Kenneth Kaufman of CFOWise Pays $220,000 for Admitted Copying and Violation of Federal Copyright Law

Federal Court rules to protect B2B CFO’s Intellectual Property, settlement ends lawsuit with former partner Kenneth Kaufman sued by B2B CFO for copyright infringement, Lanham Act violations, Federal RICO (Racketeering) violations, misappropriation of trade secrets, and breach of fiduciary duty.

PHOENIX–(BUSINESS WIRE) – In midst of widespread intellectual property misappropriation, Jerry L.  Mills and B2B CFO are pleased to announce the settlement of their  lawsuit against former partner Kenneth Kaufman and three of his entities, including CFOWise.

“By executing this Agreement, Defendant Kenneth A. Kaufman admits that  he copied the intellectual property of B2B CFO, LLC and B2B CFO  Partners, LLC, in violation of federal civil copyright law.”

Jerry Mills and B2B CFO filed the lawsuit in 2009 against Kenneth  Kaufman and three of his entities, including CFOWise, alleging  copyright infringement, Lanham Act violations, Federal RICO violations,  misappropriation of trade secrets, and breach of fiduciary duty.    Kaufman, who was a partner in the firm, left B2B CFO to form CFOWise  in 2007, but made the critical mistake of using copyrighted intellectual  property owned by B2B CFO in his CFOWise business. In agreeing to settle  the lawsuit, Kaufman not only paid $220,000 to B2B CFO, but he also  admitted to his improper conduct. His full admission states:

“By executing this Agreement, Defendant Kenneth A. Kaufman admits that  he copied the intellectual property of B2B CFO, LLC and B2B CFO Partners, LLC, in violation of federal civil copyright law.”   

Improper copying, like Kaufman’s, presents a growing problem in the United States. According to the United States International Trade Commission (USITC), a record high number of new intellectual property-related cases were filed during FY 2011. The vast majority of the investigations include patent infringement allegations, but complainants may also assert copyright, trademark, trade dress, trade secret or other intellectual property rights claims. The number of new section 337 investigations started in FY 2011 increased by 37 percent  from FY 2010. As seen in the data for the last decade, this is the  greatest number of new investigations instituted in any given year.

“We are pleased that the Federal Court upheld the validity of our intellectual property,” said Jerry L. Mills, founder and CEO of B2B CFO.  “Intellectual property misappropriation is a serious problem in this country and businesses need to know how to protect themselves and understand the legal process which is very complex and can be quite costly.”

According to Mills, the lawsuit provided an unprecedented learning opportunity and many chances to understand the complexities surrounding the laws and legal issues of intellectual property misappropriation. “I hope to use my experience and the knowledge I gained by fighting this battle to educate other entrepreneurs about protecting their business,”  said Mills.

Mills knows he’s not alone in the fight against IP misappropriation. The Bureau of Justice Statistics released an article written by Mark Motivans, Ph.D. showcasing the trend of this increasing problem. The statistics on enforcement of Federal intellectual property laws for 1994-2002 show clearly how this is a growing problem. The report,  available for purchase from the Bureau of Justice Statistics, summarizes  intellectual property legislation and nine-year trends and presents intellectual property trends in the number of suspects (both individuals  and organizations) referred to U.S. attorneys and defendants prosecuted, convicted, and sentenced. The report highlights include:

•  The number of suspects referred to U.S. attorneys with an IP misappropriation-related charge increased 26% from 1994-2002.
• From 1994 to 2002 the number of cases in which plaintiffs sought civil remedies related to patent, trademark, and copyright infringement increased 20% to 8,254.
• During 2002, 88% of defendants with IP offense as their most serious  offense were convicted.

“This clearly points to a much larger problem and I am willing to bet that the statistics for this current decade will be much higher,” added Mills. “Businesses, especially small and growing businesses like ours, are prime targets for intellectual property misappropriation and must take proper measures to protect their intellectual property and trade secrets.”

Mills is leveraging this development to send a clear message to business owners: “Do everything you can to protect your intellectual property. It is much easier and less expensive to hire attorneys to protect your property ahead of time than it is to go to court to litigate. Copyright  laws are very complicated. Businesses who find themselves faced with litigation will need to engage a specialized legal team to lead the lawsuit and/or a trial, a very expensive and time-consuming process. You  must be prepared that even those close to you, like a former partner or employee, can misappropriate your intellectual property and sell it for  money. This misappropriation might include information from websites,  training manuals, books, brochures and other important material.”

M. Martin Mercer, attorney, partner, and Executive Committee member of B2B CFO, said: “Contrary to common belief, copyrighted intellectual property is not actually ‘protected’ until a U.S. Federal court rules that both the intellectual property and the ‘copyright application’ are valid. Not only did the U.S. Federal Court rule that: ‘The Court find as a matter of law that the 2005 Manual is entitled to copyright protection,’ but Kaufman has fully admitted that he copied this federally protected property and has paid $220,000. Kaufman’s public  admission is an example of the consequences that occur to those who  misappropriate and misuse the intellectual property of B2B CFO.”

With intellectual property misappropriation and copyright infringement on the rise, the Department of Justice and other agencies are working to  improve protections and enforce intellectual property laws.

The Global Intellectual Property Center (GIPC) was established in 2007  as an affiliate of the U.S. Chamber of Commerce. Today, the GIPC is  leading a worldwide effort to champion intellectual property rights as vital to creating jobs, saving lives, advancing global economic growth,  and generating breakthrough solutions to global challenges.

“Intellectual property (IP) is a critical part of our economy,” said Mark Elliot, Executive Vice President for the U.S. Chamber of Commerce’s Global Intellectual Property Center. “In Arizona, IP-intensive  industries account for one third of the state’s private sector jobs,  employing more than 750,000 Americans. In the 21st Century, innovation and creativity will remain the driving forces behind America’s competitiveness and economic future. Neither can thrive without the strong IP rights—embodied in patents, copyrights, and trademarks. That is why these important rights must be constantly protected and promoted.” To learn more about the importance of IP and how it affects our daily lives, visit www.theglobalipcenter.com.

“I personally detest litigation,” said Mills. “But the copying of our  material was so blatant by Kaufman that we were forced to stop him and  CFOWise from their actions.”

Mills continued, “The admission by Kaufman of copying our intellectual property, violating federal copyright law and paying $220,000 speak for   themselves. Those who wrongfully copy the intellectual property of another cannot be allowed to prosper from their own wrongdoing. Kaufman is now a prime example of what should happen to those who choose to  misappropriate the intellectual property of another.”

Further information and details about the case are available upon request.

ABOUT B2B CFO

Headquartered in Phoenix, Ariz., the firm was founded in 1987 by Jerry  L. Mills who pioneered the “CFO for hire” concept. Today, B2B CFO is the nation’s largest CFO firm serving entrepreneurial, growth and mid-market  companies. The firm’s partners have an average of 25 years of experience and each individual partner is a senior level executive with a broad  range of expertise. Please visit online at www.B2BCFO.com  to find out more about the company and CFO Careers.