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Salesforce.com Taps Veteran Microsoft Nemesis for Countersuit

Salesforce.com Taps Veteran Microsoft Nemesis for Countersuit

Salesforce.com has spotted five patents it says Microsoft has infringed upon, and the SaaS provider has launched a countersuit against Redmond based on those claims. The move follows the patent lawsuit that Microsoft threw at Salesforce last month. For its countersuit, Salesforce has hired attorney David Boies, who worked with the U.S. Justice Department in the late-'90s Microsoft antitrust case.

By Erika Morphy CRM Buyer ECT News Network
06/28/10 5:00 AM PT

Salesforce.com has filed a countersuit against Microsoft, alleging that the software giant infringed on five of its patents in such products as Windows Server, the .Net platform and Microsoft's Windows Live authentication system.

Salesforce.com is seeking unspecified damages in the suit, which was filed last week in U.S. District Court for the District of Delaware.

Leading the charge on behalf of Salesforce.com is none other than legal superstar David Boies, who at one time helped to bring a major antitrust case against Microsoft while working with the U.S. Justice Department.

Microsoft Moved First

This move follows Microsoft own suit, which it filed last month against Salesforce.com in the U.S. District Court in Seattle, alleging that the company infringed nine of its patents.

The patents that Microsoft said Salesforce.com infringed touch upon a range of functions having to do with cloud-based CRM. Several focus on ease-of-use features, such as toolbars and navigational elements; others are more technical, such as displaying a Web page with an embedded menu. Microsoft is seeking an injunction as well as damages.

The two companies have clearly been circling each other for a great deal of time on this issue. According to a regulatory filing Salesforce.com made last year, it had been contacted by a "large technology company" about a possible patent infringement issue and was at that time in discussions.

The patent infringement allegations were not expected to "have a material adverse effect on our financial condition," Salesforce said in the filing. However, it could be material to the net income or cash flows -- or both -- of a particular quarter.

Common Tactic

The countersuit by Salesforce.com was practically a foregone conclusion, given that is how patent legal disputes typically unfold. "It is a common litigation tactic in patent suits -- telling the judge or jury that the original plaintiff is also an infringer," Raymond Van Dyke, a technology lawyer in Washington, DC, told CRM Buyer.

The Boies hire was a nice touch on Salesforce.com's part, he added, as it effectively sends the message that it is not intimidated. Of course, it is unlikely that Microsoft, which is fielding more than 50 patent suits concurrently, has been cowed by Salesforce.com's rentention of the skilled litigator, Van Dyke speculated.

More than likely -- again going by past patent tech disputes -- the two companies will ultimately settle, Van Dyke concluded.

Picked the Wrong Fight

It's true that most cases settle, agreed Alexander Poltorak, chairman & CEO of General Patent. Less than 4 percent of filed cases go to trial, he told CRM Buyer. However, he continued, to settle a case, one needs bargaining chips.

Microsoft probably is not interested in monetary compensation, he speculated. "It is hard to appease a plaintiff like Microsoft by offering money to settle the case. This is not what they are after." Rather, he said, its goal is likely the permanent injunction.

The only way for Salesforce.com to get rid of this suit is to "demonstrate to Microsoft that it picked the fight with the wrong guys and it stands to lose more than to gain," Poltorak said. "And the only way to do that is by countersuing Microsoft for infringing Salesforce.com's patents. This is precisely why companies accumulate large stockpiles of patents."

A most likely outcome of this confrontation is a cross-license deal with no money changing hands, Poltorak said.


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