Case 3:06-cv-00145-PMP-VPC Document 26-2 Filed 05/15/06 Page 1 of 8

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Ronald J. Logar --State Bar No. 303

Eric Pulver--State Bar No. 7874
LAW OFFICE OF LOGAR & PULVER, PC
225 S. Arlington Ave., Ste. A
Reno , NV 89501
Tel: (775) 786-5040
Fax: (775) 786-7544

Michael J. Flynn, Mass. State Bar No.

Philip H. Stillman, California State Bar No. 152861
FLYNN & STILLMAN
224 Birmingham Drive, Suite 1A4
Cardiff, CA 92007
Tel: (888) 235-4279
Fax: (888) 235-4279

Admitted Pro Hac Vice

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Attorneys for Defendants DENNIS MONTGOMERY and MONTGOMERY FAMILY TRUST

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UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF NEVADA

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ETREPPID TECHNOLOGIES, INC., a

California corporation,

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Plaintiff,
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vs.
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DENNIS MONTGOMERY, an individual, )
MONTGOMERY FAMILY TRUST, a
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California Trust and DOES 1 THROUGH 20, )
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Defendants.
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_____________________________________ )
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AND RELATED COUNTERCLAIM
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_____________________________________ )

CASE NO.:

3:06-cv-00145-BES-VPC

DECLARATION OF DENNIS MONTGOMERY IN

SUPPORT OF MOTION TO VACATE
PRELIMINARY INJUNCTION

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Motion to Vacate Preliminary Injunction

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DECLARATION OF DENNIS MONTGOMERY

I, Dennis Montgomery, declare:

1.

I am over the age of 18 and a party to this action. I have personal knowledge of

the facts stated herein and if called as a witness, I could and would testify competently to them.

A.

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Background Of This Case.

2.

I have been a software programmer for more than 20 years. Germane to this proceeding,

I am the author of numerous copyrights, set forth in the Complaint, 8.

3.

In or about 1982, I developed certain pattern recognition and anomaly detection

software for which the U.S. Copyright Office granted a series of copyrights. Although those copyrights
were originally held in the name of two companies that I owned, Computermate, Inc. and Barrett Labs,
Inc., I received written assignments of those copyrights from each company to me, dated April 7, 1983
and August 11, 1987, copies of which is attached hereto as Exhibit 1.
4.

I subsequently assigned all of my rights, title and interest to these copyrights to the

Montgomery Family Trust, of which I am co-trustee.The Montgomery Family Trust (the Trust) is the
owner of Copyright Registration Nos. TXu-98-018, TXu-98-699, TXu-98-727, TXu-98-728,
TXu-98-731, TXu-117-868, TXu-119-540, TX-1-983-147, TX-1-992-867, TX-2-000-234,
TX-2-083-750 and TX-2-095-009 (the Copyrights). I have just learned that assignments were no
actually filed for these copyrights, and I am in the process of obtaining the certified assignments, and
will provide them and the registrations to the Court as soon as I (or my attorneys) receive them.
5.

After the registration of these copyrights, I began to develop derivative works based on

the pattern recognition technology originally copyrighted between 1982 and January 1987, particularly
during the 1993 -1996 time period, in the field of pattern recognition and anomaly detection.
Those uniquely important derivative works were fully developed prior to 1998 and are also the
exclusive property of the Trust.
6.

In or about 1997 and early 1998, I was introduced to defendant Warren Trepp, a very

wealthy investor who was Michael Milkens right hand man and head trader at Drexel Burnham,

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Lambert during the junk bond scandal. Trepp had supposedly left Drexel with over $200 million.
During those early meetings, I and Trepp spoke of a software compression technology that I had
developed which could be used to shrink feature-length movies and other types of files dramatically.
7.

In or about September 1998, I and defendant Trepp, formed Intrepid Technologies, LLC,

a Limited Liability Company. At the time of the formation of Intrepid Technologies and the execution
by Plaintiffs of the Contribution Agreement, Trepp orally and in writing promised me that I would be a
50% shareholder in Intrepid Technologies with Trepp. I believe that the representations Trepp made to
me at the time were knowingly false and part of his plan to defraud me of my technology and use that
technology without paying any fees and diluting my interest in the company. He further represented
that I would share equally with Trepp in the profits of the company. In reliance on these an dother
representations by Trepp, pursuant to a Contribution Agreement dated September 28, 1998, between
Trepp, the Trust and I, in exchange for a fifty percent interest in Intrepid Technologies, LLC to me, the
Trust contributed specific technology to Intrepid that is identified in paragraph 1.2.1 of the
Contribution Agreement. That paragraph specifically identifies the contributed technology as the
software compression technology contained on that certain Software Compression Engine
Development Program contained on CD No. 1. This was especially important to me because, as stated
above, the Trust owned other technology totally unrelated technology which are listed above.
Accordingly, Paragraph 1.3 of the Contribution Agreement states that the Trust is expressly not
contributing, transferring or conveying to Intrepid under this agreement or by any other means, nor is
Intrepid acquiring from [the Trust] any other tangible and intangible assets of the Trust or
Montgomery.
8.

Thus, pursuant to the express terms of the Contribution Agreement, Intrepid only

acquired the software compression technology contained on CD No. 1 and nothing else. In particular,
my and the Trusts pattern recognition and anomaly detection software were not part of the
software compression technology contained on CD No. 1 that is subject to the Contribution Agreement.
Moreover, the Contribution Agreement contains an integration clause. Since it is clear that we had

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discussed pattern recognition and anomaly detection at least nine months prior to entering into the
Contribution Agreement, it is equally clear that those two types of technology were not included in the
Contribution Agreement.
9.

