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CONFIDENTIAL — ATTORNEY WORK PRODUCT — PRIVILEGED

CONFIDENTIAL INFORMATION INVENTORY

Pinnacle Workforce Analytics, Inc.

Categories of Information in Firm Possession Relevant to TruScan 360 Biometric Platform

MEMORANDUM

TO:

Lawrence Keating, Senior Partner & Chair, Conflicts Committee Helen Drazkowski, General Counsel Colleen Farrow, Director, Conflicts & New Business Rachel Bernstein, Partner, Privacy & Data Security

FROM:

Jonathan Mercer, Partner, intellectual Property / Patent Litigation Priya Subramaniam, Associate, intellectual Property

DATE: May 14, 2024

RE: Inventory of Pinnacle Workforce Analytics, Inc. Confidential Information in Calderwood & Harkness's Possession — Matter No. 1031-00001 — Relevance to Proposed MTDC Engagement (Matter No. 1031-00001)

CONFIDENTIALITY LEGEND: This memorandum is prepared at the direction of the firm's General Counsel and Conflicts Committee for the sole purpose of assessing a potential conflict of interest. It is protected by the attorney-client privilege and the work-product doctrine. Distribution is limited to the addressees listed above. Do not forward, copy, or discuss outside the distribution list. Any unauthorized disclosure may constitute a breach of the firm's ethical obligations to Pinnacle Workforce Analytics, Inc. and could give rise to disciplinary proceedings, malpractice liability, and disqualification.

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I. Purpose and Scope

This memorandum inventories, at a categorical level only, the confidential and proprietary information of Pinnacle Workforce Analytics, Inc. ("Pinnacle") currently in Calderwood & Harkness LLP's ("the firm" or "Calderwood & Harkness") possession, custody, or control in connection with the firm's ongoing representation of Pinnacle under Matter No. 1031-00001. The memorandum is intended to provide the Conflicts Committee with a comprehensive, structured view of the nature and scope of confidential client information that may be implicated by the proposed new engagement described below, without disclosing the substance of that information to any person outside the authorized Pinnacle engagement team.

This inventory is prepared in response to the Conflicts Committee's request, formalized during the Committee's meeting on the morning of May 14, 2024, to assess whether the confidential information the firm holds on behalf of Pinnacle bears on the proposed representation of Metropolitan Transit Development Corp. ("MTDC") in Matter No. 1031-00001. The proposed MTDC engagement would involve: (a) the defense of an Illinois Attorney General Civil Investigative Demand (CID Ref. CRB-2024-0417) directed at MTDC's employee biometric-data practices; (b) the defense of a putative employee class action filed in the Circuit Court of Cook County (Case No. 2024-CH-04417) alleging violations of the Illinois Biometric Information Privacy Act, 740 ILCS 14/1 et seq. ("BIPA"), and the Illinois Personal Information Protection Act, 815 ILCS 530/1 et seq. ("PIPA"); and (c) the investigation and prosecution of anticipated cross-claims and indemnification demands against Pinnacle arising under the Pinnacle–MTDC Master Software License and Services Agreement dated June 15, 2021 (the "MSLA").

The scope of this inventory is deliberately limited to categories — not substance. Consistent with the firm's continuing fiduciary obligations to Pinnacle as a current client under Illinois Rules of Professional Conduct 1.6 and 1.9, this memorandum describes only the types and general nature of confidential information in the firm's files. No Pinnacle confidential information has been, or will be, disclosed to the proposed MTDC engagement team, which the Conflicts & New Business Department has identified as consisting of Rachel Bernstein (Partner, Privacy & Data Security), Miriam Calloway (Senior Associate, Privacy & Data Security), Devon Archer (Associate, Complex Commercial Litigation), and Nadia Petrov (Associate, Government Investigations).

The undersigned have personally reviewed the firm's physical and electronic files under Matter No. 1031-00001 and consulted with members of the Pinnacle engagement team in preparing this inventory. We have endeavored to be comprehensive, though we note that additional categories of confidential information may exist in informal communications (e.g., telephone call notes, in-person meeting notes) that are not centrally indexed in the firm's document management system.

II. Background on the Pinnacle Engagement

A. Overview of the Client Relationship

Calderwood & Harkness has represented Pinnacle Workforce Analytics, Inc. since 2019, when the firm was initially retained by Pinnacle's then-General Counsel, Margaret Holloway, to provide patent-landscape counseling and freedom-to-operate analyses related to biometric workforce-management technologies. The engagement was formalized and expanded under Matter No. 1031-00001, opened on March 14, 2022, to encompass patent-licensing negotiations and enforcement litigation related to Pinnacle's flagship biometric workforce-management product, the TruScan 360 Biometric Platform ("TruScan 360").

B. TruScan 360 — Product Overview

TruScan 360 is an AI-powered timekeeping, attendance-tracking, and workforce-scheduling platform that utilizes three distinct modalities of biometric identification: (i) fingerprint scanning, (ii) facial-geometry recognition, and (iii) iris-scan verification. The platform is marketed to large employers — including government agencies, transit authorities, healthcare systems, and logistics companies — as a means of ensuring accurate, fraud-resistant timekeeping and workforce management. According to publicly available marketing materials, TruScan 360 serves over 240 enterprise clients and processes biometric data for approximately 1.8 million active employees across the United States.

C. The Active Litigation Matter

The active matter under Matter No. 1031-00001 involves patent-infringement claims that Pinnacle brought against Veritas Biometrics Corp. ("Veritas") in the United States District Court for the Eastern District of Virginia, Alexandria Division (Case No. 1:22-cv-01533-LMB-IDD), filed on September 6, 2022. The complaint asserts infringement of three United States utility patents owned by Pinnacle: U.S. Patent Nos. 10,XXX,891; 10,XXX,217; and 11,XXX,503 (the "Asserted Patents"). The case is currently in the expert-discovery phase, with a Markman hearing completed on November 17, 2023, and a trial date set for February 3, 2025.

In connection with this litigation, the firm has obtained extensive access to Pinnacle's proprietary technical documentation, source-code summaries, algorithm design materials, and commercial and financial data, as detailed in Section III below.

D. Pinnacle Engagement Team and Client Contacts

The Pinnacle engagement team at Calderwood & Harkness consists of the following individuals:

• Responsible and Billing Partner: Jonathan Mercer, Partner, intellectual Property / Patent Litigation

• Lead Associate: Priya Subramaniam, Associate, intellectual Property

• Additional Team Members: Two contract patent agents and one litigation paralegal, all of whom are subject to the firm's standard confidentiality protocols and have executed supplemental nondisclosure agreements at Pinnacle's request

On the client side, the firm's primary contacts are:

• Sandra Yee, General Counsel, Pinnacle Workforce Analytics, Inc.

• Gregory Harmon, Chief Executive Officer, Pinnacle Workforce Analytics, Inc.

Both Ms. Yee and Mr. Harmon have been directly and extensively involved in directing the firm's work and have shared confidential business, technical, and strategic information with the engagement team on a regular basis throughout the representation. The firm also has had direct contact with Pinnacle's Vice President of Engineering, Dr. Anil Kapoor, and its Chief Information Security Officer, Maria del Carmen Reyes, both of whom have provided technical briefings and documentation to the firm.

E. Financial Scope of the Engagement

For fiscal year 2023 (the most recent full fiscal year), actual billings from Pinnacle totaled $2,137,500, making Pinnacle a significant client of the firm's intellectual Property practice group. Year-to-date billings through April 30, 2024 are approximately $1,045,000. The relationship is ongoing, with active work continuing in preparation for the February 2025 trial.

F. Client Entity Information

Pinnacle Workforce Analytics, Inc. is a Delaware corporation headquartered at 11900 Sunrise Valley Drive, Suite 500, Reston, Virginia 20191. Its registered agent in Delaware is Crowne Albany Corporation, located at Cobalt Ridge Technologies, 1209 Orange Street, Wilmington, Delaware 19801. Pinnacle's federal Employer Identification Number is 54-2198437. Pinnacle is a privately held corporation; its principal investors include Ridgeline Capital Partners, L.P. and Harmon Family Holdings, LLC.

III. Categories of Pinnacle Confidential Information in Firm Possession

The following subsections identify the categories of confidential and proprietary information of Pinnacle currently maintained in Calderwood & Harkness's physical and electronic files under Matter No. 1031-00001. For each category, a brief description of the type of information is provided, followed by a notation regarding its potential relevance to the proposed MTDC engagement. No substantive content is disclosed.

