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Softscape Lawsuit Against SuccessFactors Dismissed Font size=1UPDATED Oct. 22, 2008-font size

September 10, 2008
Related Topics: Human Resources Management Systems (HRMS/HRIS), Miscellaneous Legal Issues, Latest News
The legal dispute between HR software rivals SuccessFactors and Softscape has narrowed to one case.

A Massachusetts superior court last month dismissed Softscape’s suit alleging trade-secret theft by SuccessFactors.

In his ruling to dismiss the suit, Associate Justice Timothy Feeley said Softscape was making the same factual allegations in federal court in California, where SuccessFactors sued Softscape earlier this year.

The decision could speed a resolution of the litigation between the firms, which are two of the leading players in the fast-growing field of talent management applications.

Talent management software refers to tools that help with key human resource tasks, such as recruiting and employee performance management. Sales of the products have been brisk, partly thanks to fears of a looming shortage of workers as baby boomers age and retire.

In a statement, Wayland, Massachusetts-based Softscape said it was “pleased” with the move to dismiss the suit it filed in June.

“Based on this ruling, it’s clear that the Court thought it would be more efficient if the claims raised in the Massachusetts case are tried in California, given that the other case was already pending there and Softscape has raised similar facts in defense of the claims there,” the company said in a statement. “The Court in no way ruled or commented on the actual merits or validity of Softscape’s allegations against SuccessFactors raised in the Massachusetts case.”

Litigation between the companies goes back several years.

Softscape sued San Mateo, California-based SuccessFactors in 2005 in connection with a former Softscape employee who had joined SuccessFactors. That suit resulted in a settlement in which both companies agreed not to solicit each other’s employees for a six-month period that began in June 2007.

But SuccessFactors continued to “target Softscape employees” within that period, Softscape alleged in its June lawsuit filed in Massachusetts.

SuccessFactors called that lawsuit an attempt to divert attention from Softscape’s “illegal and reprehensible conduct.”

In March, SuccessFactors sued Softscape in the U.S. District Court for the Northern District of California, accusing it of false advertising, unfair competition and other alleged misdeeds associated with the circulation of a PowerPoint presentation that was highly critical of SuccessFactors. Softscape has said it authored the document but that it was for internal use only.

A judge issued a preliminary injunction that bars Softscape from disseminating or “affirming the purported truth or accuracy of” the presentation.

There are some 20 vendors competing in talent management software. Both SuccessFactors and Softscape are highly regarded. A Forrester Research study last year of 10 integrated performance and compensation management products found four leaders: SuccessFactors, Softscape, Authoria and Plateau Systems.

The rivalry between SuccessFactors and Softscape has taken on the flavor of a duel between their respective CEOs. Noting that four members of the Watkins family—CEO Dave Watkins along with his father, mother and brother—have roles at Softscape, SuccessFactors CEO Lars Dalgaard has accused the firm of nepotism. Watkins, in turn, has said Dalgaard is jealous of Softscape’s profitability.

—Ed Frauenheim

This article has been revised to reflect the following correction:

Correction: October 22, 2008

Forrester’s 2007 study of 10 integrated performance and compensation management software products initially concluded there were three leaders: Authoria, Softscape and SuccessFactors. Later, Forrester corrected its report, saying there were four leaders: Authoria, Plateau Systems, Softscape and SuccessFactors. This story did not reflect the conclusion of the updated report.

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