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Epicor suit claims services firm hijacked its ERP software

Chris Kanaracus | March 28, 2013
Alternative Technology Solutions illegally used copies of Epicor software to develop and sell add-ons, according to the suit

Epicor is suing Alternative on a number of grounds, including trademark and copyright infringement, intentional interference, false advertising, unjust enrichment and fraudulent and unlawful business practices. The vendor is seeking assorted damages as well as orders barring Alternative from continuing with its alleged unlawful actions.

Alternative hadn't filed a response to Epicor's allegations as of Wednesday, and the company didn't respond to requests for comment.

The lawsuit could reflect some bad blood between Epicor's management team and Alternative, said analyst Ray Wang, CEO of Constellation Research. "These things don't happen overnight," he said of the lawsuit. "One could speculate that they could not come to an agreement."

Of broader interest to customers is the dispute's parallel to the third-party software maintenance debate.

Software vendors derive huge profits from annual maintenance payments and are no doubt loath to see a major market for third-party providers spring up.

Oracle famously sued SAP and its former subsidiary, TomorrowNow, which provided lower-cost support for Oracle software. In 2010, SAP admitted liability for wrongdoing, including the illegal downloading of Oracle software, on the part of TomorrowNow employees, but the case is still tied up in appeals by both parties.

Oracle is also suing Rimini Street, which is led by a TomorrowNow co-founder. Rimini Street has denied any wrongdoing on its part, saying it acts within the bounds of its customers' license agreements with Oracle. The company has also countersued Oracle, claiming it is trying to stymie the third-party support market.

Third-party support advocates have offered analogies to explain why customers should be able to use such services, such as when a person buys a car and then goes to an independent mechanic for repairs, rather than an authorized dealer.

But the picture is arguably made murkier in the case of enterprise software. That's because customers typically can't purchase it outright, instead buying perpetual software licenses, and end up subject to terms that restrict certain activities.

For example, Epicor bars its customers from providing access to its software and documentation to a competitor without written permission, according to its suit.

However, last year Europe's highest court ruled that it was legal to resell used software licenses, a landmark decision that boosted software customers' rights.

Overall, software customers should be able to go to any third-party provider that doesn't violate intellectual property laws for support and help, whether they are officially authorized by a vendor or not, according to Wang.

Hence, like Oracle's suit against Rimini Street, the outcome of Epicor's dispute with Alternative will have implications for the rest of the software industry, he said.

 

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