A. Technical Specifications — TruScan 360 Platform

The firm possesses detailed technical specifications of the TruScan 360 platform architecture, including hardware interface requirements, software module descriptions, and system integration protocols governing TruScan 360's interaction with third-party enterprise resource planning ("ERP") and human capital management ("HCM") systems. These specifications were provided by Pinnacle's engineering team at the firm's request to support claim-construction analysis and infringement contentions in the Veritas litigation.

The technical specifications include, among other materials, documentation regarding the platform's biometric capture mechanisms across all three modalities — fingerprint scanning, facial-geometry recognition, and iris-scan technology. This documentation addresses sensor specifications, data-capture workflows, the sequencing of biometric enrollment and verification events, and the technical parameters governing the quality and fidelity of biometric data captured at the employee-facing terminal.

The specifications also describe the communication protocols between TruScan 360's edge devices (biometric terminals deployed at customer sites) and Pinnacle's centralized cloud infrastructure, including data transmission frequencies, bandwidth requirements, and failover mechanisms.

Relevance to Proposed MTDC Engagement: These specifications describe the precise manner in which TruScan 360 collects, processes, and transmits biometric data. This information is directly relevant to whether TruScan 360's data-collection and data-handling practices comply with the requirements of BIPA (740 ILCS 14/1 et seq.), including the informed-consent requirements of Section 15(b), the prohibition on profiting from biometric data under Section 15(c), and the data-security obligations of Section 15(e). The specifications are also relevant to compliance with the Illinois Personal Information Protection Act (815 ILCS 530/1 et seq.). An attorney representing MTDC in the AG CID response or the class action would derive significant strategic advantage from knowledge of these specifications, which illuminate the technical operation of the very system at issue in those proceedings.

B. Source-Code Architecture Summaries

The firm possesses high-level and intermediate-level summaries of TruScan 360's source-code architecture. These summaries were prepared by Pinnacle's engineering team, in some instances with input from the firm's patent agents, to support patent-prosecution activities and the development of patent-litigation strategy in the Veritas matter. The summaries were provided under the terms of a Source Code Access and Nondisclosure Protocol agreed between the parties in the Veritas litigation (Dkt. No. 87, entered January 12, 2023), and separately under Pinnacle's standing engagement letter with the firm.

These source-code architecture summaries describe the logical structure of TruScan 360's codebase, including — at a functional level — the manner in which biometric inputs are captured, preprocessed, converted into biometric templates, matched against stored templates, and retained in Pinnacle's database infrastructure. The summaries also address the modular organization of TruScan 360's software, including the separation (or lack thereof) between biometric-processing functions and analytics functions.

Relevance to Proposed MTDC Engagement: An understanding of TruScan 360's source-code architecture would provide material insight into the platform's data-handling practices — specifically, how biometric identifiers and biometric information (as those terms are defined in BIPA §10) are processed, stored, and retained. This knowledge is directly pertinent to the factual and legal issues at the heart of the BIPA claims that MTDC would need to defend and, potentially, shift to Pinnacle through cross-claims. Knowledge of the source-code architecture would also be relevant to assessing whether TruScan 360's default configuration facilitates or impedes its licensees' compliance with applicable biometric-privacy laws.

C. Data-Flow Diagrams

The firm possesses comprehensive data-flow diagrams illustrating how biometric data moves through TruScan 360 from the point of initial capture at the employee-facing terminal, through intermediate processing servers, to long-term storage repositories and downstream analytics modules. These diagrams were originally prepared by Pinnacle's engineering team for internal use and were subsequently provided to the firm in connection with the preparation of infringement claim charts and technical expert reports in the Veritas litigation.

The data-flow diagrams identify, in granular detail, each touchpoint at which biometric data exists at rest and in transit. They specify the encryption protocols applied at each stage (including the type of encryption, key lengths, and key-management practices), the points at which biometric data is converted from raw biometric samples into mathematical templates, and the interfaces through which biometric data or derivative data may be shared with third-party systems, including analytics platforms, workforce-management dashboards, and client-operated reporting tools.

Several of the data-flow diagrams also depict the data lifecycle from collection to destruction, including the conditions under which biometric data is retained, archived, or purged, and the technical mechanisms (automated and manual) by which data destruction is effectuated.

Relevance to Proposed MTDC Engagement: These data-flow diagrams would be central to any BIPA compliance analysis, as they illuminate whether and how biometric data is disseminated to third parties, how it is stored, the duration of storage, and the process by which it is ultimately destroyed — all of which are key statutory compliance questions under BIPA §15. Specifically, BIPA §15(d) prohibits the sale, lease, trade, or other profiting from a person's biometric identifier or biometric information, and BIPA §15(a) requires the establishment of a retention schedule and destruction guidelines. The data-flow diagrams in the firm's possession would allow a knowledgeable attorney to map TruScan 360's actual data practices against each of BIPA's substantive requirements with a high degree of precision. This knowledge would be of enormous strategic value to any party litigating against Pinnacle on BIPA-related theories.

D. Biometric-Data Retention Policies

The firm possesses copies of Pinnacle's internal data-retention policies governing biometric identifiers and biometric information collected via TruScan 360. These policies address retention schedules for biometric data across each of the three modalities (fingerprint, facial geometry, and iris scan), as well as the protocols for the permanent destruction of biometric data upon satisfaction of the initial purpose of collection or upon the termination of the employment relationship between the data subject and the relevant Pinnacle customer.

The retention-policy documents also describe the client-configurable retention settings available within TruScan 360 — that is, the settings that Pinnacle's customers, such as MTDC, have the ability to adjust to tailor biometric-data retention to their own compliance requirements and internal policies. These configurable settings include retention-period durations, automated deletion triggers, and exception-handling procedures for disputed or flagged biometric records.

In addition, the firm possesses internal memoranda prepared by Pinnacle's legal and compliance team analyzing the adequacy of TruScan 360's retention practices under various state biometric-privacy laws, including BIPA, the Texas Capture or Use of Biometric Identifier Act (Tex. Bus. & Com. Code §503.001), and the Washington Biometric Identifiers statute (Wash. Rev. Code §19.375.020). These memoranda were shared with the firm to inform the firm's counseling work and litigation strategy.

Relevance to Proposed MTDC Engagement: BIPA §15(a) requires that a private entity in possession of biometric identifiers or biometric information develop a written policy, made available to the public, establishing a retention schedule and guidelines for permanently destroying biometric identifiers and biometric information when the initial purpose for collecting or obtaining such identifiers or information has been satisfied or within three years of the individual's last interaction with the private entity, whichever occurs first. The internal retention policies in the firm's possession bear directly on whether Pinnacle's platform is designed to facilitate or impede its customers' BIPA compliance. They are also directly relevant to the indemnification arguments MTDC would pursue under the MSLA, to the extent MTDC would contend that Pinnacle's platform defaults caused or contributed to MTDC's alleged BIPA violations. Knowledge of the client-configurable settings, in particular, would be strategically significant in assessing the allocation of fault between Pinnacle and MTDC.

E. Algorithm Design Documents

The firm possesses design documentation for TruScan 360's proprietary biometric-recognition algorithms, which constitute the core intellectual property at issue in the Veritas litigation. These documents describe the machine-learning models used for facial-geometry matching, fingerprint identification, and iris-scan verification, including the neural network architectures, training methodologies, and optimization techniques employed by Pinnacle's engineering team.

The algorithm design documentation further includes specifications regarding algorithm training data — including the sources, volume, and demographic composition of training datasets — as well as accuracy and performance metrics, including false-positive rates, false-negative rates, and performance benchmarks across varying environmental conditions (lighting, angle, skin condition, etc.). The documentation also addresses the algorithmic decision-making logic governing match/no-match determinations and the confidence thresholds applied at each stage of biometric verification.

These materials were provided to the firm to support the preparation of infringement claim charts, the development of claim-construction positions, and the drafting of expert reports in the Veritas litigation. They reflect Pinnacle's most sensitive trade secrets and proprietary methodologies.

Relevance to Proposed MTDC Engagement: The algorithm design documents are the core subject matter of the patent-enforcement action against Veritas Biometrics Corp. (Case No. 1:22-cv-01533), in which the firm argues on Pinnacle's behalf that the algorithms are innovative, legitimate, and commercially valuable. A representation of MTDC in the AG CID response and employee class action would require the firm to characterize these same algorithms as components of an unlawful biometric surveillance system that violated the privacy rights of approximately 12,400 current and former MTDC employees. This would place the firm in the position of simultaneously championing and condemning the identical technology on behalf of two different clients — a fundamentally irreconcilable position that no ethical screen or information barrier could adequately address.

