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2:15-cv-10628-MFL-EAS Doc # 59 Filed 10/28/15 Pg 1 of 56 Pg ID 1338
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MICHIGAN
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`CASE NO. 15-10628-MFL-EAS
`(Consolidated with
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`Case No. 15-11624-MFL-EAS)
`Hon. Matthew F. Leitman
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`FORD MOTOR COMPANY,
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`Plaintiff/Counter-Defendant,
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`v.
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`VERSATA SOFTWARE, INC., F/K/A
`TRILOGY SOFTWARE, INC., TRILOGY
`DEVELOPMENT GROUP, INC. AND
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`TRILOGY, INC.,
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`Defendants/Counter-Plaintiffs.
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`DEFENDANTS’ ANSWER TO PLAINTIFF’S COMPLAINT,
`AFFIRMATIVE AND SPECIAL DEFENSES,
`DEFENDANTS’ COUNTERCLAIMS,
`AND RELIANCE ON JURY DEMAND
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`Page 1 of 56
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`FORD 1003
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`2:15-cv-10628-MFL-EAS Doc # 59 Filed 10/28/15 Pg 2 of 56 Pg ID 1339
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`ANSWER
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`
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`Defendants Versata Software, Inc., f/k/a Trilogy Software, Inc., Trilogy
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`Development Group, Inc., and Trilogy, Inc. (collectively, “Versata”) by their
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`attorneys, Steven J. Mitby of the Houston, Texas law firm of AHMAD,
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`ZAVITSANOS, ANAIPAKOS, ALAVI & MENSING, P.C., and Rodger D. Young
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`of the Farmington Hills, Michigan law firm of YOUNG & ASSOCIATES, hereby
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`answer the Complaint of Plaintiff Ford Motor Company (“Ford”):
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`
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`PRELIMINARY STATEMENT
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`Plaintiff Ford Motor Company Has Misappropriated Versata’s Trade Secrets
`and Infringed Versata’s Patents
`Ford Motor Company is one of the biggest automotive companies in the
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`world. Ford’s success depends on complex software that works behind the scenes
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`to enable Ford to design, develop, manufacture, distribute, market, and sell vehicles
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`on four continents. The backbone of this global system is Versata’s Automotive
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`Configuration Management (ACM), a software program that Versata developed in
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`Austin, Texas at a cost of hundreds of thousands of person-hours and millions of
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`dollars.
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`Versata’s ACM software enables Ford to “configure” vehicles from billions
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`of potential combinations of parts, features, and options. By solving the complex
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`mathematical, logical, and logistical problems involved in designing and configuring
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`vehicles, ACM ensures that every Ford vehicle consists of compatible parts and
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`features that Ford can manufacture. In addition, the software ensures that each Ford
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`vehicle configuration complies with Ford’s sales, marketing, and other business
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`requirements. In short, ACM ensures that the automotive designs Ford develops are
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`for vehicles that Ford can build, manufacture, and sell.
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`Ford began using Versata’s automotive configuration technology in October
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`1998 after experimenting unsuccessfully with homegrown solutions. Ford tried, but
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`ultimately failed, to develop software that was sophisticated, accurate, and efficient
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`enough to meet its configuration needs. By the late 1990s, these needs had become
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`critical because Ford had lost hundreds of millions of dollars because of
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`configuration errors. Ford incurred these costs primarily because its existing
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`configuration process – which depended heavily on large teams of engineers,
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`involved extensive manual inputs, and was subject to significant risk of human error
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`– caused multi-million dollar vehicle recalls and manufacturing delays.
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`Between October 1998 and January 2015, Versata became Ford’s chief
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`provider of configuration software. Ford integrated ACM throughout its business
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`and came to depend on Versata to run its global operations. Because ACM provides
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`the configuration models that determine the products Ford can design and build,
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`Ford has integrated ACM with its global design, development, finance, marketing,
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`dealer ordering, and retail website software. In short, Ford’s global information
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`technology infrastructure was totally dependent on – and could not function without
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`– ACM. Because of this dependence, Ford could not design, manufacture, or sell a
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`single vehicle without Versata’s technologies.
