Palantir Lawsuit
Palantir Lawsuit
E-FILED
9/1/2016 11:20:57 AM
David H. Yamasaki
Chief Executive Officer/Clerk
Superior Court of CA,
County of Santa Clara
16CV299476
Reviewed By:Rowena Walker
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UNLIMITED JURISDICTION
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Plaintiff,
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v.
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MARC L. ABRAMOWITZ, in his individual )
capacity and as trustee of the MARC
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ABRAMOWITZ CHARITABLE TRUST NO. )
2, KT4 PARTNERS LLC, a Delaware limited )
liability company, and DOES 1 through 50, )
inclusive,
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Defendants.
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Case No.
16CV299476
COMPLAINT FOR:
(1) Breach of Contract
(2) Breach of the Implied Covenant of Good
Faith and Fair Dealing
(3) Violation of Cal. Civ. Code 3426 et seq.
(4) Declaratory Relief
(5) Violation of Californias Unfair
Competition Law, Cal. Bus. & Prof. Code
17200 et seq.
JURY TRIAL DEMAND
Complaint Filed: September 1, 2016
Trial Date: Not set
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COMPLAINT
(Abramowitz), both in his individual capacity and as trustee of the Marc Abramowitz
Charitable Trust No. 2 (the Trust), KT4 Partners LLC (KT4), and Does 1 through 50
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1.
information and proprietary trade secrets for their own benefit and to prevent them from receiving
any additional confidential or proprietary information from Palantir pursuant to their Investors
Rights Agreement.
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2.
Abramowitz was a respected confidant and advisor to Palantir and its senior
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executives until he betrayed the trust they bestowed upon him for his own personal gain. He was,
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through KT4 and other entities, an early equity investor in Palantir who personally engaged in
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regular discussions with executives about some of the companys most sensitive business
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strategies and trade secrets. Those discussions were highly confidential, as was made clear by
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express written agreements among the parties at the time and a course of dealing based on the
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most basic principles of fairness and honesty between a trusted shareholder and advisor and
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management.
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3.
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information and trade secrets as his own, Abramowitz stole those secrets, engaged in methodical
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deception of Palantirs senior executives, and made false claims to the United States Patent and
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the data analysis area. He has made most of his career and fortune in real estate and buyout
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investing. Yet, beginning in 2014, Abramowitz suddenly filed three patents, all of them based on
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ideas and trade secrets he stole from Palantir. This was plainly illegal and highly unethical
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conduct, and it was a betrayal of his trusted relationship with Palantir and its executives.
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COMPLAINT
5.
But Abramowitzs scheme did not end there. After stealing from Palantir, he hired
lawyers to demand from Palantir sensitive and confidential information about the company,
including the Companys finances and business dealings, which Palantir considers to be, and
treats as, highly sensitive and confidential. Having uncovered Abramowitzs breach of Palantirs
trust (and of his contractual obligations to Palantir under multiple agreements), it is apparent that
Abramowitz is not seeking this information in good faith for a proper purpose. In fact, history
has shown that Abramowitz has and will misuse any information provided to him in breach of
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Palantir now has been forced to protect itself, both through amendments to its
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corporate documents and through this action, by which Palantir seeks redress for Abramowitzs
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proprietary information and trade secrets. Further, to protect Palantir and its shareholders
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confidence in the future, Palantir seeks a declaratory judgment that Abramowitz has no right to
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The Court has jurisdiction over this action by virtue of Article VI 10 of the
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Hamilton Avenue, Palo Alto, California, 94301. Palantir has suffered, and continues to suffer,
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Palantir is informed and believes and on that basis alleges that defendant Marc L.
