SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SANTA CLARA
Case No. 23-CV-004871
Filed: January 19, 2023
Plaintiff Lumos Analytics Inc. ("Lumos" or "Lumos AI"), by and through its attorneys of record, Calderwood & Harkness LLP, hereby files this Verified Complaint for Trade Secret Misappropriation, Breach of Contract, and Related Claims against Defendants NovaSpark Technologies Inc. ("NovaSpark"), Rajiv Anand ("Anand"), Serena Mallick ("Mallick"), and Derek Yun ("Yun") (collectively, "Defendants"), and alleges as follows:
NATURE OF THE ACTION
1. This action arises from the systematic theft and misappropriation of the most valuable proprietary technology, trade secrets, and confidential information belonging to Lumos Analytics Inc. — a leading AI-driven financial analytics software-as-a-service ("SaaS") company — by three of its former senior engineers, Defendants Rajiv Anand, Serena Mallick, and Derek Yun (collectively, the "Individual Defendants"), and their newly formed competing startup, NovaSpark Technologies Inc.
2. Over the course of their employment at Lumos, the Individual Defendants occupied positions of trust and responsibility at the heart of Lumos's engineering organization. They were granted access to Lumos's most sensitive proprietary codebases, machine-learning model architectures, training datasets, data-pipeline infrastructure, and confidential business strategy documents. They repaid that trust by orchestrating a coordinated scheme to abscond with Lumos's crown-jewel technology and use it to launch a directly competing company.
3. The Individual Defendants departed Lumos en masse in late September through October 2022, in rapid succession, pursuant to a pre-arranged plan. Defendant Anand resigned on September 30, 2022. Defendant Mallick resigned on October 14, 2022. Defendant Yun resigned on October 21, 2022. Each departure was effective immediately or near-immediately, and each Individual Defendant commenced employment at NovaSpark within days — in some cases, within just three calendar days — of departing Lumos.
4. In the days immediately preceding their respective resignations, each Individual Defendant exfiltrated substantial quantities of Lumos proprietary materials from Lumos's secured systems. Defendant Anand transferred approximately 3.2 gigabytes of proprietary model architecture files and hyperparameter configurations to a personal Hollowell Health IT account and forwarded the confidential 37-page "LumosEdge 3.0 Product Roadmap" to a personal email address. Defendant Mallick cloned the entirety of Lumos's proprietary "DataStream" ETL pipeline repository — approximately 780 megabytes of code and data-schema definitions — to a personal external USB drive. Defendant Yun downloaded 47 proprietary Jupyter notebooks containing feature-engineering code and model-training scripts to a personal Larkspur Technologies account. These acts were undertaken without authorization and in direct violation of each Defendant's Proprietary Information and Inventions Assignment Agreement ("PIIAA"), Lumos's information-security policies, and applicable law.
5. Defendant Anand incorporated NovaSpark Technologies Inc. in the State of Delaware on October 3, 2022 — just three days after his resignation from Lumos. Defendants Mallick and Yun followed, joining NovaSpark within days of their own departures. NovaSpark directly competes with Lumos in the AI-driven financial analytics market, purporting to offer AI-driven alternative-data analytics for hedge funds and proprietary trading desks — the same core market served by Lumos's flagship LumosEdge product.
6. In a remarkably compressed timeframe, NovaSpark secured $12 million in seed funding from Blackpine Capital Partners LP, with the round closing on November 15, 2022 — barely six weeks after NovaSpark's incorporation. Upon information and belief, NovaSpark was able to secure this funding by leveraging the very technology misappropriated from Lumos, presenting investor materials and prototype technology that were derived from and dependent upon Lumos's proprietary trade secrets. The misappropriated Lumos technology has accelerated NovaSpark's time to market by an estimated fourteen to eighteen months — time that would otherwise have been required for independent research and development.
7. Through this action, Lumos seeks injunctive relief to prevent the continued use and disclosure of its trade secrets, compensatory damages to redress the harm caused by Defendants' unlawful conduct, exemplary damages on account of Defendants' willful and malicious misappropriation, disgorgement and restitution of all profits and benefits obtained by Defendants through their unlawful conduct, reasonable attorneys' fees, costs of suit, and all other relief available under law and equity.
THE PARTIES
8. Plaintiff Lumos Analytics Inc. Lumos Analytics Inc. is a corporation duly organized and existing under the laws of the State of Delaware, with its principal place of business at 4700 Orchard Parkway, Suite 300, San Jose, California 95134. Lumos's Delaware File Number is 6518274. Lumos's Employer Identification Number ("EIN") is 82-4713956. Lumos's registered agent for service of process in Delaware is National Corporate Services Inc., located at 1209 Orange Street, Wilmington, Delaware 19801.
9. Lumos was founded in approximately 2017 and is a software-as-a-service company specializing in AI-driven financial analytics for institutional asset managers, including hedge funds, mutual fund complexes, pension funds, and proprietary trading desks. Lumos's flagship product, "LumosEdge," uses proprietary ensemble machine-learning models to generate predictive signals for equity and fixed-income portfolio optimization. LumosEdge is widely recognized in the financial technology industry as a market-leading product that provides significant competitive advantage to its users.
10. Since its founding, Lumos has raised approximately $185 million in venture capital funding through its Series D financing round. Significant milestones in Lumos's financing history include a $40 million Series B round led by Ridgeline Ventures in 2019 and a $72 million Series D round led by Northstar Growth Equity, which closed in June 2022. These investments reflect the substantial value of Lumos's proprietary technology and the confidence of sophisticated institutional investors in Lumos's market position and growth trajectory.
11. As of the date of this filing, Lumos employs approximately 340 full-time employees and generated 2022 annual recurring revenue ("ARR") of approximately $67 million. Lumos's Chief Executive Officer is Priya Chandrasekaran. Lumos's General Counsel is Thomas Brightwell. Lumos's Vice President of Engineering is Rachel Fong.
