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Judge sends NCR, KAL to arbitrator

April 10, 2006

Nearly a year and a half after Dayton, Ohio's NCR Corp. sued multivendor software provider Korala Associates Ltd. (KAL) for copyright infringement, a federal chief magistrate judge has granted KAL's motion to dismiss.

In his March 31 ruling, Judge Michael Merz wrote that, while the "matter is ripe for decision on the merits," the contract between the two companies bound them first to arbitration.

The ruling comes 17 months after NCR sued KAL, a U.K. software developer, for copyright infringement, breach of contract and unfair competition - allegations stemming from KAL's development of a Triple DES upgrade kit, Kalignites Upgrades, for NCR ATMs.

The two companies were once amicable associates. In 1998, NCR and KAL signed a software license deal that allowed KAL to develop components for NCR. Along the way, KAL accessed NCR ATMs with NCR's copyrighted Aptra XFS and S4i software - sometimes with NCR's express permission, sometimes without, NCR says - to develop its kit.

In the suit, NCR alleged that KAL used its hardware and software for purposes beyond those outlined in the license deal. KAL answered, saying the suit was born from a misunderstanding and eventually moved twice to dismiss, citing the arbitration clause. KAL said the contract requires the two companies to resolve their differences through a third-party, without involvement from the courts. (Read also, NCR accuses software developer of copyright infringement.)

And so the debate continued, through a litany of legal filings that touch on everything from KAL's distribution relationship with Cincinnati-based ATM Exchange, to which court has jurisdiction over the proceedings, since KAL is based in Scotland.

"Fundamentally, what this is about is open software and interoperability," said KAL's chief executive, Aravinda Korala. "The question is: Can companies like NCR have very proprietary software that only they can control? Fundamentally, this is a very big issue."

NCR has not said whether it will appeal the ruling. The company would not comment about the case.

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KAL ATM Software

KAL is a world-leading provider of multivendor ATM platform, application and management software, specializing in solutions for bank ATMs, self-service kiosks, and bank branch networks.

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