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Abramowitz is an individual residing in California at 1029 Ramona Street, Palo Alto, California,
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94301. Palantir is informed and believes and on that basis alleges that Abramowitz is the trustee
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of the Marc Abramowitz Charitable Trust No. 2. The wrongful actions of Abramowitz occurred
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COMPLAINT
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Palantir is informed and believes and on that basis alleges that defendant KT4
Partners LLC is a Delaware limited liability company with its principal place of business at 1029
Ramona Street, Palo Alto, California, 94301. On information and belief, KT4 does business in
California and has committed acts that submit it to the jurisdiction of Californias courts. Upon
information and belief, Abramowitz is the sole member of KT4 and controls and directs the
activities of KT4. The wrongful actions of KT4 occurred in, were targeted to, and caused damage
in, California.
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Palantir is ignorant of the true names of Does 1 through 50 and such names are
fictitious. Such defendants are legally responsible for the events and happenings described herein
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and for the damages proximately caused thereby. Once Palantir learns of the true names of Does
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1 through 50, Palantir will amend the complaint to include the real name(s) of such party or
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parties.
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This action is founded on injuries and damages suffered by Palantir in Santa Clara
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County by virtue of the Defendants misappropriation of trade secrets, breach of contract, breach
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of confidence and other illegal and wrongful acts as alleged in this Complaint. Venue is proper in
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this Court because the parties reside in this County and the events that form the basis for this
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FACTUAL BACKGROUND
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Palantirs Business
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2004, Palantir was founded on a vision: to provide solutions not only to problems then faced by
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business and government, but also solutions to problems that did not yet exist, but that would
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surely come to be as part of our rapidly-evolving world. It sought to make this vision a reality by
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the use of technology. And it embarked on an ambitious, time-consuming, and costly endeavor to
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create a viable, successful business. As a result of hard work, Palantir has succeeded and is now a
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leader in its industry. Today, Palantirs products are deployed at the most critical government,
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COMPLAINT
commercial, and non-profit institutions in the world to solve problems the companys founders
In particular, at its founding Palantir set out to create products that would
transform the way organizations use perhaps their most important asset in todays business world:
data. Palantirs mission has been and remains to develop flexible tools and services to provide
human-driven analysis of real-world data, with a focus on creating the worlds best user
experience for working with data. To achieve this, Palantir builds platforms for integrating,
managing, and securing data, on top of which it layers applications for fully interactive, human-
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services that allow businesses and government to run their businesses in a way that corresponds
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Businesses and government use Palantirs software to interpret and visualize large
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quantities of information from various sources. For example, businesses use Palantirs software
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to analyze their internal and market data to better understand consumer trends, and government
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agencies use Palantirs software to analyze intelligence data to better understand emerging
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threats.
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Palantirs success is due in part to its early recognition that many organizations are
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traditionally unable to leverage insights from their internal data because the data is held in
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separate silos that are often disconnected and have different access, security controls, and privacy
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containerized, unrelated unitsbusinesses and government cannot fully realize the potential of
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that data. Palantir provides software solutions that avoid this problem, allowing users to run their
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products are used to fuse and analyze customer data across platforms and sources and enable
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secure collaboration among analysts, while protecting data privacy and security.
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Thus, Palantirs
and development. Palantir spends millions of dollars each year to expand its business and seek
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COMPLAINT
out new opportunitiesand to stay ahead of the curve and atop the industry. This research and
development investment involves both creating new software, technologies and processes as well
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Initial funding for Palantir came from a variety of sources, including the
companys founders who remain with Palantir today as shareholders of common shares of
Palantir stock. Abramowitz, through KT4 and other entities he controls, was an early investor in
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Through the years, Abramowitz was involved with the business of Palantir.
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Rather than acting as a passive investor, he became a regular fixture at Palantir. He established
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relationships with the companys founders, officers, and employees. As a result, he was viewed
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as a trusted figure by the company, including its several founders and senior employees.
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Abramowitz fostered these relationships of confidence and held himself out as a friend of Palantir
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whose interests were completely aligned with the company. He made clear that he could be
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Indeed, Abramowitz spent so much time at Palantir that in 2014 he asked for an
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office. Between 2010 and 2015, Abramowitz visited Palantir offices over thirty times. When
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Abramowitz had questions about Palantirs business, including financial information, that were
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relevant to his status as a shareholder and trusted advisor to the company, he was provided with
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the information.