12. Defendant NovaSpark Technologies Inc. NovaSpark Technologies Inc. is a corporation organized and existing under the laws of the State of Delaware, with its principal place of business at 88 Bluxome Street, Floor 4, San Francisco, California 94107. NovaSpark's Delaware File Number is 7294183. NovaSpark's Employer Identification Number ("EIN") is 88-3291047. NovaSpark's registered agent for service of process in Delaware is National Corporate Services Inc., located at 1209 Orange Street, Wilmington, Delaware 19801.
13. NovaSpark was incorporated on October 3, 2022 — just three days after Defendant Rajiv Anand resigned from Lumos on September 30, 2022. NovaSpark purports to offer AI-driven alternative-data analytics for hedge funds and proprietary trading desks — a market that directly and substantially overlaps with the core market served by Lumos's LumosEdge product. Upon information and belief, NovaSpark's products and services are derived from, and are substantially dependent upon, Lumos's misappropriated proprietary technology and trade secrets.
14. NovaSpark received $12 million in seed funding from Blackpine Capital Partners LP, a venture capital firm with offices at 101 Mission Street, 38th Floor, San Francisco, California 94105 (Managing Partner: Franklin Osei). The seed funding round closed on November 15, 2022 — barely six weeks after NovaSpark's incorporation. Defendant Rajiv Anand serves as Chief Executive Officer and co-founder of NovaSpark.
15. Defendant Rajiv Anand. Rajiv Anand, age 37, is an individual residing at 1482 Mariposa Avenue, Palo Alto, California 94306. Anand served as Principal Engineer — ML Infrastructure at Lumos from approximately March 2019 through September 30, 2022 — a period of approximately three and a half years. In this role, Anand was a key architect of the LumosEdge signal-generation engine and had broad and deep access to Lumos's most sensitive proprietary codebases, machine-learning training data, model architectures, hyperparameter configurations, and confidential business information, including strategic product roadmap materials.
16. Anand resigned from Lumos on September 30, 2022, effective immediately, providing no advance notice. Three days later, on October 3, 2022, Anand incorporated NovaSpark Technologies Inc. in the State of Delaware. Anand now serves as Chief Executive Officer and co-founder of NovaSpark.
17. Upon joining Lumos in March 2019, Anand executed Lumos's standard Proprietary Information and Inventions Assignment Agreement ("PIIAA"), which contains, among other provisions, confidentiality and non-disclosure obligations, non-solicitation of employees restrictions, invention-assignment provisions vesting ownership of work product in Lumos, a requirement to return all company materials upon termination of employment, and restrictive covenants regarding the use and disclosure of Lumos trade secrets.
18. Defendant Serena Mallick. Serena Mallick, age 34, is an individual residing at 578 Guerrero Street, Apartment 3B, San Francisco, California 94110. Mallick served as Senior Software Engineer — Data Pipelines at Lumos from approximately June 2020 through October 14, 2022 — a period of approximately two years and four months. In this role, Mallick was directly responsible for building, maintaining, and enhancing the proprietary ETL (extract, transform, load) pipelines — known internally at Lumos as "DataStream" — that ingest alternative financial data into the LumosEdge platform from 43 distinct alternative-data vendors. As such, Mallick possessed intimate knowledge of the DataStream system's architecture, source code, data-schema definitions, custom data connectors, normalization logic, and quality-assurance protocols.
19. Mallick resigned from Lumos on October 14, 2022, effective immediately. Three days later, on October 17, 2022, Mallick commenced employment at NovaSpark in the role of Vice President of Engineering. The minimal interval between Mallick's resignation from Lumos and commencement of employment at NovaSpark confirms that Mallick's departure was pre-arranged as part of the coordinated scheme orchestrated by the Individual Defendants.
20. Upon joining Lumos in June 2020, Mallick executed Lumos's standard PIIAA, which contains the same confidentiality, non-disclosure, non-solicitation, invention-assignment, return-of-materials, and restrictive covenant provisions described above with respect to Defendant Anand.
21. Defendant Derek Yun. Derek Yun, age 31, is an individual residing at 2241 Cowper Street, Apartment 12, Palo Alto, California 94301. Yun served as Machine Learning Engineer II at Lumos from approximately January 2021 through October 21, 2022 — a period of approximately one year and ten months. In this role, Yun had direct access to Lumos's proprietary training datasets, model hyperparameters, feature-engineering libraries, and model-training scripts. Yun worked closely with Defendant Anand on multiple aspects of the LumosEdge signal-generation engine.
22. Yun resigned from Lumos on October 21, 2022, effective immediately. Three days later, on October 24, 2022, Yun commenced employment at NovaSpark as a founding engineer. As with Defendants Anand and Mallick, the minimal interval between Yun's resignation and commencement of employment at NovaSpark confirms that Yun's departure was pre-arranged as part of the coordinated scheme.
23. Upon joining Lumos in January 2021, Yun executed Lumos's standard PIIAA, which contains the same confidentiality, non-disclosure, non-solicitation, invention-assignment, return-of-materials, and restrictive covenant provisions described above with respect to Defendants Anand and Mallick.
JURISDICTION AND VENUE
24. This Court has jurisdiction over the subject matter of this action pursuant to the California Constitution, Article VI, Section 10, which grants the Superior Courts of the State of California original jurisdiction in all cases except those given by statute to other trial courts. The amount in controversy exceeds the jurisdictional minimum of this Court.
25. Venue is proper in the County of Santa Clara pursuant to California Code of Civil Procedure Section 395 because Lumos's principal place of business is located in San Jose, Santa Clara County, California; a substantial portion of the tortious conduct alleged herein occurred in Santa Clara County, including the exfiltration of proprietary data from Lumos systems accessed and maintained in Santa Clara County; and the PIIAA agreements executed by each Individual Defendant contain a forum-selection clause designating Santa Clara County, California as the exclusive venue for disputes arising under or in connection with such agreements.
26. This Court has personal jurisdiction over all Defendants. Each Individual Defendant resides in the State of California and committed the tortious acts alleged herein within the State of California. Defendant NovaSpark Technologies Inc. maintains its principal place of business in San Francisco, California, conducts business within the State of California, and has committed the tortious acts alleged herein within the State of California.
