Q&A: Ford's collision with Versata

Ford took a blow last week when it was  ordered to pay damages of almost $105 million to a long-standing software licensor, for breach of contract and misappropriation of trade secrets.  Dan Webb, partner at Winston & Strawn and lead counsel for Versata, speaks to WIPR about the case.

In the hearing on Wednesday, October 26, a jury in the  US District Court for the Eastern District of Michigan decided that the carmaker must pay the award to  Versata Software and its co-plaintiffs Trilogy Development Group, and Trilogy.

Ford was accused of copying Versata's Automotive Configuration Management (ACM) software to develop its own after not renewing its licence after a decade-long agreement. Versata also alleged that Ford breached the contract between them by, among other things, using its software after the contract expired.

Dan Webb, partner at Winston & Strawn and lead counsel for Versata, spoke to WIPR about the case.

What is your response to the verdict?

We were very pleased. It was a very strong and favourable verdict in favour of Versata. We prevailed on six out of seven of our legal claims, and we received damages of about $105 million, which is about 85% of what we asked the jury to award.

We're very grateful to the jury for dealing with a very complicated case, and they came to the right result.

Could you tell us more about those seven claims Versata made against Ford?

We filed seven legal claims against Ford. Three of those claims were claims for breach of contract, and four of the claims were for misappropriation or theft of our trade secrets.

The one that wasn't awarded was one of the trade secret claims—the jury found no liability on Ford’s part for that fourth trade secret.

Three of the components [of the claims] were for part of the ACM software, and one was a different software programme called MCA. So the jury awarded all of the ACM software claims, and did not award MCA, the fourth point.

Why do you think the jury favoured Versata in this trial?

Here's what I believe. Whenever as a trial lawyer, you are faced with an extremely complex factual case, you need to find a way to explain it to the jury, in simple, straightforward terms. And I did that at the beginning of my closing arguments.

I explained to the jury, and in three minutes, an overview of what Versata's case was. I then explained to them in three minutes what Ford's defence was before I went down into the weeds for the next two and a half hours.

I told the jury that Ford's defence was a completely phoney and fabricated defence that had no support in the evidence. And that when a party raises a phoney defence, then you know they're guilty, because why would you raise a phoney defence if you're innocent?

I believe that was a pretty powerful argument to show the jury that at the end of the day, when you climb out of the weeds, Versata wins the case and Ford loses. And that's what I think the strength of our case was.

Can you explain the ‘Chinese Wall’ claim made and then dropped by Ford?

The Chinese Wall is simply a reference to when a company like Ford has a major conflict of interest [such that] they had here, because Ford was using our software under a licence agreement.

They owe us a duty of loyalty as their business partner, [but] they made a choice to stab us in the back and develop a competing product so they would never have to pay licence fees again.

When they did that, under the law, they should have built a Chinese Wall, which is simply a barrier that would make sure that Ford employees who had had access to our software would never be allowed to build the new software, because they should never [have stolen] our trade secrets and put it into the new software.

Ford did not build the Chinese wall. They lied and said that they did, but the evidence showed they didn't. And I think that was one of the problems that the jury had with Ford's defence and position in the case.

[The jury saw] the evidence of 26 different people that were Ford employees who had worked with our software and knew our trade secrets. And then [Ford] put them on the development team to build the competing product so they could steal our software.

What happens next?

That's an issue that will be addressed by the trial judge. But the evidence is that the jury found by its verdict that Ford is still using our software today, seven and a half years after they stopped paying licence fees.

So the jury verdict is that Ford is still using our stolen trade secrets as we speak today. And the judge will have to deal with that issue as the case proceeds.