Trademark Trial and Appeal Board Electronic Filing System. httgj/estta.usQto.gov
`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`
`
`92057201
`
`Plaintiff
`
`NexPay, Inc.
`Defendant
`
`Yes
`
`StoneEag|e Services, Inc.
`
`Motion for Suspension in View of Civil Proceeding With Consent
`
`The parties are engaged in a civil action which may have a bearing on this proceeding. Accordingly, NexPay,
`Inc. hereby requests suspension of this proceeding pending a final determination of the civil action.
`Trademark Rule 2.117.
`
`NexPay, Inc. has secured the express consent of all other parties to this proceeding for the suspension and
`resetting of dates requested herein.
`
`NexPay, Inc. has provided an e-mail address herewith for itself and for the opposing party so that any order
`on this motion may be issued electronically by the Board.
`
`Certificate of Service
`
`The undersigned hereby certifies that a copy of this paper has been sewed upon all parties, at their address
`record by Facsimile or email (by agreement only) on this date.
`Respectfully submitted,
`/Dyan Housel
`Dyan M. House
`dhouse@carterstafford.com, trademarks@carterstafford.com, jtorke|son@carterstafford.com
`Andriy.Lytvyn@smithhopen.com, anton.hopen@smithhopen.com
`09/13/2013
`
`Trademark Trial and Appeal Board Electronic Filing System. http://estta.uspto.gov
`ESTTA559429
`ESTTA Tracking number:
`09/13/2013
`
`Filing date:
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`92057201
`Plaintiff
`NexPay, Inc.
`Defendant
`StoneEagle Services, Inc.
`Yes
`
`Proceeding.
`Applicant
`
`Other Party
`
`Have the parties
`held their
`discovery
`conference as
`required under
`Trademark Rules
`2.120(a)(1) and
`(a)(2)?
`
`Motion for Suspension in View of Civil Proceeding With Consent
`
`The parties are engaged in a civil action which may have a bearing on this proceeding. Accordingly, NexPay,
`Inc. hereby requests suspension of this proceeding pending a final determination of the civil action.
`Trademark Rule 2.117.
`NexPay, Inc. has secured the express consent of all other parties to this proceeding for the suspension and
`resetting of dates requested herein.
`NexPay, Inc. has provided an e-mail address herewith for itself and for the opposing party so that any order
`on this motion may be issued electronically by the Board.
`
`Certificate of Service
`
`The undersigned hereby certifies that a copy of this paper has been served upon all parties, at their address
`record by Facsimile or email (by agreement only) on this date.
`Respectfully submitted,
`/Dyan House/
`Dyan M. House
`dhouse@carterstafford.com, trademarks@carterstafford.com, jtorkelson@carterstafford.com
`Andriy.Lytvyn@smithhopen.com, anton.hopen@smithhopen.com
`09/13/2013
`
`

`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`
`NexPay, Inc.,
`
`
`
`Petitioner,
`
`
`
`
`
`
`
`
`
`
`
`
`v.
`
`
`
`
`StoneEagle Services, Inc.,
`
`
`
`
`Registrant.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`§
`
`MOTION TO SUSPEND PROCEEDING FOR CIVIL ACTION
`WITH CONSENT
`
`
`
`
`
`Cancellation No. 92057201
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`The parties hereby move for a suspension of this proceeding due to the action
`
`pending before the U.S. District Court for the Northern District of Texas, StoneEagle Services,
`
`Inc. v. David Gillman, et al, Case No. 3:11-cv-02408-P (the “Civil Action”).
`
`Attached for the Board’s reference are the operative pleadings in the Civil Action,
`
`Plaintiff’s Second Amended Complaint filed June 11, 2013, and Defendants’ Answer to
`
`Plaintiff’s Second Amended Complaint filed June 28, 2013, Attachments A and B,
`
`respectively. Registrant has alleged trademark infringement, among other things, in the Civil
`
`Action. The issues of ownership and validity of the marks that are before the Board in this
`
`proceeding are present in the Civil Action. The determination of these issues by the District
`
`Court will be dispositive of the issues involved in this proceeding.
`
`The parties therefore respectfully request a six-month suspension of this proceeding
`
`pursuant to Trademark Rule 2.117(a), 37 C.F.R. §2.117(a). Whopper-Burger, Inc. v. Burger King
`
`Corp., 171 U.S.P.Q. 805, 807 (TTAB 1971) (suspending Cancellation proceeding in light of
`
`pending federal litigation because “the outcome of the civil action will have a direct bearing
`
`

