The Findora Lawsuit Against Espresso Systems and Its Founders
Setting The Record Straight ON THE FINDORA LAWSUIT AGAINST ESPRESSO SYSTEMS
Findora Lawsuit: Table of Contents
1 Introduction | 2 Timeline | 3 History | 4 Nature of IP Disputes | 5 Key Terms & Concepts
In 2020,
Findora founders began to file lawsuits against a group of former employees for intellectual property theft and defamation.
That group went on to create Espresso Systems.
This is an explainer of the Findora lawsuit against Espresso Systems.
FULL EVENT TIMELINE
NOVEMBER 2020
Findora Lawsuit Against Ariel Abittan, Ben Fisch, and Charles Lu
Temujin Labs Inc (the original core developers of Findora) filed a lawsuit against Ariel Abittan, Ben Fisch, and Charles Lu on November 6, 2020, in the state court of California. (Case No. 20CV372622, pending in the Superior Court of Santa Clara County)
Ariel Abittan was associated with a now-defunct entity that sold certain intellectual property to Temujin Labs. Ben Fisch, and Charles Lu were former executives of Temujin Labs, the original company building the Findora blockchain. In late 2020, Fisch and Lu started to part ways with the company. During that period of time, Fisch and Lu, together with Ariel Abittan, colluded to harm Temujin Labs and their former colleagues, including falsely claiming ownership of Findora and attempting to steal trade secrets. In addition, they interfered with control over and access to Temujin’s assets and social media accounts. The group further colluded to inflict damage by ruining relationships between Temujin Labs and several of their investors.
The team at Temujin Labs took the necessary measures to stop Ariel Abittan, Ben Fisch, and Charles Lu by filing a lawsuit against them for their harmful and nefarious acts.
DECEMBER 2020
Ariel Abittan Countersues Findora, Lily Chao, and Damien Leung
Ariel Abittan countersued Temujin Labs, Lily Chao, and Damien Leung on December 24, 2020, at the federal District Court of Northern California. (Case No. 5:20-CV-09340)
Shortly after the original Findora state lawsuit against Ariel Abittan, Ben Fisch, and Charles Lu, Ariel filed a countersuit against Temujin Labs and its founding members on Christmas Eve of 2020. The court would later dismiss this countersuit as Ariel could not provide sufficient facts to support his claim. Ariel Abittan amended his complaint, and the case is currently pending.
In other words, the original countersuit filed by Ariel Abittan was found to have so little basis, it was not allowed into court.
JANUARY 2021
Findora Lawsuit Against Frank Fu
Findora filed a lawsuit against former business associate Frank Fu on January 4th, 2021, in the state court of California. [Case No: 21CV375422, pending in the Superior Court of Santa Clara County]
Shortly after Abittan’s countersuit, Temujin Labs filed another lawsuit, this time against former associate and business advisor Frank Fu. Frank Fu was originally engaged in raising funds with investors and key players in the Web3 space. The methods used by Frank Fu ranged from dishonest at best to illegal, including kickbacks, bribery, and “under-the-table” dealings.
MARCH 2021
Frank Fu Files a Cross-Complaint Against Findora
Frank Fu, in response to being sued by Temujin Labs for questionable business tactics, filed a cross-complaint against Temujin Labs, and founding members Lily Chao and Damien Leung. The cross-complaint was filed in March 2021.
MAY 2021
Frank Fu Files Motion To Disqualify Findora’s Attorneys but was Denied
In May of 2021, two months after his cross-complaint, Frank Fu filed a motion to disqualify Fenwick & West, the law firm representing Temujin Labs. The motion was denied by the court in August, three months after it was filed.
AUGUST 2021
“[Frank] Fu’s motion is DENIED.”
The state court denied Frank Fu’s motion to disqualify Findora’s attorney, Fenwick & West.
NOVEMBER 2021
Ben Fisch and Charles Lu File a Cross-Complaint
Two of the people named in Findora’s original lawsuit, Ben Fisch and Charles Lu, decided to file a cross-complaint against Temujin Labs and founding members Lily Chao and Damien Leung. This cross-complaint was made in response to the original lawsuit filed by the Findora development team in November of 2020 (Case No. 20CV372622).
NOVEMBER 2021
Findora Lawsuit Against Espresso Systems, Ben Fisch, Benedikt Bunz, Charles Lu, and Associates.
After discovering new information, Findora filed a new lawsuit on November 24, 2021 against Espresso Systems (a.k.a. Translucence Labs) and their associates at the federal District Court of Northern California. [Case No. 3:21-cv-09152.]
The group of associates named in the original state lawsuit (Case No. 20CV372622) went on to launch a competing project, Espresso Systems while using trade secrets owned by Temujin Labs. This is one of the numerous unethical and illegal acts performed by Espresso System founders against Temujin Labs.
Doing what needed to be done to protect the Findora project, Temujin Labs filed this latest lawsuit against Espresso Systems and their founders and associates Ben Fisch, Benedikt Bunz, Charles Lu, Nathan McCarthy, Fernando Krell, Philippe Camacho Cortina, Binyi Chen, Luoyuan (Alex) Xiong. The lawsuit, filed in November of 2021, describes in detail the numerous complaints against the group, including trade libel, civil conspiracy, trade secret misappropriation (theft), and intentional interference with contractual relationships.
APRIL 2022
Benedikt Bunz Served at Princeton University
RE: Original Findora Lawsuit
Chief Scientist at Espresso Systems, Benedikt Bunz, was served at Princeton University in April of 2022 in relation to Case No. 3:21-cv-09152.
