SAP is reportedly escalating its long-running legal battle with Versata Software, seeking a review by the Supreme Court of a significant antitrust victory previously awarded to Versata. The enterprise software giant contends that critical legal errors were made in the lower court proceedings, warranting the Supreme Court's intervention. This move marks the latest chapter in a complex dispute involving allegations of anti-competitive behavior and patent infringement.
The heart of the matter lies in Versata's claim that SAP engaged in actions that stifled competition within the enterprise resource planning (ERP) software market, specifically concerning pricing software. Versata, a Texas-based software company, originally brought the case, alleging that SAP "illegally excluded" it from a substantial portion of the market, representing roughly three-quarters of SAP's largest customers. The core accusation centers on SAP allegedly withholding crucial interoperability information, thereby hindering Versata's ability to effectively sell its products to SAP's clientele.
Adding another layer to the dispute, Versata accused SAP of cloning its "Pricer" application, which manages the pricing of goods, and subsequently bundling this clone with its own ERP platform. Versata argued that this action violated European Union treaty articles related to competitive practices. According to investigation documents, SAP allegedly took steps to marginalize Versata after an SAP executive observed Versata was "raking in the cash among the SAP customers".
SAP's alleged anti-competitive tactics included creating problems for Versata's product to work with SAP's enterprise software and then telling customers that Versata's product would not work properly. This isn't the first time the two companies have clashed in court. Before this antitrust case, Versata had sued SAP for patent infringement related to how items are priced. A Texas court initially ordered SAP to pay Versata around $139 million in damages.
The legal back-and-forth has been extensive and multifaceted. In one instance, the U.S. Court of Appeals for the Federal Circuit ruled that a $345 million award for patent infringement by SAP was supported by the record. UnitedLex, a litigation support company that assisted Versata, stated that their supporting evidence led the jury to conclude infringement of two of Versata's patents by SAP, awarding a $390 million verdict to Versata. They analyzed over 5 million lines of source code to identify the three lines that established infringement and reverse-engineered product development life cycle covering a 15-year period to pinpoint every instance of infringement.
SAP's side of the story has consistently revolved around defending its business practices and challenging the validity of Versata's claims. In one instance, SAP requested that the United States Patent and Trademark Office (PTO) review the patent's validity and the Patent Trial and Appeal Board (the board) determined that Versata's patent claimed an invention that qualified as a covered business method and that several of the patent's claims were invalid.
SAP previously petitioned for a writ of certiorari to the Supreme Court, arguing that the district court judgment action should have been stayed by the Federal Circuit in view of the unpatentability of Versata's patent as determined by the Patent Office in the CBM review. However, in January 2014, the Supreme Court denied certiorari of SAP's petition.
The implications of this case extend beyond the immediate financial impact on SAP and Versata. The outcome could potentially set precedents for antitrust law concerning the software industry, particularly regarding the responsibilities of dominant players in ensuring fair competition and interoperability. The Supreme Court's decision, should it agree to review the case, will be closely watched by companies and legal experts alike, as it could reshape the landscape of competition in the software market.