`
`on the question of the rights of the parties herein and may in fact completely resolve all the
`
`issues.”).
`
`Dated this 13th day of September 2013.
`
`Respectfully submitted,
`
`
`
`
`
`/s/ Dyan M. House
`Dyan M. House
`Texas Bar No. 24036923
`J. Robert Arnett II
`Texas State Bar No. 01332900
`John T. Mockler
`Texas State Bar No. 00789495
`John S. Torkelson
`Texas State Bar No. 00795154
`CARTER STAFFORD ARNETT
`HAMADA & MOCKLER, PLLC
`8150 N. Central Expressway
`Suite 1950
`Dallas, Texas 75206
`214.550.8188 Telephone
`214.550.8185 Facsimile
`
`
`
`
`
`
`
`
`
`ATTORNEYS FOR PETITIONER
`
`
`
`
`
`
`
`/s/ Andriy Lytvyn
`Andriy Lytvyn
`Florida State Bar No. 100298
`SMITH & HOPEN, P.A.
`180 Pine Avenue North
`Oldsmar, Florida 34677
`813.925.8505 Telephone
`800.726.1491 Facsimile
`
`
`ATTORNEYS FOR REGISTRANT
`
`
`
`

`
`CERTIFICATE OF SERVICE
`
`I hereby certify that a true copy of the foregoing Motion to Suspend Proceedings
`
`Pending Civil Action with Consent has been served on Registrant’s Attorney, Andriy Lytvyn,
`
`Smith & Hopen, P.A., 180 Pine Avenue North, Oldsmar, Florida 34677, via email (by
`
`agreement) on this 13th day of September 2013.
`
`
`
`
`
`
`
`
`/s/ Dyan M. House
`Dyan M. House
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`

`
`ATTACHMENT A
`
`ATTACHMENT A
`
`
`
`
`
`

`
`Case 3:11-cv-02408-P Document 302 Filed 06/11/13 Page 1 of 32 PageID 7497
`
`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF TEXAS
`DALLAS DIVISION
`
`
`
`
`Civil Action No. 3:11-CV-2408-P-BD
`
`
`
`§§§§§§§§§
`
`STONEEAGLE SERVICES, INC.,
`
`
`
`Plaintiff,
`
`
`v.
`
`DAVID GILLMAN, et al.,
`
`
`Defendants.
`
`PLAINTIFF’S SECOND AMENDED COMPLAINT
`
`Plaintiff STONEEAGLE SERVICES, INC. (“SES”) hereby complains of Defendants
`
`David Gillman (“Gillman”), Talon Transaction Technologies, Inc., a Texas corporation (“T3-
`
`TX”), Talon Transaction Technologies, Inc., an Oklahoma corporation (“T3-OK”), and NexPay,
`
`Inc., a South Dakota corporation (“NexPay”) (collectively, “Defendants”).
`
`PARTIES, JURISDICTION, AND VENUE
`
`Texas.
`
`1.
`
`2.
`
`3.
`
`4.
`
`5.
`
`6.
`
`SES is a Texas corporation with its principal place of business in Dallas County,
`
`Gillman has previously appeared.
`
`T3-TX has previously appeared.
`
`T3-OK has previously appeared.
`
`NexPay has previously appeared.
`
`The Court has subject matter jurisdiction over this case pursuant to 28 U.S.C.
`
`§ 1331 because it arises under the laws of the United States. In addition, the Court has exclusive
`
`subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 1338(a) because this is an
`
`action for patent infringement and a declaration of inventorship arising under Title 35 of the
`
`United States Code. The Court also has subject matter jurisdiction under 28 U.S.C. § 1338(b)
`
`PLAINTIFF’S SECOND AMENDED COMPLAINT
`
`PAGE 1
`
`

