Qualia accuses title startup Settlor of stealing trade secrets

Closing software provider Qualia is accusing a former employee and startup title production software firm Settlor of stealing trade secrets.

In a lawsuit filed on Tuesday in U.S. District Court in Denver, Qualia claims that its former senior manager of product at Resware Krista Myers, who is now a product manager at Settlor, secretly stole data from Qualia before she resigned from her position. The suit alleges that Myers then uploaded these files onto Settlor’s computer systems and used them to “unfairly compete against Qualia.”

Qualia claims that Myers stole roughly 900 files, which the firm said included “the plans for scale-up of ResWare, the software itself, key customer contacts, lists of actual and potential customers, specifications of future product features, customer experience and feedback data, research regarding new software upgrades and features, historic and planned customer pricing methodologies, market research and data, product roadmap documentation, and customer facing documentation.”

The plaintiff also states that as the former leader of the Resware team, Myers knew the value of the information she took.

Myers joined Qualia in 2021 through the firm’s acquisition of Resware from Adeptive Software, which closed in December 2020. Prior to the acquisition, Myers had been with Adeptive for nearly 10 years. According to the complaint, Myers resigned from her position at Qualia in May 2023, after she “secretly” interviewed for an accepted the position at Settlor. Qualia also claims that during her time at the firm, Myers was “highly disgruntled with her employment” and that she “openly disagreed with Qualia’s business plans for what was formerly ResWare.”

Settlor is a spin-off of Land Title Guarantee Company, but Qualia noted in its complaint that it is still investigating how much governance and oversight the title firm has over its title production software startup.

In the complaint, Qualia states that is reached out to Myers on Sept. 1, 2023, to remind her of her agreement to keep any confidential information and trade secrets private, which it says she ignored. Nearly two months later, in late November 2023, Qualia said that it found forensic proof that Myers had stollen intellectual property and trade secrets.

The complaint states that upon this discovery, Qualia sent a letter to Settlor and Myers on Dec. 1, 2023, in an effort to resolve matter. In the letter, Qualia asks Myers and Settlor to disclose and return the allegedly stolen data and it cautioned them against deleting or altering the files. Despite this warning, Qualia claims that within hours of receiving the letter, Myers and Settlor deleted all of the Qualia data she had uploaded to the Settlor system.

“Based on the facts currently known and in connection with its ongoing investigation, Defendants Myers’ and Settlor’s actions were not inadvertent, but rather intentionally and willfully undertaken as part of a larger plan, to quickly build a competing product by cutting corners and illegally using stolen Qualia data to do it,” the complaint states.

Qualia is suing both Settlor and Myers for misappropriation of trade secrets, and it is suing Myers for breach of contract, and Settlor for intentional interference with a contract. The company is asking for damages and injunctive relief, and it is demanding a jury trial.

“Qualia respects the rights of its employees to leave and work elsewhere, but cannot permit former employees or competitors to steal and use our Intellectual Property. Qualia attempted for weeks to resolve its legitimate concerns that Ms. Myers, a former employee, and her new employer, Settlor, had taken, used and destroyed hundreds of Qualia’s confidential documents and proprietary materials. When it became clear that informal resolution was not progressing, Qualia was forced to file a lawsuit. We believe this lawsuit will reveal the full extent of the confidential materials taken, and the breadth of the improper use by Settlor and Ms. Myers once she began working at Settlor.”

The defendants in the suit did not return a request for comment.