I. BREACH OF WARRANTY OF OWNERSHIP OF SOFTWARE
Smartmatic: “71. COMELEC has requested from Smartmatic certain modifications, comprising enhancements and improvements to the Licensed Products or, alternatively, Additional Project Assistance, some of which require adjustments to the Licensed Technology. Pursuant to the Agreement, which obligates Dominion to provide Smartmatic with technical support and assistance to make such requested modifications and improvements, Smartmatic specifically requested Dominion’s assistance with those modifications that required adjustments to the Licensed Technology. Because the Licensed Technology includes Dominion’s proprietary source code and intellectual property, Smartmatic requires Dominion to perform its support obligations under the Agreement for the purpose of the 2013 Philippines elections and also to release the Escrowed Materials to Smartmatic to enable Smartmatic to provide the support which Dominion refuses to provide.” (emphasis supplied)
Dominion: “RESPONSE NO. 71: Dominion lacks knowledge or information sufficient to form a belief as to the truth of the allegations in the first sentence of Paragraph 71 of the Complaint. Dominion denies the remaining allegations in Paragraph 71 of the Complaint, except admits that Smartmatic has requested that Dominion International make certain modifications and enhancements to Dominion voting systems related to the Philippines. By way of further response, Dominion states that Dominion International has no further obligations with respect to the 2013 election because the License Agreement has been terminated and the initial SOW has expired and/or been terminated.”
Tandem: The admission by Smartmatic that another entity Dominion in fact owns the proprietary source code and intellectual property to the PCOS based AES, proves beyond reasonable doubt that Smartmatic FOOLED the Filipino people when it deceitfully made an express warranty that the software and systems were the “exclusive property of Smartmatic.” Contract for the Provision of an AES for the May 10, 2010 Synchronized National and Local Elections, Article 10, Section 10.1.
II. BREACH OF DUTY TO PLACE SOURCE CODE IN ESCROW
Smartmatic: “117. Section 5.2 of the License Agreement obligates Dominion International to place in escrow, within thirty days of the date of the License Agreement, “all of its source code for the firmware and EMS, as well as all hardware design and manufacture documents as per Exhibit B.” See Agreement at § 5.2. Exhibit B to the License Agreement states that “the concept Source Code and IP to be placed in escrow by Dominion applies to the current vision and the immediate prior version” of the subject technology, source code, and other information as enumerated in that Exhibit. See Exhibit to the Agreement. In the event Dominion International breaches its obligation to provide products or support, and fails to cure such breach within thirty days of receipt of notice from Smartmatic, “the escrowed materials shall be released to Smartmatic for the sole purpose of providing such products or services that Dominion failed to provide.” See Agreement at § 5.2.”
Dominion: “RESPONSE NO. 117: Dominion denies the allegations in Paragraph 117 of the Complaint, except admits that the paragraph selectively quotes from or cites to the License Agreement. By way of further response, Dominion respectfully refers the Court to the License Agreement for its full and accurate contents.”
Smartmatic: “118. Based on information and belief, Dominion International failed to place in escrow any of the required materials until May 7, 2012. Moreover, Smartmatic International subsequently learned that the material Dominion International placed in escrow was not the current version and the immediate prior version of the required information, but was instead an outdated and possibly encrypted version of these materials, rendering them ineffective. In response to Smartmatic’s request to fulfill its escrow obligations, Dominion International notified Smartmatic International on June 11, 2012 that it was under no obligation to place in escrow the materials described in the License Agreement and Exhibit B to the Agreement. Dominion International’s failure to place in escrow the source code and other required information as set forth in the License Agreement is a breach of that contract. Dominion International’s failure to fulfill its contractual obligations is not excused by any reason.”
Dominion: “RESPONSE NO. 118: Dominion denies the allegations in Paragraph 118 of the Complaint, except admits that Dominion International placed in escrow the version of software that had been deployed in the Philippines.”