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`In or before 2011, Ford management became concerned about the extent of
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`Ford’s dependence on ACM and did not want to pay the relatively modest price
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`increases that Versata requested as part of license renewals. Even though Ford was
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`receiving hundreds of millions and perhaps billions of dollars in benefits from
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`Versata software, Ford’s management decided it wanted to break ties with Versata.
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`Ford vice president Elena Ford (who is also an influential shareholder within the
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`company) expressed her distaste for Versata and told a colleague that Ford would
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`not do business with Versata because Versata had allegedly “put Ford over a barrel.”
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`But Ford did not have any software that it could use to replace ACM or reduce its
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`need for Versata’s technologies. So, based on this pressure from upper management,
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`Ford launched a program called “Total Configuration Management” or “TCM” to
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`replicate the functionality of ACM and provide a complete replacement for ACM
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`software.
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`Ford now claims that TCM (which Ford later renamed “Product Definition
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`and Offer” or “PDO”) uses entirely different technologies from ACM, claiming that
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`the company implemented a “Chinese wall” to protect Versata trade secrets and
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`emphasizing the fact that Ford obtained a patent (U.S. Patent No. 8,812,375) on
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`some of the technology used in this software. However, the functionality of the
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`TCM software and the development process Ford used to create it refutes this
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`assertion. Even without any fact discovery, it is evident that Ford incorporated
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`Versata’s patented technologies and trade secrets into TCM and used these
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`technologies to replace ACM.
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`First, far from employing a “Chinese wall,” Ford used at least twenty-six
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`people – and possibly more – who had worked on or had access to Versata’s
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`configuration technologies to develop TCM. The head of this development project
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`was Mike Sullivan, the Ford executive who had overseen Ford’s implementation and
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`integration of ACM since at least 2000. Indeed, Sullivan had unrestricted access to
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`ACM for more than a decade before he was assigned to lead the TCM development
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`process and Sullivan continued to work on ACM simultaneously with TCM. The
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`other individuals on both sides of Ford’s “Chinese wall” include Bryan Goodman,
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`Gintaras Puskorius, Kurt Reinke, Sanjay Sisale, Ram Pillarisetty, Garghi Shah,
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`David Wierzbicki, Sunil Gajula, Manisha Tambe, Darlene Coomer, Jian Lin, Fred
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`Wilkinson, Linda Wu, Rachel Sims, Chris Andrews, Martin Pipoly, Yakov Fradkin,
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`Jim Beardslee, Ravi Kundoor, Ganesh Alla, Erin Jasso, Aaron Bush, Rachel Smith,
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`Sai Viswanatha, and Colin Shury. Versata expects to identify even more individuals
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`through discovery.
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`Ford’s deliberate use of people who had significant knowledge of and
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`exposure to ACM confidential information was not a coincidence: These individuals
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`could not simply “forget” or “separate” what they knew about ACM from their work
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`on the TCM replacement software for ACM – especially when Ford was under
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`pressure to develop replacement software that would eliminate Ford’s dependence
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`on Versata.
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`Second, Ford’s public patent filings – which purport to describe the
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`technologies used in TCM – actually demonstrate that Ford incorporated numerous
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`Versata technologies into TCM. These patent filings include U.S. Patent No.
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`8,812,375 and U.S. Patent Publication No. US20140279602.
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`Even if Ford added additional elements to its patent claims in order to secure
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`Patent Office approval (a claim which is, at best, open to question), the fundamental
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`basis of both of these patent filings is technology that Ford obtained and copied from
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`Versata. Not surprisingly, the named inventors on these Ford patent filings include
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`at least eight people who gained knowledge of Versata configuration technologies
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`such as Bryan Goodman, Gintaras Puskorius, Jian Lin, Martin Pipoly, Yakov
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`Fradkin, Ravi Kundoor, Ganesh Alla, and Jim Beardslee.
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`Third, TCM functions as a complete replacement for ACM and was integrated
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`with downstream design, development, finance, marketing, dealer ordering, and
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`retail website systems without any change to those systems. The fact that Ford was
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`able to remove ACM and replace it with TCM without changing any downstream
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`systems highlights the overlap between TCM and ACM software.