`
`Case 3:11-cv-02408-P Document 302 Filed 06/11/13 Page 2 of 32 PageID 7498
`
`
`
`because this is an action for unfair competition under the Lanham Act, joined with substantial
`
`and related actions for patent and trademark infringement. Finally, the Court has supplemental
`
`jurisdiction over the state law claims in this matter pursuant to 28 U.S.C. § 1367.
`
`FACTS
`
`7.
`
`SES Conceived a Medical Payment System Based on SES’s Auto Payments
`
`System. SES has long been involved in developing and implementing inventions for the virtual
`
`payment systems industry. In 2002, SES began developing a system involved in making a
`
`virtual payment through a secured delivery method in the automotive industry, i.e., a method of
`
`facilitating warranty payments of automotive-related benefits on behalf of a payor comprising
`
`the step of electronically transmitting a stored-value card account payment of the authorized
`
`benefit amount concurrently with an explanation of payment (the “Warranty Payments System”).
`
`In 2003, SES filed an application for a patent for the Warranty Payments System. The
`
`application remains pending.
`
`8.
`
`While SES was using the Warranty Payments System to do business in the
`
`automotive sector of the virtual payment systems industry, the inventor of that system and SES’s
`
`current Chairman and Chief Executive Officer, Robert M. Allen (“Allen”), conceived of a new
`
`invention: an application of the Auto Payments System to the medical sector that would operate
`
`as a proprietary medical benefits payment processing system and accompanying technology (the
`
`“Medical Payment System”). Later, at the patent application stage, Allen consulted, among
`
`others, Gillman, an individual with knowledge of the medical industry. Allen, however,
`
`maintained intellectual domination over, and conceived of the Medical Payment System, both in
`
`its development and in its final form as it was put into practice. Gillman participated in
`
`consultations after conception to assist Allen with the patent application process and preparation.
`
`PLAINTIFF’S SECOND AMENDED COMPLAINT
`
`PAGE 2
`
`

`
`Case 3:11-cv-02408-P Document 302 Filed 06/11/13 Page 3 of 32 PageID 7499
`
`
`
`9.
`
`The Medical Payment System that Allen conceived is comprised of acquiring a
`
`primary account number, such as a credit card or debit card number, and merging that account
`
`number with an explanation of benefits from a medical benefits payor. The Medical Payment
`
`System then facilitates the secured delivery of the primary account number to the payee by
`
`secured transmission. The payee’s contact information is contained in a database (the “Provider
`
`Database”) developed through the use of SES/VPay’s resources and at SES/VPay’s expense.
`
`10.
`
`The Medical Payment System also contains various specifically-designed fraud
`
`prevention measures and value-based limitations to ensure proper payment of claims. The
`
`system then reconciles the primary account numbers with the explanation of benefits in order to
`
`identify any unused funds that are subject to return to the payor for redistribution or escheatment.
`
`In addition to these features, the system also includes specialized funding mechanisms,
`
`transaction identification and routing mechanisms, and software systems that can be tailored to
`
`specific account requirements that are unique to individual clients.
`
`11.
`
`Combined, the Medical Payment System is a portion of SES’s business, which
`
`includes SES’s pre-funded payment system, post-funded payment system, funds acquisition
`
`systems, and all other payment processing systems developed, maintained or operated by SES,
`
`including SES’s integration of payment processes into a single authorization or issuing platform.
`
`12.
`
`SES Protects its Trade Secrets and Confidential Information. The systems,
`
`processes, information (including the Provider Database), intellectual property, and technology
`
`described above or associated with the above-described systems comprise the proprietary and
`
`confidential trade secrets of SES (collectively referred to herein as the “Trade Secrets and
`
`Confidential Information”). The Trade Secrets and Confidential Information associated with the
`
`Medical Payment System were developed by SES at considerable financial cost and near all-
`
`PLAINTIFF’S SECOND AMENDED COMPLAINT
`
`PAGE 3
`
`

