The Lawsuit Card

MicroStrategy's strategy in removing Actuate 6 from the playing field is business as usual

IE Index An Intelligent Enterprise Dozen Update Crystal Decisions The news isn't all bad in strategic IT: This company's Q4 revenue was up significantly from last year. Microsoft A July ".Net Briefing Day" did little to dispel confusion about the company's long-term strategy. But who can argue with its track record of selling more and more software? SAP Recently logged the first quarterly loss in the company's history and lowered its 2002 sales growth forecast by 5 to 10 percent. Will the company adjust to the new bias against monolithic IT investments? Sun Microsystems The company's historic decision to sell Intel-based servers for Linux and Solaris is the right move, but there's a wide gap to close: IBM has been on the Lintel bandwagon for a long time. INDEX LEGEND HOT — On the upswing NOT — Possible trouble ahead STATUS QUO — No change

MicroStrategy Inc. will soon see software rival Actuate Corp. in court at a trial scheduled to commence November 4. The McLean, Va.-based business intelligence software supplier alleges that Actuate and two of its senior software engineers misappropriated MicroStrategy trade secrets in designing and developing its latest information delivery product, Actuate 6.

Both software engineers accused alongside their employer (Actuate) of misappropriating trade secrets are former MicroStrategy employees.

MicroStrategy plans to seek financial restitution as well as an injunction blocking the further marketing and sale of Actuate 6.

The plaintiff first filed its lawsuit in June 2001, but wasn't granted a trial until August 2002 when the Circuit Court for Fairfax County, Virginia, denied Actuate summary judgment. At that hearing, MicroStrategy specifically identified some of its allegedly stolen trade secrets to the court to help secure a trial and thwart Actuate's motion for dismissal.

South San Francisco-based Actuate refutes the charges. According to Bill Garvey, Actuate's vice president and general counsel, "Actuate firmly believes that MicroStrategy filed its lawsuit for anti-competitive reasons."

Whether this is a legitimate case of secret-stealing — or just an attempt to thin out the competition via the courts, as Actuate claims — may be inconsequential to vendors and customers, whose spending habits aren't greatly affected by publicized lawsuits.

Companies use litigation to leverage their products and services in the increasingly competitive business intelligence market on a regular basis.

In a similar case, Informatica Corp. recently filed a patent infringement suit against Acta Technology Inc., hoping to wipe out at least three of its competitor's products just days after Business Objects announced its acquisition of Acta.

Cognos Inc. also just ended a pricey, two-year patent infringement battle with Business Objects, settling to pay $24 million over several years and agreeing to a mutually observed five-year moratorium on additional patent charges.

All these cases indicate the direction in which competition is driving the business intelligence market: toward heightened intellectual property protection.

Heated competition and a flagging economy are forcing businesses to protect their patents, licensing, and trade secrets legally but aggressively. Intellectual property is what's at stake, and if managed prudently, albeit often in a court of law, it promises a strategic edge in the software industry.

— Jill Duffy

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