MAY 2022
Ariel Abittan’s Lawsuit Against Findora Founders is Dismissed!
“The Motion to Dismiss [Abbitan’s Lawsuit] is GRANTED.”
The original countersuit (Case No. 5:20-CV-09340) made by Ariel Abittan in December 2020 was dismissed by the courts for lacking sufficient evidence to proceed; a win for the Findora team as they continue to seek justice and defend the Findora project from Ariel and Espresso System associates. Ariel Abittan later filed an amended complaint against Temujin Labs and the founding members.
OCTOBER 2022
Chief Cryptographer at Espresso Systems, Binyi Chen, was served at UC Berkeley in October 2022 in relation to Case No. 3:21-cv-09152.
A HISTORY OF THE FINDORA LAWSUIT AGAINST ESPRESSO SYSTEMS
In 2019, Temujin Labs purchased intellectual property from Eian Labs and became the owner of the intellectual property. Temujin Labs started working on Findora in August 2019. Since then, a group of former employees and consultants have tried to copy and steal core technology behind the Findora project and even tried to cripple the reputation of many of Findora’s original founders.
This small group of conspirators interfered with Temujin’s business dealings, ruined investor relationships, and fostered internal turmoil at the company. Findora sued them to stop their illegal conduct against the company and the team building Findora.
In response,
the defendants launched a series of meritless countersuits and,
in the thick of the legal actions,
founded Espresso Systems using the stolen code base developed by Temujin Labs.
Findora has always been focused on building and innovating. However, members of Espresso System’s founders continued to misrepresent the source of the technology and tried to block Findora from would-be backers and funders.
THE NATURE OF CRYPTO INTELLECTUAL PROPERTY DISPUTES
Examples of intellectual property disputes are not uncommon in Web3. When there is a breakthrough or a great idea, it’s common that some parties will attempt to take credit and profit from the technology developed by others.
The rightful owners are often forced to take legal action to protect their intellectual property.
Here are a few examples of similar disputes in the crypto industry:
In 2017, Jared Mimms claimed that Ethereum was created from his intellectual property and attempted to sue founders like Vitalik. Mimms even filed a complaint with the FBI and launched a 2017 ICO dedicated to helping him win his case.
In 2022, the popular cryptocurrency exchange Coinbase was sued by Veritaseum Capital LLC for patent infringement, asking for $350 million in damages. Reggie Middleton alleged that Coinbase stole products he patented to create some of their offerings.
Also in 2022, Yuga Labs, which created the Bored Ape Yacht Club NFTs, sued digital creator Ryder Ripps for creating a copycat project. Ripps used the exact same logos and images that BAYC did and tried to sell NFTs from his collection for the same price.
Even Bitcoin is not immune, as there are multiple parties claiming to be Satoshi Nakamoto. Whenever there is the opportunity to make significant money, there will be those wanting to take advantage of the situation – that is human nature.
Intellectual property disputes in crypto are often contentious because there is a lot of new intellectual property relying on old laws and systems. Decentralization in Web3 poses unique problems for intellectual property disputes, as IP laws require that “a single identifiable entity” controls the assets. How or if DAOs can hold intellectual property is a subject crypto lawyers will no doubt be forced to wrestle with in the near future.
Web3 projects’ tendency to open-source their code is another complicating factor. Discreet Labs is proud of making their cryptography library, Zei, open for all to use – they believe we all go further if we work together. But open-source does not necessarily mean copy-free. And just because part of a codebase is published certainly doesn’t mean every bit of code can be copied freely.The terms of the license under which the code is open-sourced govern, and not all open-source licenses are equal.
Further, while some parts of the codebase may be open-sourced, other parts of the codebase may be kept private and protected as trade secrets. Findora’s source code for its ledger system is a trade secret that derives actual economic value from not being generally known.
GLOSSARY OF KEY LEGAL CONCEPTS
Intellectual Property Sales Agreements
Intellectual property sales agreements are contracts that transfer rights to intellectual property, like code or software programs, from one party to another. In these transactions, a seller transfers ownership of assets such as patents, trademarks, copyrights, and trade secrets. IP sales usually grant exclusive ownership rights to a buyer.
Civil Conspiracy
Civil conspiracy occurs when two or more parties work together to cause another party injury or harm or pursue any unlawful purpose. Criminal conspiracy, for comparison, is when two or more people plot a criminal act (an act that can be tried under criminal law), rather than an unlawful act. Examples of civil conspiracy in a business context include negligent misrepresentation of other businesses or seeking to disrupt business relationships
Tortious Interference with Contract
Tortious interference is when a party works to undermine your business opportunities or relationships for their own gain. There are two types of tortious interference: one where a contract exists and one where it doesn’t. Tortious interference with a contract is when a defendant wrongfully interferes with the contractual relationships of the plaintiff, often for their own gain.
Trade Secret
A trade secret is any information that is not generally known or readily accessible to the public and has economic value because it is secret.
Protecting Open Source Code
Open-sourcing code is when a company publishes that code in an open repository where anyone can access it. Any use of which is governed by a license with specific terms and conditions. However, there are different open-source licenses, and it’s important to choose the right one before publishing software code. Different open-source licenses come with various rules on how the code can be used or improved.
Also, many Web3 open-source projects often still leave certain parts of the base code or source code proprietary. Just because one part of a project’s database is open source doesn’t mean all of their databases are open source.