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Battle for Hotline hits the courts

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THE fate of a young software developer and that of his father's business hangs in the balance as a Victorian Supreme Court hearing into alleged misconduct opened in Melbourne last week.

At issue is the rights to a software program named Hotline and the underlying class libraries, known as App Warrior.

Hotline is a communications tool for the Apple Macintosh that circumvents the World Wide Web in allowing users around the world to share and publish information.

Lawyers for Canadian Internet software company, Hotline Communications or HCL, allege Adam Hinkley on 4 March last year stole confidential proprietary intellectual property and returned to Australia. The plaintiffs further allege 20-year old Hinkley, a resident of an outer suburb of Melbourne, sought to destroy the company by encrypting source code left on its PCs and shutting down its connection to the Internet. They seek damages arising out of the harm this alleged breach of fiduciary duty caused their business.

In a fiery flurry of accusations before Justice Marilyn Warren, barrister for the plaintiffs, Simon Wilson QC, characterised the defendants as ``liars, ``dishonest and ``rapists of the company. Adam's father, Paul, and his company, Meta Consultants, are co-defendants.

``Mr Adam Hinkley left Canada like a thief in the night with the material, Wilson told the court. ``They have proven themselves to be untrustworthy.

``They are people who have proven to be simply dishonest. They are prepared to say and do anything that will give them the source code in the meantime.

The barrister for the defendants, Richard Kendall, told the court Hotline Communications persuaded Adam Hinkley to go to Canada and work on the program there. ``They took his intellectual property.

In a shock admission, Kendall agreed that Mr Adam Hinkley's actions in leaving Canada were ``inappropriate.

``There may have been some inappropriate and wrongful conduct on the part of Adam Hinkley, Kendall told the court. ``What he did was not an appropriate response to the contractual problems he was faced with.

But he said it was mitigated by frustration with the Canadian partners.

Kendall said venture capitalist Austin Page and business manager Jason Roks refused to provide the $C500,000 ($A526,700) in backing they promised when a shareholders' agreement was signed six months earlier.

The defendants seek the return of items confiscated during the execution of an Anton Piller search and seizure order on 11 September last year.

``Things were taken that weren't authorised to be taken, Kendall said. ``This isn't a search warrant, although people in public would see it that way. It's draconian.

HCL alleges these prove after Mr Adam Hinkley left Canada he continued to work illegally on the Hotline software program and his father's program, eText.

Kendall argued that HCL's lawyers also took an unrelated programming tool named Paradox or PXB, on which eText is built, and without which development cannot proceed. There was evidence of an Internet chat transcript that alleges Adam Hinkley admitted publicly that Paradox was AppWarrior.

``Paradox is a substantial copy of the AppWarrior software so that's lie number two in that matter, Wilson argued. ``It is unlikely Mr Adam Hinkley could have written Paradox from scratch... without having to rely on AppWarrior.

The Hinkleys want HCL to provide a bond in case it loses at trial - a demand rejected by the plaintiffs' lawyers. ``If any part of its ($300,000) working capital is taken from it, (HCL) will be unable to prosecute its case, Wilson pleaded.

Wilson also accused Paul Hinkley of using his son to advance himself. ``Mr Paul Hinkley is the man with the son on the end of the puppet strings, Wilson said.

In a detailed exposition of case law and the Copyright Act, Kendall argued Paul Hinkley had an implied oral license to use the AppWarrior libraries on a non-exclusive basis that pre-dated a shareholders agreement with HCL, a claim disputed by the plaintiffs.

``Mr Paul Hinkley didn't need (a licence), Meta (his company) didn't need it, Kendall told Justice Warren. ``The party that needed a license to scale down (on the defendant) was the plaintiff.

HCL has offered to upgrade Paul Hinkley's software at no charge provided he did not get the source code. This was countered by an offer that the source code be delivered to Paul Hinkley for him to upgrade his own software but would not be used or disseminated for any other purpose. The Hinkleys also pledged not to publicise the matter.

Hotline servers and Web sites have carried discussion about the case and the fate of its creator, which is harming HCL's reputation.

Wilson said there was a ``strong prima facie case for contempt of court, because Adam's mother, Meg Lehmann, set up a support Web site to collect money for a legal fighting fund.

He said it would mean the end of HCL if the Hinkleys got the source code.

``No one's going to invest in a company that doesn't have exclusive control of its own property, Wilson said.

``If they get control of the source code they will do everything in their power to broadcast through the Net (that) we are no longer the company with the source code, he said.

Also in court, in a related but separate action, was counsel for Melbourne company, A2B Telecommunications, which alleges AppWarrior may belong to it.

Before commencing Hotline, Adam Hinkley was hired by A2B to write software code while he was still a teenager. In a rare display of agreement, both HCL's and Hinkley's lawyers expressed concern that a third party might lay a claim. A2B's application was held out until the matter of Hotline v Hinkley is resolved.

The case was set to continue yesterday, with a judgment regarding a possible trial date to be determined.