`
`Case 3:11-cv-02408-P Document 302 Filed 06/11/13 Page 4 of 32 PageID 7500
`
`
`
`encompassing use of SES’s time, facilities, staff, IT, and other resources over a period of nine (9)
`
`years.
`
`13.
`
`SES utilizes the Trade Secrets and Confidential Information in its business, and in
`
`doing so, derives a competitive advantage over its peers in the industry of virtual payment
`
`processing. SES rigorously guards the secrecy and proprietary nature of the Trade Secrets and
`
`Confidential Information through standard and systematic use of mandatory non-disclosure
`
`agreements for all employees, agents and contractors that are granted access to the Trade Secrets
`
`and Confidential Information.
`
`14.
`
`SES further utilizes a licensing agreement and non-circumvention agreements in
`
`its business relationships to protect the Trade Secrets and Confidential Information. SES’s
`
`employees, prospective strategic partners, a license holder and multiple contractors are also
`
`required to adhere to strict corporate security standards, privacy protocols and internet policies,
`
`and are required to acknowledge same in writing as a condition of initial employment, and from
`
`time-to-time, as a condition to continued employment.
`
`15.
`
`SES also safeguards the Trade Secrets and Confidential Information by utilizing
`
`secure computer systems and a secure office facility that is monitored by full time security
`
`personnel, 24-hour video surveillance, and electronically controlled magnetic locks with
`
`individualized access codes. SES also utilizes for its own protection, and the protection of
`
`others, the stringent privacy and confidentiality requirements imposed upon SES by PCI
`
`Certification and SAS 70, Level II Certification and the updated versions thereof as released
`
`from time to time. These certifications, which are required by many payors, demonstrate SES’s
`
`compliance with stringent industry-based standards for security, privacy, and accounting
`
`protocols.
`
`PLAINTIFF’S SECOND AMENDED COMPLAINT
`
`PAGE 4
`
`

`
`Case 3:11-cv-02408-P Document 302 Filed 06/11/13 Page 5 of 32 PageID 7501
`
`
`
`16.
`
`As a result of these efforts and others, the Trade Secrets and Confidential
`
`Information are not known outside of SES’s business, are not generally known by the public, are
`
`known by SES’s employees on a limited basis, and are not readily discoverable by outside
`
`examination as there is no physical product that results from the services provided pursuant to
`
`the Trade Secrets and Confidential Information. As a result of SES’s diligence in safe-guarding
`
`the Trade Secrets and Confidential Information, the Trade Secrets and Confidential Information
`
`are not subject to easy duplication.
`
`17. Gillman and T3-TX Agree to Confidentiality and Non-Disclosure Provisions.
`
`On or about May 1, 2006, SES entered a Mutual Non-Disclosure Agreement (the “Non-
`
`Disclosure Agreement”) with Gillman, the company he represented at that time (Gillman
`
`Software Systems), and its affiliates and subsidiaries (collectively, “Gillman and his
`
`Companies”). The Non-Disclosure Agreement gave Gillman and his Companies access to the
`
`Trade Secrets and Confidential Information to further explore a prospective business relationship
`
`between Gillman and his Companies and SES. A true and correct copy of the Non-Disclosure
`
`Agreement is attached hereto as Exhibit A-1, which is attached to the Affidavit of Robert Allen,
`
`a true and correct copy of which is attached hereto as Exhibit A.
`
`18.
`
`The Non-Disclosure Agreement includes confidentiality and non-disclosure
`
`provisions regarding the Trade Secrets and Confidential Information. For instance, Gillman and
`
`his Companies and SES agreed that, without SES’s prior written approval, Gillman and his
`
`Companies would not: (1) disclose, publish, or disseminate the Trade Secrets and Confidential
`
`Information to anyone (other than Gillman and his Companies’ authorized employees with a
`
`demonstrable need to know and binding, written, confidentiality obligations regarding the Trade
`
`Secrets and Confidential Information); or (2) authorize anyone else to disclose the Trade Secrets
`
`and Confidential Information to others.
`
`PLAINTIFF’S SECOND AMENDED COMPLAINT
`
`PAGE 5
`
`