F. Patent-Prosecution Correspondence

The firm possesses correspondence between Pinnacle and Calderwood & Harkness — as well as correspondence between Pinnacle and its prior patent counsel, Whitfield & Crane LLP — relating to the prosecution of patents covering TruScan 360's biometric-recognition technology before the United States Patent and Trademark Office ("USPTO"). This correspondence was provided to the firm when Pinnacle transitioned its patent work to Calderwood & Harkness in 2019 and has been supplemented on an ongoing basis as new patent applications have been filed and existing applications have been prosecuted.

The patent-prosecution correspondence includes patent applications (both filed and pending), responses to office actions, amendments to patent claims, declarations and affidavits submitted to the USPTO, interview summaries with patent examiners, and internal analyses of prosecution-history estoppel and its implications for the scope of the Asserted Patents in the Veritas litigation. The correspondence also includes prior-art search results and analyses of the patentability of various features of TruScan 360 over the cited prior art.

Relevance to Proposed MTDC Engagement: Patent-prosecution files contain detailed descriptions of the claimed inventions and their intended uses, often including representations about data-handling practices, the nature of the biometric data collected, and the purposes for which the technology was designed. These representations may have implications for the BIPA analysis, particularly with respect to whether TruScan 360 was designed and marketed for purposes that are consistent or inconsistent with BIPA's requirements. Moreover, prosecution-history estoppel and claim-scope issues in the Veritas litigation intersect with the characterization of TruScan 360's functionality that would be at issue in the BIPA proceedings. The firm's deep familiarity with the prosecution history provides strategic insight that would be difficult to replicate and impossible to effectively screen.

G. Litigation Strategy and Work-Product Materials

The firm possesses a substantial body of attorney work product generated in connection with the ongoing prosecution of Pinnacle Workforce Analytics, Inc. v. Veritas Biometrics Corp., Case No. 1:22-cv-01533. This work product includes, but is not limited to:

(a) Litigation strategy memoranda addressing case theory, anticipated defenses, and overall prosecution strategy;

(b) Claim-construction analyses, including the firm's Markman brief, proposed claim constructions, and internal assessments of claim-construction risks;

(c) Expert-witness reports, in both draft and final form, including technical reports on infringement and invalidity and economic reports on damages;

(d) Deposition preparation outlines for fact and expert witnesses, including outlines for depositions of Pinnacle's own witnesses (which necessarily reflect the firm's assessment of favorable and unfavorable testimony);

(e) Damages theories and supporting analyses, including reasonable-royalty calculations, lost-profits models, and apportionment analyses;

(f) Mediation and settlement strategy memoranda, including assessments of case value and negotiation parameters authorized by Pinnacle; and

(g) Trial preparation materials, including motions in limine, jury instructions, and demonstrative exhibits.

These materials necessarily incorporate and reflect Pinnacle's confidential technical and business information categorized in Sections III.A through III.F above. They also reflect the firm's mental impressions, conclusions, opinions, and legal theories — the quintessential core work product entitled to the highest level of protection.

Relevance to Proposed MTDC Engagement: While these materials are protected attorney work product, their existence and the firm's intimate knowledge of the litigation strategy developed for Pinnacle significantly heighten the material-limitation conflict under Illinois Rule of Professional Conduct 1.7(a)(2). The firm's attorneys who have developed and internalized this strategy cannot simply "forget" their knowledge of Pinnacle's litigation vulnerabilities, settlement posture, and strategic priorities. To the extent that the MTDC engagement would involve cross-claims against Pinnacle, the firm's knowledge of Pinnacle's litigation approach, risk tolerance, and authorized settlement parameters would confer an unfair and impermissible advantage.

H. Commercial and Financial Information

The firm possesses a range of Pinnacle's commercial and financial information, shared in connection with establishing damages in the patent-enforcement action against Veritas. This information includes:

(a) Pinnacle's revenue data, including annual and quarterly revenue figures, revenue growth trends, and revenue attributable to TruScan 360 as compared to other Pinnacle products;

(b) Licensing-fee structures, including standard and negotiated per-employee-per-month pricing tiers, volume discounts, and pricing models offered to different customer segments (government, healthcare, logistics, etc.);

(c) Customer lists, including the identities of Pinnacle's enterprise clients, the contract values associated with those clients, and the term and renewal status of each engagement;

(d) Market-positioning analyses, competitive intelligence reports, and internal assessments of Pinnacle's market share relative to competitors, including Veritas; and

(e) Information regarding the Pinnacle–MTDC MSLA, including the total contract value ($8,700,000 over a five-year initial term ending June 14, 2026, with a three-year optional renewal), the annualized contract value ($1,740,000 per year), and the specific contractual provisions governing indemnification, limitation of liability, representations and warranties regarding legal compliance, and allocation of responsibility for data-privacy compliance between Pinnacle (as the technology vendor) and MTDC (as the licensee-employer).

Relevance to Proposed MTDC Engagement: The firm's knowledge of the MSLA's indemnification terms and Pinnacle's financial position is directly relevant to the cross-claims MTDC would pursue against Pinnacle. An attorney representing MTDC who possessed knowledge of the MSLA's indemnification cap (if any), the contractual allocation of data-privacy compliance obligations, and the representations Pinnacle made regarding TruScan 360's legal compliance would have a significant and unfair strategic advantage in prosecuting those cross-claims. Similarly, knowledge of Pinnacle's revenue data and financial condition would inform settlement strategy and damages calculations in ways that would be prejudicial to Pinnacle's interests.

IV. Relevance to the Proposed MTDC Engagement

A. Scope of the Proposed Representation

The proposed MTDC engagement (Matter No. 1031-00001) would require Calderwood & Harkness to undertake the following on behalf of Metropolitan Transit Development Corp.:

1. Defense of the AG CID. Respond to the Illinois Attorney General's Civil Investigative Demand (CID Ref. CRB-2024-0417), which seeks extensive documentation and testimony regarding MTDC's use of biometric-identification technology in connection with employee timekeeping and workforce management. The CID specifically references TruScan 360 by name and requests information regarding MTDC's data-collection practices, informed-consent procedures, data-retention and destruction policies, and contractual arrangements with Pinnacle.

2. Defense of the Employee Class Action. Defend MTDC in the putative class action filed in the Circuit Court of Cook County (Case No. 2024-CH-04417), in which a putative class of approximately 12,400 current and former MTDC employees alleges that MTDC violated BIPA §15(a), (b), (d), and (e) and PIPA by collecting, storing, using, and disseminating biometric identifiers and biometric information through TruScan 360 without obtaining legally adequate informed consent, without publishing a compliant retention-and-destruction policy, and without implementing adequate data-security measures.

3. Cross-Claims Against Pinnacle. Investigate and, as appropriate, prosecute cross-claims and indemnification demands against Pinnacle under the MSLA dated June 15, 2021, seeking to shift liability for any BIPA and PIPA violations — and any resulting damages, penalties, and attorneys' fees — to Pinnacle as the designer, developer, and licensor of TruScan 360.

4. Characterization of TruScan 360. In furtherance of the foregoing, argue that TruScan 360's biometric-data collection, storage, and dissemination practices violated BIPA and PIPA, and characterize TruScan 360 as an unlawful surveillance tool that was designed, configured, and deployed in a manner that did not comply with applicable biometric-privacy laws.

B. Direct Overlap with Confidential Information

Every category of confidential information inventoried in Section III above is directly relevant to one or more of the tasks that the proposed MTDC engagement would entail. The following table summarizes the overlap:

C. The Irreconcilable Positional Conflict

The proposed MTDC engagement would require the firm to adopt a litigation posture that is diametrically opposed to its current position in the Veritas litigation. In Pinnacle v. Veritas, the firm affirmatively argues — and has argued for nearly two years — that TruScan 360's biometric-recognition algorithms are innovative, commercially valuable, and deserving of patent protection. The firm has submitted declarations, expert reports, and legal briefs making precisely this argument. Representing MTDC would require the firm to argue, in a different forum but concerning the identical technology, that TruScan 360 is an unlawful biometric surveillance tool that collects, stores, and uses biometric data in violation of Illinois law. These positions are fundamentally irreconcilable and cannot coexist within a single law firm, regardless of the information barriers that might be erected.

