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Versata Can’t Shake Software Counterclaims

MARSHALL, Texas (CN) - A federal judge refused to toss state-law counterclaims against Versata Software, which accused software rivals of patent infringement after a collaboration effort turned sour.

Versata Software sued Internet Brands fka CarsDirect.com and AutoData Solutions 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. Versata also sued for breach of settlement agreement, tortious interference with 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 claimed the software companies misrepresented the terms of their license with Versata and snatched away its client, Chrysler.

Last week U.S. District Judge William Bryson denied Versata's motion for partial summary judgment.

The motion concerned state-law counterclaims made by Internet Brands and AutoData Solutions. The software providers sought quiet title and alleged misappropriation of trade secrets, breach of contract, and tortious interference with prospective business relationships.

"The misappropriation counterclaim at issue in this case states a cause of action against the plaintiffs that, if found to have merit, could defeat the plaintiffs' infringement claims," Bryson wrote. "It arises out of the same transaction or occurrence - in this case, the grant of the patents-in-suit. Additionally, the same facts (e.g., the technology underlying the patents and the proper inventorship of that technology) are significant and highly relevant to both the claim of infringement and the misappropriation counterclaim. ...

"In this case, the plaintiffs have failed to show that there is no disputed issue of material fact as to when the defendants should have known of the misappropriation," Bryson said in his 15-page order.

Despite questions of timeliness raised by Versata, Bryson refused to grant summary judgment for the misappropriation counterclaim.

Versata was likewise unable to persuade the judge that the settlement agreement released the counterclaims, or that Internet Brands and AutoData Solutions failed to provide sufficient evidence.

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