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`Fourth, at the end of 2014, Ford made several desperate attempts to renew its
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`ACM license by subterfuge, signaling that Ford was not ready to stop using ACM
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`when its license expired in January 2015. For example, in October 2014, Ford sent
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`an unsolicited $8.45 million check to Versata’s corporate offices in Texas for a one-
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`year ACM license renewal, even though Versata had rejected this proposal just days
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`earlier. Ford also sent two unsolicited purchase orders to Versata’s corporate offices
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`based on this same proposal that Versata had rejected.
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`These tactics – apparently intended to prompt someone at Versata to create a
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`binding contract by cashing the check or executing one of the purchase orders –
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`show that Ford was not prepared to terminate its license to ACM at the beginning of
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`2015. Significantly, Ford also refused to allow Versata to review its TCM software
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`or documentation as part of a contract audit process, stonewalling Versata’s efforts
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`to determine the full extent to which TCM incorporates its trade secrets and patented
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`technologies.
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`For these reasons, and as further stated below, it is apparent that Ford is liable
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`for breaching its software license agreements with Versata, misappropriating
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`Versata’s trade secrets, and infringing Versata’s patents.
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` PARTIES
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`1.
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`Versata lacks knowledge or information sufficient to form a belief
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`about the truth of the allegations contained in this paragraph, and on that basis denies
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`them.
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`2.
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`3.
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`Admitted.
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`Versata admits that Trilogy Development Group, Inc.’s principal place
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`of business is in Austin, TX. Versata denies the remaining allegations of paragraph
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`3.
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`4.
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`5.
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`Admitted.
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`Admitted.
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`JURISDICTION AND VENUE
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`6.
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`Versata incorporates by reference the allegations in paragraphs 1-5 of
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`its Answer, and to the extent an answer is required, denied.
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`7.
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`Admitted that this Court has subject matter jurisdiction over this action
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`pursuant to 28 U.S.C. §§ 1331, 1338, and 2201; otherwise denied.
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`8.
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`Versata lacks knowledge or information sufficient to form a belief
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`about the truth of the allegations contained in this paragraph, and on that basis denies
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`them.
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`9.
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`Denied.
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`BACKGROUND FACTS
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`10. Versata incorporates by reference the allegations in paragraphs 1-9 of
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`its Answer, and to the extent an answer is required, denied.
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`11. The term “Original Equipment Manufacturer” is undefined; Versata
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`lacks knowledge or information sufficient to form a belief about the truth of the
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`allegations contained in this paragraph, and on that basis denies them.
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`12. Versata admits
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`that Ford sells vehicles with many different
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`configurations. Versata lacks knowledge or information sufficient to form a belief
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`about the truth of the remainder of the allegations contained in this paragraph, and
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`on that basis denies them.
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`13. Admitted.
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`14. Admitted to the extent that these allegations are not intended to
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`preclude that billions of configurations may be possible for a vehicle line; otherwise
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`denied.
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`15. Versata lacks knowledge or information sufficient to form a belief
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`about the truth of the allegations contained in this paragraph, and on that basis denies
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`them.
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`16. Versata admits that Ford licensed software from Versata in October
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`1998; otherwise denied.
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`17. Versata admits that it entered into a Contract Services Agreement
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`(“CSA”) with Ford in 1998. For all other allegations herein, lacks knowledge or
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`information sufficient to form a belief about the truth of the allegations contained in
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`this paragraph, and on that basis denies them.
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`18. Versata admits that the CSA speaks for itself. Versata denies any
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`allegation that is inconsistent with the terms of the CSA. Versata denies the
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`remaining allegations.
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`19. Denied.
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`20. Versata admits that Ford’s vehicle offerings required high levels of data
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`volumes and complexity; otherwise denied.
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`21. Denied.
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`22. Versata admits that it entered into a Master Subscription and Services
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`Agreement (“MSSA”) with Ford in 2004 and that the MSSA speaks for itself.
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`Versata denies any allegation that is inconsistent with the terms of the MSSA.
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`Versata denies the remaining allegations.
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`23. Versata admits that the MSSA speaks for itself. Versata denies any
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`allegation that is inconsistent with the terms of the MSSA. Versata denies the
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`remaining allegations.
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`24. Denied.
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`25. Denied.
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`26. Denied.
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`27. Versata admits that it entered into an addendum to the original software
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`license. Otherwise, denied.
