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SuccessFactors Wins Lawsuit Battle

April 2, 2008
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HR software company SuccessFactors has scored a victory in its lawsuit against rival Softscape in a case that now includes allegations that Softscape created a phony company to secure secret information.

On Friday, March 28, a federal judge issued a preliminary injunction that, among other things, bars Softscape from disseminating or “affirming the purported truth or accuracy of” a PowerPoint presentation critical of SuccessFactors.

And in court papers filed this month, SuccessFactors accused Softscape of “an elaborate ruse” involving the creation of a fake customer, New Millenium Shoe.

In a statement Monday, March 31, SuccessFactors said evidence from its investigation into the presentation “suggested that Softscape representatives masqueraded as a prospective customer—New Millenium Shoe purportedly operating out of Puerto Rico—in order to gain unauthorized access to SuccessFactors sales materials and SuccessFactors’ password-protected sales demonstration site.”

SuccessFactors also said Softscape’s attorney stated in a hearing that Softscape chief executive Dave Watkins is CEO of New Millenium Shoe.

Softscape on Wednesday, April 2, declined to provide answers to several questions, including whether Dave Watkins is CEO of the shoe company.

But in a statement, Softscape contested the idea that New Millenium Shoe is a phony company.

“Big & Beautiful Shoe was actually a multi-million dollar shoe company founded in approximately 1979, and became New Millenium Shoe Corp in approximately 1987,” Softscape said in the statement. “…There is much more to this story, and we welcome the opportunity to have all the facts revealed through the legal process as we feel we will be vindicated."

In addition, Softscape on Monday, March 31, issued a statement saying it appreciates that the court granted a limited version of the preliminary injunction SuccessFactors had requested.

San Mateo, California-based SuccessFactors filed its suit in early March in U.S. District Court for the Northern District of California. The complaint accuses Wayland, Massachusetts-based Softscape of false advertising, unfair competition and other misdeeds associated with the anonymous circulation of the 43-page presentation. Softscape admits it wrote the document but says it was meant for internal use only.

The legal tussle is between competitors in the fast-growing market for talent management software. SuccessFactors and Softscape sell tools for such key HR tasks as employee performance and compensation management.

Workforce Management saw a copy of the presentation. Titled “The Naked Truth,” the document suggests that it may have been written by a former customer or customers of SuccessFactors. It includes a SuccessFactors logo and what appear to be screen shots of SuccessFactors software.

The Softscape presentation alleges a variety of failures and problems at SuccessFactors, including customer attrition. It names many prominent corporations, indicating they had trouble with SuccessFactors, left the vendor or no longer serve as a reference customer. The document suggests that retail giant Sears, for example, may no longer be a customer because it “pulled the plug” on a SuccessFactors project.

In its complaint, SuccessFactors specifically rebuts many of the charges. It says, for example, that Sears “remains an active and valued customer.”

A Sears spokeswoman declined to say whether Sears is a SuccessFactors customer. She said Sears does not comment on its vendors.

The site, www.newmilleniumshoe.com, is a rudimentary Web site with 35 photographs of shoes. The site says, “Please Call Rafael at 787-767-1766 to order..” Calls to that number on Monday, March 31, were met with sounds like those of a fax machine.

—Ed Frauenheim

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