D. Impossibility of Effective Screening

The firm's deep knowledge of TruScan 360's technical architecture, data-handling practices, retention policies, algorithm design, and commercial terms — obtained from Pinnacle in confidence and over the course of a five-year attorney-client relationship — could not be "unknowed" or effectively screened from the proposed MTDC engagement team. The information is of such breadth and centrality to the proposed new matter that even the most rigorous ethical screen would be insufficient to eliminate the risk of prejudice to Pinnacle's interests. Moreover, the positional conflict identified above is not amenable to screening, as it involves the institutional posture of the firm itself, not merely the knowledge of individual attorneys.

V. Conclusions and Recommendations

Based on the foregoing inventory and analysis, the Pinnacle engagement team offers the following conclusions and recommendations for the Conflicts Committee's consideration:

1. Heightened Conflict Under Rules 1.7(a)(1) and 1.7(a)(2). The breadth and depth of Pinnacle confidential information in the firm's possession significantly heighten the conflict identified under Illinois Rules of Professional Conduct 1.7(a)(1) (direct adversity — the proposed MTDC engagement would involve cross-claims directly adverse to Pinnacle, a current client) and 1.7(a)(2) (material limitation — the firm's duties to Pinnacle would materially limit its ability to represent MTDC fully and competently, and vice versa).

2. Core Relevance, Not Peripheral. The information inventoried in Section III is not peripheral or tangentially related to the proposed MTDC engagement. To the contrary, it goes to the very core of the legal and factual issues MTDC would need to litigate. The technical specifications, data-flow diagrams, retention policies, and algorithm design documents describe the precise technology and practices that are the subject of the AG CID, the class action, and the anticipated cross-claims. There is no meaningful way to segregate the firm's representation of Pinnacle from the issues raised by the proposed MTDC engagement.

3. No Prior Disclosure. The Pinnacle engagement team (Mercer, Subramaniam) confirms that no Pinnacle confidential information has been shared with any member of the proposed MTDC engagement team (Bernstein, Calloway, Archer, Petrov) at any time, whether formally or informally. The firm's document management system access logs confirm that no member of the proposed MTDC engagement team has accessed any file under Matter No. 1031-00001.

4. Recommendation: Decline the MTDC Engagement. This inventory supports the Conflicts Committee's determination that the conflict presented by the proposed MTDC engagement is not capable of waiver under Illinois Rule of Professional Conduct 1.7(b), because the firm cannot reasonably believe that it will be able to provide competent and diligent representation to both Pinnacle and MTDC simultaneously, and because the representation involves the assertion of a claim by one client against another client represented by the firm in the same or a substantially related matter. Accordingly, Calderwood & Harkness must decline the proposed MTDC engagement under Matter No. 1031-00001.

5. Continued Safeguarding of Pinnacle Information. The firm should continue to safeguard all Pinnacle confidential information in accordance with its obligations as Pinnacle's current counsel under Illinois Rules of Professional Conduct 1.6, the terms of the Pinnacle engagement letter, and the Source Code Access and Nondisclosure Protocol in the Veritas litigation. No changes to the firm's information-security protocols with respect to Pinnacle materials are warranted at this time, provided the MTDC engagement is declined.

6. Documentation and File Retention. This memorandum and any related Conflicts Committee deliberations should be retained in the firm's conflicts-management files and treated as privileged attorney-client communications and attorney work product. A copy of this memorandum should not be provided to Pinnacle, MTDC, or any third party absent express authorization from the General Counsel.

VI. Certification

I, Jonathan Mercer, certify that, to the best of my knowledge, information, and belief formed after reasonable inquiry, this memorandum accurately describes the categories of Pinnacle Workforce Analytics, Inc. confidential information in Calderwood & Harkness LLP's possession, custody, or control that are relevant to the TruScan 360 Biometric Platform and the proposed MTDC engagement (Matter No. 1031-00001). I further certify that no Pinnacle confidential information has been disclosed to the proposed MTDC engagement team — consisting of Rachel Bernstein, Miriam Calloway, Devon Archer, and Nadia Petrov — or to any other unauthorized person, at any time, whether in connection with the proposed MTDC engagement or otherwise.

This certification is made as of the date of this memorandum and is based upon my personal knowledge and my review of the firm's physical and electronic files under Matter No. 1031-00001, as well as consultations with the members of the Pinnacle engagement team.

CALDERWOOD & HARKNESS LLP

By: ________

Name: Jonathan Mercer

Title: Partner, intellectual Property / Patent Litigation

Calderwood & Harkness LLP One North Wacker Drive, Suite 4200 Chicago, Illinois 60606

Date: ________

CALDERWOOD & HARKNESS LLP

By: ________

Name: Priya Subramaniam

Title: Associate, intellectual Property

Calderwood & Harkness LLP One North Wacker Drive, Suite 4200 Chicago, Illinois 60606

Date: ________

Appendix — Index of Physical and Electronic File Locations (Referenced Only)

NOTE: The underlying documents referenced in this Appendix are maintained in the firm's secure document management system ("DMS") under Matter No. 1031-00001 with restricted access limited to the authorized Pinnacle engagement team (Jonathan Mercer, Priya Subramaniam, and designated support personnel). Access permissions are administered by the firm's Information Technology Department in coordination with the Conflicts & New Business Department. This Appendix references file locations by DMS identification numbers only; it does not reproduce or summarize any substantive content of the documents contained therein.

Total estimated document count: Approximately 2,160 documents across all categories.

All documents are subject to the confidentiality obligations set forth in the Pinnacle engagement letter dated March 14, 2022 (as amended), the Protective Order entered in Pinnacle Workforce Analytics, Inc. v. Veritas Biometrics Corp., Case No. 1:22-cv-01533 (Dkt. No. 45, entered July 28, 2022), and the Source Code Access and Nondisclosure Protocol (Dkt. No. 87, entered January 12, 2023). Certain documents within DMS Folder 2022-1847-ALG are additionally designated "Highly Confidential — Attorneys' Eyes Only" under the terms of the Protective Order and may be accessed only by the attorneys of record and designated outside experts.

No physical files exist outside the DMS. All original documents provided by Pinnacle in hard copy have been scanned and uploaded to the DMS, and the originals have been returned to Pinnacle or securely destroyed, in each case as documented in the firm's chain-of-custody log maintained by the Pinnacle engagement team's designated paralegal.

End of Memorandum

CONFIDENTIAL — ATTORNEY WORK PRODUCT — PRIVILEGED This document is the property of Calderwood & Harkness LLP and is prepared solely for the internal use of the addressees. Unauthorized reproduction, distribution, or disclosure is strictly prohibited.

Information Category	AG CID Defense	Class Action Defense	Cross-Claims v. Pinnacle
A. Technical Specifications	Directly relevant	Directly relevant	Directly relevant
B. Source-Code Architecture	Relevant	Directly relevant	Directly relevant
C. Data-Flow Diagrams	Directly relevant	Directly relevant	Directly relevant
D. Retention Policies	Directly relevant	Directly relevant	Directly relevant
E. Algorithm Design	Relevant	Directly relevant	Relevant
F. Patent-Prosecution Correspondence	Relevant	Relevant	Relevant
G. Litigation Strategy / Work Product	—	—	Directly relevant
H. Commercial / Financial Information	Relevant	Relevant	Directly relevant
Category	DMS Folder Reference	Approximate Volume	Access Restriction Level
A. Technical Specifications — TruScan 360 Platform	DMS Folder 2022-1847-TECH	~340 documents	Restricted — Pinnacle Team Only
B. Source-Code Architecture Summaries	DMS Folder 2022-1847-SCA	~85 documents	Restricted — Pinnacle Team Only; additional Source Code Protocol restrictions apply
C. Data-Flow Diagrams	DMS Folder 2022-1847-DFD	~120 documents	Restricted — Pinnacle Team Only
D. Biometric-Data Retention Policies	DMS Folder 2022-1847-RET	~55 documents	Restricted — Pinnacle Team Only
E. Algorithm Design Documents	DMS Folder 2022-1847-ALG	~210 documents	Restricted — Pinnacle Team Only; designated "Highly Confidential — Attorneys' Eyes Only" under Veritas Protective Order
F. Patent-Prosecution Correspondence	DMS Folder 2022-1847-PAT	~475 documents	Restricted — Pinnacle Team Only
G. Litigation Strategy and Work-Product Materials	DMS Folder 2022-1847-LIT	~680 documents	Restricted — Pinnacle Team Only; work-product protection applies
H. Commercial and Financial Information	DMS Folder 2022-1847-COM	~195 documents	Restricted — Pinnacle Team Only