Tandem: The admission by Smartmatic that it never had the source code, and that the real owner Dominion placed it in escrow only belatedly 07 May 2012, proves beyond reasonable doubt that Smartmatic FOOLED the Filipino people when it made them believe that it deposited the subject “source code” with the BSP before the 10 May 2010 elections. Contract for the Provision of an AES for the May 10, 2010 Synchronized National and Local Elections, Article 9, Section 9.5.
III. SUPPLY OF DEFECTIVE SOFTWARE FOR 2010
Smartmatic: “12. In 2009, Smartmatic International and Dominion International executed a License Agreement in which Dominion granted to Smartmatic a worldwide license to market, make, use, and sell precinct count optical scan (“PCOS”) voting systems utilizing Dominion’s optical scan voting system technology. The License Agreement obligated Dominion International to provide Smartmatic International with, among other things, the hardware, software, firmware, and technical support needed to enable Smartmatic to exploit the broad license granted by Dominion. As set forth more fully below, Dominion International breached its obligations under the License Agreement by ...
(2) failing to deliver fully functional technology for use in the 2010 Philippines national election;
(3) failing to provide timely technical support during and after the Philippines election...”
Dominion: “RESPONSE NO. 12: Dominion denies the allegations in Paragraph 12 of the Complaint, except admits that, in October 2009, Smartmatic International and Dominion International entered into the PCOS Framework License Agreement (the “License Agreement”) (a redacted copy of the License Agreement, with confidential pricing information excised, is attached hereto as Exhibit A), which granted to Smartmatic a license to market, make, use, and sell precinct count optical scan (“PCOS”) voting systems utilizing Dominion’s optical scan voting system technology...”
Smartmatic: “37. During a test of the automated voting system conducted shortly before the Election, COMELEC and Smartmatic discovered a defect in the Licensed Technology— Dominion International’s software failed to correctly read and record the paper ballot. Once Dominion acknowledged the problem with the software and proposed a solution, Smartmatic International had to obtain, load, distribute, and install new memory cards with the reprogrammed software to over 76,000 PCOS voting systems, most of which had already been delivered to the various polling stations located throughout the 7,100 islands in the archipelago. These steps were necessary to ensure the correct interpretation of votes cast on approximately 50,000,000 paper ballots that had already been printed and were ready for use. Remedying this programming error—for which Dominion International contemporaneously acknowledged responsibility—caused Smartmatic International to incur significant monetary damages and reputational harm, and allowed some to cast doubt as to the legitimacy of the elections themselves. Not only did Smartmatic incur over thirteen million dollars in remedial expenses, but as a direct consequence of Dominion International’s failure to perform, COMELEC withheld funds owed to Smartmatic International, initiated a public investigation into Smartmatic’s handling of the election and delayed its decision to purchase the voting products and systems (the “Goods”) pending additional technical verification. This failure also led to a series of judicial challenges questioning the use of the Licensed Technology for future elections, which continue to this day. Smartmatic has incurred damages in excess of $20 million as a result of Dominion’s failure to deliver functional Licensed Technology.” (emphasis supplied)
Dominion: “RESPONSE NO. 37: Dominion lacks knowledge or information sufficient to form a belief as to the truth of the allegations in the first, second, and third sentences of Paragraph 37 of the Complaint, except denies that it acknowledged legal responsibility for the costs of addressing issues with the system. Dominion denies the remaining allegations in Paragraph 37. By way of further response, Dominion avers that, upon information and belief, Smartmatic failed to control processing and delivery timelines and as a consequence failed to conduct standard and routine industry-wide testing of the voting system prior to deployment despite the fact that Dominion International had told Smartmatic that it was standard and routine in the industry and needed to be done and despite the fact that Smartmatic had known the necessity of such testing and conducted such testing in prior elections in other countries. Dominion further avers that it nevertheless proposed a solution to issues that arose during belated testing post-deployment, which solutions would have been easy and inexpensive to implement had Smartmatic conducted such timely routine and standard industry-wide testing prior to deployment.” (emphasis supplied)
Tandem: The admission by Smartmatic that the PCOS system it supplied COMELEC for the 2010 elections was NOT fully functional, failing to correctly read and record the paper ballots, confirms its non-compliance with the minimum accuracy rate of 99.995%, and proves beyond reasonable doubt that Smartmatic and its staunch ally COMELEC, continuously deceived the Filipino people by disregarding all citizen complaints against the reliability of the system, when it knew all along that its system had a basic defect in its scanning function.
