Case 4:20-cv-03399-DMR Document 1 Filed 05/19/20 Page 1 of 22
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`Phil J. Montoya, Jr. (SBN 124085)
`HAWKINS PARNELL & YOUNG LLP
`445 South Figueroa Street, Suite 3200
`Los Angeles, CA 90071-1651
`Telephon e: (213) 486-8000
`Facsimile : (213) 486-8080
`Email:
`law.com
`on
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`Attorneys þr PlaintiffKhoros, LLC
`
`UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF CALIFORNIA
`
`KHOROS,LLC
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`Case No.:
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`Plaintiff
`
`V
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`PLAINTIFFOS COMPLAINT
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`LENOVO SINGAPORE PTE LTD,
`LENOVO HK SERVICES, LTD., and
`LENOVO (LTNITED STATES), INC.,
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`IREDACTED VERSION OF
`PLAINTIFF'S COMPLAINT
`souGHT TO BE SEALEDI
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`Defendants.
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`Plaintiff, Khoros, LLC ("Khoros"), for its Complaint against Defendants
`Lenovo Singapore PTE Ltd. ("Lenovo Singapore"), Lenovo HK Services, Ltd.
`("Lenovo HK"), and Lenovo (United States), Inc. ("Lenovo USA") (collectively
`"Lenovo") alleges as follows:
`
`NATT]RE OF ACTION
`This is an action for breach of contract and for misappropriation of trade
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`1
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`secrets.
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`THE PARTIES
`2. Plaintiff, Khoros, LLC, is incorporated under the laws of Delaware and
`headquartered in San Francisco, in San Francisco County, California.
`3. Defendant, Lenovo (Singapore) PTE Ltd., is, on information and belief, a
`private company limited by shares, incorporated in Singapore with a principal place of
`business in Singapore.
`4. Defendant, Lenovo HK Services Ltd., is, on information and belief,
`organized under the laws of Hong Kong and headquartered in Hong Kong.
`5. Defendant, Lenovo (United States), Inc., is organized under the laws
`Delaware and headquartered in North Carolina.
`JURISDICTION AND VENUE
`6. This Court has original jurisdiction over this matter pursuant to I S U.S.C.
`$ I 836(c).
`7. This Court has subject matter jurisdiction pursuant to 28 U.S.C. $1331,
`because Plaintiff asserts a federal cause of action under the Defend Trade Secrets Act
`("DTSA"), 1B U.S.C. $ 1936(c).
`8. This Court has personal jurisdiction over Lenovo Singapore because it
`entered a thirteen-year contractual relationship with Khoros, a California resident. The
`terms of the contract were to be performed in the State of California at the direction
`Lenovo Singapore's agent and alter ego,Lenovo USA. IVhen contracting with Khoros
`in California, Lenovo Singapore bound itself to a continuing obligation of
`confidentiality. Lenovo Singapore's breaches of its agreements with Khoros caused
`damage to Khoros in California.
`9. This Courl has personal jurisdiction over Lenovo HK because it entered a
`long-term service contract with Khoros, a California resident. The terms of the
`contract were to be performed in the State of Califomia at the direction of Lenovo
`HK's agent and alter ego,Lenovo USA. When contracting with Khoros in California,
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`Lenovo HK bound itself to a continuing obligation of confidentiality. Lenovo HK's
`breaches of its agreements with Khoros caused damage to Khoros in California.
`10. This Court has personal jurisdiction over Lenovo USA because it is
`registered to do business in the State of California and maintains a registered agent for
`service of process in Califomia. By acting as the agent and alter ego of Lenovo
`Singapore and Lenovo HK, Lenovo USA engaged in ongoing and long-term dealings
`with Khoros employees located in the State of California and is bound by contracts
`entered into, performed, and breached (by Defendants) in Califomia. Lenovo USA
`also engages in business operations which constitute continuous and systematic
`contacts with the State of California.