`
`Case 3:11-cv-02408-P Document 302 Filed 06/11/13 Page 6 of 32 PageID 7502
`
`
`
`19.
`
`Gillman and his Companies and SES also agreed that any use by Gillman and his
`
`Companies of the Trade Secrets and Confidential Information for purposes other than those of
`
`mutual interest as set forth in the Non-Disclosure Agreement were prohibited unless mutually
`
`agreed to in writing by SES and Gillman and his Companies. Gillman and his Companies and
`
`SES further agreed that: (1) any unauthorized use or disclosure of the Trade Secrets and
`
`Confidential Information could constitute unfair competition; (2) that violation of the
`
`confidentiality provisions of the Non-Disclosure Agreement concerning the Trade Secrets and
`
`Confidential Information would cause “irreparable injury for which there is no adequate remedy
`
`at law,” entitling the non-breaching party to “immediate injunctive relief prohibiting such
`
`violation”; and (3) that such acts of unfair competition were prohibited even after the Non-
`
`Disclosure Agreement’s term had otherwise expired. Finally, Gillman and his Companies agreed
`
`to submit to the laws and Courts of the State of Texas in any dispute arising under the Non-
`
`Disclosure Agreement.
`
`20.
`
`On or about June 29, 2006, SES granted a license to use certain of its Trade
`
`Secrets and Confidential Information to Gillman’s now-defunct Texas company, T3-TX (the
`
`“2006 Licensing Agreement”). A true and correct copy of the 2006 Licensing Agreement is
`
`attached as Exhibit A-2. The enunciated business purpose of T3-TX was to market and utilize
`
`the certain Trade Secrets and Confidential Information covered by the 2006 Licensing
`
`Agreement.
`
`21.
`
`The 2006 Licensing Agreement: (1) broadly defined all confidential and
`
`proprietary information to include the Trade Secrets and Confidential Information; (2) obligated
`
`the parties to perpetually maintain the Trade Secrets and Confidential Information in the strictest
`
`confidentiality; (3) acknowledged that breach of that confidentiality would leave the non-
`
`breaching party without an adequate remedy at law; and (4) expressly consented to the
`
`PLAINTIFF’S SECOND AMENDED COMPLAINT
`
`PAGE 6
`
`

`
`Case 3:11-cv-02408-P Document 302 Filed 06/11/13 Page 7 of 32 PageID 7503
`
`
`
`enforcement of the confidentiality provisions by the non-breaching party through a temporary or
`
`permanent injunction, as well as damages.
`
`22.
`
`Furthermore, SES and T3-TX agreed that the 2006 Licensing Agreement provides
`
`that it is binding upon all successors and assigns of SES and T3-TX, and that the parties’
`
`successors or assigns must execute any instrument required to that end. Importantly, the 2006
`
`Licensing Agreement specifically provides that “SES is the owner of the subject Technology,”
`
`i.e., the Medical Payment System, the related Trade Secrets and Confidential Information, and
`
`any related technology, among other things.
`
`23.
`
`In August 2008, SES and T3-OK formed VPay Assist, Inc. (later changed to
`
`VPay, Inc.) (“VPay”) to expand customer base and market share. Ownership in VPay was
`
`originally split 50/50 between SES and T3-OK.
`
`24.
`
`T3-OK Agreed to Confidentiality and Non-Disclosure Provisions. The Texas
`
`Secretary of State forfeited T3-TX’s existence on May 30, 2008, pursuant to Texas Tax Code
`
`Section 171.309, because T3-TX failed to pay its franchise taxes (the “Tax Forfeiture”). A true
`
`and correct copy of the Tax Forfeiture is attached hereto as Exhibit A-3.
`
`25.
`
`The following month, on June 19, 2008, T3-OK was formed. Gillman is T3-OK’s
`
`President, or was at all relevant times. On January 1, 2010, T3-OK and a third party, SWG
`
`Investments, Ltd., signed a Marketing Agreement with regard to the Trade Secrets and
`
`Confidential Information. T3-OK’s address was listed as 111 West Spring Valley Road, Suite
`
`220, Richardson, Texas 75081 on that Marketing Agreement. A true and correct copy of the
`
`Marketing Agreement is attached hereto as Exhibit A-4.
`
`26.
`
`The Marketing Agreement contains a Mutual Confidentiality, Non-Disclosure,
`
`Non-Circumvention Agreement entered between SES, SWG Investments, Ltd., and T3-OK,
`
`through its President, David Gillman (the “Three-Party Non-Disclosure Agreement”). As in the
`
`PLAINTIFF’S SECOND AMENDED COMPLAINT
`
`PAGE 7
`
`

