FILED

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA

Alexandria Division
ELCOMSOFT, LTD.,

2013 JAN -i P * 33
CLERK US DISTRICT COURT ALEXANDRIA. VIRGINIA

Plaintiff,
v.

Civil Action No. * /3 Ov /&

ftUfi-JTW)
PASSCOVERY CO. LTD; ACCENTSOFT; DENIS GLADISH; and IVAN GOLUBEV,

Defendants.

COMPLAINT

1.

Plaintiff ElcomSoft, Ltd. ("ElcomSoft" or "Plaintiff), by its counsel, hereby

demands a jury trial and complains of Defendants Passcovcry Co. Ltd, Accentsoft, Denis Gladish, and Ivan Golubev (collectively, "Defendants") as follows:

NATURE OF THE ACTION

2.

This is an action for patent and copyright infringement arising under the patent

and copyright laws of the United States, including 35 U.S.C. 271, et seq. and 17 U.S.C. 101 el seq. ElcomSoft brings this action to enjoin infringement by Defendants and obtain damages resulting from Defendants' unauthorized use, sale, offer to sell, and/or importation into
the United States for subsequent use or sale of products, methods, processes, services, and/or systems that infringe one or more claims of ElcomSoft's United States Patent No. 7,787,629 (the '"629 Patent") and United States Patent No. 7,929,707 (the '"707 Patent"). In addition,

ElcomSoft seeks to enjoin and obtain damages resulting from Defendants' unauthorized
appropriation of ElcomSoft's copyrighted materials.
PARTIES

3.

Plaintiff ElcomSoft, Ltd. is a company organized under the laws of the Russian

Federation and located at Zvezdnyi Blvd. 21, Office 541, Moscow, 129085, Russian Federation.
4. On information and belief, Passcovery Co. Ltd. d/b/a Accentsoft, is a company

organized under the laws of the Russian Federation and located at Tovarischesky, 32-1-340
St.Petersburg SPb 193231 Russian Federation.
5. On information and belief, Accentsoft is a brand under which Passcovery Co.

Ltd., Danis Gladish, and Ivan Golubev, among others, conduct business transactions.
6.
7.

On information and belief, Denis Gladish is a resident of the Russian Federation.

On information and belief, Ivan Golubev is a resident of the Russian Federation

and located atNauki Ave., bid. 15-1 apt. 1008 Saint-Petersburg, 195220 Russian Federation.
8. On information and belief, Defendants develop, use, sell, offer to sell, or control,

directly or indirectly certain software products, including password recovery software products that are copied and/or derived from ElcomSoft's copyrighted materials and infringe on one more
claims of'629 Patent and '707 Patent.
JURISDICTION AND VENUE

9.

This Court has jurisdiction over the subject matter of this patent and copyright

infringement action pursuant to 28 U.S.C. 1331 because it arises under federal copyright law,
17 U.S.C. 101 et seq., 28 U.S.C. 1338(a), and the Patent Act, 35 U.S.C. 1, et seq.

10.

This Court has personal jurisdiction over Defendants because Defendants

consented to jurisdiction in the Commonwealth of Virginia in accordance with 17 U.S.C.

512(g)(3)(D), the Digital Millennium Copyright Act ("DMCA") counter notification procedure.
Additionally, upon information and belief, Defendants regularly conduct business in the Commonwealth of Virginia and have committed acts of patent and copyright infringement in the
Commonwealth of Virginia.

11.
1400(b).

Venue is proper in this judicial district pursuant to 28 U.S.C. 1391 and

FACTS

12.

ElcomSoft is a recognized leader in the development of cryptographic-related

software products and is well-known for its long-standing commitment to innovation and quality.
As such, ElcomSoft devotes significant resources to developing the highest quality products for
which ElcomSoft has acquired substantial goodwill. 13. ElcomSoft is the owner and developer of certain software products, including, but

not limited to "Advanced Archive Password Recovery," "Advanced Office Password Recovery,"

"Elcomsoft Distributed Password Recovery" and "Advanced PDF Password Recovery," and is

the owner of all intellectual property rights related thereto (collectively, the "Products").