FACTUAL ALLEGATIONS
A. Lumos's Proprietary Technology and Trade Secrets
27. Over the course of approximately six years since its founding, Lumos has invested substantial effort and tens of millions of dollars in research and development to create its proprietary technology, which constitutes the core competitive advantage of the company and forms the technological foundation of its flagship product, LumosEdge. Lumos's proprietary technology represents the cumulative output of years of iterative engineering, data curation, domain research in quantitative finance, and machine-learning innovation by a team of highly skilled and specialized engineers, data scientists, and financial analysts.
28. The trade secrets at issue in this action fall into five principal categories, each of which is described in detail below. Each category of trade secret derives independent economic value, actual or potential, from not being generally known to the public or to other persons who could obtain economic value from their disclosure or use, and Lumos has taken extensive and reasonable measures to maintain the secrecy of each.
(1) LumosEdge Ensemble ML Model Architecture.
29. The first category of trade secrets at issue is the proprietary neural-network topology, ensemble model architecture, and hyperparameter configurations used in the LumosEdge signal-generation engine (collectively, the "Model Architecture"). The Model Architecture defines the fundamental structure and behavior of the machine-learning models that power LumosEdge's predictive analytics capabilities — including the specific arrangement of neural-network layers, the ensemble methods used to combine multiple model outputs, the loss functions employed during training, the regularization strategies applied to prevent overfitting, and the precise hyperparameter values that govern model performance.
30. The Model Architecture represents years of iterative development and refinement by Lumos's engineering team, including substantial contributions by Defendant Anand in his role as Principal Engineer — ML Infrastructure. The specific configuration of the Model Architecture is not disclosed to Lumos's customers or to the public and is maintained as a closely guarded trade secret. The Model Architecture provides LumosEdge with its distinctive predictive accuracy and represents a core differentiator in the competitive marketplace for AI-driven financial analytics.
(2) Proprietary Feature-Engineering Libraries.
31. The second category of trade secrets at issue is Lumos's proprietary feature-engineering library, which contains 2,847 individually engineered features for financial signal generation (the "Feature Library"). Each feature in the Feature Library represents a specific quantitative transformation, calculation, or derivation applied to raw financial data or alternative data to extract predictive information relevant to equity and fixed-income portfolio optimization. The Feature Library encompasses features derived from market microstructure data, macroeconomic indicators, alternative data sources (including satellite imagery, web-scraping pipelines, sentiment analysis outputs, and supply-chain data), and proprietary composite indicators.
32. The Feature Library represents the distillation of Lumos's deep domain expertise at the intersection of quantitative finance and machine learning. The development of these features required extensive experimentation, backtesting, and validation by Lumos's team of engineers and quantitative researchers. The Feature Library is critical to LumosEdge's predictive performance, and the specific features contained within the library are not disclosed to Lumos's customers or to the public.
(3) DataStream ETL Pipeline Codebase and Data-Schema Definitions.
33. The third category of trade secrets at issue is Lumos's proprietary "DataStream" ETL (extract, transform, load) pipeline codebase and associated data-schema definitions (collectively, the "DataStream System"). The DataStream System is the technology infrastructure that enables LumosEdge to ingest, normalize, and process alternative financial data from 43 distinct alternative-data vendors. The DataStream System includes custom-built data connectors tailored to each vendor's specific data format and delivery mechanism, proprietary normalization logic that transforms heterogeneous data sources into a unified schema suitable for consumption by Lumos's machine-learning models, and sophisticated quality-assurance protocols that detect and handle data anomalies, gaps, and errors in real time.
34. The DataStream System represents years of proprietary innovation in data engineering. The architecture, source code, data-schema definitions, and operational parameters of the DataStream System are closely guarded trade secrets that are not disclosed to Lumos's customers or to the public. Defendant Mallick, as Senior Software Engineer — Data Pipelines, was intimately involved in the development and maintenance of the DataStream System and possessed comprehensive knowledge of its internal workings.
(4) Curated Training Dataset.
35. The fourth category of trade secrets at issue is Lumos's curated and labeled training dataset of approximately 14.6 terabytes of historical financial and alternative data (the "Training Dataset"). The Training Dataset has been painstakingly assembled, cleaned, labeled, and validated over the course of several years by Lumos's data-engineering and quantitative-research teams. The Training Dataset includes historical market data, macroeconomic time series, alternative data from dozens of vendors, and proprietary labels and annotations reflecting the outcomes of extensive backtesting and validation procedures.
36. The value of the Training Dataset lies not only in the raw data itself — much of which is sourced from third-party vendors pursuant to licensing agreements — but in the proprietary labeling, curation, structuring, and quality assurance applied by Lumos's engineering team. The specific composition, labeling conventions, temporal alignment, and data-quality standards of the Training Dataset represent significant intellectual property that is critical to the performance of Lumos's machine-learning models and is not available to the public or to competitors.
(5) Confidential Product Roadmap — LumosEdge 3.0.
37. The fifth category of trade secrets at issue is Lumos's confidential product roadmap for the period 2023 through 2025, including detailed specifications for the unreleased "LumosEdge 3.0" product upgrade (the "Product Roadmap"). The Product Roadmap is a 37-page PDF document containing highly sensitive strategic plans, technical specifications, competitive-positioning analysis, go-to-market strategies, timeline milestones, resource-allocation plans, and customer-acquisition targets for the next generation of the LumosEdge platform.
38. The Product Roadmap was circulated internally at Lumos on a strictly need-to-know basis and was accessible only to senior members of the engineering and executive teams. The Product Roadmap contains forward-looking strategic information the disclosure of which to a competitor would cause severe and irreparable competitive harm to Lumos. Defendant Anand, by virtue of his role as Principal Engineer — ML Infrastructure, was among the limited number of Lumos personnel who had access to the Product Roadmap.
Lumos's Reasonable Measures to Protect Its Trade Secrets.
