion for a default judgment; I’ve had enough of this
from him’. All of a sudden he is realizing this is serious. If this ever goes
to another trial, he is going to have a hard time.”
Although Holforty has contacted the various parties that
she believes were utilizing Aditya’s software, not one has responded
proactively to the court order. She stated that she has faxed each licensee
and offered to produce software programs for the clients that are independent
of DigiFile, DigiCourt, and DigiRecord. Digital offered not to impound the
software until it was replaced and would provide help desk support if a
majority of the outstanding 118 licenses participated in the program. If they
chose not to participate, Holforty asked that they remove the programs from
“I spoke to a few on the phone – one said she had paid
for it and would use it as long as she wanted while another said it was only a
default judgment and she was having new programs installed for free,” said
Holforty. “Many did not return my call… I told each of them that they and our
company were victims of Akhilesh, that we did not want to disrupt their court
procedures, and they could continue to use the software until I contacted them
with a solution. Akhilesh stole over 12 years of development in the one year
he was being paid by us. A criminal act - pure and simple - and it should not
Source of Title attempted to contact several of the
counties where Holforty believes the pirated software is still being used;
none returned calls, however, prior to publication date. According to Mims,
other software vendors have begun imaging for the counties and have gained the
customers that he lost. Because a decision has not yet been determined in
India’s High Court of Delhi, Source of Title will continue to cover this issue
and bring members the results as they develop.
© 2005, Source of Title
Source of Title
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Note: News for Public Officials has prepared a special report on this
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