A 25-person legal technology company in California is fighting back against one of the world’s largest law firms in a lawsuit over ownership rights to legislation-drafting software that each side says was its idea.
In October, the law firm Akin Gump Strauss Hauer & Feld filed a lawsuit against Xcential Legislative Technologies for misappropriation of trade secrets, breach of contract, and other causes of action, alleging that Xcential’s Bill Synthesis software, for which Xcential filed a patent application, was actually invented by an Akin Gump attorney, Louis Agnello, who is counsel to the firm.
Early this month, Xcential fought back with an answer and counterclaim denying that its software was based on Agnello’s idea. To the contrary, the company says that Agnello stole its idea after it gave him a demonstration of the software in 2019.
Attorneys at Akin Gump declined to discuss the lawsuit. Shade Vaughn, the firm’s chief marketing and business development officer, provided this statement: “In accordance with the court’s timetable, we will be replying to the counterclaims, which are frivolous, and we will continue to vigorously pursue our claims against the defendant for its misappropriation and contractual breaches.”
Executives at Xcential also declined to discuss the case on the record, but issued a press release in which Grant Vergottini, the company’s cofounder, CEO and CTO, asserted that Xcential was solely responsible for the design and execution of the software.
‘K Street Parade’
The focus of the case is on Xcential’s 2019 patent application for a software prototype it named Bill Synthesis. The company says the prototype was based on two of its existing technologies: one called Change Set software and another internal technology later named Snapshot.
Xcential says both were developed out of its experience with the federal legislative process and were demonstrated to Akin Gump in 2019.
But Akin Gump, in its complaint for damages and injunctive relief filed in the District of Columbia Superior Court and in a petition to the U.S. Patent and Trademark Office, claims that Bill Synthesis was actually invented by Agnello. According to Akin Gump’s October 2022 lawsuit, Agnello claims he had “an idea that would forever change the complex process of drafting federal legislation” and lead to a “K Street Parade” among lobbying firms.
Akin Gump says it approached Xcential about adding Agnello’s concept to Xcential’s existing LegisPro software, which automates certain aspects of federal bill drafting. Akin Gump alleges that Agnello and Xcential even referred to the initial prototype as the “K-Street Parade” based on Agnello’s description.
In its answer and counterclaim filed Nov. 8, Xcential denies that Bill Synthesis was based on an idea presented to it by Agnello.
“Defendants deny any suggestion or implication that Agnello is the first or only person to conceive of” the software concept for Bill Synthesis, the pleading says. Xcential says it not only designed and executed the idea, but also has been creating software products to streamline the process of drafting legislation, including federal legislation, in response to legislative drafting professionals’ similar needs, for 20 years.
“Only Xcential has created software that functions as described in the patent application for Bill Synthesis,” said Grant Vergottini, the company’s cofounder, CEO and CTO. “We will not be intimidated into surrendering our know-how and intellectual property to a giant law firm like Akin Gump. This litigation should be a warning to all innovative legal technology providers.”
Series of Meetings
The dispute arose after a series of meetings and software demonstrations undertaken at Akin Gump’s request, beginning in 2018. Agnello had contacted Xcential in pursuit of a way to modernize and make more efficient its process of drafting and amending federal legislation for its corporate clients.
Between March and August 2019, Xcential and Akin Gump “operated under an implied-in-fact contract … whereby Xcential committed to contribute various resources to delivering updated Xcential software to (Akin Gump) that would meet the needs of Counterclaim Defendant Agnello, in exchange for financial compensation,” according to Xcential’s answer and counterclaim.
Relying on contractual protections that Akin Gump accepted, Xcential alleges, it “provided hundreds of hours of services, disclosed its trade secrets and confidential information, and made capital contributions towards the launch of more advanced Xcential software.” All of Xcential’s work was performed at no cost to Akin Gump.
As a result of these meetings, Xcential’ says, it developed the Bill Synthesis prototype, which it demonstrated to Agnello and Akin Gump personnel in August 2019. It asserts that Akin Gump then “breached the implied contract by rejecting the project as soon as financial terms were discussed and tried to file a patent on the work Xcential performed.”
Two weeks after the Akin Gump demo, Xcential filed its patent application, which it says built on and extended a prior patent application by Xcential for Change Sets.
‘Absurd and Embarrassing’
In addition to its lawsuit against Xcential, Akin Gump has filed a Petition to Institute Derivation with the USPTO, in which it claims Xcential’s patent application was derived from Akin Gump’s claimed invention.
Xcential alleges in its court filing that the Akin Gump petition, which repeats its narrative depicting Xcential’s Bill Synthesis software as “Agnello’s K-Street parade bill-drafting invention,” constitutes “slander of title and rights of and to property and assets of Xcential, including, without limitations, title and rights of and to the Invention, and the claim of inventorship of the same.”
By “falsely claiming to the United States Patent and Trademark Office that Agnello is a true inventor of the Invention … Xcential has been severely damaged and is entitled to damages in the amount to be determined at trial and punitive damages against Counterclaim Defendants,” according to the counterclaim.
In addition to the slander of title claim, Xcential is seeking damages for Akin Gump’s breach of the EULA contract, for its misappropriation of trade secrets, misappropriation of confidential information and breach of implied contract, and is seeking to permanently enjoin Akin Gump from representing Agnello as an inventor of Xcential’s Bill Synthesis.
“For Agnello to claim this invention is a little like him saying, ‘If we had a rocket we could go to Mars,’ and then telling the rocket scientists he invented the rocket,” Vergottini said. “It’s absurd – and, frankly, a little embarrassing for him.”
The case is No. 2022 CA 004744 B, filed in the Civil Division of the Superior Court of the District of Columbia. Akin Gump is being represented by its attorneys Anthony T. Pierce, Caroline L. Wolverton and Nathaniel B. Botwinick. Xcential is being represented by Holland & Knight attorneys Cynthia A. Gierhart and R. David Donoghue.