14.

Specifically, ElcomSoft has registered copyrights with the United States

Copyright Office and possesses valid registrations for the source code and the software
associated with the Products. See Exhibits A-l to A-5.

15.

ElcomSoft is also the owner of (i) the United States Patent No. 7,787,629 (the

"'629 Patent"), issued on August 31, 2010, titled "USE OF GRAPHICS PROCESSORS AS

PARALLEL MATH CO-PROCESSORS FOR PASSWORD RECOVERY" (see Exhibit B-n

and (ii) the U.S. Patent No. 7,929,707 (the '"707 Patent," together with '629 Patent, the "Patents"), issued on April 19, 2011, titled "USE OF GRAPHICS PROCESSORS AS
PARALLEL MATH CO-PROCESSORS FOR PASSWORD RECOVERY" (see Exhibit B-2V

16.

ElcomSoft's Patents offer an approach to accelerated password recovery by,

among other things, utilizing the Graphical Processing Unit (GPU).

17.

The processes claimed under the Patents are an essential part of ElcomSoft's

Products and largely contribute to the success of ElcomSoft's Products in the market.
18. On or about June 1, 2003 ElcomSoft hired Defendant Ivan Golubev ("Golubev")

as a software developer pursuant to an employment agreement ("Employment Agreement"). See

Exhibit C. The Employment Agreement contained non-disclosure and confidentiality provisions.

Mat H2.2.

19.

During Defendant Golubev's employment with ElcomSoft, Defendant Golubev

had access to, worked on, and developed in part, the source code for ElcomSoft's Products as
well as the GPU-based acceleration of password recovery feature.

20.

While employed at ElcomSoft and without ElcomSoft's knowledge or

authorization, Defendant Golubev secretly founded Defendant Passcovery Co, Ltd. with
Defendant Denis Gladish ("Gladish").

21.

Defendant Passcovery Co. Ltd. ("Passcovery") develops, markets and distributes

password recovery software products in the United States and other countries which directly
compete with ElcomSoft's Products. See Exhibit D (the Passcovery website, last accessed on
December 31,2012).

22.

On or about December 31, 2009, Defendant Golubev unilaterally terminated his

employment with ElcomSoft.

23.

After unilaterally terminating his employment with ElcomSoft, Defendant

Golubev continued working for Defendant Passcovery.

24.

Soon after Defendant Golubev left ElcomSoft, Defendant Passcovery, where

Defendant Golubev was employed, released through its AccentSoft brand three software

applications titled "Accent OFFICE Password Recovery," "Accent ZIP Password Recovery,"
and "Accent RAR Password Recovery" (collectively, the "Infringing Products") that, upon

information and belief, are solely derived from and based on ElcomSoft's Products and related
source code.

25.

Currently, the Infringing Products are distributed and offered for sale in the

United States through Defendants' website located at http://www.passcovery.com ("Defendants'

Website") under the title "Passcovery Suite." See Exhibit D.

26.

In addition, Defendants market the Infringing Products via numerous distributors

and other websites owned by Defendants, including, without limitations, www.accentsoft.com

andwww.passcovery.com/password-recovery-software.

27.

Upon information and belief, the Infringing Products meet every limitation ofthe

claims setsforth in the '629 and the '707 patents and therefore infringe those patents.

28.

Upon information and belief, Defendants misappropriated ElcomSoft's

intellectual property, with which Defendant Golubev was intimately familiar.

29.

Specifically, Defendant Golubev misappropriated ElcomSoft's protected

technology not otherwise disclosed to the public, while employed at ElcomSoft, and

subsequently disclosed the same to Defendant Gladish and Defendant Passcovery in violation of,
among other things, the non-disclosure and confidentiality provisions of the Employment
Agreement. See Exhibit C at 112.2.

30.

Defendant Passcovery employed and continues to employ Defendant Golubev for

the purpose of acquiring an unfair competitive advantage over ElcomSoft by misappropriating

ElcomSoft's proprietary materials, including, without limitation, ElcomSoft's Products' source
code.