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`28. Versata admits that Ford paid Versata pursuant to the addendum.
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`Otherwise denied.
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`29. Versata admits that it sent a letter to Ford dated October 7, 2014, and
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`that the letter speaks for itself; otherwise denied.
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`30. Versata admits that it sent a letter to Ford dated November 13, 2014,
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`and that the letter speaks for itself; otherwise denied.
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`31. Denied.
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`32. Denied
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`33. Denied.
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`34. Denied.
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`35. Versata admits that a Ford employee stated orally that it planned to
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`replace ACM software. Otherwise, denied.
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`36. Versata lacks knowledge or information sufficient to form a belief
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`about the truth of the allegations contained in this paragraph, and on that basis denies
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`them.
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`37. Versata lacks knowledge or information sufficient to form a belief
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`about the truth of the allegations contained in this paragraph, and on that basis denies
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`them.
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`38. Versata lacks knowledge or information sufficient to form a belief
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`about the truth of the allegations contained in this paragraph, and on that basis denies
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`them.
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`39. Denied.
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`40. Versata lacks knowledge or information sufficient to form a belief
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`about the truth of the allegations contained in this paragraph, and on that basis denies
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`them.
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`41. Denied.
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`42. Versata lacks knowledge or information sufficient to form a belief
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`about the truth of the allegations contained in this paragraph, and on that basis denies
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`them.
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`43. Versata admits that the United States Patent and Trademark Office
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`(USPTO) issued Patent No. 8,812,375 in August 2014; otherwise denied.
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`44. Denied.
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`45. Denied.
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`46. Denied.
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`47. Denied.
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`48. Denied.
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`49. Denied.
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`50. Denied.
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`51. Versata lacks knowledge or information sufficient to form a belief
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`about the truth of the allegations contained in this paragraph, and on that basis denies
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`them.
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`52. Denied.
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`53. Denied.
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`54. Versata admits that it sent a letter to Ford dated October 7, 2014, and
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`that the letter speaks for itself; otherwise denied.
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`55. Versata admits that some of its representatives met with Ford
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`representatives in Dearborn on December 19, 2014; otherwise denied.
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`56. Versata admits that it has notified Ford of its intent to exercise its on-
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`premises audit rights pursuant to the MSSA. Otherwise denied.
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`57. Versata admits that it requested interviews with Ford personnel
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`pursuant to its on-premises audit rights under the MSSA. Otherwise denied.
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`58. Versata admits that it holds the following patents: U.S. Patent No.
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`5,825,651 (the ‘651 Patent) (incorrectly identified in Ford’s Complaint as the “‘561
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`Patent”), U.S. Patent No. 6,405,308 (the ‘308 Patent), and U.S. Patent No. 6,675,294
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`(the ‘294 Patent). Versata also admits that the claims of these patents cover aspects
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`of ACM. Otherwise, denied.
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`59. Versata’s October 7, 2014 letter speaks for itself. Otherwise, denied.
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`60. The context for the allegations in this are paragraph is vague.
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`Accordingly, Versata lacks knowledge or information sufficient to form a belief
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`about the truth of the allegations contained in this paragraph, and on that basis denies
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`them.
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`FIRST CAUSE OF ACTION
`(Declaratory Judgment That Ford Does Not Infringe The ‘651 Patent)
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`61. Versata incorporates by reference the allegations in paragraphs 1-60 of
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`its Answer, and to the extent an answer is required, denied.
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`62. Denied.
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`63. Denied.
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`64. Denied.
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`SECOND CAUSE OF ACTION
`(Declaratory Judgment That Ford Does Not Infringe The ‘308 Patent)
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`65. Versata incorporates by reference the allegations in paragraphs 1-64 of
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`its Answer, and to the extent an answer is required, denied.
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`66. Denied.
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`67. Denied.
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`68. Denied.
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`THIRD CAUSE OF ACTION
`(Declaratory Judgment That Ford Does Not Infringe The ‘294 Patent)
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`69. Versata incorporates by reference the allegations in paragraphs 1-68 of
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`its Answer, and to the extent an answer is required, denied.
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`70. Denied.
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`71. Denied.
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`72. Denied.
