UPDATED: Ford faces $105m damages for theft of software trade secrets
A US jury found the motor company to have misappropriated automotive software trade secrets | Ford also found in breach of contract with long-standing software developer.
A US federal jury has ordered Ford Motor Company to pay damages to Versata Software for breach of contract and misappropriation of trade secrets.
In a hearing yesterday, Wednesday October 26, the US District Court for the Eastern District of Michigan ordered Ford to pay damages of almost $105 million to Versata Software along with co-plaintiffs Trilogy Development Group, and Trilogy.
The software in question is Versata's Automotive Configuration Management (ACM) software, which Versata licensed to Ford for about 10 years.
Versata alleges that Ford breached the parties’ contract by, among other things, using Versata’s software after the contract expired.
The damages amount is based on Versata’s assertion that Ford would have paid at least $17 million per year to use Versata’s software after the contract’s expiry.
Negotiation breakdown
The dispute, which began in 2015, centres upon whether Ford’s replacement software infringes Versata’s software patents. In mid-2014, Ford and Versata began negotiating a renewal of the annual licence for the ACM software.
Since both parties were unable to reach an agreement and negotiations “ultimately broke down”, Ford decided to decommission Versata’s ACM software and develop its own version internally.
A series of court filings and hearings ensued, with the original dispute resulting in two federal civil actions. One was filed by Ford against Texas-based Versata (the ‘Ford action’), and the other was a related action filed by Versata against Michigan-based Ford in the US District Court for the Eastern District of Texas (the ‘Versata action’).
In the Ford action, the car maker sought a declaratory judgment that it had not infringed any IP rights owned by Versata.
In the Versata action, Versata alleged that Ford infringed its patents and misappropriated its IP. According to the Michigan court in 2015, the two actions were “substantially similar and address much of the same subject matter”.
‘Chinese Wall’
According to Versata, Ford had originally argued that there was a "Chinese wall" (a virtual barrier to block the exchange of confidential information) between software developers and those working with ACM's technology. Versata says that Ford lied about this, and that due to a lack of evidence, Ford has since dropped this claim.
In July 2017, the Patent Trial and Appeal Board ( PTAB) denied Ford its request to challenge the legitimacy of six of Versata’s software patents. Versata alleged at the time that Ford had attempted to “circumvent the legal system by challenging Versata's patents in the PTO nearly 30 times”.
In May this year, 2022, the court denied Ford’s motion in limine, requesting that Versata et al were precluded “from offering argument, testimony, or other evidence of contract damages” at trial because Ford believed they lacked evidence.
Dan Webb—partner at Winston & Strawn and lead counsel for Versata—was at the jury trial and told WIPR that he and his legal team were “very pleased with the verdict”.
“It was a very strong and favourable verdict in favour of Versata,” he said. “We're very grateful to the jury for dealing with a very complicated case, and they came to the right result.”
He explained that Versata prevailed on six out of seven of its legal claims, and that the damages received represented about 85% of what they asked the jury to award.
He added: “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?”
Representatives for Ford did not respond immediately to WIPR’s request for comment.
This article was updated later on the day of publication to include comment from Versata's counsel.
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