39. Lumos has taken extensive and reasonable measures to protect the secrecy of each of the foregoing categories of trade secrets, including but not limited to the following:
(a) Requiring all employees, contractors, and consultants with access to proprietary information to execute PIIAAs containing confidentiality, non-disclosure, invention-assignment, and restrictive covenant provisions prior to being granted access to any proprietary systems or information;
(b) Implementing and enforcing robust access controls, including role-based access management, multi-factor authentication, and the principle of least privilege, to ensure that employees have access only to the proprietary information necessary for their assigned responsibilities;
(c) Encrypting proprietary data at rest and in transit using industry-standard encryption protocols;
(d) Maintaining comprehensive audit logging and monitoring of access to proprietary systems and data repositories, including tracking file access, downloads, transfers, and modifications;
(e) Limiting access to the most sensitive proprietary information, including the Product Roadmap, on a strict need-to-know basis;
(f) Conducting regular information-security training for all employees, including annual training on trade-secret protection, data-handling procedures, and the requirements of employees' PIIAA obligations;
(g) Implementing data-loss-prevention ("DLP") tools and network-monitoring systems designed to detect and prevent unauthorized data transfers;
(h) Enforcing policies prohibiting the use of personal devices, personal email accounts, or personal cloud-storage services for the storage or transmission of company proprietary information; and
(i) Requiring departing employees to participate in exit interviews and confirm the return of all company materials and the deletion of all company proprietary information from personal devices and accounts.
40. Despite these extensive protective measures, Defendants circumvented Lumos's security controls and exfiltrated proprietary materials through the methods described in detail below.
B. The Defendants' Employment at Lumos and Contractual Obligations
41. Each Individual Defendant — Anand, Mallick, and Yun — executed Lumos's standard Proprietary Information and Inventions Assignment Agreement ("PIIAA") upon commencing his or her employment with Lumos. The PIIAA is a comprehensive agreement governing the protection of Lumos's proprietary information and intellectual property and sets forth each employee's obligations with respect thereto during and after employment.
42. The PIIAA includes, among other provisions, the following material terms:
(a) Assignment of Inventions. An assignment of all inventions clause, pursuant to which each employee assigns to Lumos all right, title, and interest in and to any and all inventions, discoveries, improvements, works of authorship, software code, algorithms, data compilations, and other intellectual property conceived, developed, or reduced to practice by the employee, either solely or jointly with others, during the period of employment, to the extent they relate to Lumos's business or were created using Lumos's resources, time, or proprietary information. This provision vests full ownership of all work product in Lumos.
(b) Confidentiality and Non-Disclosure. A confidentiality and non-disclosure provision that prohibits the employee from using or disclosing any Lumos confidential information or trade secrets during or after employment, and that survives the termination of employment for a period of three years with respect to confidential information and indefinitely with respect to trade secrets.
(c) Non-Solicitation of Employees. A non-solicitation of employees clause that prohibits the employee, for a period of twelve (12) months following the termination of employment for any reason, from directly or indirectly soliciting, recruiting, or inducing any Lumos employee or contractor to leave Lumos's employ or to terminate or reduce his or her engagement with Lumos.
(d) Restrictive Covenant — Trade Secrets. A covenant not to use or disclose Lumos trade secrets at any time during or after employment — i.e., a restrictive covenant that applies indefinitely to trade-secret information, without temporal limitation, consistent with the protections afforded under the California Uniform Trade Secrets Act.
(e) Return of Materials. A requirement that the employee return all company materials, documents, data, devices, and other property — in both physical and electronic form — upon the termination of employment, and confirm in writing the deletion of all Lumos proprietary information from personal devices and accounts.
43. Each Individual Defendant acknowledged and agreed to the terms of his or her PIIAA, which was supported by adequate consideration in the form of, among other things, the offer of employment, access to Lumos proprietary information, and receipt of compensation and equity awards. True and correct copies of the PIIAAs executed by Defendants Anand, Mallick, and Yun will be produced to the Court and opposing counsel in due course and are incorporated herein by reference.
44. None of the three Individual Defendants returned any company materials or confirmed the deletion of Lumos proprietary information from personal devices and accounts at any time following their respective departures from Lumos. As detailed below, each Individual Defendant instead retained and misappropriated Lumos proprietary materials for use at NovaSpark.
C. The Coordinated Departure and Formation of NovaSpark
45. The Individual Defendants orchestrated a coordinated and pre-planned scheme to leave Lumos in rapid succession, take with them Lumos's most valuable proprietary technology and trade secrets, and use those misappropriated materials to launch a directly competing company — NovaSpark Technologies Inc. The timing, sequence, and circumstances of the Individual Defendants' departures demonstrate that the scheme was carefully planned and executed.
46. The relevant timeline is as follows:
(a) September 30, 2022: Defendant Rajiv Anand resigns from Lumos, effective immediately, providing no advance notice. Anand does not participate in an exit interview, does not return any company materials, and does not confirm the deletion of Lumos proprietary information from personal devices or accounts.
(b) October 3, 2022: Just three (3) calendar days after his resignation, Anand incorporates NovaSpark Technologies Inc. in the State of Delaware. The minimal interval between Anand's resignation and NovaSpark's incorporation demonstrates that Anand had planned and prepared the formation of NovaSpark while still employed at Lumos.
(c) October 14, 2022: Defendant Serena Mallick resigns from Lumos, effective immediately, providing no advance notice. Mallick does not participate in an exit interview, does not return any company materials, and does not confirm the deletion of Lumos proprietary information from personal devices or accounts.
(d) October 17, 2022: Just three (3) calendar days after her resignation, Mallick commences employment at NovaSpark in the role of Vice President of Engineering, a senior leadership position reflecting the prominence of her role in the coordinated scheme.
(e) October 21, 2022: Defendant Derek Yun resigns from Lumos, effective immediately, providing no advance notice. Yun does not participate in an exit interview, does not return any company materials, and does not confirm the deletion of Lumos proprietary information from personal devices or accounts.
(f) October 24, 2022: Just three (3) calendar days after his resignation, Yun commences employment at NovaSpark as a founding engineer.
47. The rapid and sequential nature of these departures — each resignation followed by commencement of employment at NovaSpark within exactly three calendar days — combined with the immediate incorporation of a directly competing company, demonstrates beyond any reasonable doubt that the Individual Defendants engaged in a pre-arranged scheme to leave Lumos, misappropriate its technology, and launch a competing enterprise. The pattern is not coincidental; it is the hallmark of a coordinated plan.
