Contractor Botched Installation of Encryption Software, Says Samsung Complaint

March 5, 2018 by Paul Gluckman|Courts

Contractor WinMagic owes Samsung SDS America (SDSA) $277,100 in refunds for botching the installation of encryption software for itself and an unnamed client, alleged the U.S. subsidiary of Samsung’s global information technology company in a federal complaint Thursday. SDSA signed an April 2016 contract to license WinMagic’s SecureDoc Enterprise encryption software for its own use and for “its client’s business operations,” said the complaint (in Pacer), filed in U.S. District Court in Newark, New Jersey. The complaint didn’t identify the client, but a copy of the attached contract suggested it was a large customer, because it said SDSA ordered 7,000 copies of the SecureDoc software. SDSA’s representatives “specifically and unequivocally advised WinMagic that the SecureDoc solution must be compatible with the encryption configuration that SDSA and its client were required to utilize on the computers used in their business operations based upon the requirements of their respective parent companies,” said the complaint. WinMagic nevertheless failed to properly “configure the SecureDoc solution to be compatible with the very encryption requirements that SDSA previously identified as a mandatory component” of the contract, it said. Almost immediately after WinMagic technicians began installing SecureDoc in September 2016, SDSA “provided WinMagic with written notice of serious issues” with the encryption software that “were so severe that SDSA was wholly unable to use the technology solution for any purpose,” it said. Three months later, SDSA canceled the contract and demanded its refund, “consistent with the express warranty provision contained” in the agreement, it said. “To date, WinMagic has failed and refused to provide a full refund of the $277,100 that SDSA paid to WinMagic for SecureDoc,” said the complaint, which alleged fraudulent concealment, negligent misrepresentation, unjust enrichment and other accusations. WinMagic representatives didn’t comment Friday.