October 20, 2007

Wrinkles in the Informatica versus Business Objects patent litigation

Business Objects recently lost a patent lawsuit to Informatica in the area of data integration. While I was at the Business Objects conference, I asked about it, and was told in effect “It’s no big deal. In fact, the monetary award was reduced. Anyhow, we shipped a non-infringing version within 12 days after the decision, and sales are rolling along.” I then reflected that answer back to Informatica’s stellar analyst relations guy Chas Kielt. He checked with corporate counsel, and sent back the detailed clarification below. Since I got my Business Objects answers from a couple of caught-off-guard non-lawyer French guys, while Chas got a careful explanation of an American court’s judgment from an American lawyer, I’m inclined to think that in any details where they might conflict, Chas’ version is more likely to be accurate.

There’s a more substantive disagreement as to whether the features deleted from BOBJ’s product due to the injunction are actually important in the marketplace. I’m looking into that subject, and hope to post about it in the near future.

There has not yet been any appeal. There is no new decision. And BOBJ had no choice in accepting or rejecting the remittitur – what the BOBJ rep referred to as the “judge’s new proposal.” Only Informatica, the prevailing party in this case — has the option to accept or reject the remittitur.

To save a round of “he said, she said,” let me head off at the pass another point BOBJ may proffer. While the judge found that the $25 million dollar award was appropriate and supported by the evidence, the remittitur reduced the award to $12M because case law had changed as a result of AT&T v. Microsoft. The ruling in that Supreme Court case came in after the INFA v. BOBJ verdict and held that the jury could not include damages for sales of copies made outside the United States. Specifically, the case resulted in a legal change that holds that plaintiffs relying on US patent rights can only go after US damages and would not be entitled any international damages. The decision had a binding effect on our case and the Judge, therefore, gave Informatica the choice to retry the issue of damages again next year (and assume all of the costs associated with this – and be limited to only evidence of US damages) or take a reduced damages number of $12.2 million.

We want to be clear that: 1. Informatica could have asked for a new trial to determine a new damages amount; 2. Though Informatica may have obtained even more in a new trial, $12M for BODI’s sales in the United States represents a very substantial royalty of approximately $20,000 per infringing sale.

In summary, the reduced amount had nothing to do with the merits of the case or any “appeal”’ by BODI – it only had to do with unfortunate timing of the AT&T case and that decision and the fact that given some administrative issues a final order had not yet been issued when the AT&T case came down. There is no new decision – the jury’s verdict stands (other than the amount) – the patents are valid, BODI willfully infringed those patents and Informatica was awarded an injunction against BODI.

The final order will be entered in the next few weeks and then they will appeal the decision – which given the facts in this case – will be a tough road ahead for BODI/SAP.

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