48. On November 15, 2022 — just forty-three (43) days after NovaSpark's incorporation — NovaSpark closed a $12 million seed funding round from Blackpine Capital Partners LP, a venture capital firm based at 101 Mission Street, 38th Floor, San Francisco, California 94105, managed by Managing Partner Franklin Osei. The extraordinary speed with which NovaSpark secured institutional venture capital funding is consistent with, and upon information and belief was made possible by, NovaSpark's possession and use of Lumos's misappropriated proprietary technology and trade secrets to present a compelling product demonstration and technology roadmap to potential investors.
49. NovaSpark purports to offer AI-driven alternative-data analytics for hedge funds and proprietary trading desks — the same core market served by Lumos's LumosEdge product. NovaSpark's stated business model, target customer base, and technology offering overlap directly and substantially with Lumos's existing business, confirming that NovaSpark was conceived and designed as a direct competitor to Lumos, built upon Lumos's own stolen technology.
D. Evidence of Misappropriation and Exfiltration
50. On or about December 12, 2022, Lumos's IT security team, operating under the direction of Vice President of Engineering Rachel Fong, conducted a routine post-departure audit of the Individual Defendants' system access and data activity during their final weeks of employment. This audit identified anomalous data-exfiltration activity from the final weeks of each Individual Defendant's employment at Lumos.
51. Lumos promptly retained the forensic technology consulting firm CyberTrace Solutions LLC, based in Mountain View, California, to conduct a comprehensive forensic investigation of the Individual Defendants' data-access and data-transfer activity. The forensic investigation confirmed the specific acts of exfiltration summarized below.
(i) Rajiv Anand's Exfiltration.
52. On September 26, 2022 — four (4) days before his resignation — Defendant Anand transferred approximately 3.2 gigabytes ("GB") of files from Lumos's internal systems to a personal Hollowell Health IT account not associated with Lumos's corporate Crestline Software environment. Lumos's audit logs and the forensic investigation confirm that the transferred files included model architecture specifications, neural-network topology diagrams, ensemble configuration files, and hyperparameter configuration files for the LumosEdge signal-generation engine. These files constitute core elements of the Model Architecture trade secret described in Paragraphs 29–30 above.
53. On September 28, 2022 — two (2) days before his resignation — Defendant Anand accessed the confidential "LumosEdge 3.0 Product Roadmap" document (a 37-page PDF file) from Lumos's secure internal document-management system and forwarded the document from his Lumos corporate email address to his personal email address at r.anand.personal@vaultmail.com. Lumos's email server logs confirm this transmission. The LumosEdge 3.0 Product Roadmap constitutes the Product Roadmap trade secret described in Paragraphs 37–38 above.
54. These transfers were made by Anand without any authorization from Lumos management, were not related to any legitimate business purpose, and were undertaken in direct violation of Lumos's information-security policies and Anand's obligations under his PIIAA. The timing of these transfers — in the days immediately preceding Anand's unannounced resignation — demonstrates that they were undertaken in furtherance of Anand's plan to misappropriate Lumos's technology for use at NovaSpark.
(ii) Serena Mallick's Exfiltration.
55. On October 10, 2022 — four (4) days before her resignation — Defendant Mallick cloned the entire DataStream ETL pipeline repository from Lumos's internal version-control system to a personal external USB drive. Lumos's endpoint-monitoring systems recorded the connection of an external USB storage device with serial number WD-4837291 to Mallick's Lumos-issued workstation on that date. The cloned repository comprised approximately 780 megabytes ("MB") of proprietary source code and data-schema definitions constituting the DataStream System trade secret described in Paragraphs 33–34 above.
56. The DataStream repository cloned by Mallick encompasses the entirety of Lumos's proprietary ETL infrastructure, including all custom data connectors for 43 alternative-data vendors, the complete normalization logic, data-schema definitions, quality-assurance protocols, and operational configuration files. This transfer was made by Mallick without any authorization from Lumos management, was not related to any legitimate business purpose, and was undertaken in direct violation of Lumos's information-security policies and Mallick's obligations under her PIIAA.
(iii) Derek Yun's Exfiltration.
57. On October 18, 2022 — three (3) days before his resignation — Defendant Yun downloaded 47 proprietary Jupyter notebooks from Lumos's internal data-science platform to a personal Larkspur Technologies account. Lumos's network-monitoring systems detected the outbound data transfer to external Larkspur Technologies servers associated with Yun's personal account. The downloaded notebooks contained proprietary feature-engineering code, model-training scripts, data-preprocessing routines, and experimental results that constitute elements of the Feature Library and Model Architecture trade secrets described in Paragraphs 29–32 above.
58. Notably, October 18, 2022 — the date of Yun's exfiltration — was three days before Yun's own resignation from Lumos, but three days after Defendant Mallick had already commenced employment at NovaSpark on October 17, 2022. This chronological overlap further evidences the coordinated nature of the scheme: Yun was exfiltrating Lumos's proprietary materials while his co-conspirator Mallick was already working at NovaSpark, and all three Individual Defendants were acting in concert pursuant to a common plan.
59. This transfer was made by Yun without any authorization from Lumos management, was not related to any legitimate business purpose, and was undertaken in direct violation of Lumos's information-security policies and Yun's obligations under his PIIAA.
E. Defendants' Use of Lumos Trade Secrets at NovaSpark
60. Upon information and belief, Defendants have used and continue to use Lumos's misappropriated trade secrets and proprietary information in the development, marketing, and operation of NovaSpark's competing products and services. The following circumstances support this allegation:
61. First, NovaSpark's ability to secure $12 million in institutional seed funding from a sophisticated venture capital firm, Blackpine Capital Partners LP, within approximately six weeks of incorporation (October 3 to November 15, 2022) is extraordinary and inconsistent with the typical timeline for a newly formed startup without pre-existing technology. Upon information and belief, NovaSpark was able to obtain this funding by presenting investor materials, product demonstrations, and/or prototype technology that were derived from and dependent upon the Lumos proprietary technology and trade secrets misappropriated by the Individual Defendants.