CONFIDENTIAL — ATTORNEY WORK PRODUCT — PRIVILEGED
CONFIDENTIAL INFORMATION INVENTORY
Pinnacle Workforce Analytics, Inc.
Categories of Information in Firm Possession Relevant to TruScan 360 Biometric Platform
MEMORANDUM
TO:
Lawrence Keating, Senior Partner & Chair, Conflicts Committee Helen Drazkowski, General Counsel Colleen Farrow, Director, Conflicts & New Business Rachel Bernstein, Partner, Privacy & Data Security
FROM:
Jonathan Mercer, Partner, intellectual Property / Patent Litigation Priya Subramaniam, Associate, intellectual Property
DATE: May 14, 2024
RE: Inventory of Pinnacle Workforce Analytics, Inc. Confidential Information in Calderwood & Harkness's Possession — Matter No. 1031-00001 — Relevance to Proposed MTDC Engagement (Matter No. 1031-00001)
CONFIDENTIALITY LEGEND: This memorandum is prepared at the direction of the firm's General Counsel and Conflicts Committee for the sole purpose of assessing a potential conflict of interest. It is protected by the attorney-client privilege and the work-product doctrine. Distribution is limited to the addressees listed above. Do not forward, copy, or discuss outside the distribution list. Any unauthorized disclosure may constitute a breach of the firm's ethical obligations to Pinnacle Workforce Analytics, Inc. and could give rise to disciplinary proceedings, malpractice liability, and disqualification.
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I. Purpose and Scope
This memorandum inventories, at a categorical level only, the confidential and proprietary information of Pinnacle Workforce Analytics, Inc. ("Pinnacle") currently in Calderwood & Harkness LLP's ("the firm" or "Calderwood & Harkness") possession, custody, or control in connection with the firm's ongoing representation of Pinnacle under Matter No. 1031-00001. The memorandum is intended to provide the Conflicts Committee with a comprehensive, structured view of the nature and scope of confidential client information that may be implicated by the proposed new engagement described below, without disclosing the substance of that information to any person outside the authorized Pinnacle engagement team.
This inventory is prepared in response to the Conflicts Committee's request, formalized during the Committee's meeting on the morning of May 14, 2024, to assess whether the confidential information the firm holds on behalf of Pinnacle bears on the proposed representation of Metropolitan Transit Development Corp. ("MTDC") in Matter No. 1031-00001. The proposed MTDC engagement would involve: (a) the defense of an Illinois Attorney General Civil Investigative Demand (CID Ref. CRB-2024-0417) directed at MTDC's employee biometric-data practices; (b) the defense of a putative employee class action filed in the Circuit Court of Cook County (Case No. 2024-CH-04417) alleging violations of the Illinois Biometric Information Privacy Act, 740 ILCS 14/1 et seq. ("BIPA"), and the Illinois Personal Information Protection Act, 815 ILCS 530/1 et seq. ("PIPA"); and (c) the investigation and prosecution of anticipated cross-claims and indemnification demands against Pinnacle arising under the Pinnacle–MTDC Master Software License and Services Agreement dated June 15, 2021 (the "MSLA").
The scope of this inventory is deliberately limited to categories — not substance. Consistent with the firm's continuing fiduciary obligations to Pinnacle as a current client under Illinois Rules of Professional Conduct 1.6 and 1.9, this memorandum describes only the types and general nature of confidential information in the firm's files. No Pinnacle confidential information has been, or will be, disclosed to the proposed MTDC engagement team, which the Conflicts & New Business Department has identified as consisting of Rachel Bernstein (Partner, Privacy & Data Security), Miriam Calloway (Senior Associate, Privacy & Data Security), Devon Archer (Associate, Complex Commercial Litigation), and Nadia Petrov (Associate, Government Investigations).
The undersigned have personally reviewed the firm's physical and electronic files under Matter No. 1031-00001 and consulted with members of the Pinnacle engagement team in preparing this inventory. We have endeavored to be comprehensive, though we note that additional categories of confidential information may exist in informal communications (e.g., telephone call notes, in-person meeting notes) that are not centrally indexed in the firm's document management system.
II. Background on the Pinnacle Engagement
A. Overview of the Client Relationship
Calderwood & Harkness has represented Pinnacle Workforce Analytics, Inc. since 2019, when the firm was initially retained by Pinnacle's then-General Counsel, Margaret Holloway, to provide patent-landscape counseling and freedom-to-operate analyses related to biometric workforce-management technologies. The engagement was formalized and expanded under Matter No. 1031-00001, opened on March 14, 2022, to encompass patent-licensing negotiations and enforcement litigation related to Pinnacle's flagship biometric workforce-management product, the TruScan 360 Biometric Platform ("TruScan 360").
B. TruScan 360 — Product Overview
TruScan 360 is an AI-powered timekeeping, attendance-tracking, and workforce-scheduling platform that utilizes three distinct modalities of biometric identification: (i) fingerprint scanning, (ii) facial-geometry recognition, and (iii) iris-scan verification. The platform is marketed to large employers — including government agencies, transit authorities, healthcare systems, and logistics companies — as a means of ensuring accurate, fraud-resistant timekeeping and workforce management. According to publicly available marketing materials, TruScan 360 serves over 240 enterprise clients and processes biometric data for approximately 1.8 million active employees across the United States.
C. The Active Litigation Matter
The active matter under Matter No. 1031-00001 involves patent-infringement claims that Pinnacle brought against Veritas Biometrics Corp. ("Veritas") in the United States District Court for the Eastern District of Virginia, Alexandria Division (Case No. 1:22-cv-01533-LMB-IDD), filed on September 6, 2022. The complaint asserts infringement of three United States utility patents owned by Pinnacle: U.S. Patent Nos. 10,XXX,891; 10,XXX,217; and 11,XXX,503 (the "Asserted Patents"). The case is currently in the expert-discovery phase, with a Markman hearing completed on November 17, 2023, and a trial date set for February 3, 2025.
In connection with this litigation, the firm has obtained extensive access to Pinnacle's proprietary technical documentation, source-code summaries, algorithm design materials, and commercial and financial data, as detailed in Section III below.
D. Pinnacle Engagement Team and Client Contacts
The Pinnacle engagement team at Calderwood & Harkness consists of the following individuals:
•  Responsible and Billing Partner: Jonathan Mercer, Partner, intellectual Property / Patent Litigation
•  Lead Associate: Priya Subramaniam, Associate, intellectual Property
•  Additional Team Members: Two contract patent agents and one litigation paralegal, all of whom are subject to the firm's standard confidentiality protocols and have executed supplemental nondisclosure agreements at Pinnacle's request
On the client side, the firm's primary contacts are:
•  Sandra Yee, General Counsel, Pinnacle Workforce Analytics, Inc.
•  Gregory Harmon, Chief Executive Officer, Pinnacle Workforce Analytics, Inc.
Both Ms. Yee and Mr. Harmon have been directly and extensively involved in directing the firm's work and have shared confidential business, technical, and strategic information with the engagement team on a regular basis throughout the representation. The firm also has had direct contact with Pinnacle's Vice President of Engineering, Dr. Anil Kapoor, and its Chief Information Security Officer, Maria del Carmen Reyes, both of whom have provided technical briefings and documentation to the firm.
E. Financial Scope of the Engagement
For fiscal year 2023 (the most recent full fiscal year), actual billings from Pinnacle totaled $2,137,500, making Pinnacle a significant client of the firm's intellectual Property practice group. Year-to-date billings through April 30, 2024 are approximately $1,045,000. The relationship is ongoing, with active work continuing in preparation for the February 2025 trial.
F. Client Entity Information
Pinnacle Workforce Analytics, Inc. is a Delaware corporation headquartered at 11900 Sunrise Valley Drive, Suite 500, Reston, Virginia 20191. Its registered agent in Delaware is Crowne Albany Corporation, located at Cobalt Ridge Technologies, 1209 Orange Street, Wilmington, Delaware 19801. Pinnacle's federal Employer Identification Number is 54-2198437. Pinnacle is a privately held corporation; its principal investors include Ridgeline Capital Partners, L.P. and Harmon Family Holdings, LLC.
III. Categories of Pinnacle Confidential Information in Firm Possession
The following subsections identify the categories of confidential and proprietary information of Pinnacle currently maintained in Calderwood & Harkness's physical and electronic files under Matter No. 1031-00001. For each category, a brief description of the type of information is provided, followed by a notation regarding its potential relevance to the proposed MTDC engagement. No substantive content is disclosed.
A. Technical Specifications — TruScan 360 Platform
The firm possesses detailed technical specifications of the TruScan 360 platform architecture, including hardware interface requirements, software module descriptions, and system integration protocols governing TruScan 360's interaction with third-party enterprise resource planning ("ERP") and human capital management ("HCM") systems. These specifications were provided by Pinnacle's engineering team at the firm's request to support claim-construction analysis and infringement contentions in the Veritas litigation.