`
`Case 3:11-cv-02408-P Document 302 Filed 06/11/13 Page 8 of 32 PageID 7504
`
`
`
`Marketing Agreement, the Three-Party Non-Disclosure Agreement lists T3-OK’s address as 111
`
`West Spring Valley Road, Suite 220, Richardson, Texas 750814 (sic). As in the confidentiality
`
`and non-disclosure agreements entered by Gillman and T3-TX, the Three-Party Non-Disclosure
`
`Agreement binds T3-OK to hold the Trade Secrets and Confidential Information in the strictest
`
`confidence and prevent disclosure to all unauthorized third parties.
`
`27.
`
`The Valentines Agreed to Confidentiality Provisions. Vincent and Jim
`
`Valentine (the “Valentines”) had been working hand-in-hand with SES’s programmers to refine
`
`SES’s product offerings. In that role, SES disclosed certain aspects of the Trade Secrets and
`
`Confidential Information to the Valentines in confidence, and the Valentines knew or should
`
`have known that the information was confidential and that they were obligated to maintain it in
`
`confidence. As a result, the Valentines were under a duty to keep the Trade Secrets and
`
`Confidential Information in the strictest confidence and not to use that information for their own
`
`benefit. The Valentines also obtained access to the Trade Secrets and Confidential Information
`
`while working for Defendants and were, thus, bound to keep the information confidential as
`
`Defendants’ agents.
`
`28.
`
`In November 2009, SES/VPay formally retained the Valentines as independent
`
`contractors and had them execute identical Independent Contractor Agreements (the “IC
`
`Agreements”) and Confidential Disclosure Agreements (the “Confidentiality Agreements”) with
`
`VPay. True and correct copies of the executed IC Agreements and Confidential Agreements are
`
`attached hereto as Exhibits A-6 and A-7.
`
`29.
`
`In the IC Agreements, the Valentines expressly acknowledged the following:
`
`(1) T3-OK and/or T3-TX had a vested interest in and a strategic alliance with VPay; (2) VPay
`
`and T3-OK and/or T3-TX are bound by security and confidentiality restrictions imposed by SES;
`
`(3) the Valentines are bound by all SES corporate security policies and restrictions; (4) the
`
`PLAINTIFF’S SECOND AMENDED COMPLAINT
`
`PAGE 8
`
`

`
`Case 3:11-cv-02408-P Document 302 Filed 06/11/13 Page 9 of 32 PageID 7505
`
`
`
`Valentines are bound by all SES employee handbook policies and restrictions; and (5) the
`
`Valentines are bound by the Confidentiality Agreements. Further, the Valentines agreed to the
`
`following, among other things: (1) the Valentines would not use the Trade Secrets and
`
`Confidential Information for any purpose outside the performance of their duties to VPay; (2) the
`
`Valentines would not disclose the Trade Secrets and Confidential Information except in the
`
`performance of their duties for VPay; (3) the Valentines, in perpetuity, would not use the Trade
`
`Secrets and Confidential Information and would prevent the disclosure of same; and (4) any
`
`misappropriation, unauthorized use, or unauthorized disclosure of the Trade Secrets and
`
`Confidential Information by the Valentines would cause irreparable harm to VPay, and by
`
`extension, SES.
`
`30.
`
`After these agreements were entered, VPay (and by extension, SES) provided the
`
`Valentines with further access to the Trade Secrets and Confidential Information. Having
`
`received the Trade Secrets and Confidential Information while under common law duties and
`
`subsequent contractual duties, Defendants colluded with the Valentines to breach their respective
`
`obligations, began utilizing the Trade Secrets and Confidential Information for their own gain
`
`and that of others, and began disclosing the information to others in such a manner as to risk
`
`SES’s and VPay’s substantial investment in the Trade Secrets and Confidential Information and
`
`the competitive advantage derived from that information.
`
`31.
`
`SES Patents the Medical Payment System. In the years following entry of the
`
`confidentiality agreements with Defendants, SES further expanded the scope of, and refined, its
`
`Trade Secrets and Confidential Information. Eventually, Allen applied for a United States Patent
`
`on December 5, 2006, via patent application number 11/566,930 (the “Application”) to protect
`
`his rights in that invention. In the Application, Allen listed himself as its sole inventor. Allen
`
`sent Gillman one or more drafts of the Application while Allen was preparing it. Gillman only
`
`PLAINTIFF’S SECOND AMENDED COMPLAINT
`
`PAGE 9
`
`