62. Second, upon information and belief, NovaSpark's product-development timeline has been accelerated by an estimated fourteen (14) to eighteen (18) months as a direct result of NovaSpark's possession and use of Lumos's misappropriated trade secrets — including the Model Architecture, Feature Library, DataStream System codebase, and Product Roadmap. Development of comparable technology from scratch, without the benefit of Lumos's proprietary work product, would require a minimum of fourteen to eighteen months of independent research, engineering, and testing, based on industry benchmarks and Lumos's own development experience.
63. Third, NovaSpark's stated product offering — AI-driven alternative-data analytics for hedge funds and proprietary trading desks — so closely mirrors Lumos's existing LumosEdge product that it is implausible that NovaSpark independently conceived and developed its technology in the brief period since its incorporation.
64. Defendants' use of Lumos's trade secrets gives NovaSpark an unfair and unlawful competitive advantage in the marketplace, directly undermines the substantial investments made by Lumos and its investors, and causes ongoing and irreparable harm to Lumos's competitive position, customer relationships, and business prospects.
F. Defendants' Failure to Return Company Materials
65. Under the express terms of their respective PIIAAs, each Individual Defendant was required, upon the termination of his or her employment with Lumos, to immediately return to Lumos all company materials, documents, data, devices, and other property — in both physical and electronic form — and to confirm in writing the deletion of all Lumos proprietary information from personal devices and accounts.
66. None of the three Individual Defendants returned any company materials to Lumos at any time following their respective departures. None of the three Individual Defendants confirmed the deletion of Lumos proprietary information from personal devices or accounts. To the contrary, as detailed above, each Individual Defendant affirmatively exfiltrated Lumos proprietary materials in the days immediately preceding his or her resignation and, upon information and belief, retains and continues to use those materials at NovaSpark.
67. On January 9, 2023, Lumos, through its counsel Calderwood & Harkness LLP, transmitted formal demand letters to each Individual Defendant and to NovaSpark Technologies Inc. The demand letters: (a) identified the specific acts of exfiltration and misappropriation known to Lumos at that time; (b) demanded the immediate return of all Lumos proprietary materials in the possession, custody, or control of each Defendant; (c) demanded that all Defendants immediately cease and desist from all use and disclosure of Lumos's trade secrets and proprietary information; and (d) demanded that all Defendants preserve all electronic devices, accounts, files, communications, and other materials relevant to the matters described herein, including but not limited to all devices, accounts, and files used in connection with the exfiltration and use of Lumos proprietary materials.
68. As of the date of this filing, none of the Defendants have complied with any of the demands set forth in the January 9, 2023 demand letters. None of the Defendants have returned any Lumos proprietary materials, confirmed the deletion of any Lumos proprietary information, or provided any assurance that they have ceased using Lumos's trade secrets.
FIRST CAUSE OF ACTION
MISAPPROPRIATION OF TRADE SECRETS
(California Uniform Trade Secrets Act, Cal. Civ. Code §§ 3426–3426.11)
(Against All Defendants)
69. Lumos incorporates by reference each and every allegation set forth in Paragraphs 1 through 68 above, as though fully set forth herein.
70. The five categories of proprietary technology described in Paragraphs 27 through 38 above — namely, (1) the LumosEdge Ensemble ML Model Architecture, (2) the Proprietary Feature-Engineering Libraries, (3) the DataStream ETL Pipeline Codebase and Data-Schema Definitions, (4) the Curated Training Dataset, and (5) the Confidential Product Roadmap — LumosEdge 3.0 — constitute "trade secrets" within the meaning of California Civil Code Section 3426.1(d). Each category of trade secret derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use, and Lumos has made reasonable efforts under the circumstances to maintain the secrecy of each, as detailed in Paragraph 39 above.
71. Defendants have "misappropriated" Lumos's trade secrets within the meaning of California Civil Code Section 3426.1(b) by, among other acts:
(a) Acquiring Lumos's trade secrets by improper means, including through the unauthorized copying, downloading, transferring, and removal of Lumos's proprietary materials from Lumos's secured systems, in breach of the Individual Defendants' duty to maintain the secrecy of those trade secrets and in breach of their contractual obligations under their respective PIIAAs;
(b) Disclosing Lumos's trade secrets to NovaSpark Technologies Inc. and to third parties, including investors, without Lumos's express or implied consent; and
(c) Using Lumos's trade secrets in the development, marketing, funding, and operation of NovaSpark's competing products and services, without Lumos's express or implied consent.
72. Defendants' misappropriation was willful and malicious within the meaning of California Civil Code Section 3426.3(c). The Individual Defendants knowingly and deliberately exfiltrated Lumos's proprietary materials in the days immediately preceding their respective resignations, as part of a coordinated scheme to steal Lumos's technology and use it to compete against Lumos. Defendants acted with conscious disregard for Lumos's rights and with full knowledge that their conduct was wrongful and in violation of their contractual and legal obligations.
73. As a direct and proximate result of Defendants' misappropriation, Lumos has suffered and continues to suffer irreparable injury, including the loss of the secrecy of its trade secrets, the loss of its competitive advantage, the diversion of business opportunities to a competitor built upon stolen technology, and ongoing harm to Lumos's market position, customer relationships, and business prospects. Such injury is not adequately compensable by monetary damages alone, and Lumos is entitled to injunctive relief pursuant to California Civil Code Section 3426.2, including a temporary restraining order, a preliminary injunction, and a permanent injunction.
74. As a further result of Defendants' misappropriation, Lumos has suffered and continues to suffer actual damages, including the loss of competitive advantage and the diminution in the value of its trade secrets, in an amount to be proven at trial. Lumos is further entitled to recover the unjust enrichment of Defendants caused by the misappropriation, to the extent that such unjust enrichment is not taken into account in computing actual damages, pursuant to California Civil Code Section 3426.3(a).
75. Due to Defendants' willful and malicious misappropriation, Lumos is entitled to an award of exemplary damages in an amount up to twice the award of actual damages, pursuant to California Civil Code Section 3426.3(c).