The technical specifications include, among other materials, documentation regarding the platform's biometric capture mechanisms across all three modalities — fingerprint scanning, facial-geometry recognition, and iris-scan technology. This documentation addresses sensor specifications, data-capture workflows, the sequencing of biometric enrollment and verification events, and the technical parameters governing the quality and fidelity of biometric data captured at the employee-facing terminal.
The specifications also describe the communication protocols between TruScan 360's edge devices (biometric terminals deployed at customer sites) and Pinnacle's centralized cloud infrastructure, including data transmission frequencies, bandwidth requirements, and failover mechanisms.
Relevance to Proposed MTDC Engagement: These specifications describe the precise manner in which TruScan 360 collects, processes, and transmits biometric data. This information is directly relevant to whether TruScan 360's data-collection and data-handling practices comply with the requirements of BIPA (740 ILCS 14/1 et seq.), including the informed-consent requirements of Section 15(b), the prohibition on profiting from biometric data under Section 15(c), and the data-security obligations of Section 15(e). The specifications are also relevant to compliance with the Illinois Personal Information Protection Act (815 ILCS 530/1 et seq.). An attorney representing MTDC in the AG CID response or the class action would derive significant strategic advantage from knowledge of these specifications, which illuminate the technical operation of the very system at issue in those proceedings.
B. Source-Code Architecture Summaries
The firm possesses high-level and intermediate-level summaries of TruScan 360's source-code architecture. These summaries were prepared by Pinnacle's engineering team, in some instances with input from the firm's patent agents, to support patent-prosecution activities and the development of patent-litigation strategy in the Veritas matter. The summaries were provided under the terms of a Source Code Access and Nondisclosure Protocol agreed between the parties in the Veritas litigation (Dkt. No. 87, entered January 12, 2023), and separately under Pinnacle's standing engagement letter with the firm.
These source-code architecture summaries describe the logical structure of TruScan 360's codebase, including — at a functional level — the manner in which biometric inputs are captured, preprocessed, converted into biometric templates, matched against stored templates, and retained in Pinnacle's database infrastructure. The summaries also address the modular organization of TruScan 360's software, including the separation (or lack thereof) between biometric-processing functions and analytics functions.
Relevance to Proposed MTDC Engagement: An understanding of TruScan 360's source-code architecture would provide material insight into the platform's data-handling practices — specifically, how biometric identifiers and biometric information (as those terms are defined in BIPA §10) are processed, stored, and retained. This knowledge is directly pertinent to the factual and legal issues at the heart of the BIPA claims that MTDC would need to defend and, potentially, shift to Pinnacle through cross-claims. Knowledge of the source-code architecture would also be relevant to assessing whether TruScan 360's default configuration facilitates or impedes its licensees' compliance with applicable biometric-privacy laws.
C. Data-Flow Diagrams
The firm possesses comprehensive data-flow diagrams illustrating how biometric data moves through TruScan 360 from the point of initial capture at the employee-facing terminal, through intermediate processing servers, to long-term storage repositories and downstream analytics modules. These diagrams were originally prepared by Pinnacle's engineering team for internal use and were subsequently provided to the firm in connection with the preparation of infringement claim charts and technical expert reports in the Veritas litigation.
The data-flow diagrams identify, in granular detail, each touchpoint at which biometric data exists at rest and in transit. They specify the encryption protocols applied at each stage (including the type of encryption, key lengths, and key-management practices), the points at which biometric data is converted from raw biometric samples into mathematical templates, and the interfaces through which biometric data or derivative data may be shared with third-party systems, including analytics platforms, workforce-management dashboards, and client-operated reporting tools.
Several of the data-flow diagrams also depict the data lifecycle from collection to destruction, including the conditions under which biometric data is retained, archived, or purged, and the technical mechanisms (automated and manual) by which data destruction is effectuated.
Relevance to Proposed MTDC Engagement: These data-flow diagrams would be central to any BIPA compliance analysis, as they illuminate whether and how biometric data is disseminated to third parties, how it is stored, the duration of storage, and the process by which it is ultimately destroyed — all of which are key statutory compliance questions under BIPA §15. Specifically, BIPA §15(d) prohibits the sale, lease, trade, or other profiting from a person's biometric identifier or biometric information, and BIPA §15(a) requires the establishment of a retention schedule and destruction guidelines. The data-flow diagrams in the firm's possession would allow a knowledgeable attorney to map TruScan 360's actual data practices against each of BIPA's substantive requirements with a high degree of precision. This knowledge would be of enormous strategic value to any party litigating against Pinnacle on BIPA-related theories.
D. Biometric-Data Retention Policies
The firm possesses copies of Pinnacle's internal data-retention policies governing biometric identifiers and biometric information collected via TruScan 360. These policies address retention schedules for biometric data across each of the three modalities (fingerprint, facial geometry, and iris scan), as well as the protocols for the permanent destruction of biometric data upon satisfaction of the initial purpose of collection or upon the termination of the employment relationship between the data subject and the relevant Pinnacle customer.
The retention-policy documents also describe the client-configurable retention settings available within TruScan 360 — that is, the settings that Pinnacle's customers, such as MTDC, have the ability to adjust to tailor biometric-data retention to their own compliance requirements and internal policies. These configurable settings include retention-period durations, automated deletion triggers, and exception-handling procedures for disputed or flagged biometric records.
In addition, the firm possesses internal memoranda prepared by Pinnacle's legal and compliance team analyzing the adequacy of TruScan 360's retention practices under various state biometric-privacy laws, including BIPA, the Texas Capture or Use of Biometric Identifier Act (Tex. Bus. & Com. Code §503.001), and the Washington Biometric Identifiers statute (Wash. Rev. Code §19.375.020). These memoranda were shared with the firm to inform the firm's counseling work and litigation strategy.
Relevance to Proposed MTDC Engagement: BIPA §15(a) requires that a private entity in possession of biometric identifiers or biometric information develop a written policy, made available to the public, establishing a retention schedule and guidelines for permanently destroying biometric identifiers and biometric information when the initial purpose for collecting or obtaining such identifiers or information has been satisfied or within three years of the individual's last interaction with the private entity, whichever occurs first. The internal retention policies in the firm's possession bear directly on whether Pinnacle's platform is designed to facilitate or impede its customers' BIPA compliance. They are also directly relevant to the indemnification arguments MTDC would pursue under the MSLA, to the extent MTDC would contend that Pinnacle's platform defaults caused or contributed to MTDC's alleged BIPA violations. Knowledge of the client-configurable settings, in particular, would be strategically significant in assessing the allocation of fault between Pinnacle and MTDC.
E. Algorithm Design Documents
The firm possesses design documentation for TruScan 360's proprietary biometric-recognition algorithms, which constitute the core intellectual property at issue in the Veritas litigation. These documents describe the machine-learning models used for facial-geometry matching, fingerprint identification, and iris-scan verification, including the neural network architectures, training methodologies, and optimization techniques employed by Pinnacle's engineering team.
The algorithm design documentation further includes specifications regarding algorithm training data — including the sources, volume, and demographic composition of training datasets — as well as accuracy and performance metrics, including false-positive rates, false-negative rates, and performance benchmarks across varying environmental conditions (lighting, angle, skin condition, etc.). The documentation also addresses the algorithmic decision-making logic governing match/no-match determinations and the confidence thresholds applied at each stage of biometric verification.
These materials were provided to the firm to support the preparation of infringement claim charts, the development of claim-construction positions, and the drafting of expert reports in the Veritas litigation. They reflect Pinnacle's most sensitive trade secrets and proprietary methodologies.
