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SuccessFactors alleges covert scheme by competitor

Chris Kanaracus | Feb. 11, 2011
SuccessFactors is alleging that rival human-resources-software vendor Halogen Software concocted a fraudulent and covert scheme in order to obtain competitive information from it, according to a lawsuit filed in U.S. District Court for the Northern District of California.

SuccessFactors then discovered that the Magnus Group address and contact information listed on its site were invalid, it adds. The salesperson contacted the site's design firm, Creative Equilibrium, which told him the work had been done for an Ottawa company, it states.

In addition, SuccessFactors determined that e-mails Rodriguez had sent to the salesperson originated from an Internet Protocol address linked to Halogen, according to the complaint.

Halogen's "continued use of the pricing and product information it has wrongly obtained will cost [SuccessFactors] considerable, untold sales," the complaint adds. SuccessFactors is asking for an injunction that would bar Halogen from using its information as well as various compensatory and punitive damages.

On Dec. 27, Halogen filed a motion to dismiss the case, arguing that SuccessFactors is filing suit based on its own "willingness to disclose its product and pricing information without taking the necessary steps to protect itself under the law," such as asking Magnus Group to sign a nondisclosure agreement.

"At most, SuccessFactors points to a confidentiality disclaimer present on a single email it unilaterally sent to The Magnus Group relatively late in the parties' dealings with each other," the motion states.

"SuccessFactors is embarrassed about what it has done, and it has brought suit alleging untenable claims that are all superseded by California's Uniform Trade Secret Act in an effort to punish Halogen for SuccessFactors' own failings," it adds. "SuccessFactors fails to identify any 'property' that has been permanently deprived by Halogen, any instance in which its information was used or disclosed by Halogen, any specific 'economic relations' that have been interfered with, or any lost sales or profits as resulting from the conduct complained about."

Even if all of SuccessFactors' claims were accepted as true, all the suit succeeds in doing is alleging that "Halogen, via The Magnus Group, freely obtained nonconfidential information that many other companies and individuals already have in their possession," Halogen's motion argues. "There is no legally cognizable claim for relief for such activity."

In a statement, Doug Dennerline, president for SuccessFactors, said, "Although we would rather devote all our energy to building great products and providing great services to our customers and more than 8 million users, we have a responsibility to take action to protect SuccessFactors, including our employees, customers, investors and partners, in the face of such a blatant and unethical attack. We plan to vigorously pursue this lawsuit."

The motion to dismiss will be heard on March 29, according to Halogen's filing.

Halogen did not respond to a request for additional comment.

 

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