Ariba/Emptoris: Even Plaintiffs That Win Can Lose
In the continuing saga of my coverage surrounding the recent patent ruling, I thought I'd conclude my writings with a quick note from an Emptoris customer that I reached out to (Emptoris did not give me their information) about their feelings in the case. This senior procurement executive from a large-multi national that successfully utilizes both Ariba and Emptoris and who was very close to the details expressed how dissapointed she/he and her/his company were by Ariba's actions. I won't get into her/his specific involvement in the matters, but it cost the company money and time. And they were not happy about it. So if you're a vendor thinking about pursuing litigation, best to think through all the consequences. Would you want to potentially risk losing a number of multi-million dollar deals in the future based on the ill-will generated by your actions? It's worth thinking about. That's it from me on the subject. I'm done unless new developments come up.
- Jason Busch
- Jason Busch
http://www.eweek.com/c/a/IT-Management/ePlus-Wins-...
"Spend management software developer ePlus Inc., of Herndon, Va., on Monday announced that it has been awarded a $37 million settlement in a patent infringement suit against rival Ariba Inc.
The settlement, awarded by a Federal Court jury in Alexandria, Va., also awards ePlus the rights to cross-license Aribas software patents—including pending patents—for the next three years.
The court determined Ariba "willfully infringed" three ePlus software patents relating to electronic procurement technology, according to a statement released by ePlus."
Sound familiar? As I said previously, the only certainty in these cases is that the lawyers win every time. And we all pay for it in higher software costs.
With all due apologies -- and please send my regards to the new messiah taking the oval office oath -- it sounds to me that you do not understand how influence works in this sector. Let's for a minute assume that a senior executive -- maybe she/he is or was on the board of CIPs, CAPs, ISM, IACCM, PMAC, etc. -- is the one who is not happy about this situation. This lady or gentleman is certainly apt to voice her/his discontent inside this inner circle who will in term relay the story to others (e.g., we spent $20K just prepping for the deposition ...)
How do I know how this influence works? We do a lot of work on the marketing front for providers of all types. We maintain a database of the top 100 influencers in procurement and supply chain which we have used effectively with a number of clients. We built this in large part based on cross-interviewing the other influencers on the list about who they found influenced their thinking. Over half of the names on this list are practitioners (not analysts, consultants, bloggers, media, etc.) What does this tell us? Folks like said senior executive are VERY influential in not only their future procurement technology buying decisions, but others in their sphere of influence, both directly and indirectly.
If I started a software company in this space selling a traditional enterprise product (which I have no plans to do, mind you), the last thing I would ever do is want to get on the wrong side of one of the true influencers in the space. I suppose if you're thinking through litigation and pursuing "law breakers" in unit cost terms, you could give a fig about this. But if you apply total cost thinking to litigation and related actions, you might arrive at a very different decision.
IP protection is very important, especially for a technology company. Real Intellectual Property that is. (This is a general argument, not specific to this case - as from what I understand, this is not technology IP, it’s a process patent, of which there are way too many).
Technology companies owe it to their shareholders to protect their IP, as that is one of the assets the shareholders have invested in, and in many cases for early stage tech companies, the primary competitive asset. They owe it to the employees responsible for creating the IP. Although that is usually one of the less motivating factors.
They also owe it to their customers, who purchased the technology based on its capabilities (again, talking about real IP here, not a bunch of process hooey), and should feel they have something riding on their supplier’s ability to deliver as promised. You might argue me on this point Jason, suggesting that without the patent, competition was free to run rampant - but just as strategic supply management benefits from competition; it also benefits from a strong and resilient supply base – without the ability to protect your uniqueness, what, other than price, does a supplier have?
To say that a company shouldn’t protect its IP without considering the consequences is a valid point; they should consider all angles pragmatically. But for an influential customer to essentially hold a technology vendor hostage, because of the inconvenience to their business, and their ability to influence their target market, is absurd; patently childish even. Funny thing is, I don’t think that will happen, and I don’t think you believe it will either, but there is that risk.
So what’s the solution? How does a technology vendor with infringed upon IP patents win?
Pragmatic consideration of the risk of an influential customer’s backlash is valid, regardless of what I personally think about an executive-level temper tantrum. So, I’d say (from the comfort of my armchair, with a clear view of the playing field on my HDTV) that communication is key. Communicating to your strategic customers, the influencers, and others that you know to have installations of both software platforms, why you are pursuing your IP protection strategy, how you are doing so, what impact not doing so would have, and understanding the impact it will have on your customers, could go a long way to help ease the blow. Not saying that wasn’t done in this case, there’s no instant replay on that one. Sometimes there isn’t a solution – there’s nothing the vendor could do to help ease the pain, but sometimes just the act of reaching out and communicating with your customers is enough to proactively repair the schism.
What cost? Legal time for deposition prepping, depositions themselves, etc. It adds up fast. And that's not even counting the internal time lost from other activities.
Methodology of patent awarded to e-LYNXX Corporation cuts costs for procured customized goods and services
http://www.bignews.biz/?id=789197&pg=1&key...
Natick,MA,USA
"U. S. Patent No. 7,451,106 is revolutionary because it forms the backbone for any electronic system that manages the procurement of a customized good or service. Systems are available today through such companies as SAP, Ariba and Oracle that manage the procurement of inventoried items -- those items that are mass produced and kept in a warehouse until they are ordered, such as through an on-line catalogue..."
Process patent madness is here!
1) Hard dollar costs -- money paid to lawyers, etc.
2) Soft dollar costs -- time spent away from other activities (including pursuing direct cost savings initiatives); figure a VP Procurement is worth at least $1,000 per hour to a Global 1000 company (not to mention her/his direct reports)