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several occasions, Palantir provided information to Abramowitz about concepts for new
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technology and/or new use cases for existing technology that Palantir had spent significant time
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and resources researching, developing and testing. Palantir always provided any information to
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Abramowitz with the express and reasonable expectation that Abramowitz would maintain its
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confidentiality and would never pass Palantirs ideas off as his own or use the information to
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COMPLAINT
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Abramowitz, Palantir also protected its confidential information and trade secrets through written
agreements.
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In
an
August
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2012
Preferred
Stock
Transfer
Agreement,
Abramowitz agreed to keep confidential and refrain from using or disclosing all agreements,
documents and other information regarding the Company or its securityholders provided or made
at 7.) Abramowitz renewed that agreement in a June 17, 2015 Preferred Stock Transfer
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In a June 17, 2015 Preferred Stock Transfer Agreement, KT4 similarly agreed to
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keep confidential and refrain from using or disclosing all agreements, documents and other
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In addition, during at least one of his visits to Palantir, on July 12, 2014,
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Abramowitz executed an NDA (the July 2014 NDA) covering Proprietary Information,
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which is defined in the NDA as non-public business, technical or other information, materials
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and/or ideas of Palantir [including] anything you learn or discover as a result of exposure to or
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analysis of any Proprietary Information. The NDA expressly forbids Abramowitz from using or
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discover Palantir trade secrets and convert them to his own use and profit. In furtherance of his
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scheme, during 2014 alone, Abramowitz was in contact with Palantir employees at least 34 times
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and visited Palantir facilities at least 20 times. Pursuant to his scheme, Abramowitz violated the
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COMPLAINT
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The first occasion of which Palantir is aware involves a Palantir idea concerning
clinical trials of drugs. Palantir had been working hard since 2011 on the best way to enter the
clinical trial space, including using Palantirs technology and data analytics services to improve
the conduct of clinical trials of prescription drugs by pharmaceutical companies and academic
institutions.
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Palantirs work in the field of clinical trials has been extensive, and the processes
and systems developed through that work were important company trade secrets. As part of its
research and development work, Palantir employees created white papers and presentations
describing the ideas and projects they were working on. Palantir also signed on customers to help
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drive the project from the research side into the market.
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Abramowitz learned from Palantir about Palantirs work in the area of clinical
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trials and, in February 2014, sought to broker a deal between Palantir and a customer to take
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something to market. Through his conversations with Palantir on the subject and the confidential
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access Palantir granted him to documents describing Palantirs research and development work,
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Abramowitz learned the details of the work Palantir had been doing in the area for years.
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Abramowitz misappropriated Palantirs inventions in this space and has attempted to patent them
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as his own.
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Provisional Application No. 62/072,368 with the United States Patent and Trademark Office
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(USPTO) seeking to patent the idea developed by Palantir and explained to Abramowitz in
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confidence. The application falsely identifies Abramowitz as the inventor, includes no mention
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In the second occurrence where Palantir knows Abramowitz abused his position of
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trust to further his scheme, Abramowitz participated in discussions about an idea for using
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Palantirs cyber security technology to improve the ability of insurance companies to provide
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insurance to retailers and other institutions against the potential harm caused by data breaches and
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other cybercrimes.
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COMPLAINT
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expressed interest in the concept and requested additional information, the Palantir executive
arranged for Abramowitz to speak with another Palantir executive, who sent Abramowitz some
information on the idea via email and invited Abramowitz to meet with him at Palantirs offices
executive described two related concepts that Palantir had developed relating to cyber security
insurance and the use of customer consortia to improve cyber security, as well as the Palantir
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When Abramowitz
During his June 2014 meeting with Abramowitz, the second Palantir
When Abramowitz next met with Palantir on the subject, he indicated he was
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interested in setting up a Palantir subsidiary that he would run to perform the insurance-related
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function Palantir had revealed to him, further confirming that his participation in the discussions
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suggestion.
