Altech sues ex-employee over software system

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Altech sues ex-employee over software system

Claims developer injected malicious code, stole trade secrets.

Altech Computers has filed suit against the creator of one of its business software systems in the Federal Court, alleging the developer wrongly licensed the program to other resellers, disclosed trade secrets and inserted malicious code that caused major system crashes.

The computer hardware maker alleged that Andrew Shelomanov and his company Montez refused to hand over the source code of software that Altech commissioned him to make and update.

It was alleged that Shelomanov was provided access to Altech trade secrets including price and cost structures and supplier details to allow him to make updates to the BMS software system used by Altech.

Altech claimed Shelomanov disclosed the secrets to Dropship and Megabuy, companies he was also alleged to have licensed the BMS software to without permission.

It was further claimed that Shelomanov refused to hand over the source code of the software to Altech once he ceased employment at its subsidiaries and that he "deliberately disrupted the operations of the Altech business by writing malicious code into the source code of the BMS software."

Altech was seeking damages and costs from Montez.

Montez was expected to file defence by October 14, 2010.

Background

In March 1997, Shelomanov was engaged to develop the BMS software "for the sole and exclusive use of the Altech business", according to a statement of claim filed with the Federal Court.

It was an "implied term of the BMS software agreement that the company who operates the Altech business from time to time would own the copyright", the claim stated.

"In the alternative, it was an implied term... that the owner of the Altech business would have an exclusive and irrevocable license to use BMS software".

It was alleged Shelomanov entered a verbal agreement in 2001 to continue developing the software.

"From March 1997 to June 2003, Montez and Mr Shelomanov received valuable consideration paid by Altech/[director] Mr Antony Sheen for specific customisations of the BMS software", the claim stated.

From 30 June 2003, Shelomanov was employed by Altech or one of its subsidiaries "continuously" until June 2010.

The first agreement was oral; two subsequent employment contracts were in writing.

Altech alleged that for the entire period of employment, Shelomanov's responsibilities included developing and designing the BMS software for the exclusive use of Altech.

He was allegedly paid $70,000 per year for the work.

One of the terms of employment was allegedly that Shelomanov would hand over source code for the BMS software developed prior to 2003.

Shelomanov allegedly failed to turn over the source code.

He and Montez were also claimed to have "made representations in trade and commerce to consumers" that they owned the copyright to the software.

It was also claimed that the two licensed the BMS software "to third parties, including but not limited to Dropship Pty Ltd and Megabuy Pty Ltd" on that basis.

And it was also claimed that Shelomanov and Montez disclosed Altech trade secrets used in the development and updating of the software when the software was licensed.

Bad code

It was also claimed that Shelomanov "installed on the server of the Altech business a version of the BMS software that contains malicious code", causing major outages for the company.

The first crash occurred at Altech's New Zealand offices on July 13 this year, allegedly putting the company offline for 4.5 hours.

Three days later, the Sydney office experienced three major system crashes.

It was alleged the outages were caused by the injection of the malicious code.

The case was relisted for directions on November 18, 2010.

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