IV. SUPPLY OF DEFECTIVE SOFTWARE FOR 2013
Smartmatic: “12. In 2009, Smartmatic International and Dominion International executed a License Agreement in which Dominion granted to Smartmatic a worldwide license to market, make, use, and sell precinct count optical scan (“PCOS”) voting systems utilizing Dominion’s optical scan voting system technology. The License Agreement obligated Dominion International to provide Smartmatic International with, among other things, the hardware, software, firmware, and technical support needed to enable Smartmatic to exploit the broad license granted by Dominion. As set forth more fully below, Dominion International breached its obligations under the License Agreement by ...
(2) failing to deliver fully functional technology for use in the 2010 Philippines national election;
(3) failing to provide timely technical support during and after the Philippines election...”
Dominion: “RESPONSE NO. 12: Dominion denies the allegations in Paragraph 12 of the Complaint, except admits that, in October 2009, Smartmatic International and Dominion International entered into the PCOS Framework License Agreement (the “License Agreement”) (a redacted copy of the License Agreement, with confidential pricing information excised, is attached hereto as Exhibit A), which granted to Smartmatic a license to market, make, use, and sell precinct count optical scan (“PCOS”) voting systems utilizing Dominion’s optical scan voting system technology...”
Smartmatic: 91. Under the terms of the License Agreement, Dominion International was obligated to provide to Smartmatic International the technical support needed to incorporate the “hardware, software, firmware and EMS developed by Dominion” into the Licensed Products. The initial SOW, which the Agreement expressly incorporates, further obligated Dominion International to provide “Project Assistance” as set forth on Tables 1 and 2 of the initial SOW and “Additional Project Assistance,” as set forth in Section 5 of the initial SOW. Despite these obligations, Dominion International failed to provide Smartmatic International with timely technical support in accordance with its contractual obligations. Dominion International failed to address timely Smartmatic International’s Requested Improvements and COMELEC’s conditions for exercising its option to purchase the Licensed Products (i.e., the “Goods”), which has compromised Smartmatic International’s ability to provide satisfactory customer service and materially harmed Smartmatic’s ability to sell the Licensed Products to COMELEC. See Agreement § 3.3. Moreover, Dominion has also failed to provide the required technical support needed to incorporate the modifications and enhancements requested by COMELEC in preparation for the Philippines 2013 national elections. These requested modifications and enhancements were communicated to Dominion well before its purported termination of the Agreement, which does not serve as a basis for avoiding these support obligations in any event. Instead, Dominion International has sought to use its ownership and control of the Licensed Technology to rewrite the License Agreement by insisting upon the inclusion of ex post contract conditions in the in the amended SOWs as a condition to fulfilling its pre-existing contractual obligations. Dominion International’s failure to perform is not excused by any reason.” (emphasis supplied)
Dominion: “RESPONSE NO. 91: Dominion denies the allegations of Paragraph 91 of the Complaint, except admits that the first and second sentences of the paragraph selectively quote from or cite to the License Agreement and the initial SOW. By way of further response, Dominion respectfully refers the Court to the License Agreement and the initial SOW for their full and accurate contents.”
Tandem: The admission by Smartmatic that it needs the technical support of the software owner Dominion to provide the modifications required by COMELEC for the 2013 elections, and that the support is not coming, proves beyond reasonable doubt that Smartmatic continues to deceive the Filipino people by disregarding all citizen concerns against the reliability of the system, when it knows all along that it cannot by itself provide those modifications.