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Application No. 62/066,716 at the USPTO attempting to patent the ideas he learned about in
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confidence through his conversations with Palantir executives and claiming to be the inventions
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sole owner and inventor. To read Abramowitzs application, one would never suspect Palantir
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had anything to do with the idea at all, as Abramowitz fails to mention Palantir and does not
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own patent application on the invention in February 2014, months before Abramowitz learned of
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the idea from Palantir. That application resulted in United States Patent No. 9009827 (the '827
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Palantirs valid patent and Abramowitzs application are stunning. Even a cursory reading of the
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abstract of the '827 Patent issued to Palantir and the application filed by Abramowitz reveals that
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they are the same inventionone which Abramowitz misappropriated from Palantir.
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COMPLAINT
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applications within ten days of one another seeking to secure sole inventorship over ideas he
misappropriate Palantirs ideas in at least one more, third area. After discussions with Palantir
employees concerning Palantirs work on adapting its data analysis technology for use in oil and
gas exploration, Abramowitz filed Provisional Application No. 62/094,888 with the USPTO,
seeking to patent as sole owner and inventor the ideas he learned from Palantir concerning
Palantirs work in this area. As with his other applications described above, Abramowitz filed the
application without Palantirs knowledge or consent and failed to credit Palantir or its employees
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in any way.
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trusted investor at Palantir in an attempt to profit at Palantirs expense by taking multiple ideas
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from Palantir and attempting to patent them as his own. Although, on information and belief,
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Abramowitz does not have the resources, technology, or experience to market the ideas
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effectively, he could attempt to use the patent applications or any issued patents to hold Palantir
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hostage in exchange for royalties. Abramowitzs actions are causing Palantir irreparable harm,
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and Palantir is therefore separately seeking to have Abramowitzs patent applications denied by
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the USPTO.
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The patent applications are not the only indication that Abramowitz has
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company name is inspired by the seeing stones referenced in The Lord of the Rings. Without
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Palantirs knowledge, Abramowitz filed for a trademark on the mark Shire, which is also
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referenced in The Lord of the Rings as the place where one of the main characters lives. It is
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clear that Abramowitz has filed this trademark application in an attempt to further improperly
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Furthermore, Abramowitz has filed this trademark application with an intent to use
the mark in connection with underwriting and administration of cyber liability insurance;
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COMPLAINT
underwriting and administration of cyber security insurance; insurance brokerage in the field of
cyber liability and cyber security insurance. He has claimed he intends to use the mark for the
aforementioned goods and services despite knowing that the aforementioned goods and services
are services offered by, or intended to be offered by, Palantir, from whom he misappropriated
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Williams & Connolly LLP, sent Palantir a letter (the Demand Letter) demanding information
pursuant to the Investors Rights Agreement (as amended most recently on September 1, 2016,
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the IRA). Under the February 15, 2008 version of the IRA (the February IRA) invoked by
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Abramowitz in his letter, and the July 8, 2015 version in effect at the time Abramowitz sent his
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letter (the July IRA), the agreement granted certain rights to receive information from Palantir
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to anyone who was a Major Investor in Palantir, defined in Section 2.1 of the IRA as any
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investor that holds at least 5,000,000 shares of certain types of Palantir stock.
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demands that Palantir produce documents and provide information to its counsel pursuant to
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Sections 2.1 and 2.2 of the February IRA. Neither IRA, however, provides any right for counsel
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its trade secrets, property (including physical locations, intellectual property, and network
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confidential information is not generally known to the public and provides actual and potential
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economic value to Palantir from not being generally known to the public or to Palantirs
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competitors.
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43.
This
Palantir employs both technical and physical safety measures to maintain the
security of its property and confidential information. Among other things, Palantir restricts
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COMPLAINT
employees access to sensitive internal information such that individual employees can only
access such data after obtaining appropriate authorization and only to the extent necessary to
perform their jobs. Additionally, Palantir employs a multitude of technical security measures to
protect its systems and networks, including, among other methods: intrusion detection systems,
network monitoring tools, anti-malware software, network firewalls, and whole disk encryption
of employee computers, among other measures. Palantirs network and security systems are also
continually monitored for potential security risks. To secure access to information and data no
matter where employees are, Palantir uses and requires complex password requirements and two-
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also highly restricted. Palantir employees must use electronic badges to access Palantir facilities.