`11. Venue is proper in this district pursuant to 28 U.S.C. $1391(b) because
`the contract at issue was intended to be and was performed in the State of California,
`was breached in California by Defendants, and caused damages to Khoros in
`California. A substantial portion of the events giving rise to this action occurred in
`San Francisco County, California.
`
`FACTUAL BACKGROUND
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`I.
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`Khorosts business.
`12. Khoros was formed in October 2018 as a result of a merger between
`Lithium Technologies, LLC ("Lithium") and Spredfast, Inc. ("Spredfast").
`13. The intent of the merger was to form a company focused on the
`development of social media marketing platforms and web-based communities;
`Lithium and Spredfast were category creators and leaders in social customer care,
`social media marketing, and communities.
`14. At the time of their merger, Lithium and Spredfast collectively managed
`over one billion customer connections a day across social media, messaging, and
`owned digital channels, hosting platforms for more than 2,000 brands spanning 100
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`countries.
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`15. Creating and hosting web-based community platforms for customers is
`one of Khoros's primary business lines.
`16. Khoros's community software and services help brands connect with
`custorrers to grow existing relationships, build new ones, and create a platform for
`these brands' customers to interact, increasing brand loyalty and driving repeat sales.
`I7. In that regard, Khoros provides a branded, interactive community
`platform for spreading knowledge that transforms search, evaluation, purchase, and
`support interactions into valuable customer learning experiences.
`18. One of the greatest benefits of these interactive community platforms is
`the deflection of call-center support questions, providing its customers with
`substantial savings in terms of call-center time, money, and resources.
`19. Khoros is one of only a handful of major companies in the third-party
`community platform creation/development business and is viewed as an industry
`leader.
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`20. Over a period of fifteen-plus years, through the expenditure of hundreds
`of millions of dollars in research and development, and the experiential benefit of
`basic trial-and-error over the same time period, Khoros has created a community
`platform software product that has a look, feel, and functionality that is (1) an industry
`leading product; and (2) distinctively Khoros's.
`2I. While Khoros's customers are permitted (and encouraged) to work with
`Khoros to customize how their community looks superficially, the overall
`functionality of the communities is particular to Khoros.
`22. The community components made available by Khoros's product are a
`key differentiator for Khoros in the community platform marketplace.
`23. Khoros offers the industry's most comprehensive suite of solutions in one
`platform, providing integrated workflows and actionable insights from every customer
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`conversation that enables them to deepen their customer bonds and grow their
`business.
`24. Khoros also provides its customers with rich data and analytics, along
`with the industry's most cutting-edge benchmarking to help brands optimize their
`custorner engagement efforts.
`II. Lenovo and its IJ.S. operations.
`25. Lenovo is a Chinese multinational technology company with
`headquarters in Beijing. Lenovo manufactures and sells (among other things)
`personal computers, tablets, smartphones, servers, and other electronic devices.
`26. According to Wikipedia.com, Lenovo is the world's largest personal
`computer vendor by unit sales, as of March2019.
`27. Lenovo is a massive integrated global entity with hundreds of subsidiary
`companles.
`28. Lenovo's U.S. operations are run out of Morrisville, North Carolina by
`its U.S. subsidiary, Lenovo USA.
`29. Lenovo ignored corporate formalities and traditional parent-subsidiary
`relationships when it dealt with Khoros.
`30. Over the course of Khoros's 13+ year relationship with Lenovo, every
`single contract negotiation, every service or product order, all day-to-day operational
`communications, all troubleshooting, and all other communications or decisions in
`general were handled andlor made through employees of Lenovo IJSA who were
`based in North Carolina.
`31. Despite Lenovo USA handling the relationship with Khoros, Lenovo
`insisted that the signatories to Khoros's contracts be with other Lenovo entities based
`outside of the United States.
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`32. The original 2007 contract between Lenovo and Khoros (the "Master
`Services Agreement" or "MSA" ) was signed on Lenovo's behalf by Lenovo
`Singapore.