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`FOURTH CAUSE OF ACTION
`(Declaratory Judgment That Ford Owns, Or Is Licensed To Reproduce,
`Software Versata Developed Pursuant to the 1998 Contract Services
`Agreement)
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`73. Versata incorporates by reference the allegations in paragraphs 1-72 of
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`its Answer, and to the extent an answer is required, denied.
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`74. Denied.
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`75. Versata admits that Versata and Ford entered into the CSA in October
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`1998 and that the CSA speaks for itself; otherwise denied.
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`76. Denied.
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`77. Denied.
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`78. Denied.
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`FIFTH CAUSE OF ACTION
`(Declaratory Judgment That Ford Owns, Or Is Licensed To Reproduce,
`Software Versata Developed Pursuant to the 2004 Master Subscription and
`Services Agreement)
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`79. Versata incorporates by reference the allegations in paragraphs 1-78 of
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`its Answer, and to the extent an answer is required, denied.
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`80. Denied.
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`81. Versata admits that Versata and Ford entered into the MSSA in
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`December 2004 and that the MSSA speaks for itself; otherwise denied.
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`82. Denied.
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`83. Denied.
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`84. Denied.
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`SIXTH CAUSE OF ACTION
`(Declaratory Judgment That Ford Did Not Misappropriate Defendants’
`Trade Secrets)
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`85. Versata incorporates by reference the allegations in paragraphs 1-84 of
`
`its Answer, and to the extent an answer is required, denied.
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`86. Denied.
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`87. Denied.
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`88. Denied.
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`89. Denied.
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`90. Denied.
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`SEVENTH CAUSE OF ACTION
`(Declaratory Judgment That Defendants Are Not Permitted To Inspect Ford’s
`TCM Software or Interview Ford’s TCM Developers Pursuant To The Audit
`Provisions Of The 2004 MSSA)
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`91. Versata incorporates by reference the allegations in paragraphs 1-90 of
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`its Answer, and to the extent an answer is required, denied.
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`92. Denied.
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`93. Versata admits that it requested to interview Ford personnel, otherwise
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`denied.
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`94. Denied.
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`95. Denied.
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`96. Denied.
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`97. Denied.
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`98. Denied.
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`99. Versata admits
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`that Versata
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`representatives met with Ford
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`representatives in Dearborn on December 19, 2014; otherwise denied.
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`100. Denied.
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`101. Denied.
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`EIGHTH CAUSE OF ACTION
`(Breach of Contract)
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`102. Versata incorporates by reference the allegations in paragraphs 1-101
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`of its Answer, and to the extent an answer is required, denied.
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`103. Denied.
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`104. Denied.
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`105. Denied.
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`106. Denied.
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`107. Denied.
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`108. Denied.
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`109. Denied.
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`RELIEF REQUESTED
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`WHEREFORE, the Versata Defendants deny the allegations in the Prayer for
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`Relief and any other allegations of the Complaint not specifically responded to
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`herein, and respectfully pray for the following relief:
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`A.
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`That the Court deny Ford’s request for declaratory judgment, and
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`otherwise dismiss Ford’s Complaint with prejudice.
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`B.
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`C.
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`That the Court provide for trial by jury on all issues triable by jury.
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`That the Court award Versata its attorney’s fees and costs in connection
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`with this action.
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`D.
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`That the Court award such other and further relief in law or in equity to
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`which Versata may be justly entitled.
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`DATED: Oct. 28, 2015
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`Respectfully submitted,
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`YOUNG & ASSOCIATES
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`
`
`
` /s/ Rodger D. Young
`Rodger D. Young (P22652)
`Jason D. Killips (P67883)
`27725 Stansbury Blvd., Suite 125
`Farmington Hills, MI 48334
`248.353.8620
`efiling@youngpc.com
`P22652
`
`AHMAD, ZAVITSANOS, ANAIPAKOS,
`ALAVI & MENSING, P.C
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`
`
` /s/ Steven J. Mitby
`
`Steven J. Mitby
` 1221 McKinney, Suite 3460
`
`Houston, Texas 77010
` 713.655.1101
`
`smitby@azalaw.com
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`
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`Counsel for Defendants, Versata Software,
`Inc., F/K/A Trilogy Software, Inc., Trilogy
`Development Group, Inc. and Trilogy, Inc.