Relevance to Proposed MTDC Engagement: The algorithm design documents are the core subject matter of the patent-enforcement action against Veritas Biometrics Corp. (Case No. 1:22-cv-01533), in which the firm argues on Pinnacle's behalf that the algorithms are innovative, legitimate, and commercially valuable. A representation of MTDC in the AG CID response and employee class action would require the firm to characterize these same algorithms as components of an unlawful biometric surveillance system that violated the privacy rights of approximately 12,400 current and former MTDC employees. This would place the firm in the position of simultaneously championing and condemning the identical technology on behalf of two different clients — a fundamentally irreconcilable position that no ethical screen or information barrier could adequately address.
F. Patent-Prosecution Correspondence
The firm possesses correspondence between Pinnacle and Calderwood & Harkness — as well as correspondence between Pinnacle and its prior patent counsel, Whitfield & Crane LLP — relating to the prosecution of patents covering TruScan 360's biometric-recognition technology before the United States Patent and Trademark Office ("USPTO"). This correspondence was provided to the firm when Pinnacle transitioned its patent work to Calderwood & Harkness in 2019 and has been supplemented on an ongoing basis as new patent applications have been filed and existing applications have been prosecuted.
The patent-prosecution correspondence includes patent applications (both filed and pending), responses to office actions, amendments to patent claims, declarations and affidavits submitted to the USPTO, interview summaries with patent examiners, and internal analyses of prosecution-history estoppel and its implications for the scope of the Asserted Patents in the Veritas litigation. The correspondence also includes prior-art search results and analyses of the patentability of various features of TruScan 360 over the cited prior art.
Relevance to Proposed MTDC Engagement: Patent-prosecution files contain detailed descriptions of the claimed inventions and their intended uses, often including representations about data-handling practices, the nature of the biometric data collected, and the purposes for which the technology was designed. These representations may have implications for the BIPA analysis, particularly with respect to whether TruScan 360 was designed and marketed for purposes that are consistent or inconsistent with BIPA's requirements. Moreover, prosecution-history estoppel and claim-scope issues in the Veritas litigation intersect with the characterization of TruScan 360's functionality that would be at issue in the BIPA proceedings. The firm's deep familiarity with the prosecution history provides strategic insight that would be difficult to replicate and impossible to effectively screen.
G. Litigation Strategy and Work-Product Materials
The firm possesses a substantial body of attorney work product generated in connection with the ongoing prosecution of Pinnacle Workforce Analytics, Inc. v. Veritas Biometrics Corp., Case No. 1:22-cv-01533. This work product includes, but is not limited to:
(a) Litigation strategy memoranda addressing case theory, anticipated defenses, and overall prosecution strategy;
(b) Claim-construction analyses, including the firm's Markman brief, proposed claim constructions, and internal assessments of claim-construction risks;
(c) Expert-witness reports, in both draft and final form, including technical reports on infringement and invalidity and economic reports on damages;
(d) Deposition preparation outlines for fact and expert witnesses, including outlines for depositions of Pinnacle's own witnesses (which necessarily reflect the firm's assessment of favorable and unfavorable testimony);
(e) Damages theories and supporting analyses, including reasonable-royalty calculations, lost-profits models, and apportionment analyses;
(f) Mediation and settlement strategy memoranda, including assessments of case value and negotiation parameters authorized by Pinnacle; and
(g) Trial preparation materials, including motions in limine, jury instructions, and demonstrative exhibits.
These materials necessarily incorporate and reflect Pinnacle's confidential technical and business information categorized in Sections III.A through III.F above. They also reflect the firm's mental impressions, conclusions, opinions, and legal theories — the quintessential core work product entitled to the highest level of protection.
Relevance to Proposed MTDC Engagement: While these materials are protected attorney work product, their existence and the firm's intimate knowledge of the litigation strategy developed for Pinnacle significantly heighten the material-limitation conflict under Illinois Rule of Professional Conduct 1.7(a)(2). The firm's attorneys who have developed and internalized this strategy cannot simply "forget" their knowledge of Pinnacle's litigation vulnerabilities, settlement posture, and strategic priorities. To the extent that the MTDC engagement would involve cross-claims against Pinnacle, the firm's knowledge of Pinnacle's litigation approach, risk tolerance, and authorized settlement parameters would confer an unfair and impermissible advantage.
H. Commercial and Financial Information
The firm possesses a range of Pinnacle's commercial and financial information, shared in connection with establishing damages in the patent-enforcement action against Veritas. This information includes:
(a) Pinnacle's revenue data, including annual and quarterly revenue figures, revenue growth trends, and revenue attributable to TruScan 360 as compared to other Pinnacle products;
(b) Licensing-fee structures, including standard and negotiated per-employee-per-month pricing tiers, volume discounts, and pricing models offered to different customer segments (government, healthcare, logistics, etc.);
(c) Customer lists, including the identities of Pinnacle's enterprise clients, the contract values associated with those clients, and the term and renewal status of each engagement;
(d) Market-positioning analyses, competitive intelligence reports, and internal assessments of Pinnacle's market share relative to competitors, including Veritas; and
(e) Information regarding the Pinnacle–MTDC MSLA, including the total contract value ($8,700,000 over a five-year initial term ending June 14, 2026, with a three-year optional renewal), the annualized contract value ($1,740,000 per year), and the specific contractual provisions governing indemnification, limitation of liability, representations and warranties regarding legal compliance, and allocation of responsibility for data-privacy compliance between Pinnacle (as the technology vendor) and MTDC (as the licensee-employer).
Relevance to Proposed MTDC Engagement: The firm's knowledge of the MSLA's indemnification terms and Pinnacle's financial position is directly relevant to the cross-claims MTDC would pursue against Pinnacle. An attorney representing MTDC who possessed knowledge of the MSLA's indemnification cap (if any), the contractual allocation of data-privacy compliance obligations, and the representations Pinnacle made regarding TruScan 360's legal compliance would have a significant and unfair strategic advantage in prosecuting those cross-claims. Similarly, knowledge of Pinnacle's revenue data and financial condition would inform settlement strategy and damages calculations in ways that would be prejudicial to Pinnacle's interests.
IV. Relevance to the Proposed MTDC Engagement
A. Scope of the Proposed Representation
The proposed MTDC engagement (Matter No. 1031-00001) would require Calderwood & Harkness to undertake the following on behalf of Metropolitan Transit Development Corp.:
1.  Defense of the AG CID. Respond to the Illinois Attorney General's Civil Investigative Demand (CID Ref. CRB-2024-0417), which seeks extensive documentation and testimony regarding MTDC's use of biometric-identification technology in connection with employee timekeeping and workforce management. The CID specifically references TruScan 360 by name and requests information regarding MTDC's data-collection practices, informed-consent procedures, data-retention and destruction policies, and contractual arrangements with Pinnacle.
2.  Defense of the Employee Class Action. Defend MTDC in the putative class action filed in the Circuit Court of Cook County (Case No. 2024-CH-04417), in which a putative class of approximately 12,400 current and former MTDC employees alleges that MTDC violated BIPA §15(a), (b), (d), and (e) and PIPA by collecting, storing, using, and disseminating biometric identifiers and biometric information through TruScan 360 without obtaining legally adequate informed consent, without publishing a compliant retention-and-destruction policy, and without implementing adequate data-security measures.
3.  Cross-Claims Against Pinnacle. Investigate and, as appropriate, prosecute cross-claims and indemnification demands against Pinnacle under the MSLA dated June 15, 2021, seeking to shift liability for any BIPA and PIPA violations — and any resulting damages, penalties, and attorneys' fees — to Pinnacle as the designer, developer, and licensor of TruScan 360.
4.  Characterization of TruScan 360. In furtherance of the foregoing, argue that TruScan 360's biometric-data collection, storage, and dissemination practices violated BIPA and PIPA, and characterize TruScan 360 as an unlawful surveillance tool that was designed, configured, and deployed in a manner that did not comply with applicable biometric-privacy laws.
B. Direct Overlap with Confidential Information
Every category of confidential information inventoried in Section III above is directly relevant to one or more of the tasks that the proposed MTDC engagement would entail. The following table summarizes the overlap:
C. The Irreconcilable Positional Conflict
The proposed MTDC engagement would require the firm to adopt a litigation posture that is diametrically opposed to its current position in the Veritas litigation. In Pinnacle v. Veritas, the firm affirmatively argues — and has argued for nearly two years — that TruScan 360's biometric-recognition algorithms are innovative, commercially valuable, and deserving of patent protection. The firm has submitted declarations, expert reports, and legal briefs making precisely this argument. Representing MTDC would require the firm to argue, in a different forum but concerning the identical technology, that TruScan 360 is an unlawful biometric surveillance tool that collects, stores, and uses biometric data in violation of Illinois law. These positions are fundamentally irreconcilable and cannot coexist within a single law firm, regardless of the information barriers that might be erected.
