A copyright infringement case filed by NCR Corp. highlights the often incestuous nature of the ATM business, in which a company's competitors are also sometimes its customers or contractors.
In a lawsuit filed in November in the U.S. District Court for the Southern District of Ohio, NCR contends that Scottish software developer Korala Associates Ltd. (KAL) obtained information about NCR's copyrighted APTRA XFS software while working as a contractor for NCR.
According to the suit, the two companies entered into a software license agreement in late 1998 and signed a mutual non-disclosure agreement. NCR hired KAL to develop and license several software components to NCR. To facilitate the development of the desired software, NCR loaned KAL an ATM loaded with APTRA XFS software
According to NCR, KAL violated the agreement by later using knowledge obtained during that project to produce a Triple DES upgrade kit called Kalignite Upgrades.
The kit, introduced at the recent BAI Retail Delivery Conference and Expo, includes a Triple DES-compliant EPP (encrypting PIN pad) and new processor with Microsoft Windows XP, plus a Kalignite NDC application. Steve Hensley, KAL's executive vice president of sales, said in an earlier interview with ATMmarketplace that KAL also intends to develop kits for other ATM models, including those manufactured by Diebold and Wincor Nixdorf.
In its statement, KAL said the suit represents "a fundamental misunderstanding on the part of NCR as to how KAL's upgrade product operates" and adds, "(KAL) would have welcomed the opportunity to discuss any concerns that NCR may have had as an alternative" to court proceedings.
NCR also contends that KAL accessed an NCR ATM running in the OS/2 environment on which NCR's S4i software was installed, despite the fact it was not licensed to do so.
"KAL knew or should have known that no licensee of an NCR bank ATM could authorize KAL to use either the APTRA XFS software or S4i software installed on an NCR bank ATM, especially not for the purpose of developing a system software upgrade to directly compete with that of NCR," according to the suit.
On its site, KAL said its upgrade kit does not contain any NCR software or firmware and encourages customers and potential customers to "challenge any assertions to the contrary that NCR may make to you in private."
KAL's site states: "KAL believes that the U.S. banking market will welcome the ability to choose between NCR's Triple DES upgrade and KAL's Triple DES upgrade product.
In addition to copyright infringement of both APTRA XFS and S4i software, NCR is suing KAL for breach of contract and "common law unfair competition." According to NCR, it has suffered damages of at least $75,000 on all four counts.
NCR concludes: "KAL seeks to undercut NCR's hard-earned position in the ATM marketplace by offering to NCR's current and prospective licensees the Kalignite Upgrade Solutions at prices far lower than KAL could have done had it competed fairly in the marketplace by independently developing its ATM upgrades without unauthorized access to, and use of, NCR's copyrighted and secret intellectual property."
Both NCR and KAL declined to comment further on the case while legal proceedings continue.
However, an NCR spokesman said the company "has invested significant resources in its research and development" and would "act aggressively to defend its intellectual property."
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