Fundraising ASP Alleges Theft by Competitor

Kintera Inc., an application service provider to nonprofit organizations, said yesterday that it filed a lawsuit against competitor Convio Inc. alleging trade secrets theft and copyright infringement.

The lawsuit, filed Monday in the U.S. District Court of the Southern District of California, alleges that Convio stole Kintera's trade secrets and intentionally copied copyrighted computer codes, said Harry Gruber, CEO at Kintera, San Diego.

Kintera was alerted to the situation when it received calls from more than one Convio employee, he claimed.

“Some of Convio's employees who are in the nonprofit space and believe in the ethics of the space became very upset when they realized that Convio was asking them to use stolen information,” Gruber said. “They complained but Convio still went for it so they called us.”

Though it is unclear how Convio might have acquired Kintera's proprietary information, Gruber said he thinks it could have occurred through a prospective Kintera client that had been given information in confidence. He would not name the organization but said it was a major national nonprofit.

The prospect later went to Convio, Gruber said. But he added that he does not necessarily think the organization intentionally shared Kintera's trade secrets with Convio.

According to Gruber, Kintera contacted Convio about three weeks ago to try to resolve the situation out of court but the attempt failed.

In response to the charges, Vinay Bhagat, founder and CEO of Convio, Austin, TX, released a statement that said in part, “The lawsuit is without merit and we will defend it vigorously. Given the nature of litigation, we cannot comment further on the matter at this time.”

Kintera has asked the court to order Convio to pay damages and for a permanent injunction prohibiting Convio from using Kintera's trade secrets, proprietary computer codes and derivative works. Kintera also asked the court to order that Convio refrain from destroying documents, electronic and computer files and other relevant evidence.

Meanwhile, a trademark infringement suit between the two firms was settled this week when Convio agreed to change the name of one of its Web-based features.

In a lawsuit filed in December, Kintera alleged that the name of Convio's Friend2Friend service too closely resembled its Friends Asking Friends trademark. Kintera dismissed the lawsuit when Convio changed the name of its product to TeamRaiser.

Both TeamRaiser and Friends Asking Friends allow visitors to client Web sites to e-mail a link to the site to others.

“To end the dispute quickly and to avoid wasting our resources on activities that would be of no benefit to our clients or shareholders,” Bhagat said in a statement, “we settled the lawsuit by agreeing to change our product name and not use terms that could be confused with Kintera's trademark.”

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