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Access to certain sensitive areas of Palantirs facilities is further restricted to a small subset of
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Palantir employees with a specific need for access (including, for example, Palantir facilities
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containing network servers and security equipment, among others). Visitors must be invited to
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Palantir facilities, must sign in and wear a visitor badge and are escorted at all times. In addition,
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certain areas of Palantirs facilities are off limits to visitors, and Palantir deploys security guards
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Palantir also implements numerous measures and policies to ensure that its
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employees safeguard the confidentiality and security of its trade secrets and sensitive and
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employment background checks for all new employees and also requires legal training for new
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Palantir and Major Investors Amend the IRA to Protect Palantir, its Employees, and
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trust and misappropriating its trade secretsand fearing more such betrayals and breaches of
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COMPLAINT
confidence that remain undiscoveredPalantir could no longer trust Abramowitz with its
confidential information, including the information demanded by KT4 in the Demand Letter.
47.
other shareholdersfrom the malicious acts of Defendants, on September 1, 2016, Palantir and a
group of its Major Investors holding a majority of the Registrable Securities held by Major
Investors invoked their rights under Section 3.7 of the July IRA to amend the agreement (the
Amendment). Even assuming KT4 was a Major Investor with rights under Sections 2.1 and 2.2
of the July IRA, which Palantir does not concede, KT4 has no such rights under the current IRA,
and the Amendment is expressly retroactive in its effect, as permitted by Section 3.7.
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48.
Palantir did not take this action lightly, but after receiving the Demand Letter and
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noting the nefarious activities of Defendants through their access as investors, Palantir determined
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that it was necessary to act to protect itself and others from the harmful actions of Defendants.
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Palantir regularly and frequently works with investors, upon request, to provide relevant
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As it has done in responding to Abramowitzs reasonable questions in the past, Palantir stands
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ready to do the same with KT4 upon a showing that such requests are being made in good faith
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49.
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Palantirs confidential and proprietary information and trade secrets as well as his co-opting of
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Palantirs work developing technology and ideas and subsequently passing them off as his own,
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Palantir has been and will continue to be injured absent equitable relief.
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COMPLAINT
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51.
Palantir hereby realleges, as if set forth fully herein, the allegations of paragraphs 1
through 50.
52.
Defendants contracts with Palantir, including, inter alia, the Transfer Agreements
and the July 2014 NDA (the Confidentiality Contracts), imposed a contractual obligation on
Defendants investments in Palantir, Abramowitzs visits to Palantirs offices, and his discussions
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contract and all conditions precedent to its enforcement have been performed by Palantir.
54.
The July 2014 NDA, signed by Abramowitz, is a valid contract and all conditions
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confidence, and not to use, except for the benefit of the Company, any information they obtain or
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56.
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information and ideas he learned from Palantir employees to file patent applications listing
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himself as sole inventor of Palantirs ideas that he learned in confidence, as well as a trademark
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application on Shire.
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57.
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been harmed and is being forced to take expensive steps to reduce and mitigate that harm,
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58.
In addition to equitable relief, Palantir demands monetary damages, fees and costs,
where allowed.
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COMPLAINT
(Breach of the Implied Covenant of Good Faith and Fair Dealing Against All Defendants)
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59.
Plaintiff repeats and realleges paragraphs 1 through 58 above as though fully set
forth herein.
60.
California law implies a covenant of good faith and fair dealing in all contracts.
61.
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contract and all conditions precedent to its enforcement have been performed by Palantir.
62.
The July 2014 NDA, signed by Abramowitz, is a valid contract and all conditions
Defendants have unfairly interfered with Plaintiffs right to receive the benefit of
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the Transfer Agreements and July 2014 NDA by, among other things, misappropriating and using
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Plaintiffs proprietary, confidential, and trade secret information and falsely claiming to have
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64.
