Check Point Suing SofaWare Founders for NIS 16 Million

A week after losing to SofaWare Technologies founders Etay Bogner and Adi Ruppin in the Supreme Court, Check Point Software Technologies has sued them.

Last week Check Point lost in court. The appellate court ruled against it, saying that Bogner and Ruppin had veto power over any decision they hadn't approved made by SofaWare, a subsidiary of Check Point (60%), even after they left the company.

Now Check Point is suing Bogner and Ruppin for NIS 16 million at the Tel Aviv District Court.

Like Check Point, SofaWare develops data security products. In 2004 Bogner filed for permission to pursue a derivative lawsuit against Check Point (which is a lawsuit that a shareholder files on behalf of a company that isn't pursuing legal remedies itself). He claimed that Check Point was failing to pay SofaWare money it owed for using its technology and products.

In November 2005, the SofaWare board of directors advised Bogner that he was fired as CEO, following his own resignation from the board due to differences of opinion. In February 2008, Tel Aviv District Court judge Danya Kareth Meyer accepted his position in part. She ruled that Check Point had to pay NIS 13 million to SofaWare, for violating their trade agreement.

Check Point claims that as directors and shareholders of SofaWare, Bogner and Ruppin abused their power to veto certain decisions, and led the company to violate its contract with Check Point. They ignored their duties as directors and, with only their personal gain in view, had not hesitated to cause damage to Sofaware while causing substantial damage to Check Point, the latter claims.

Check Point claims to have lost all the money it invested in a product called Arrow after Bogner and Ruppin sabotaged its distribution.

In short, Bogner and Ruppin are causing Check Point to lose business opportunities by scuttling decisions for their own personal good, Check Point claims. Their entire purpose is to induce Check Point to buy out their remaining shares in SofaWare at an inflated price, it argues, and they will do anything to further that aim, including misleading employees, directors and shareholders, and depressing the company's value, Check Point charges.

Yigal Doron, the lawyer representing Bogner, says he hasn't received the lawsuit yet and cannot comment, beyond noting that so far, Check Point has lost all the legal battles against SofaWare's people.