31.

Moreover, Defendant Passcovery knowingly employs Defendant Golubev in

violation of his obligations to ElcomSoft under the Employment Agreement and Defendant
Golubev's non-disclosure and confidentiality obligations contained therein. See Exhibit C at U
2.2.

32.

Upon information and belief, Defendants Gladish and Golubev knowingly

misappropriated ElcomSoft's Products and related technology, including without limitation, the
GPU based acceleration of password recovery feature and its underlying source code and
incorporated the source code into the Infringing Products.
33. On or about November 11, 2010, ElcomSoft sent a cease and desist letter to

Defendants setting forth its demands for Defendants to immediately cease their infringement of
ElcomSoft's intellectual property. See ExhibitE.

34.

Defendants ignored ElcomSoft's demands, failed to properly respond to

ElcomSoft, and continue their infringing activities by distributing, marketing and selling the

Infringing Products through various resellers and websites in the United Sates and other
countries.

35.

To prevent further damage to its intellectual property, ElcomSoft sent "take

down" notices to Google, Inc., SoftKey ZAO, CifNet, Inc. and Avangate BV pursuant to 17

U.S.C. 512 (c)(1)(C) ("DMCA Notices") in connection with Defendants' infringing activities.
See Exhibit F-l to F-3.

36.

On orabout September 23,2011, eight months after the DMCA Notices were sent

by ElcomSoft, Defendants provided "counter notification" pursuant to 17 U.S.C. 512(g)(3) thereby submitting themselves to the jurisdiction of the United States Federal District Courts for
the judicial districts where the service providers may be found. See Exhibit Gl to G3. 37. Upon information and belief, during the eight months prior to the filing of

Defendants' "counter notification" pursuant to 17 U.S.C. 512(g)(3), Defendants revised the

Infringing Products' source code in such way as to hide, conceal and mask the presence of
ElcomSoft's source code in the Infringing Products.

38.

On or about February 24, 2012, ElcomSoft again contacted Defendants' counsel

demanding that Defendants stop their infringing activities. See Exhibit H. Defendants have
refused to cease their infringing activities.

39.

Despite ElcomSoft's efforts to stop Defendants' infringing activities set forth in

the preceding paragraphs, Defendants continue to distribute the Infringing Products in violation
ofElcomSoft's proprietary rights, up to the time ofthe filing ofthis Complaint.
COUNTI

(Infringement ofU.S. Patents No. 7,787,629 and 7,929,707 under 35 U.S.C. 271)
40. ElcomSoft re-alleges the allegations contained in paragraphs 1 through 39 as
though fully and completely set forth herein.

41.

ElcomSoft is the owner of United States Patent No. 7,787,629 (the "'629 Patent"),

issued on August 31, 2010, titled "USE OF GRAPHICS PROCESSORS AS PARALLEL

MATH CO-PROCESSORS FOR PASSWORD RECOVERY" (attached hereto as Exhibit B-H.
42. ElcomSoft is the owner of United States Patent No. 7,929,707 (the "'707 Patent")

issued on April 19, 2011, titled "USE OF GRAPHICS PROCESSORS AS PARALLEL MATH
CO-PROCESSORS FOR PASSWORD RECOVERY" (attached hereto as Exhibit B-2\

43.

Defendants make, cause to be made, use, sell, offer for sale, and/or import

products, methods, systems, devices, and/or service, including but not limited to the Infringing
Products, that infringe, directly and/or indirectly, or which employ systems, components, and/or

steps that make use ofsystems orprocesses that infringe, directly and/or indirectly, one or more claims ofthe '629 patent and the '709 patent as part oftheir normal and intended operation in
the United States without the permission of, ormaking any compensation to, ElcomSoft.
44. ElcomSoft has been irreparably harmed by Defendants' infringement of

ElcomSoft's patents.