D. Impossibility of Effective Screening
The firm's deep knowledge of TruScan 360's technical architecture, data-handling practices, retention policies, algorithm design, and commercial terms — obtained from Pinnacle in confidence and over the course of a five-year attorney-client relationship — could not be "unknowed" or effectively screened from the proposed MTDC engagement team. The information is of such breadth and centrality to the proposed new matter that even the most rigorous ethical screen would be insufficient to eliminate the risk of prejudice to Pinnacle's interests. Moreover, the positional conflict identified above is not amenable to screening, as it involves the institutional posture of the firm itself, not merely the knowledge of individual attorneys.
V. Conclusions and Recommendations
Based on the foregoing inventory and analysis, the Pinnacle engagement team offers the following conclusions and recommendations for the Conflicts Committee's consideration:
1.  Heightened Conflict Under Rules 1.7(a)(1) and 1.7(a)(2). The breadth and depth of Pinnacle confidential information in the firm's possession significantly heighten the conflict identified under Illinois Rules of Professional Conduct 1.7(a)(1) (direct adversity — the proposed MTDC engagement would involve cross-claims directly adverse to Pinnacle, a current client) and 1.7(a)(2) (material limitation — the firm's duties to Pinnacle would materially limit its ability to represent MTDC fully and competently, and vice versa).
2.  Core Relevance, Not Peripheral. The information inventoried in Section III is not peripheral or tangentially related to the proposed MTDC engagement. To the contrary, it goes to the very core of the legal and factual issues MTDC would need to litigate. The technical specifications, data-flow diagrams, retention policies, and algorithm design documents describe the precise technology and practices that are the subject of the AG CID, the class action, and the anticipated cross-claims. There is no meaningful way to segregate the firm's representation of Pinnacle from the issues raised by the proposed MTDC engagement.
3.  No Prior Disclosure. The Pinnacle engagement team (Mercer, Subramaniam) confirms that no Pinnacle confidential information has been shared with any member of the proposed MTDC engagement team (Bernstein, Calloway, Archer, Petrov) at any time, whether formally or informally. The firm's document management system access logs confirm that no member of the proposed MTDC engagement team has accessed any file under Matter No. 1031-00001.
4.  Recommendation: Decline the MTDC Engagement. This inventory supports the Conflicts Committee's determination that the conflict presented by the proposed MTDC engagement is not capable of waiver under Illinois Rule of Professional Conduct 1.7(b), because the firm cannot reasonably believe that it will be able to provide competent and diligent representation to both Pinnacle and MTDC simultaneously, and because the representation involves the assertion of a claim by one client against another client represented by the firm in the same or a substantially related matter. Accordingly, Calderwood & Harkness must decline the proposed MTDC engagement under Matter No. 1031-00001.
5.  Continued Safeguarding of Pinnacle Information. The firm should continue to safeguard all Pinnacle confidential information in accordance with its obligations as Pinnacle's current counsel under Illinois Rules of Professional Conduct 1.6, the terms of the Pinnacle engagement letter, and the Source Code Access and Nondisclosure Protocol in the Veritas litigation. No changes to the firm's information-security protocols with respect to Pinnacle materials are warranted at this time, provided the MTDC engagement is declined.
6.  Documentation and File Retention. This memorandum and any related Conflicts Committee deliberations should be retained in the firm's conflicts-management files and treated as privileged attorney-client communications and attorney work product. A copy of this memorandum should not be provided to Pinnacle, MTDC, or any third party absent express authorization from the General Counsel.
VI. Certification
I, Jonathan Mercer, certify that, to the best of my knowledge, information, and belief formed after reasonable inquiry, this memorandum accurately describes the categories of Pinnacle Workforce Analytics, Inc. confidential information in Calderwood & Harkness LLP's possession, custody, or control that are relevant to the TruScan 360 Biometric Platform and the proposed MTDC engagement (Matter No. 1031-00001). I further certify that no Pinnacle confidential information has been disclosed to the proposed MTDC engagement team — consisting of Rachel Bernstein, Miriam Calloway, Devon Archer, and Nadia Petrov — or to any other unauthorized person, at any time, whether in connection with the proposed MTDC engagement or otherwise.
This certification is made as of the date of this memorandum and is based upon my personal knowledge and my review of the firm's physical and electronic files under Matter No. 1031-00001, as well as consultations with the members of the Pinnacle engagement team.
CALDERWOOD & HARKNESS LLP
By: ________
Name: Jonathan Mercer
Title: Partner, intellectual Property / Patent Litigation
Calderwood & Harkness LLP One North Wacker Drive, Suite 4200 Chicago, Illinois 60606
Date: ________
CALDERWOOD & HARKNESS LLP
By: ________
Name: Priya Subramaniam
Title: Associate, intellectual Property
Calderwood & Harkness LLP One North Wacker Drive, Suite 4200 Chicago, Illinois 60606
Date: ________
Appendix — Index of Physical and Electronic File Locations (Referenced Only)
NOTE: The underlying documents referenced in this Appendix are maintained in the firm's secure document management system ("DMS") under Matter No. 1031-00001 with restricted access limited to the authorized Pinnacle engagement team (Jonathan Mercer, Priya Subramaniam, and designated support personnel). Access permissions are administered by the firm's Information Technology Department in coordination with the Conflicts & New Business Department. This Appendix references file locations by DMS identification numbers only; it does not reproduce or summarize any substantive content of the documents contained therein.
Total estimated document count: Approximately 2,160 documents across all categories.
All documents are subject to the confidentiality obligations set forth in the Pinnacle engagement letter dated March 14, 2022 (as amended), the Protective Order entered in Pinnacle Workforce Analytics, Inc. v. Veritas Biometrics Corp., Case No. 1:22-cv-01533 (Dkt. No. 45, entered July 28, 2022), and the Source Code Access and Nondisclosure Protocol (Dkt. No. 87, entered January 12, 2023). Certain documents within DMS Folder 2022-1847-ALG are additionally designated "Highly Confidential — Attorneys' Eyes Only" under the terms of the Protective Order and may be accessed only by the attorneys of record and designated outside experts.
No physical files exist outside the DMS. All original documents provided by Pinnacle in hard copy have been scanned and uploaded to the DMS, and the originals have been returned to Pinnacle or securely destroyed, in each case as documented in the firm's chain-of-custody log maintained by the Pinnacle engagement team's designated paralegal.
End of Memorandum
CONFIDENTIAL — ATTORNEY WORK PRODUCT — PRIVILEGED This document is the property of Calderwood & Harkness LLP and is prepared solely for the internal use of the addressees. Unauthorized reproduction, distribution, or disclosure is strictly prohibited.
Information Category | AG CID Defense | Class Action Defense | Cross-Claims v. Pinnacle
A. Technical Specifications | Directly relevant | Directly relevant | Directly relevant
B. Source-Code Architecture | Relevant | Directly relevant | Directly relevant
C. Data-Flow Diagrams | Directly relevant | Directly relevant | Directly relevant
D. Retention Policies | Directly relevant | Directly relevant | Directly relevant
E. Algorithm Design | Relevant | Directly relevant | Relevant
F. Patent-Prosecution Correspondence | Relevant | Relevant | Relevant
G. Litigation Strategy / Work Product | — | — | Directly relevant
H. Commercial / Financial Information | Relevant | Relevant | Directly relevant
Category | DMS Folder Reference | Approximate Volume | Access Restriction Level
A. Technical Specifications — TruScan 360 Platform | DMS Folder 2022-1847-TECH | ~340 documents | Restricted — Pinnacle Team Only
B. Source-Code Architecture Summaries | DMS Folder 2022-1847-SCA | ~85 documents | Restricted — Pinnacle Team Only; additional Source Code Protocol restrictions apply
C. Data-Flow Diagrams | DMS Folder 2022-1847-DFD | ~120 documents | Restricted — Pinnacle Team Only
D. Biometric-Data Retention Policies | DMS Folder 2022-1847-RET | ~55 documents | Restricted — Pinnacle Team Only
E. Algorithm Design Documents | DMS Folder 2022-1847-ALG | ~210 documents | Restricted — Pinnacle Team Only; designated "Highly Confidential — Attorneys' Eyes Only" under Veritas Protective Order
F. Patent-Prosecution Correspondence | DMS Folder 2022-1847-PAT | ~475 documents | Restricted — Pinnacle Team Only
G. Litigation Strategy and Work-Product Materials | DMS Folder 2022-1847-LIT | ~680 documents | Restricted — Pinnacle Team Only; work-product protection applies
H. Commercial and Financial Information | DMS Folder 2022-1847-COM | ~195 documents | Restricted — Pinnacle Team Only

CONFIDENTIAL — ATTORNEY WORK PRODUCT — PRIVILEGED

CONFIDENTIAL INFORMATION INVENTORY

MEMORANDUM

CALDERWOOD & HARKNESS LLP

CALDERWOOD & HARKNESS LLP

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