`33. A true and correct copy of the MSA, along with the parties' original
`Service Order, is attached hereto as Exhibit A.
`34. The original Service Order associated with the MSA was approved by
`Mark Hopkins of Lenovo USA.
`35. A new Service Order was executed between the parties in 2018 (the
`"2019 so").
`36. A true and correct copy of the 2018 SO is attached hereto as Exhibit B.
`37. The 2018 SO was negotiated with Amy Tupper of Lenovo [JSA, but
`ultimately signed by a putative employee of Lenovo HK.
`38. As a result of the way Lenovo operated its business, at alI times Khoros
`considered itself to be contracting with the Lenovo group of companies as a whole, all
`run through Lenovo USA, as the Lenovo entities' agent andlor corporate alter ego.
`39. Lenovo treated the parties' relationship exactly the same way.
`III. Khorosos contract with Lenovo.
`A. The original Master Services Agreement and Service Order.
`40. As referenced above, effective September 27,2007, Lenovo entered into
`a "Master Services Agreement" ("MSA") with Lithium, the company that ultimately
`became Khoros via merger.
`41. Khoros assumed all applicable Lenovo contracts when Lithium and
`Spredfast merged including the MSA and all associated SOs and SOWs.
`42. At the time the MSA was executed, Lithium was headquartered at 5980
`Horton Street, Emeryville, Califomia, 94708, within this Judicial District, and the
`contract was therefore made and entered into in California.
`43. Khoros continues to maintain an office in California.
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`44.
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`relationship.
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`The MSA acted as the "base" agreement governing the parties'
`It was supplemented by both Service Orders ("SOs") or Statements
`\Mork ("SO'Ws") at various times throughout the parties' relationship.
`45. As described above, while the MSA was signed by Lenovo Singapore,
`representatives of Lenovo IJSA negotiated the MSA, provided direction as to work,
`engaged in communications regarding the parties' contractual relationship, and
`directed payments to Khoros under the MSA and related Service Orders.
`46. The original Service Order entered into between the parties in association
`with the MSA was specifically for Lenovo USA, with Mark Hopkins of Lenovo USA
`in North Carolina being the primary contact.
`47. Khoros was informed by Lenovo USA representatives that the only
`reason that Lenovo Singapore signed the MSA and original SO was because the value
`of the contract was above the monetary threshold for the Lenovo USA to sign without
`approval from its parent company(ies).
`48. The same was true for the 2018 SO.
`49. REDACTED
`50. REDACTED
`51. REDACTED
`52. REDACTED
`53. REDACTED
`54. MSA $10.3 expressly prohibits the disclosure andlor misuse of Khoros's
`Confidenti al Inform ation.
`55. The confidentiality requirements imposed by MSA $10.3 survived the
`termination of the parties' agreement.
`56. Under the MSA, Khoros retained all of its intellectual property rights.
`57. Lenovo expressly agreed not to copy or reverse-engineer Khoros's
`software, to keep Khoros's non-public information confidential, and to immediately
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`cease using Khoros's software and information upon the termination of the parties'
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`relationship.
`B. Subsequent SOs and/or SOWs.
`58. ln2018, the parties entered into the 2018 SO.
`59. As was the custom, with respect to the 2018 SO, the primary Lenovo
`contact listed on the face of the SO was Amy Tupper of Lenovo USA. All billing and
`payment under the 2018 SO was handled through Lenovo USA.
`60. As further evidence of Lenovo's disregard of corporate formalities, yet
`another Lenovo entity - Lenovo HK signed the 2018 SO for Lenovo.
`61. The 2018 SO incorporates the MSA, and Lenovo HK acknowledged that
`it too was Khoros's customer for purposes of these agreements (see 2018 SO, 1T 1).
`C. Lenovo steals critical portions of Khorosts platform to create its own
`copycat version.