Defendants' ongoing, unauthorized, infringing use of ElcomSoft's

patented technologies threatens the value of this intellectual property because it results in
ElcomSoft's loss of its lawful patent rights to exclude others from making, using, selling,
offering to sell, and/or importing the patented inventions.
45. Defendants have knowingly, deliberately, intentionally, willfully, or wantonly

infringed the '629 and '709 patents and therefore ElcomSoft is entitled to receive enhanced
damages at the discretion of the Court.
46. ElcomSoft is entitled to recover damages to compensate for the infringement

pursuant to 35 U.S.C. 284, including without limitation, enhanced damages.

8

In addition,

ElcomSoft is entitled to recover its attorneys' fees pursuant to 35 U.S.C. 285 and is entitled to injunctive relief pursuant to 35 U.S.C. 283.
COUNT II

(Copyright Infringement under 17 U. S. C. 101 etseq.)

47.

ElcomSoft re-alleges the allegations contained in paragraphs 1 through 46 as

though fully and completely set forth herein.

48.

ElcomSoft is the legal owner ofthe United States copyrights to the source code

and the software ofthe Products that have been unlawfully infringed upon by Defendants.

49.

ElcomSoft has registered the copyrights with the Copyright Office and possesses

valid registrations for the copyrighted source code and the software program of the Products. See
Exhibits A-l to A-4.

50.

Upon information and belief, after March 2010, Defendants sold and distributed

the Infringing Products, which incorporated the ElcomSoft's Products' underlying source code,

thereby engaging in unauthorized distribution and misappropriation of ElcomSoft's copyrighted

material.

51.

These acts are an infringement ofthe exclusive rights granted to ElcomSoft under

17 U.S.C. 106.

52.

Defendants committed such infringement with the knowledge that the source code

and software ofthe Products was subject to valid copyright rights, and with the knowledge that it did not have authorization from ElcomSoft to incorporate the copyrighted source code in the

Infringing Products. Such infringement was thus "willful" within the meaning of 17 U. S. C.
504(c)(2).

53.

For acts of copyright infringement, ElcomSoft is entitled to recover from

Defendants damages pursuant to 17 U.S.C. 504. ElcomSoft reserves the right provided to it

under 17 U.S.C. 504 to make an election after all information is obtained and prior to issuance

offinal judgment in this matter between the receipt ofactual damages orstatutory damages as set
forth in 17 U.S.C. 504.

54.

ElcomSoft is also entitled to recover its attorney's fees and costs of suit pursuant

to 17 U.S.C. 505.
COUNT III

(Unjust Enrichment)

55.

ElcomSoft re-alleges the allegations contained in paragraphs 1 through 54 ofthis

Complaint as though fully and completely set forth herein.

56. As a result of the conduct described above, Defendants have been and will be

unjustly enriched at the expense of ElcomSoft.

Specifically, Defendants' illegal

misappropriation of ElcomSoft's proprietary technology, including, without limitation,

infringement of ElcomSoft's '629 and '709 patents, copyright infringement upon the Products as
described above and Golubev's violations ofhis non-disclosure and confidentiality obligations to

ElcomSoft under his Employment Agreement have enabled Defendants to be unjustly enriched at
an amount to be proven at trial.

57.

ElcomSoft is entitled to be compensated for Defendants' unjust enrichment in an

amount to be determined at trial, up to and including attorneys' fees, costs, and exemplary
damages.

10

COUNT IV

(Breach of Contract / Confidentiality Obligations)

58.

ElcomSoft re-alleges the allegations contained in paragraphs 1 through 58 ofthis

Complaint as though fully and completely set forth herein.

59. In exchange for valid consideration, Golubev entered in an Employment

Agreement with ElcomSoft. In that agreement, Golubev agreed that, among other things, he
would not disclose ElcomSoft's confidential proprietary information for three (3) years outside

ofhis employment with ElcomSoft without ElcomSoft's prior consent.

60. ElcomSoft has performed its obligations under the Employment Agreement.

61.

During his employment with ElcomSoft, Golubev had access to ElcomSoft's

confidential proprietary information.

