Westbourne Awarded $5.8 Million

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By Ara C. Trembly

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NU Online News Service, Aug. 14, 12:50 p.m.EDT?A six-member federal jury on Monday unanimouslyordered San Diego-based Arrowhead General Insurance Agency Inc. topay $5,823,000 in damages for infringing Westbourne's copyrightedinsurance-pricing software program.

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Arrowhead, a large, privately-held managing general agent with$450 million in annual premiums, was held liable for usingWestbourne International Inc.'s PrimeRater software withoutpermission and creating illegal derivative works based on thesoftware, according to an announcement from Westbourne. Arrowheadsaid it will appeal.

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Westbourne said Arrowhead used its software to launchYouZoom.com, an online insurance portal, and licensed thetechnology to more than 170 companies, including Bank of Americaand e-Trade.

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Frank Ruyak, president and chief executive officer of Arrowhead,said his company is going through post-trial motions and willappeal the judgments. He also pointed out that the jury had awardeddamages "far less than being sought by the plaintiff." Mr. Ruyaksaid Westbourne had been seeking "in the area of $36 million."

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Mr. Ruyak added that the copyright claim is restricted toisolated parts of the rater's code and not to the program as awhole.

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During the eight-day trial in the U.S. District Court for theSouthern District of California, Westbourne claimed, the jury waspresented with evidence that Arrowhead executives "consciouslyignored Westbourne's copyright notices" and that Arrowheademployees "destroyed and altered documents in an attempt to coverup the infringement."

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Mr. Ruyak said his company was "deeply disturbed" by theallegations of altering documents.

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"It's not true. There was no evidence and no finding by the juryor judge on that," he insisted.

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Westbourne claimed that, according to Arrowhead's financialrecords, the PrimeRater software generated more than $50 million ayear in commission revenue for Arrowhead.

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Martin Desmond, Westbourne's founder and CEO, said, "This hasbeen a long and difficult road for us, and I'm thankful that thejury saw through the lies and deception."

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Westbourne had filed its federal lawsuit in May 2001.Westbourne's trial counsel, Gregory Dovel, of Dovel & LunerLLP, a Los Angeles law firm specializing in intellectual propertylitigation, commented, "This is an example of a large company whothought they could rip off a small start-up firm and get away withit. We proved them wrong."

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Southern District Chief Judge Marilyn Huff, who presided overthe trial, may enter a permanent injunction today, barringArrowhead's future infringement of the PrimeRater software, saidWestbourne. If an injunction is issued, Westbourne asserted thatArrowhead may be forced to shut down its automated insurance salesoperations.

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Westbourne International Inc. is an enterprise software companybased in La Jolla, Calif.

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