`62. On or about November 2017, Lenovo USA informed Khoros that Lenovo
`was considering terminating the parties' relationship and would instead create and
`host its own community webpage. Despite that communication, Lenovo was not
`prepared to venture out on its own, and in March 2018 renewed its relationship with
`Khoros via the 2018 SO. In November 2019, Lenovo informed Khoros that it was
`nearing completion of its own community site and planned to terminate the parties'
`agreement, but asked to extend it by only one year.
`63. Khoros did not agree to renew the agreement. So, the MSA was
`terminated. The Lenovo self-hosted community webpage ultimately went live on or
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`around February 21, 2020.
`64. For purposes of its claims here, Khoros's software can be understood has
`having three (3) main components. First, there is the rendered HTML source code
`that effectively "creates" the community that the public can see. The source code
`underpinning much of web design is generally viewable by anyone with a web
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`browser or HTML viewing software - that portion of the cornmunity web design can
`be seen by the public and is not necessarily secret.
`65. This public-facing HTML code is used to "draw" shapes and write text or
`media on the page and organize locations of the operational elements of the website.
`66. Second, Khoros's software includes its proprietary "studio Tool" which
`is only accessible by Khoros customers under strict obligations of confidentiality.
`67. The Studio Tool allows a trained user to very quickly create the public-
`facing code described above.
`68. Khoros developed its Studio Tool through years of trial-and-error, using
`its experience in the community platform industry, and through millions of dollars in
`R&D. The Studio Tool is a highly detailed and hard-won menu of community website
`options; it compiles and organizes every conceivable webpage element and
`configuration that might be used on a Çommunity platform - hundreds upon hundreds
`of them.
`69. The Studio Tool provides a user with the ultimate flexibility and instant
`know-how for designing a high-functioning, unique, and attractive community
`platform. While any one of the individual elements collected in the Studio Tool might
`be used in a given Khoros-supported community, the overall aggregation of these
`options is not public, and it would be extraordinarily difficult for a competitor or
`former Khoros customer to reconstruct the highly detailed, aggregated and efficiently
`organized format of the Studio Tool. Khoros's Studio Tool is a Khoros trade secret.
`70. The Studio Tool would provide an unauthorized user with a multi-year
`head start in developing and optimizing its own community platform, with an
`associated cost savings in the hundreds of millions of dollars.
`71. Third, Khoros's software includes another set of non-public and
`proprietary computer code that runs the entire software suite.
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`72. This code is not available to anyone outside Khoros, even Khoros
`customers.
`73. It is Khoros's trade secret.
`74. This code includes proprietary macros, APIs (application program
`interfaces) and databases.
`75. It integrates the Studio Tool with the public-facing HTML code o
`Khoros-hosted communities and is the engine that makes it all run. This "back-
`office" code is non-public and proprietary to Khoros.
`76. It does, however, integrate with Khoros's proprietary Studio Tool, to
`which Khoros's customers have access.
`77. The internal commands and communications between this back-offrce
`code and the Studio Tool are instructive as to how Khoros's back-office engine works
`and its overall architecture.
`A customer with sufficient technical resources (like Lenovo) in possession of the
`Studio Tool could reverse-engineer a substantially similar version of the back-office
`software based upon the clues provided by the internal communications and
`commands between the Studio Tool and that software.
`78. Lenovo's new community looks strikingly like the community previously
`developed and hosted by Khoros. As a result, Khoros conducted a thorough review of
`Lenovo's new community, looking at is construction (through an analysis of the
`public-facing code describe above), its layout, its terminology, and its functionality.
`79. Lenovo's copycat community site looks and functions strikingly like the
`one previously created and hosted by Khoros. It contains the same color schemes
`page outlines, URL structures, Khoros's unique community terminology, and overall
`look and feel.
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`80. Further investigation revealed that not only did Lenovo design its copycat
`site to visually look substantially like the one created by Khoros, but it actually cut-
`and-pasted Khoros's HTML source code for several of its site components.
