Rocky Linux backer CIQ rejects lawsuit's claims it was founded on stolen IP

A recently unsealed lawsuit filed in the US by HPC software provider Sylabs accuses rival outfit Ctrl IQ (CIQ) and its founder Greg Kurtzer of violating Sylab's trade secrets in order to start its business, and of filing its own patents based on that technology.

The federal civil case was filed in the District Court for the Northern District of California under case number 5:23-cv-00849 in February, with the judge unsealing the complaint in July. The accusations are being rejected by CIQ and Kurtzer.

Sylabs is a provider of software and services for high performance compute (HPC) environments, chiefly focused around container runtime technology. Kurtzer was formerly CEO at Sylabs, but left in March 2020 to found what would become CIQ, a company focused on "enterprise, hyper-scale, cloud and HPC technologies necessary for performance-intensive workflows."

CIQ is also known as a sponsor of Rocky Linux, a community build of Red Hat Enterprise Linux.

Sylabs' business is based around Singularity, an open source container platform that can be regarded as the HPC alternative to Docker. Like many other companies, however, it combines this with other software and services to create products it can bill customers for, notably SingularityPRO. Some of these extra software tools are what Sylabs is suing CIQ over.

In court documents seen by The Register, Sylabs alleges that Kurtzer and other defendants who were also employees at the company, commenced a mass resignation which the complaint describes as "coordinated" in March 2020. It goes on to allege that before leaving, some of the defendants accessed Sylabs servers and downloaded trade secrets and IP relating to its products and business proposals. The complaint lists several allegations of trade secret breaches, a civil conspiracy claim, an unjust enrichment claim; as well alleging violation of the California Unfair Trade Practices Act, among others.

The suit accuses Kurtzer himself of releasing Fuzzball, a cloud native service for workflow management and orchestration in HPC clusters, as open source technology so that CIQ would afterwards be able to use it without having to pay for it.

Sylabs claims that it developed Fuzzball internally as closed-source value-added technology for managing container deployments.

Sylabs goes on to allege that CIQ "fraudulently" applied for US patents on IP in both Fuzzball and Armored Containers, the latter being technology that provides increased security for container deployments, claiming them as its own.

Sylabs alleges that in both cases, it has evidence to show the technology was under development at Sylabs in mid-2019, more than a year before it alleges the IP was stolen and more than two years prior to the issuance date of the patents.

Kurtzer is also accused by Sylabs of downloading multiple documents which it alleged were relating to sales opportunities from the company's servers, and alleges he then arranged for all sales inquiries and purchase requests to be held until April 1, 2020, when he would no longer be employed by Sylabs, directing those sales inquiries and purchase requests to his personal email accounts instead.

Another defendant, Matthew Hayden, is claimed to have downloaded Sylabs’ Small Business Innovation Research (SBIR) proposal and its work relating to Sylabs' Singularity Image Format (SIF) and Armored Containers technology in use with the National Security Agency.

Two other companies are additionally named in the court filing: OpenDrives, an enterprise storage management outfit; and IAG Capital Partners. They are said to have invested in CIQ during the timeframe in question, and are essentially accused of being aware of and benefiting from what it is alleged CIQ was doing.

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In a statement, the attorney handling the case for Sylabs, Peter D Lepiscopo of Lepiscopo & Associates, told us: "As alleged in the complaint, Gregory Kurtzer and his co-conspirators engaged in cyber-theft of Sylabs' intellectual property, trade secrets, corporate secrets, confidential employee information and files, and customer and vendor files in order to launch his company, CIQ."

"To add insult to injury of the Open Source Community, Mr Kurtzer and his co-conspirators published Sylabs' intellectual property to open source – in the law this is called cyber destruction – then proceeded to use that IP as the basis for CIQ's products and for raising $33 million in capital, making profits, and unlawfully procuring US patents."

CIQ disputes all of the allegations, and says the company was founded on independently developed open source technology.

The company's attorney, Neel Chatterjee of Goodwin Procter LLP, told us in a response to Sylabs' claims that: "Sylabs is bitter that CIQ is experiencing success and it is not. The allegations in the complaint are meritless. CIQ is the owner of its pioneering technology, and Sylabs knows it."

Chatterjee added that: "Sylabs knew Mr Kurtzer was leaving the company, signed an agreement acknowledging that he started his new company with independently developed and open sourced technology, and agreed to waive any potential claims it could have against him and the other CIQ founders. We look forward to responding to the baseless allegations in court."

The plaintiff is seeking a jury trial with damages to be determined. ®