76. Lumos is further entitled to recover its reasonable attorneys' fees and costs incurred in connection with this action, pursuant to California Civil Code Section 3426.4, because Defendants' misappropriation was willful and malicious.
SECOND CAUSE OF ACTION
BREACH OF CONTRACT (PIIAA)
(Against Defendants Rajiv Anand, Serena Mallick, and Derek Yun)
77. Lumos incorporates by reference each and every allegation set forth in Paragraphs 1 through 76 above, as though fully set forth herein.
78. Each Individual Defendant — Anand, Mallick, and Yun — entered into a valid and enforceable Proprietary Information and Inventions Assignment Agreement ("PIIAA") with Lumos. The PIIAAs are binding contracts supported by adequate consideration, including the offer of employment, access to Lumos proprietary information, compensation, and equity awards.
79. The PIIAAs include, among other material terms:
(a) An assignment of inventions clause vesting ownership of all work product in Lumos;
(b) A confidentiality and non-disclosure provision prohibiting the use or disclosure of Lumos confidential information and trade secrets, surviving termination of employment for a period of three years with respect to confidential information and indefinitely with respect to trade secrets;
(c) A non-solicitation of employees clause prohibiting the solicitation or recruitment of Lumos employees for a period of twelve (12) months following the termination of employment;
(d) A restrictive covenant prohibiting the use or disclosure of Lumos trade secrets at any time during or after employment, without temporal limitation; and
(e) A requirement to return all company materials, documents, data, devices, and other property upon the termination of employment and to confirm in writing the deletion of all Lumos proprietary information from personal devices and accounts.
80. Lumos performed all conditions, covenants, and promises required of it under the PIIAAs, or such conditions were excused or waived. Among other things, Lumos provided employment, compensation, equity awards, and access to resources and proprietary information to each Individual Defendant throughout the term of his or her employment.
81. Each Individual Defendant materially breached the terms of his or her PIIAA by, among other acts:
(i) Failing to return all company materials, documents, data, devices, and other property to Lumos upon termination of employment, and failing to confirm in writing the deletion of all Lumos proprietary information from personal devices and accounts, in violation of the return-of-materials provision;
(ii) Misappropriating and retaining Lumos trade secrets and confidential information, including the Model Architecture files, Feature Library code, DataStream System codebase, and Product Roadmap, in violation of the confidentiality, non-disclosure, and restrictive covenant provisions;
(iii) Using and disclosing Lumos trade secrets and confidential information in connection with the formation, funding, and operation of NovaSpark Technologies Inc., in violation of the confidentiality, non-disclosure, and restrictive covenant provisions; and
(iv) Soliciting and recruiting fellow Lumos employees — namely, each other — to leave Lumos and join NovaSpark, in violation of the non-solicitation of employees provision.
82. As a direct and proximate result of the Individual Defendants' material breaches of their PIIAAs, Lumos has suffered damages, including the loss of its trade secrets, the loss of competitive advantage, the diversion of business opportunities, and other economic and non-economic harm, in an amount to be proven at trial.
THIRD CAUSE OF ACTION
BREACH OF THE DUTY OF LOYALTY
(Against Defendants Rajiv Anand, Serena Mallick, and Derek Yun)
83. Lumos incorporates by reference each and every allegation set forth in Paragraphs 1 through 82 above, as though fully set forth herein.
84. During the term of their employment with Lumos, each Individual Defendant owed Lumos a duty of loyalty arising under California law. The duty of loyalty requires an employee to act in the best interests of the employer, to refrain from competing with the employer during the term of employment, to refrain from diverting the employer's business opportunities for personal gain, and to refrain from misappropriating the employer's property or confidential information for the employee's own benefit or for the benefit of a competitor.
85. Each Individual Defendant breached his or her duty of loyalty to Lumos by, while still employed by Lumos, engaging in a coordinated scheme to:
(i) Plan the formation of NovaSpark Technologies Inc. as a direct competitor to Lumos, while still occupying positions of trust within Lumos's engineering organization;
(ii) Exfiltrate Lumos's proprietary technology and trade secrets from Lumos's secured systems for use at NovaSpark, while still employed by Lumos and still subject to the duty of loyalty; and
(iii) Recruit and solicit fellow Lumos employees — specifically, each other — to leave Lumos and join NovaSpark, while still employed by Lumos.
86. Specifically:
(a) Defendant Anand exfiltrated approximately 3.2 GB of proprietary data on September 26, 2022, and forwarded the LumosEdge 3.0 Product Roadmap on September 28, 2022 — both dates on which Anand was still employed by Lumos and owed Lumos a duty of loyalty;
(b) Defendant Mallick cloned the DataStream ETL pipeline repository on October 10, 2022 — a date on which Mallick was still employed by Lumos and owed Lumos a duty of loyalty; and
(c) Defendant Yun downloaded 47 proprietary Jupyter notebooks on October 18, 2022 — a date on which Yun was still employed by Lumos and owed Lumos a duty of loyalty, and notably a date on which Defendant Mallick had already commenced employment at NovaSpark.
87. Each Individual Defendant's acts of exfiltration, planning, and coordination were undertaken for the Individual Defendants' personal benefit and for the benefit of NovaSpark, in direct conflict with their obligations to Lumos as their employer.
88. As a direct and proximate result of the Individual Defendants' breaches of the duty of loyalty, Lumos has suffered damages, including the loss of its trade secrets, the loss of competitive advantage, the diversion of business opportunities, and other economic and non-economic harm, in an amount to be proven at trial.
FOURTH CAUSE OF ACTION
UNFAIR BUSINESS PRACTICES
(Cal. Bus. & Prof. Code § 17200 *et seq.*)
(Against All Defendants)
89. Lumos incorporates by reference each and every allegation set forth in Paragraphs 1 through 88 above, as though fully set forth herein.
90. Defendants' acts as alleged herein constitute unlawful, unfair, and/or fraudulent business acts or practices within the meaning of California Business and Professions Code Section 17200 et seq. (the "Unfair Competition Law" or "UCL").
