Court Affirms Judgment Against Versata Software

     MARSHALL, Texas (CN) – A federal judge has affirmed a judgment of $2 million for misappropriation of trade secrets plus an additional dollar for breach of contract against Versata Software in a long-running patent infringement case.



     In a February order, U.S. District Judge William Bryson refused to toss state-law counterclaims against Versata Software, which accused Internet Brands fka CarsDirect.com and AutoData Solutions of patent infringement after their collaboration efforts deteriorated.
     Versata Software sued the rival companies in federal court in August 2008.
     Like Versata, Internet Brands and AutoData Solutions supply automakers with software that allows shoppers to compare vehicles online.
     Versata claimed the defendants infringed on two of its patents. It also sued for breach of settlement agreement, tortious interference with existing contract and tortious interference with prospective contractual relations.
     The litigation has a history. The parties tried to collaborate and combine their products in the late 1990s, but that failed, and a series of lawsuits followed, two of which resulted in a settlement agreement, in May 2001.
     Versata claimed in 2008 that Internet Brands and AutoData Solutions violated the settlement. It said the software companies misrepresented the terms of their license with Versata and snatched away its client, Chrysler.
     Internet Brands and AutoData Solutions responded with their own counterclaims.
     A jury found in June that Versata committed breach of contract and trade secret misappropriation in dealings with Toyota. The jury awarded the defendants $2 million for the misappropriation claim and $1 for breach of contract, both of which Bryson upheld in a final judgment issued Monday.
     But Bryson rejected Internet Brands and AutoData Solutions’ bid for injunctive relief. The judge’s orders refer to the defendants collectively as “AutoData.”
     “Both AutoData and Versata are sophisticated operators in the automotive software industry, with established clients and existing products, and it is unclear how the trade secrets that were at issue in this case affect either business on an ongoing basis,” Bryson noted in a 7-page order. “Given the rapid pace of technological advancement in the software industry, it seems highly unlikely that the technology underlying the trade secrets at issue in this case is still viable or valuable today, some fourteen years after the misappropriation.”
     On the other hand, Versata failed to convince Bryson to nix Internet Brands and Autodata Solutions’ counterclaim for nominal damages.
     “The exception to the general availability of nominal damages is that they are not available ‘when the harm is entirely economic and subject to proof,'” Bryson wrote in a separate 6-page order.
     “That exception, however, is not applicable to the case at hand,” Bryson continues. “First, Versata’s argument was that AutoData never properly pleaded nominal damages, not that AutoData had sustained a quantifiable loss that it was unable to prove.
     “More importantly, the type of injury alleged by AutoData (disclosure of confidential material) is not a harm that is always entirely economic and subject to proof. Although some disclosures of confidential materials lend themselves to quantifiable harm – as is the case with AutoData’s claim that Versata used its confidential trade secretes to win the business of Toyota – other types of disclosures are not so easily put into dollars. That is the case with the confidential disclosures that were the basis of the breach of contract here,” Bryson added.

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