Westbourne Awarded $5.8 Million

By Ara C. Trembly

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

Arrowhead, a large, privately-held managing general agent with $450 million in annual premiums, was held liable for using Westbourne International Inc.'s PrimeRater software without permission and creating illegal derivative works based on the software, according to an announcement from Westbourne. Arrowhead said it will appeal.

Westbourne said Arrowhead used its software to launch YouZoom.com, an online insurance portal, and licensed the technology to more than 170 companies, including Bank of America and e-Trade.

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

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

During the eight-day trial in the U.S. District Court for the Southern District of California, Westbourne claimed, the jury was presented with evidence that Arrowhead executives "consciously ignored Westbourne's copyright notices" and that Arrowhead employees "destroyed and altered documents in an attempt to cover up the infringement."

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

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

Westbourne claimed that, according to Arrowhead's financial records, the PrimeRater software generated more than $50 million a year in commission revenue for Arrowhead.

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

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

Southern District Chief Judge Marilyn Huff, who presided over the trial, may enter a permanent injunction today, barring Arrowhead's future infringement of the PrimeRater software, said Westbourne. If an injunction is issued, Westbourne asserted that Arrowhead may be forced to shut down its automated insurance sales operations.

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

Special Reports /

Westbourne Awarded $5.8 Million

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