vBulletin v. XenForo (Case #2)

As many of you have read by now, there is a second lawsuit filed against XenForo (XF) by Jelsoft Enterprises and vBulletin Solutions (vBSI)

Case Number: CV10-8209-R
vBulletin Solutions, Inc. v. XenForo Limited

Complaints For:
1. Copyright infringement
2. Declaratory relief over ownership of software
3. Misappropriation of trade secrets
4. Intentional interference with prospective economic advantage
5. Breach of contract
6. Breach of duty of loyalty

First, let me make it clear that I am no legal expert. I have very limited experience with the technicalities of law so this is intended as mere feedback and commentary from reading the filing and is not meant to be anymore then that.

Veritas and I had a chance to read through the 44 pages of the filing and wanted to share some of our initial thoughts on it, and this case against XF and Kier, who used to work for Jelsoft.

Upon the first reading the filing, I have concluded that the majority of the filing is based on nothing but pure speculation. There is no factual basis for any of the six claims made but instead the claims are mere assumptions by vBulletin Solutions Inc.

Factual Background:
vBSI first acknowledges that Kier Darby was hired as the lead developer of Jelsoft products who “had unfettered access to over $100 million of VSBI assets” (6) and access to proprietary information which was located at the vBSI which Kier often frequented for meetings. Although this part does not come as surprise and we would expect the lead developer of vBulletin to have access to such information to perform his duties, this is the basis of the argument presented by vBSI which will be discussed further. Along with this, vBSI contends that because Kier “repeatedly complained about the new ownership and management” (7) they knew he was going to leave the company to pursue his own goals in establishing a new competing product. vBSI then goes on to accuse Kier of having convinced current and former employees of Jelsoft to collect confidential information, while having kept proprietary information himself – All of this is based on the word of a representative from vBSI HR department because apparently her opinion which I’m sure is very objective and not at all biased is good enough for them.

“Software of the kind released by XL generally takes several years to develop. Based in part on the speed in which XenForo product was released–slightly more then a year and a half after Darby and Sullivan left vBSI–vBSI is informed and believes, and on that basis alleges, that Darby retained Jelsoft’s and vBSI’s proprietary materials obtained during his employment by Jelsoft pertaining to existing and future versions of vBulletin, and used said materials to commence commercial planning and technical development of the XenForo software product prior to his resignation from Jelsoft.” (10)

This part stood out for me – To me, this reads as more speculation and no actual proof. vBSI is essentially contending that, due to the speediness of the development of XF, they must have stole the code and took advantage while they had the opportunity to access vBSI proprietary information. They claim that they were “informed” about this but I have yet to see any actual proof of it. They also proceed to drag Scott Molinari into this in the next section “Moreover, based on knowledge obtained while Darby and Sullivan were employed by Jelsoft, defendants contacted Scott Molinari, the principal of one of vBulletin’s exclusive distributors” – Once again, I am curious about this “knowledge” and “information” they are referring to which they conveniently don’t explain in further detail. Are we to take their word at face value about this? Is vBSI forgetting that XF is headed by the world renowned developer Kier and Mike, both of who have had extensive experience developing software?

First Claim:
In the first claim, vBSI accuses XF of copyright infringement.

“Defendants have reproduced, created derivative works from, distributed, and otherwise infringed upon vBSI’s protected works without vBSI’s authorization.” (11)

In this unfounded claim, I found no basis and the only argument being that the software created by XF is similar to vBulletin in the sense that each serves a similar purpose – community/forum software, that’s it. There is no evidence about similar/identical code being used by XF so using this logic the multiple other forum software available is also in violation of copyright infringement.

Second Claim:
In this second claim, vBSI argues that Kier “misused Jelsoft property and resources for his benefit and the benefit if XL by, among other things, creating source code that is now used for XenForo but which belongs exclusively to vBSI as the successor and assignee of Jelsoft’s intellectual property.” (12)

What I gather from this, is that the lead developer of vBulletin isn’t allowed to work on the software he was hired to work on, without the assumption that he was in fact working on a competing product, so now, the work he did and the source code which is apparently in XenForo (yet again without any proof) actually belongs to vBSI?

Third Claim:
In the third claim, vBSI claims that Kier misused trade secrets which he learned at vBSI in order to advance his competing product at XF. It is a well known fact that employees of the company have access to these “trade secrets” and access to propriety, confidential software which they use while at said employer, but what proof is there that these trade secrets were “taken with blatant disregard of Jelsoft and vBSI’s rights” (14) and were then used at XF? Is one supposed to pretend they no longer posses skills once they leave one employer for another?

Fourth Claim:
vBSI now claims that because they have such a large consumer base who has a vBulletin license, current and new prospective members were discouraged to stay current vB customers due to the interference by XF. vBSI disregards and fails to mention that an extremely large base of their customers were upset with the recent licensing fiasco that took place with vBulletin 4x and the overall direction the company was taking with the new management. They fail to mention that the Licensed Customer Feedback forum is filled with thousands of posts from unhappy clients who constantly express their concerns and frustrations over vBulletin, they fail to mention that customers are unhappy about the unstable, bug filled version of vBulletin 4x released prematurely and rushed compared to the version released by the old vBulletin team with Kier and company. Instead they want us to focus on how they potentially lost clients because of XF, but not because of their own stupidity and the fact that they kept digging themselves a deeper hole. They failed to mention that they lost a number of clients to Invision, well before the inception of XF but instead want to direct all the attention to the new competition which rightfully will take away their customers, but will do so for the right reasons – due to the fact that XenForo is a far superior product.

Fifth Claim:
Next we have breach of contract against Kier. vBSI claims once again that Kier provided trade secrets to XF and its employees in order to get a competitive advantage and Kier’s apparent refusal to hand back trade secrets belonging to vBSI – All of this yet again based on the word of the HR rep working for vBSI. Exactly what information was it that Kier had which he refused to turn in? How are we to know for certain that this was indeed a trade secret and not something belonging to Kier himself? Oh yes, we shouldn’t question the word of the HR rep I suppose and just accept the blanket statement as is.

Sixth Claim:
The final claim made by vBSI is breach of duty of loyalty.
Here they claim that Kier did not have the company’s interest in mind while working for them. Apparently their crystal ball was able to read his mind and know precisely what he was thinking at every given time in the day. vBSI also claims that Darby was “developing and creating XenForo software while employed by Jelsoft” (16) Was Kier “caught in the act” working on XF when he was employed at vBSI? What proof is there that he was working on XF while employed at vBSI other then the previous assumptions, which say that the software was made too soon? Or are we to yet again just take these claims at face value?

I find it ironic, and curious at the same time that the first lawsuit in UK was filed and made public the first day XF went on sale. It’s quite obvious this was to deter sales and used as a scare tactic by vBSI.

Clearly vBSI thinks they have a better chance here in the US compared to the UK courts, hence this second filing, but I see it as a continuation of the scare tactic they first used. Upon reading this filing, I have yet to see any actual evidence of wrongdoing by XF and instead we are just presented with multiple assumptions and mere speculation. Perhaps vBSI is shocked that Kier and company are able to develop a superior product so quickly, which in its beta stage is even more stable then vBulletin 4x. Perhaps they are continuing to do their absolute best, in this last ditch effort to survive since they know they will only continue to lose customers after this pathetic feeble attempt and this frivolous lawsuit – time will tell, but in the meantime, Veritas and I will continue to follow it and post our followups.