Palinode, a leading provider of credit dispute resolution technology, has taken legal action against competing software company Provana and a former customer, Plaza Services, for misappropriation of trade secrets. Palinode is seeking damages and a permanent injunction arising from Provana's scheme to, via Plaza Services, unlawfully access trade secrets and confidential information regarding Palinode's Sonnet software.
"This misappropriation of Palinode's intellectual property, which we see as theft, is causing harm and confusion in the marketplace," said Palinode President and CEO Joe Storey. "We spent millions of dollars and many thousands of hours developing and protecting the Sonnet platform. It's a superior product that Provana desperately wanted to access, but we were able to discover what they did. The legal action we're taking is a David-and-Goliath battle against a multinational software company, but we're determined to protect our valuable intellectual property."
Palinode asserts that Provana used unlawful access to learn how Sonnet works and rapidly develop rival software to try to catch up with Palinode. In doing so, Provana competed unfairly in its efforts to license the rival software to Palinode's existing and prospective customers, damaging Palinode.
Provana is a U.S. and Indian company with ties to Plaza Services, an Atlanta-based collections agency. According to the lawsuit, Plaza was a Palinode customer before a whistleblower admitted to Palinode that Provana was pushing them to provide information to Provana about Sonnet, and Palinode learned that Provana had been accessing Sonnet. Plaza had signed an agreement with Palinode that barred third-party access to Sonnet and prohibited disclosure of Palinode's trade secrets and confidential information. Palinode asserts that Provana induced Plaza to breach that agreement by allowing a Provana employee to access Sonnet, posing as a Plaza employee, then Provana had multiple members of its development team access and study Sonnet, after which it quickly produced competing software.
"We took all the proper precautions in terms of policies, procedures and technology to guard the intellectual property in our Sonnet platform," added Storey. "However, granting customer-level access to Plaza Services was sufficient for them to greatly assist Provana in developing its competing product."
Sonnet is a platform that simplifies credit dispute investigations, integrating with a customer's e-OSCAR dispute workflows to increase productivity, maintain compliance, and, ultimately, achieve efficient resolution. Sonnet helps data furnishers meet Consumer Financial Protection Bureau (CFPB) regulations to demonstrate a "reasonable investigation" and respond to each dispute within 30 days.
Customers and prospective customers with any questions about the Sonnet platform are encouraged to contact Palinode at 866-821-4484 or info@palinode.io.
Civil Action No. 1:21-cv-01378-MN-SRF (D. Del.)
