Not All Assets Belong to Company'

The complaint in the CT Motion affair was filed against 12 former employees of the company, two of whom are now the managers of the new company, Yayo Technologies.

Following the findings uncovered in the raid, CT Motion's receiver, Adi Fogel, sent warning letters to all the employees. The letters warned that any action taken in contravention of the court order forbidding them from using the company's assets would be a criminal offense under the Contempt of Court orders, a violation of intellectual property rights and the theft of trade secrets. The employees were warned that the punishment for such offenses was several years' imprisonment and fines of hundreds of thousands of shekels.

Yedidya Cohen, a former CT Motion employee and currently a manager at Yayo, notified Fogel that he had halted the activities of the group of employees for personal reasons. The employees, for their part, sent Fogel a letter claiming that there was no legal obstacle to their continuing to help PinPoint and that, "there are assets that can be attributed to the company that do not belong to it."

The workers claimed that "there is not and never was any cause to prevent them from assisting PinPoint in operating the system that it purchased and paid for in full."

The workers further claim that Fogel was trying "to threaten the employees, contrary to the law, and was overstepping the authority given him by the court... You [Fogel] will be required to bear the full responsibility for the damages that have been caused and that are liable to be caused pursuant to your improper activities as temporary receiver," wrote the employees.

The workers added that the receiver had not acted as was expected of him for the purpose of receiving and gathering the company's equipment. "You are not interested in gathering the company's assets," wrote the employees, "but rather in exerting pressure on the company's former employees, unlawfully and in deviation from your authority, in order to prevent assistance to PinPoint and to compel the latter to make an offer to acquire ownership of the company's [CT Motion's] technology."

The main clause on which the workers and PinPoint base their actions is the "trustee" clause that appears in many technology contracts. When a company purchases technology that will require technical service for many years, it insures itself against a situation in which the providing company might close and leave the buyer with no service and support. If the providing company closes, the purchaser receives the source code of the software that is held by a trustee.

When CT Motion closed, PinPoint asked Fogel to order the trustee to provide the codes. The shareholders and Leumi told Fogel not to allow access to the codes. Fogel then asked the court for advice, and the court ordered that the codes not be released at this stage.