`81. When Lenovo's copycat community went live, Khoros employees
`viewed the publicly-viewable source code Lenovo used to create its community. That
`source code contained lines of code that were cut-and-pasted directly from Khoros's
`previous Lenovo community.
`82. The copying was obvious, as the code used contained vestiges of older
`Khoros code unique to its site that had not been completely "cleaned r'rp" over time.
`As such, Lenovo flagrantly violated paragraphs2.3,3.4,and6.5 of the MSA.
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`D. Lenovo misappropriates Khoros's trade secrets by reverse-engineering
`its proprietary "Studio Tool" and application program interfaces.
`83. Not only did Lenovo do a wholesale cut-and-paste job with Khoros's
`public-facing code, it also reverse-engineered Khoros's Studio Tool and its
`proprietary back-off,rce website architecture, APIs, and macros.
`84. As mentioned, when it was a Khoros customer, Lenovo had access to
`Khoros's Studio Tool. The evidence collected by Khoros demonstrates convincingly
`that Lenovo not only copied the Studio Tool, it also used the communications between
`the Studio Tool and Khoros's back-office software to reverse-engineer its confidential
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`and proprietary community website architecture.
`85. With respect to the Studio Tool, the components that make up the
`Lenovo community-site (i.e.,the menus, options, categories of information, taskbars,
`query sections, etc.) match nearly exactly components that have been aggregated and
`constructed in Khoros's Studio Tool.
`86. Each one of the elements Lenovo presently uses on its new selÊhosted
`community has a direct cognate to one of the Khoros-created user options contained in
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`the Studio Tool.
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`87. In addition, portions of the new Lenovo community use components and
`check boxes derived from the Studio Tool that have no functionality because they are
`not yet linked to the back-office software that Lenovo reverse-engineered.
`88. These factors demonstrate that Lenovo effectively appropriated the
`Studio Tool and is using it (or a direct copy) to populate the public-facing fields of its
`community site.
`89. Khoros's Studio Tool works as the conduit between Khoros's non-public
`back-office software suite and its public-facing HTML code.
`90. Described in simplified terms, the Studio Tool communicates with the
`back-office software by sending and receiving certain commands.
`91. A sophisticated user intent on misappropriating Khoros's information can
`analyze those commands to discern the architecture of the back-office databases,
`macros and APIs that make the whole system work.
`92. Based upon the functionality of Lenovo's current community, its clear
`use of Khoros's Studio Tool to create that site, and the sheer speed at which Lenovo
`developed its community, it is apparent that Lenovo not only took the portions of
`Khoros's software to which it has access as a customer, but went the next step and
`stole Khoros's non-public code via reverse-engineering the back-end aspects o
`Khoros's trade secret Studio Tool (i.e., il leveraged one trade secret to reverse-
`engineer another, tainting the entire process).
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`IV. Khorosos cease and desist and preservation letters to Lenovo.
`93. To prevent the further misuse and misappropriation of its trade secrets,
`and to maintain the secrecy of its trade secrets, Khoros issued a cease and desist letter
`to Lenovo on March 16,2020.
`94. Khoros's cease and desist letter directed Lenovo to permanently
`decommission the new community Lenovo developed using Khoros's source code and
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`misappropriated trade secrets on or before March 23, 2020.
`95. Lenovo did not respond to or otherwise acknowledge its receipt o
`Khoros's cease and desist letter.
`96. Accordingly, in anticipation of litigation Khoros's counsel sent a
`preservation letter to Lenovo on April 3, 2020.
`97. The April 3,2020 preservation letter instructed Lenovo to preserve all
`data associated with, among other things, Lenovo's creation, development, and
`implementation of its selÊhosted community platform.
`98. Tellingly, Lenovo disregarded Khoros's preservation letter when it began
`destroying evidence of its wrongdoing by scrubbing its community's forward-facing
`HTML code and deleting all code segments mentioning Khoros or incorporating
`language unique to Khoros's Studio Tool. On information and belief, Lenovo's
`destruction of evidence began sometime between April 3 and }r4ay 7,2020.
