$1 billion suit says automaker created copycat software
Photo credit: NICK BUNKLEY
DETROIT — During a 27-year career at Ford Motor Co., Mike Richards oversaw the launch of the first Lincoln Navigator and held several high-level marketing positions. At one point, he had an office next to now-CEO Mark Fields.
Despite being let go in 2008, when the automaker was slashing jobs to survive the industry downturn, “I still have blue blood,” Richards told Automotive News this month. “I am still as loyal to Ford as they come.”
But in his new life as a software company executive, Ford has suddenly become Richards’ adversary.
His firm, Austin, Texas-based Versata Software, is suing Ford for $1 billion, accusing the automaker of stealing its trade secrets to create a copycat version of a program used to help configure vehicles under development and reduce warranty costs. General Motors, Nissan Motor and Fiat Chrysler are among other automakers that Versata says use its software.
In statements and court filings, Ford has denied stealing anything from Versata. It told a federal judge in Texas that it has a “royalty-free license to create derivative works” of the Versata software it used until abruptly terminating the relationship at the end of 2014. Ford received two patents on the replacement program this year.
“Ford’s patented software does not use or infringe any Versata intellectual property and Versata has provided no basis for their claims against us,” Ford said in a statement last week. “We are confident that we will ultimately prevail in this case and we look forward to the opportunity to present our evidence at trial.”
Ford and Versata began working together in 1998, while Richards was a Lincoln brand manager. He didn’t know anything about it or use it then but says Versata’s software helped boost Ford profits during a very successful time for the automaker.
“A lot of things that were going on that were tailwinds for us,” he said, “were probably because of this software.”
In February, Ford filed a federal lawsuit in Michigan seeking to assert its ownership of the new software. Versata filed its own federal suit in Texas in May.
The companies are tussling over which state should hear the case, and Versata has launched an aggressive media campaign to pressure Ford. It hired a high-profile public relations firm in Washington and Lanny Davis, a former White House special counsel to President Bill Clinton, to publicize the allegations.
Versata began a press conference at a hotel near Detroit last week by showing clips from the movie Flash of Genius, the story of inventor Robert Kearns winning a $10.1 million verdict against Ford in 1990 for stealing his design for intermittent windshield wipers.
As a backdrop for the event, Versata constructed a faux brick wall with a hole in it to symbolize the internal divide that it says Ford breached by having people with knowledge of Versata’s software develop the in-house replacement. In front of the wall, it placed a near-life-size cutout of Henry Ford and a banner with a quote attributed to him: “Success does not come by imitation.”
In a June filing, Ford called Versata’s argument about how the new program was created “rank speculation.” In a court filing last week, Ford said it never had access to Versata’s source code.
Davis said that’s irrelevant because Ford reverse-engineered Versata’s program to make a substitute that works the same way.
He estimated that the battle could drag on for up to two years and said that Versata intended to take it to trial, though he didn’t rule out the possibility of a settlement or other resolution.
No contract bitterness
Though Ford lost the suit filed by Kearns — who later won an even larger verdict against Chrysler Corp. — a federal jury in Washington state this year rejected infringement allegations by a firm that claimed Ford stole the technology behind its Sync connectivity system and several other features.
Richards, president of global automotive business for Versata’s parent company, Trilogy, said he’s disappointed to be fighting Ford in court. But he says it’s necessary to protect the rights of his company and other small suppliers.
He insists the case is not related to any bitterness toward his former employer or over Versata’s loss of a big contract.
“There’s no way we’d fight that,” Richards said. “If they could do better [than Versata], that’s always their right, provided they do that within the law.”
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