Golubev learned of this confidential proprietary

information withinthe context of his relationship with ElcomSoft.

62.

Within three years of unilaterally terminating his employment with ElcomSoft,

used ElcomSoft's confidential proprietary information to develop products (including, without

limitation Infringing Products) designed to directly compete with ElcomSoft's products on

behalf of Defendant Passcovery.

63.

Specifically, Defendant Golubev used ElcomSoft's confidential proprietary

information or trade secrets in violation of the Employment Agreement to assist Defendant

Passcovery in developing at least three software applications distributed under the names
"Accent OFFICE Password Recovery," "Accent ZIP Password Recovery," and "Accent RAR
Password Recovery" (i.e. Infringing Products).

11

64.

Defendant Golubev's disclosure of ElcomSoft's confidential proprietary

information constitutes a material breach of Defendant Golubev's obligations under paragraph

2.2 of the Employment Agreement.

65.

As a consequence of Defendant Golubev's breach of Employment Agreement,

ElcomSoft has suffered and will continue to suffer substantial and irreparable harm and damages

if Defendant Golubev is not enjoined from using ElcomSoft's confidential or proprietary

information or trade secrets to assist Defendant Passcovery.

66.

ElcomSoft is also entitled to be compensated for Defendant Golubev's breach of

contract, at an amount to be determined at trial.

PRAYER FOR RELIEF

WHEREFORE, ElcomSoft respectfully requests the Court grant the following relief:

A.

An order declaring that the '629 patent is valid and enforceable against
Defendants;

B.

An order declaring that the '709 patent is valid and enforceable against
Defendants;

C.

An order declaring that Defendants have infringed, directly and indirectly,

ElcomSoft's '629 patent;

D.

An order declaring that Defendants have infringed, directly and indirectly,

ElcomSoft's '709 patent;

E.

An order declaring that Defendants' infringement of the '629 patent has been
willful;

12

F.

An order declaring that Defendants' infringement of the '709 patent has been
willful;

G.

Orders that preliminarily and permanently enjoin further infringement of the '629

patent by Defendants and their respective officers, agents, servants, employees,

attorneys, and allpersons inactive concert or participation therewith;

H.

Orders that preliminarily and permanently enjoin further infringement ofthe '709

patent by Defendants and their respective officers, agents, servants, employees,

attorneys, and all persons in active concert orparticipation therewith;
I. Orders that preliminarily and permanently enjoin further infringement

ElcomSoft's copyrights as described herein by Defendants and their respective

officers, agents, servants, employees, attorneys, and all persons in active concert
or participation therewith;

J.

An order declaring that Defendants account for and pay damages in an amount to be determined at trial, but not less than a reasonable royalty, to ElcomSoft for

Defendants' infringement of the '629 patent, and that such damages be trebled
pursuant to 35 U.S.C. 284;

K.

An order declaring that Defendants account for and pay damages in anamount to be determined at trial, but not less than a reasonable royalty, to ElcomSoft for

Defendants' infringement of the '709 patent, and that such damages be trebled
pursuant to 35 U.S.C. 284;

L.

An order granting preliminarily and permanently enjoining Defendant Golubev,

and anyone working in concert with Defendant Golubev, from disclosing or using
13

without authorization any ElcomSoft confidential or proprietary information or

trade secrets.

M.

An order awarding ElcomSoft its costs and attorneys' fees related to its filing and

pursuit of this matter, and such further reliefas may be appropriate including pre
judgment and post-judgment interest; N.
O.

An order awarding ElcomSoft exemplary damages; and

Such other and further relief as the Court may deem just and proper.

DATED this 8th day of January, 2013.

By:

L= R- A*\x~^
Kevin ft. Garden / Virginia Bar No. 30244 Attorneys for Plaintiff
ElcomSoft, Ltd.

International Legal Counsels, PC

901 N.Pitt St, Suite 325
Alexandria, VA 22314

Telephone: (703) 535-5565 Fax:(202)318-0723 kg@legal-counsels.com

14