`CAT]SES OF ACTION
`Count I -
`h of Contract
`99. Khoros adopts and incorporates paragraphs 1 through 98 as if pleaded
`fully herein.
`100. Khoros's predecessor, Lithium Technologies, Inc. and Lenovo
`(Singapore) Pte. Ltd. entered into the MSA on September 26,2007.
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`101. Representatives of Lenovo USA negotiated the MSA, provided all
`direction as to work and engaged in all communications regarding the parties'
`contractual relationship under the MSA and related Service orders.
`102. In2018, the parties extended the MSA contract by signing the 2018 SO.
`103. Lenovo HK signed the 2018 SO on Lenovo's behalf.
`I04. Lenovo USA communicated with Khoros in all respects regarding the
`subject matter of the 2018 SO.
`105. Lenovo USA is Lenovo Singapore's agent andlor alter ego, and is bound
`by the MSA.
`106. Lenovo HK bound itself to the provisions of the MSA when it signed the
`2018 SO.
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`The MSA is a valid and enforceable contract binding upon Lenovo
`Singapore, Lenovo USA, and Lenovo HK.
`108. Lenovo's employees at all relevant times had access to Khoros's Studio
`Tool and other non-public aspects of Khoros's community platform software, subject
`to the MSA's confidentiality obligations.
`109. Lenovo bound itself to a continuing duty of confidentiality and further
`agreed it would not copy, reproduce, or reverse-engineer Khoros's software, including
`Khoros's HTML code, Studio Tool, and back-office software.
`110. Lenovo breached its contractual obligations under the MSA when it
`created its own community platform by cutting and pasting Khoros's HTML code and
`copying Khoros's Studio Tool and using it to reverse-engineer Khoros's back-office
`code.
`
`111. At a minimum, Lenovo has breached Sections 2.3,3.4, 6.5 and 10
`(including subparts) of the MSA.
`II2. Lenovo's breach of the MSA has significantly damaged Khoros and
`unjustly enriched Lenovo, in an amount to be proven attriaL
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`Case 4:20-cv-03399-DMR Document 1 Filed 05/19/20 Page 15 of 22
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`Count II
`Violation of Federal Defend Trade Secrets Act looDTSA") - 18 U.S.C. S1836
`Khoros adopts and incorporates paragraphs I through ll2 as if pleaded
`113.
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`fully herein.
`II4.
`11s.
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`trade secret.
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`Khoros's Studio Tool is a trade secret.
`Khoros's non-public back-office source code (as described herein) is a
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`1 16.
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`Pursuant to the terms of the MSA, Khoros provided Lenovo with access
`to its Studio Tool on a strictly confidential and limited basis.
`ll7. The Studio Tool and Khoros's back-off,rce source code derive
`independent economic value from not being generally known to, or readily
`ascertainable by other persons who could obtain economic value from their disclosure
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`or use
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`118. Khoros took reasonable steps to protect the confidentiality of its Studio
`Tool and back-office code.
`119. This included limiting the Studio Tool's availability to customers, like
`Lenovo, who first signed a confidentiality agreement and agreed to not engage in
`unauthorized use of the software, and not permitting others to access, view, or use the
`Studio Tool.
`120. Khoros further protected the Studio Tool by requiring its customers, like
`Lenovo, to designate administrators who could only access the tool with a usemame
`and password.
`l2I. Khoros took reasonable steps to protect the confidentiality of its back-
`office source code which runs its software suite. Such code is not publicly available,
`even to customers. It is kept under password protection and encryption even within
`Khoros itself, and only limited Khoros employees have the ability to access or view
`this source code.
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`122. Khoros's computer systems, including those housing its back-office
`source code and Studio Tool, are protected from external threat, hacking, and viruses
`using up-to-date protection software. They can be accessed only by company
`employees with appropriate credentials.
`123. Access to Khoros's offices are regulated, and members of the public
`cannot access its offices without authorization.