V. SUPPLY OF UNLICENSED SOFTWARE FOR 2013
Smartmatic: “62. If Smartmatic is denied its bargained-for right either to obtain from Dominion modifications, enhancements, improvements, and new developments to the Licensed Technology, or to access the Escrowed Materials for the purpose of providing the products or services Dominion refuses to provide, Smartmatic will suffer immediate and irreparable harm, the consequences of which are unpredictable and beyond the parties’ control. As demonstrated above, Dominion is systemically engaging in anticompetitive conduct designed to jeopardize Smartmatic’s revenue-generating relationships and harm its ability to compete in a market segment characterized by significant barriers to entry. If Dominion is not prevented from withholding its services and Escrowed Materials from Smartmatic, Smartmatic will be compelled to seek alternative methods of incorporating the modified Licensed Technology into its automated election systems to attempt to mitigate the consequences of its lack of access to the underlying technology, which will jeopardize Smartmatic’s current business relationships and deprive it of opportunities to develop new ones...” (emphasis supplied)
Dominion: RESPONSE NO. 62: Dominion denies the allegations in Paragraph 62 of the Complaint.
Tandem: The admission by Smartmatic that it does not own the proprietary source code to the PCOS based AES, and that the software owner Dominion has denied it access to the source code, proves beyond reasonable doubt that Smartmatic is incapable of supplying COMELEC a licensed software for the 2013 elections.
VI. BREACH OF DUTY TO CONDUCT STANDARD AND ROUTINE TESTING OF PCOS MACHINES PRIOR TO DEPLOYMENT
Dominion: “TWELFTH AFFIRMATIVE DEFENSE. To the extent that Smartmatic is seeking damages for alleged functionality problems with Dominion voting machines in the 2010 election in the Philippines, any damages are attributable to Smartmatic’s negligence in failing to conduct standard and routine industry-wide testing of the machines prior to deployment, despite the fact that Dominion International had advised Smartmatic to consider such testing and despite the fact that Smartmatic had conducted such testing in other prior elections. Even if the negligence of Smartmatic was only partly responsible for its damages, Dominion is entitled to a reduction of the damages due to comparative negligence.” (emphasis supplied)
Tandem: Upon information that Smartmatic is familiar and experienced with testing procedures, we demand that Smartmatic and its staunch ally COMELEC account for why they failed to conduct standard and routine industry-wide testing of the PCOS machines prior to deployment, which then led to the rushed and hushed configuration of over 76,000 machines deployed throughout the 7,100 islands, beyond the watchful eyes of the public. We demand certainty and assurance that this disturbing incident did not provide a cover for the tampering of the system immediately before the 2010 elections.
VII. GROSS UNDERPRICING OF PCOS VOTING SYSTEM
Dominion: “21. Upon information and belief, Smartmatic TIM won the bidding process in the Philippines by submitting a price for PCOS voting systems that was only approximately one-third of what it had discussed with Dominion. As a result, during re-negotiations with Dominion in the summer and fall of 2009, Smartmatic International insisted that Dominion reduce its price per unit from ___ per voting machine to ___ per machine and threatened to terminate the License Agreement if Dominion International did not accede to those demands.” (emphasis supplied)
Tandem: Upon information that Smartmatic grossly underpriced its bid to supply the AES for the 2010 elections, we demand an account on how it intended to recover the subsidized costs and earn reasonable profits by “legitimate” means. We demand certainty and assurance that this incomprehensible approach is covered by some “legitimate” business plan, to dispel widespread rumors of systematic fraud nationwide, where elective posts were allegedly sold at uniform prices, i.e. P20 million for mayor, P30 million for congressman, P50 million for governor, etc.
Tanggulang Demokrasya (Tan Dem)
27 November 2012
Ilustrado, Intramuros, Manila
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