News for Public Officials and the People They Serve

Reprinted with 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 performed better. 

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 their systems.

“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 be rewarded.”

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 launched in September 2002 as a directory to help title industry professionals locate independent settlement service providers. Since then, Source of Title has added forums and full-service news content targeted at industry professionals.

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Note: News for Public Officials has prepared a special report on this issue.  Read Federal Judge Orders Clerks Programs Destroyed

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