Defendants have breached and violated its implied covenant of good faith and fair
dealing.
65.
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66.
Palantir hereby realleges, as if set forth fully herein, the allegations of paragraphs 1
through 65.
67.
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including those concerning use of data analysis in the cyber security insurance, clinical trial and
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natural resources exploration contexts, constitute protectable trade secrets as set forth in
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68.
value, actual or potential, from not being generally known to the public or to other persons who
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COMPLAINT
can obtain economic value from their disclosure or use as set forth in California Civil Code
3426.1(d)(1).
69.
Palantirs confidential and proprietary information is the subject of efforts that are
reasonable under the circumstances to maintain their secrecy as set forth in California Civil Code
3426.1(d)(2).
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70.
Palantir did not consent to the use of any of its trade secrets by anyone other than
when, inter alia, he filed patent and trademark applications claiming inventorship and ownership
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of Palantirs ideas. Palantir is informed and believes that Abramowitz has used Palantirs trade
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72.
Palantir also requests that the court take affirmative acts to protect Palantirs trade
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secrets, as set forth in California Civil Code 3426.2(c), including ordering an inspection of
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Abramowitzs personal computer(s), USB drives, email accounts, cloud storage accounts and
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other sources and equipment by a forensics expert to determine whether Palantirs trade secrets
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were wrongfully taken and/or disseminated to others, and to ensure that no trade secrets
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belonging to Palantir remain saved on those systems; and issue a writ of possession, a preliminary
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injunction, and a permanent injunction ordering the return of Palantirs confidential information
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74.
In addition to equitable relief, Palantir demands monetary damages, fees and costs,
where allowed.
75.
Abramowitzs conduct as alleged herein was willful, malicious and wanton, and
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undertaken for the purpose of injuring or causing injury to Palantir. Palantir seeks exemplary and
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COMPLAINT
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Palantir hereby realleges, as if set forth fully herein, the allegations of paragraphs 1
through 75.
77.
There presently exists a real and actual controversy between Palantir and KT4
regarding whether KT4 is entitled under the IRA to the information sought through the Demand
Letter.
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78.
KT4 maintains that it is entitled to information under Sections 2.1 and 2.2 of the
IRA, and Palantir maintains that KT4 is not a Major Investor under the IRA, and therefore has
no such right.
79.
Defendants have acted with unclean hands by, among other things,
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controversy between the parties. Palantir therefore specifically requests a judgment declaring that
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KT4 has no right to any information pursuant to Sections 2.1 or 2.2 of the IRA.
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Cal. Bus. & Prof. Code Section 17200 et seq. Against All Defendants)
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81.
Defendants have engaged in (and continues to engage in) the unlawful, fraudulent,
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and unfair business acts and practices described throughout this Complaint in violation of
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Californias Unfair Competition Law (the UCL), California Business and Professions Code,
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83.
Defendants business acts and practices were unlawful under the UCL because
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they resulted in the violations of state common law described herein, including breach of contract
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and breach of the implied covenant of good faith and fair dealing.
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COMPLAINT
84.
person would likely be deceived by Defendants false statements and claims, including that they
85.
Defendants business acts and practices are unfair because the harm suffered by
Palantir described herein outweighs any justification that Defendants may assert for engaging in
those acts and practices. Moreover, Palantir could not have avoided the harm it suffered as a
result of Defendants unfair acts and practices because Defendants made every effort to obscure
and conceal from Palantir the existence and extent of its harmful acts and practices.
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86.
Defendants unlawful, unfair and fraudulent business acts and practices were
violations of the UCL. Any such injunction will benefit Plaintiff and the general public.
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PRAYER FOR RELIEF
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1.
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Judgment in favor of Palantir and against all Defendants on all of Palantirs claims
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their officers, agents, servants, employees, and all persons acting in concert or participation with
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them from:
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a.
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b.
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COMPLAINT