Authenticom Asks for Preliminary Injunction; Lands Big Time Expert Witness in Antitrust Suit Against Reynolds, CDK

Authenticom Asks for Preliminary Injunction; Lands Big Time Expert Witness in Antitrust Suit Against Reynolds, CDK

May 19, 2017 — Late yesterday afternoon, data services provider Authenticom filed a motion in its antitrust lawsuit against Reynolds and Reynolds and CDK Global, seeking a preliminary injunction. TBR wrote about the pending request last week.

The lawsuit alleges the dealer management system providers conspired in 2015 to force Authenticom and other data integration competitors out of business.

The motion asks the court to temporarily prohibit Reynolds and Reynolds and CDK from “blocking or disabling Authenticom’s access to dealer data and from enforcing their exclusive dealing provisions imposed on dealers and vendors in order to block Authenticom,” while the case works is being tried.

Citing the “imminent collapse” of its business, Authenticom also is asking for an expedited process over the next month with an evidentiary hearing on the preliminary injunction no later than June 22.

Also included in the filings this yesterday, were statements from three expert witnesses and five statements from dealers and other vendors impacted by the actions of Reynolds and CDK.

Statements from two of the expert witnesses have been redacted. But a third statement reveals Authenticom has a big time data security expert in its corner.

Peter Swire is one of the country’s foremost experts in data security. The NancyJ. & Lawrence P. Huang Professor at the Scheller College of Business and Georgia Institute of Technology has served two stints at the White House over the last 18 years while writing four books and numerous articles on the subject of data security.

The preliminary injunction ruling will be important because, if Authenticom is successful, first it will likely be able to continue on as a viable business. And, second, it may cause other vendors and/or dealers to also seek legal recourse.

Reynolds and Reynolds Statement

Reynolds and CDK have yet to file their responses to Authenticom’s lawsuit, or to the lawsuit filed by the Motor Vehicle Software Corporation (MVSC) in California in February. (MVSC filed an amended complaint earlier this month to reflect an agreement Reynolds and CDK signed in 2015 which both lawsuits argue provides clear evidence of collusion).

But Reynolds and Reynolds did come out swinging several days ago responding to Authenticom’s allegations. Amd it’s clear the company views Authenticom as being a “hostile” integrator.

While Reynolds declined to comment on the specifics of the pending litigation, Communications Director Tom Schwartz emailed a statement saying, “In our view, Authenticom’s recent lawsuit is without merit and an obvious effort to shift responsibility for Authenticom’s long-running attempts at unlawful access to the Reynolds DMS.”

The statement also outlined several Reynolds principles which may provide a sort of roadmap for how it plans to defend against the allegations:

First, Reynolds will continue to vigorously defend its Reynolds Certified Interface (RCI) program against attempts by a third party to circumvent Reynolds policies or to gain unfettered, direct access to a Reynolds Dealer Management System (“DMS”).

Second, Reynolds Certified Interfaces do not provide direct access to the DMS by outside parties.

o   The RCI program provides a one-to-one relationship that’s secure, protected, and verified from the DMS.

o   As a result, Reynolds is the market leader with its policies around system operational integrity and data security for third-party vendors exchanging data with a Reynolds DMS.

Third, Authenticom has consistently tried to thwart Reynolds DMS security safeguards, and Reynolds is dedicated to continue building and maintaining first-in-class DMS safeguards.

Fourth, we take seriously our shared commitment and responsibility with dealers to protect the data in the Reynolds DMS – customer data, dealership business data, and Reynolds’ intellectual property resident in the system.

o   We will continue to protect it from unauthorized, direct access and hostile actions from third parties.

Finally, the RCI program and its associated integration is open to third-party application providers that meet the RCI program’s operating standards and safeguards.

o   Those standards and safeguards include, for example:

  • The third party will identify for the dealership how the data is to be used, by whom, and that the data will not then be sent on to other destinations or service providers.
  • The third party also will allow for the ongoing electronic monitoring of the data exchange to verify who accessed the data, when, and the data fields extracted.

o   Data brokers and hostile data integrators (such as Authenticom) are not able to meet those standards.

To read the lawsuit, click Authenticom_Antitrust_Rey_CDK.

For more TBR analysis of the data access controversy:

The Data Breach that Wasn’t

 Data Access Battle Goes Nuclear

Dealerships Key in Cyber Security Wars

CDK & Cox Sign Integration Agreement

 

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