`
`Case 3:11-cv-02408-P Document 302 Filed 06/11/13 Page 10 of 32 PageID 7506
`
`
`
`slightly revised the Application on December 4, 2006, the day before it was filed. Despite the
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`fact that Allen was always listed as the sole inventor on the application, Gillman never once
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`objected or claimed that he was also an inventor of the Medical Payment System prior to the
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`Application’s filing.
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`32.
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`In July 2010, after T3-OK failed to make requested capital contributions to VPay
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`and reimburse SES for SES’s significant capital contributions to VPay, Gillman requested that
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`SES buy out T3-OK’s interest in VPay, thus making VPay a wholly owned and wholly
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`controlled subsidiary of SES. On July 15, 2010, Gillman, T3-TX, and T3-OK entered an
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`Agreement (the “Patent Release”) whereby, among other things, SES refunded Gillman and T3-
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`OK the minimal expenses paid by them, and Defendants:
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`(cid:120) “Release[d] any and all claims to any right, title, or interest in the . . . Patent
`Pending [for the Medical Payment System]”;
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`(cid:120) “Agree[d] not to challenge or assist others in challenging the, the validity or
`enforceability of the . . . Patent Pending [for the Medical Payment System];
`and
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`(cid:120) Assigned and transferred to SES any right, title, or interest that Defendants
`may have had in the Patent Pending [for the Medical Payment System].
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` A
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` true and correct copy of the Patent Release is attached hereto as Exhibit A-5. The release bars
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`Defendants from asserting any inventorship or ownership interest in the Medical Payment
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`System and the Patent.
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`33.
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`On September 7, 2010, the United States Patent and Trademark Office duly and
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`legally issued United States Patent No. 7,792,686 B2 entitled “Medical Benefits Payment
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`System,” which was reissued on January 1, 2013, as United States Patent Number US RE43,904
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`E (the “Patent”). A true and correct copy of the Patent is attached as Exhibit B. The Patent
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`protects the invention called the Medical Payment System (absent the Trade Secrets and
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`Confidential Information). Allen is the sole inventor of the invention covered by the Patent and
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`PLAINTIFF’S SECOND AMENDED COMPLAINT
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`PAGE 10
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`

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`Case 3:11-cv-02408-P Document 302 Filed 06/11/13 Page 11 of 32 PageID 7507
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`
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`is listed as the inventor therein. SES is the owner by assignment of all right, title, and interest in
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`and to the Patent, and is listed as the assignee therein.
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`34.
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`Defendants Received the Rights to Use the “VPay” and “VCard” Marks. On
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`July 27, 2010, SES and T3-TX (through Gillman) entered a Service Mark Agreement, whereby
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`SES licensed, inter alia, the following service marks to T3-TX: (a) VPay;1 and (b) VCard.2 A
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`true and correct copy of the Service Mark Agreement is attached as Exhibit C. The “VPay” and
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`“VCard” marks are SES’s registered service marks. The marks are inherently distinctive. The
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`“VPay” and “VCard” marks are also protectable due to their acquired secondary meaning (i.e.,
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`because they have become distinctive of VPay’s goods in commerce) as signifying processing of
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`virtual payments in the healthcare industry. Also, the marks are fanciful in that “VPay” and
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`“VCard” are coined terms that identify the product facilitated by the Medical Payment System.
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`35. Gillman Created a Controversy Regarding Inventorship, Ownership, and
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`Enforceability of Patent. On or about August 31, 2011, Allen and other representatives from
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`SES were meeting with representatives from a potential investor for SES’s business, which is
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`built on the value of the Medical Payment System, the Patent and the intellectual property rights
`
`associated with it, and the Trade Secrets and Confidential Information. SES invited Gillman to
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`the meeting to introduce the potential investor to Gillman, as the representative of the license
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`holder in the technology. When SES’s Patent and the value of the Patent became the subject of
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`discussion, and after hearing that the potential investors associated a great deal of value to the
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`Patent, Gillman suddenly and falsely claimed that it is his patent, that he wrote the Patent, that it
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`is on his computer, and that he “authored” or “wrote” it, or words to that effect. Having
`
`
`1 Registered with the United States Patent and Trademark Office on May 20, 2008, at RN: 3,432,014 as an
`“electronic process of insurance claims and payment data.”
`
` 2
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` Registered with the United States Patent and Trademark Office on August 24, 2010, at RN: 3,839,239 as an
`“electronic process of insurance claims and payment data.”
`
`PLAINTIFF’S SECOND AMENDED COMPLAINT
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`PAGE 11
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`