`I24. On information and belief, Lenovo misappropriated the Studio Tool
`when it copied it andlor continued using it following the termination of its agreement
`with Khoros.
`I25. On information and belief, Lenovo rnisappropriated Khoros's back-office
`software by using the Studio Tool, which it illegally copied or retained following the
`termination of the parties' agreement, to reverse-engineer some or all of Khoros's
`back-office source code to create its own substantially similar community platform.
`126. Lenovo's actions, as described herein, constitute a wrongful and willful
`misappropriation of Khoros's trade secrets.
`127. Lenovo's wrongful and willful rnisappropriation of Khoros's trade
`secrets has allowed Lenovo to enjoy unwarranted pecuniary gain in the form of
`increased profits as well as a substantial savings in time and development costs.
`Lenovo has been unjustly enriched, and has obtained the value of Khoros's trade
`secrets without compensating Khoros for it.
`128. As a direct result of Lenovo's wrongful and willful misappropriation
`Khoros's trade secrets, Khoros has suffered, and continues to suffer, direct and actual
`damages. It seeks compensation in the form of damages for actual loss, damages for
`unjust enrichment, or alternatively, a reasonable royalty in amounts to be determined
`at trial.
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`I29. Lenovo's misappropriation of Khoros's trade secrets was willful. As a
`result, Khoros is entitled to double damages against Lenovo pursuant to 18 U.S.C.
`$r 836(bX3XC).
`130. Khoros is entitled to punitive damages to the extent permitted by law.
`l3l. Khoros is entitled to preliminary and permanent injunctive reli
`prohibiting Lenovo for continuing to misappropriate its trade secrets.
`132. Khoros is entitled to an award of its reasonable attorney's fees, expenses,
`and costs resulting from Defendants' violation of the DTSA, as set forth herein.
`Count III
`Violation of the California Uniform Trade Secrets Act ('o
`
`SA") - Cal. Civ.
`
`Code 83426
`I33. Khoros adopts and incorporates paragraphs 1 through I32 as if pleaded
`fully herein.
`I34. Khoros's Studio Tool is a trade secret.
`135. Khoros's non-public back-office code (as described herein) is a trade
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`secret.
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`136. Pursuant to the terms of the MSA, Khoros provided Lenovo with access
`to its Studio Tool on a strictly confidential and limited basis.
`I37. The Studio Tool and Khoros's back-office source code derive
`independent economic value from not being generally known to, or readily
`ascertainable by other persons who could obtain economic value from their disclosure
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`or use.
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`138. Khoros took reasonable steps to protect the confidentiality of its Studio
`Tool and back-office code. This included limiting the Studio Tool's availability to
`customers, like Lenovo, who first signed a confidentiality agreement and agreed to not
`engage in unauthorized use of the software, andnot permitting others to access, view,
`or use the Studio Tool.
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`139. Khoros further protected the Studio Tool by requiring its customers, like
`Lenovo, to designate administrators who could only access the tool with a username
`and password.
`140. Khoros took reasonable steps to protect the confidentiality of its back-
`office source code which runs its software suite. Such code is not publicly available,
`even to customers. It is kept under password protection and encryption even within
`Khoros itself, and only limited Khoros employees have the ability to access or view
`this source code.
`I4l. Khoros's computer systems, including those housing its back-office
`source code and Studio Tool, are protected from external threat, hacking, and viruses
`using up-to-date protection software. They can be accessed only by Çompany
`employees with appropriate credentials.
`142. Access to Khoros's offices are regulated, and members of the public
`cannot access its offices without authorization.
`143. On information and belief, Lenovo misappropriated the Studio Tool
`when it copied it andlor continued using it following the termination of its agreement
`with Khoros.
`144. On information and belief, Lenovo misappropriated Khoros's back-office
`software by using the Studio Tool, which it illegally copied or retained following the
`termination of the parties' agreement, to reverse-engineer some or all of Khoros's
`back-office source code to create its own substantially similar community platform.
`