91. Defendants' conduct is "unlawful" within the meaning of the UCL because it violates the California Uniform Trade Secrets Act, California Civil Code Sections 3426 through 3426.11, constitutes breach of contract, and constitutes breach of the duty of loyalty, as alleged herein. Each of these violations of law constitutes an independent predicate for UCL liability.
92. Defendants' conduct is "unfair" within the meaning of the UCL because it involves the systematic theft and misappropriation of Lumos's proprietary technology and trade secrets to gain an unfair and illegitimate competitive advantage in the marketplace. Defendants' conduct offends established public policy, is immoral, unethical, oppressive, and unscrupulous, and causes substantial injury to Lumos that is not outweighed by any countervailing benefits to consumers or competition. The gravity of the harm caused by Defendants' conduct — the theft of a competitor's core technology — far outweighs any asserted justification.
93. As a result of Defendants' unlawful, unfair, and/or fraudulent business acts or practices, Lumos has suffered injury in fact and has lost money or property, and Defendants have been unjustly enriched at Lumos's expense.
94. Lumos is entitled to restitution of all monies, revenues, and profits obtained by Defendants through their unlawful, unfair, and/or fraudulent business practices, and to injunctive relief prohibiting Defendants from continuing to engage in such practices, pursuant to California Business and Professions Code Section 17203.
FIFTH CAUSE OF ACTION
CONVERSION.
(Against All Defendants)
95. Lumos incorporates by reference each and every allegation set forth in Paragraphs 1 through 94 above, as though fully set forth herein.
96. Lumos is the rightful owner of the proprietary materials described herein, including the 3.2 GB of model architecture files and hyperparameter configurations exfiltrated by Defendant Anand, the 37-page LumosEdge 3.0 Product Roadmap forwarded by Defendant Anand, the 780 MB DataStream ETL pipeline repository cloned by Defendant Mallick, and the 47 proprietary Jupyter notebooks downloaded by Defendant Yun (collectively, the "Converted Property"). Lumos has a possessory interest in the Converted Property and the right to immediate possession thereof.
97. Defendants have wrongfully exercised dominion and control over Lumos's Converted Property by taking, retaining, copying, and using Lumos's proprietary materials without Lumos's authorization, consent, or approval. Defendants' exercise of dominion and control over the Converted Property is inconsistent with and adverse to Lumos's ownership rights.
98. Lumos, through its counsel Calderwood & Harkness LLP, has demanded the return of all proprietary materials by letters dated January 9, 2023, addressed to each Individual Defendant and to NovaSpark. Defendants have failed and refused to return any of the Converted Property and have failed to confirm the deletion of any copies thereof.
99. As a direct and proximate result of Defendants' conversion of Lumos's property, Lumos has suffered damages in an amount to be proven at trial, including the fair market value of the Converted Property, the diminution in value of Lumos's proprietary technology and trade secrets resulting from the unauthorized copying and retention thereof, and consequential damages flowing from Defendants' wrongful acts.
PRAYER FOR RELIEF
WHEREFORE, Plaintiff Lumos Analytics Inc. respectfully prays for judgment against Defendants NovaSpark Technologies Inc., Rajiv Anand, Serena Mallick, and Derek Yun, jointly and severally where applicable, as follows:
1. Injunctive Relief. For a temporary restraining order, preliminary injunction, and permanent injunction pursuant to California Civil Code Section 3426.2, enjoining all Defendants, and their officers, directors, employees, agents, successors, assigns, and all persons acting in concert or participation with them, from:
(a) Possessing, using, disclosing, exploiting, copying, distributing, or otherwise benefiting from any Lumos trade secrets or proprietary information, including but not limited to the LumosEdge Ensemble ML Model Architecture, the Proprietary Feature-Engineering Libraries, the DataStream ETL Pipeline Codebase and Data-Schema Definitions, the Curated Training Dataset, and the Confidential Product Roadmap — LumosEdge 3.0;
(b) Destroying, altering, deleting, concealing, or otherwise disposing of any Lumos materials, documents, data, files, or any evidence of misappropriation; and
(c) Directly or indirectly soliciting, recruiting, or inducing any current Lumos employee or contractor to leave Lumos's employ or to terminate or reduce his or her engagement with Lumos.
2. Compensatory Damages. For compensatory damages, including actual damages and unjust enrichment caused by Defendants' misappropriation of trade secrets, breach of contract, breach of the duty of loyalty, unfair business practices, and conversion, in an amount to be proven at trial, pursuant to California Civil Code Section 3426.3 and applicable law.
3. Exemplary Damages. For exemplary damages in an amount up to twice the compensatory damages award, pursuant to California Civil Code Section 3426.3(c), on account of Defendants' willful and malicious misappropriation of Lumos's trade secrets.
4. Restitution and Disgorgement. For restitution and disgorgement of all profits, revenues, and benefits obtained by Defendants through their unlawful conduct, pursuant to California Business and Professions Code Section 17203.
5. Attorneys' Fees and Costs. For reasonable attorneys' fees incurred in connection with this action, pursuant to California Civil Code Section 3426.4, and for costs of suit incurred herein pursuant to California Code of Civil Procedure Section 1032.
6. Prejudgment and Post-Judgment Interest. For prejudgment interest and post-judgment interest at the maximum rates permitted by law on all damages, restitution, and other monetary awards.
7. Such Other and Further Relief. For such other and further relief as this Court deems just, equitable, and proper under the circumstances.
DEMAND FOR JURY TRIAL
Plaintiff Lumos Analytics Inc. hereby demands a trial by jury on all claims and issues so triable in this action.
VERIFICATION
I, Priya Chandrasekaran, declare as follows:
I am the Chief Executive Officer of Lumos Analytics Inc., the Plaintiff in this action. I have read the foregoing Verified Complaint for Trade Secret Misappropriation, Breach of Contract, and Related Claims, and I know the contents thereof. The matters stated in the Verified Complaint are true of my own knowledge, except as to those matters which are stated on information and belief, and as to those matters, I believe them to be true.
I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
Dated: January 19, 2023
________________________________________
Priya Chandrasekaran Chief Executive Officer Lumos Analytics Inc.
Dated: January 19, 2023