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`Case 3:11-cv-02408-P Document 302 Filed 06/11/13 Page 12 of 32 PageID 7508
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`
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`breached the Patent Release and destroyed further negotiations of the potential investment into
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`SES by creating an actual controversy as to the enforceability of SES’s highly valuable Patent
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`and related intellectual property rights, Gillman threw down his business cards and left the
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`meeting. Later, Gillman met directly with the investors without SES’s representatives present.
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`36.
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`Defendants are Caught Using Plaintiff’s Trade Secrets and Confidential
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`Information to Compete with SES and Destroy SES’s Competitive Edge. With their
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`suspicions aroused by Gillman’s conduct in the August 31st meeting, Plaintiff began
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`investigating Gillman’s motives in September 2011. Upon investigation, Plaintiff discovered
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`that Defendants were working on setting up a competing product that was virtually identical to
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`VPay utilizing the Trade Secrets and Confidential Information. Specifically, SES learned: (1) in
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`April 2011, Defendants (and the Valentines) approached Rhonda Wallace with NxSystems, Inc.
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`(“NxSystems”), a global payment solutions network provider, for a meeting; (2) later in April,
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`Defendants participated in discussions regarding funding from Administrative Insurance
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`Management Services, Inc. (“AIMS”) (an entity which liquidates insurance companies for the
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`State of Texas, and a former client of SES/VPay) that would be a great “first push” (a
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`distribution of payments away from SES’s platform) through NxSystems; (3) in June 2011,
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`Defendants participated in a discussion regarding voting on new product and domain names,
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`including VCard, SVP, PromptPay Payment, etc., presumably to compete with VPay; (4) later in
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`June, discussions were had regarding engaging a temporary staffing agency and expanding
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`customer support capabilities (which is a function currently provided by VPay); (5) on or about
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`July 1, 2011, Defendants participated in a demo by NxSystems; (6) on or about July 5, 2011,
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`Defendants participated in discussions regarding First California Bank, presumably a
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`replacement for SES’s and VPay’s current banking relationship; (7) that same day, Jim Valentine
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`moved certain servers known to contain SES’s and VPay’s proprietary virtual card numbers from
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`PLAINTIFF’S SECOND AMENDED COMPLAINT
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`PAGE 12
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`Case 3:11-cv-02408-P Document 302 Filed 06/11/13 Page 13 of 32 PageID 7509
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`
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`SES to CoreXchange, a Dallas-based co-location facility (upon notice from SES and VPay that
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`T3-OK would be violating SAS 70, Level II requirements, T3-OK returned a server purportedly
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`returning SES’s and VPay’s data); (8) on July 29, 2011, Vince Valentine e-mailed Cindy Fink at
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`cfink@fcbank.com (with a copy to Defendants) regarding the second ACH test and processing
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`the test file through the Fed NACHA test system and requested the results; (9) that same day,
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`Fink informed the Defendants that the test had “passed”; (10) Jim Valentine responded “Good
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`work. One more piece to the puzzle”; (11) Gillman responded, “WoooooHoooooo!!!!”; (12) that
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`same day, the Defendants participated in e-mail discussions regarding great strides Jim Valentine
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`made regarding the customer user interface; and (13) the same day, the De