Neither Trepp nor eTreppid acquired any rights to what is now referred to as my

pattern recognition and anomaly detection software. These programs are completely unrelated to
the software compression technology referred to in the Contribution Agreement, and were expressly
excluded. I have never, either on my own or as trustee of the Montgomery Family Trust, transferred or
assigned any of that technology to eTreppid.
10.

From September 1998 through December 2003, I was paid by eTreppid Technologies

solely as an independent contractor and received Form 1099's. I received no employee benefits, had
separate health insurance, often worked at home, and worked on my own projects as I saw fit, other
than working to refine the software compression technology that I had transferred to eTreppid in return
for 50% of the company.
11.

During that time period, Trepp began to dilute my shares in eTreppid f/k/a Intrepid

Technologies, and used his majority interest in Intrepid to obtain favorable treatment for himself as a
majority shareholder at my expense. In particular, he would loan me money, then sell my shares to
friends of his and make me pay him back virtually all of the money that he bought my shares with.
While my shares were devalued, his and those of his friends were increased in value.
12.

As of January 2004, I became an employee of eTreppid. Moreover, after a successful

test for the U.S. Government in December 2003, where I used my existing pattern recognition and
anomaly detection software in a new and unique test for the military, eTreppid Technologies began
sublicensing the Trusts pattern recognition and anomaly detection software that I had developed
prior to September 1998 to various entities, including the United States government and collecting
licensing fees for the sublicenses. I repeatedly told Trepp that the technology was the Trusts and the
Trusts alone, and Trepp repeatedly promised to pay me for the technology; however, eTreppid failed
to do so. eTreppid was never granted a license to the copyrights or derivative works prepared

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therefrom by, and failed to pay royalties to, the Trust.

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copyrights or the derivative works prepared from those copyrights as required by 17 U.S.C. 204(a).
Although the Trust denies that it granted any oral nonexclusive license to eTreppid, to the extent that
the defendants claim some sort of implied or oral license, it was terminated by the Trust on January 19,
2006, orally and by letter dated January 25, 2006. eTreppid has failed to and refuses to cease
exploitation of the Trusts intellectual property and has so far refused to account for any profits
obtained as a result of its unlicensed exploitation of the copyrights.

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After I and Mr. Trepp had a sharp dispute over eTreppids failure to pay me to use my

technology, I left the company and was terminated by Trepp. At the time that I left eTreppid,
eTreppid was still licensing my technology to the U.S. Government, who continued to purchase certain
licenses for the use of classified technology that I had developed.

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At no time did any of the Defendants have a written license to exploit the Trusts

15.

Moreover, because of the highly confidential and sensitive nature of the intellectual

property at issue in this litigation, the exact nature of this technology cannot be disclosed without
violating secrecy oaths signed by me. In addition, the intellectual property was protected from reverse
engineering and/or tampering by sophisticated safeguards. As a result of eTreppids improper attempts
to obtain and reverse engineer the Trusts intellectual property without payment therefore, Defendants
have, upon information and belief, destroyed part of the source code of my intellectual property,
further harming the Trust.
B.

The Software At Issue In This Case.

16.

In the state court, eTreppid has made numerous blanket statements about what Trepp

calls the eTreppid Source Code. To Trepp, this phrase means any software that was or is used by
eTreppid, apparently regardless of the legal niceties of copyright and patent. Accordingly, it is
important to note what this case actually involves. As set forth above, it is clear that the software
compression technology described specifically and clearly in the Contribution Agreement was
transferred to eTreppid. That software, although invented by me prior to meeting Trepp, belonged to

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eTreppid.
17.

However, the only technology involved in this case is a much narrower and specific one

software created by me, never transferred to eTreppid, which does pattern recognition and
anomaly detection for use in video and imagery analysis. The most current version of the software
(at least as of when I left eTreppid and before is was damaged) is merely a more sophisticated version
(written for current computers) of the early 1982 copyrights (written originally for Hewlett Packard
computers) now owned by the Trust. All rights to this technology were transferred to the Montgomery
Family Trust, which holds all the intellectual property rights to my inventions.
18.

Since the programs were stored in part on eTreppid hard drives and eTreppid

Technologies has transferred various portions of the code from one computer hard drive to another,
eTreppid clearly has had access to the works and was and is using them without any license to do so.
Moreover, according to testimony that I heard at the state court evidentiary hearing, eTreppid is
actively attempting to reproduce my copyrighted works without my permission.
19.

Moreover, the eTreppid bank account had millions in it in Dcember 2005, when I

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last saw the account statements. All of that money disappeared after I left eTreppid. I am

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informed and believe that Trepp has taken that money and distributed it among his own cronies,

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while attempting to withhold any payments to me in order to prejudice my ability to defend

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myself in these proceedings. Moreover, neither I nor the Trust have been paid any licensing fees

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by Trepp or eTreppid whatsoever. Thus, while eTreppid, which is run only by Trepp, continues

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to obtain licensing revenue, they have failed to pay the Trust for the use of the Trusts technology.

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I declare under penalty of perjury under the laws of the United States and the State of

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Nevada that the foregoing is true and correct. Signed this 13th day of March, 2006 at Reno,

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Nevada.

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/s/ Dennis Montgomery

_____________________________
Dennis Montgomery

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