Ford faces Versata’s intellectual property lawsuit over ACM software

Article by Christian A., on June 10, 2015

A federal lawsuit was filed on May 7 against Ford Motor Co by Versata, a Texas software company, for having stolen its intellectual property. Versata claims that Ford benefited from its software by considerably cutting warranty costs and by bringing its vehicles to the market quicker.

Last Wednesday, Versata requested a U.S. District Court judge in Texas for an injunction against Ford, which started using the software in 1998 as part of its product-development process. The lawsuit said that at the end of 2014, Ford terminated the $8.45 million-a-year contract.

It then started using a program that was developed in-house based on Versata’s proprietary software, according to the lawsuit. Versata, which cited unspecified damages, said that Ford had gotten a software patent in 2014 based on the technology that it had licensed to Ford.

This was named the Automotive Configuration Manager. Versata’s software is capable of detecting incompatible parts in millions of possible vehicle configurations. This aids automakers to avoid problems and recalls.

Versata lawyer Lanny Davis said that its stolen code was included in what Ford submitted to the patent office. Later, Davis clarified that Ford’s patent application didn’t directly copy the code. Instead, it was “derived” from Versata.

The injunction request cited that Ford must stop using the internally developed software. The automaker has until June 29 to respond to the claim. Ford has released a statement, saying that that did not use or infringe on the software company’s intellectual property.

According to the lawsuit, the replacement software was developed by the same Ford employees who utilized ACM. It also said that Ford breached their contract when it scrapped a request from Versata to scrutinize the automakers’ servers and software.

Last February, Ford filed a sealed federal complaint against Versata in Michigan to ask for a judgment to affirm that Versata’s intellectual property was not infringed by its replacement software. In that case, the judge made an order to unseal the case.

However, no ruling was issued. Ford said that Versata’s case in Texas is a “retaliatory attempt” to avoid the Michigan lawsuit. The automaker shared that it will move to dismiss or transfer the Texas case to Michigan.

Ford’s filing last March for the Texas case revealed that its engineers started to develop replacement software in 2010 because Versata had announced ACM as “obsolete.” The automaker said that Ford’s software has the “super configurator” – a technology that finds out which vehicle configurations sell the best.

Ford said that its invention has a different approach and is more efficient than Versata’s software. The other automakers that use Versata software include Hyundai-Kia, Jaguar, General Motors, Fiat Chrysler, Toyota Motor, Volvo, and Nissan Motor.

In a conference call with reporters, Mike Richards, the president of global automotive business at Versata’s parent company, Trilogy Inc., said that the company will protect its intellectual property at all costs because it is its “lifeblood.”

Richards also said that because of Versata’s software, Ford was able to raise profits by “hundreds of millions or more likely billions of dollars.”

Topics: ford, lawsuit

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