Softscape Charges Espionage Attempt in Court Suit

Jun 5, 2008
This article is part of a series called News & Trends.

With the Clinton-Obama fight over, Softscape and SuccessFactors (profile; site) have stepped up to fill the void with the two HR software companies in court for the second time this year. This time the allegations include claims of corporate espionage, unfair competition and interference with contract.

The latest volley was fired today by Softscape, which claims in court papers filed in Massachusetts, where it is headquartered, that SuccessFactors hired its employees in order to learn company secrets, then used that information in the design of the latest release of its Performance and Talent Management Suite, ULTRA.

SuccessFactors, in an emailed comment to ERE, said, “Softscape’s recent complaint is a transparent and groundless attempt to muddy the waters to divert attention from their own well-documented illegal and reprehensible conduct. Their claims are vague and unsupported by facts, which suggest to us they have no legitimate basis.”

However, there are some specific accusations in the lawsuit, the juiciest being that the Silicon Valley-based SuccessFactors attempted to access Softscape’s computer systems “in order to obtain Softscape’s confidential and proprietary information to further develop SuccessFactors’ products.”

The suit doesn’t directly say whether the Softscape computers were penetrated, but it’s almost irrelevant, since, according to Softscape, SuccessFactors has been raiding its employees to glean company secrets. “At least of the former Softscape employees was hired by SuccessFactors,” the lawsuit says, “because SuccessFactors knew that the individual wanted to share confidential information about Softscape with SuccessFactors.”

Adds Softscape: “Upon information and belief, SuccessFactors used Sofscape’s confidential and proprietary information to develop its new competing product, SuccessFactors ULTRA.”

That phrase “Upon information and belief”, by the way, is legal shorthand for something akin to “What I hear is.”

The other parts of the lawsuit are a reprise of a 2005 lawsuit also brought by Softscape in which it alleged that SuccessFactors was hiring its employees knowing they had signed a non-compete, non-disclose agreement. That suit ended in a settlement that included an agreement by parties not to solicit the employees of the other for six months beginning in June 2007. Softscape claims SuccessFactors violated that agreement.

The two companies are developing a nasty legal history between them. In the current suit, Softscape takes a shot at its publicly-held competitor, saying it bought its way into the HR software business. In one line in the suit, Softscape says its products were “developed through years of effort at enormous cost…” In the next line it says, SuccessFactors “instead of developing its own product in-house… purchased its HCM product in a foreclosure sale.”

This suit comes only a few months after SuccessFactors sued Softscape over an unflattering PowerPoint portrayal of SuccessFactors products that was mailed to some of the company’s clients under the guise of coming from an unhappy customer. Softscape admitted creating, but not distributing, the 43-slide presentation that uses language like “lack of corporate integrity” and ” failed implementations.” The suit is still in court, but SuccessFactors did win a preliminary injunction barring Softscape from distributing the PowerPoint, using its trade marks and brands and from accessing its computer system.

Softscape spokesman Christopher Faust told us in a brief phone conversation that the today’s legal complaint only scratches the surface. “I can’t go into details,” he said in response to our questions, but added, “The chain of events is very revealing. There’s a lot there.”

Considering the three suits we were surprised when he denied there was animosity between the two companies. “Not at all,” he offered. “This is a competitive industry.”

This article is part of a series called News & Trends.
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