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`18
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`Page 18 of 56
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`FORD 1003
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`2:15-cv-10628-MFL-EAS Doc # 59 Filed 10/28/15 Pg 19 of 56 Pg ID 1356
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`AFFIRMATIVE AND SPECIAL DEFENSES
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`1.
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`Ford’s claims for breach of contract are precluded by its ratification of
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`Versata’s actions.
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`2.
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`Ford’s claims for breach of contract are precluded because Ford and
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`Versata entered into a novation and accord.
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`3.
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`Ford’s claims for breach of contract are precluded because of Ford’s
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`waiver.
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`4.
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`All of Ford’s claims are barred because Ford has failed to state a claim
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`for which relief can be granted.
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`5.
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`6.
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`All of Ford’s claims are barred by the doctrine of unclean hands.
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`Ford’s claims for breach of contract are barred because, even if it could
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`show Versata breached the MSSA, Ford materially breached the MSSA first.
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`7.
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`Ford’s claims for breach of contract are barred by estoppel and/or
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`consent.
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`YOUNG & ASSOCIATES
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`
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`
`
` /s/ Rodger D. Young
`Rodger D. Young (P22652)
`Jason D. Killips (P67883)
`27725 Stansbury Blvd., Suite 125
`Farmington Hills, MI 48334
`248.353.8620
`efiling@youngpc.com
`P22652
`
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`19
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`Page 19 of 56
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`FORD 1003
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`2:15-cv-10628-MFL-EAS Doc # 59 Filed 10/28/15 Pg 20 of 56 Pg ID 1357
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`AHMAD, ZAVITSANOS, ANAIPAKOS,
`ALAVI & MENSING, P.C
`
`
`
` /s/ Steven J. Mitby
`
`Steven J. Mitby
` 1221 McKinney, Suite 3460
`
`Houston, Texas 77010
` 713.655.1101
`
`smitby@azalaw.com
`
`
`
`
`
`Counsel for Defendants, Versata Software,
`Inc., F/K/A Trilogy Software, Inc., Trilogy
`Development Group, Inc. and Trilogy, Inc.
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`20
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`Page 20 of 56
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`FORD 1003
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`2:15-cv-10628-MFL-EAS Doc # 59 Filed 10/28/15 Pg 21 of 56 Pg ID 1358
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`VERSATA PARTIES’ COUNTERCLAIMS AGAINST FORD
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`JURISDICTION AND VENUE
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`1.
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`This is an action for patent infringement under the Patent Laws of the
`
`United States, 35 U.S.C. § 271.
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`2.
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`This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§
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`1331 and 1338(a).
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`3.
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`Venue is proper in this judicial district under 28 U.S.C. §§ 28 U.S.C.
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`1391(b) and (c).
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`PARTIES
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`4.
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` These counterclaims are asserted by Defendants against Plaintiff Ford
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`Motor Company.
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`FACTUAL ALLEGATIONS
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`A.
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`Ford licenses Versata’s configuration software for 17 years
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`5.
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`Versata realleges and incorporates by reference herein the allegations
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`in the foregoing paragraphs, including the Preliminary Statement contained in its
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`Answer.
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`6.
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`Versata is an enterprise software company. Versata develops some of
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`the most successful, sophisticated, and powerful enterprise software in the United
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`States. One of Versata’s key areas of innovation is automotive configuration
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`technologies, a field in which Versata holds multiple patents.
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`
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`21
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`Page 21 of 56
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`FORD 1003
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`2:15-cv-10628-MFL-EAS Doc # 59 Filed 10/28/15 Pg 22 of 56 Pg ID 1359
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`7.
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`Versata and its subsidiaries have developed software comprised of
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`technical data, formulas, patterns, compilations, programs, and other patented and
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`trade secret information for the purpose of assisting automotive manufactures in
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`designing and configuring automotive product lines as well as financially forecasting
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`costs and profits.
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`8.
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`From October 1998 until January 2015, Ford licensed Versata’s
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`configuration technology – including ACM – pursuant to two master agreements
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`that included multiple schedules and addenda.
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`9.
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`In 1998, Ford signed a contract services software licensing agreement
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`with Versata (the “CSA”), which permitted Ford to license Versata’s automotive
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`configuration software in return for an annual licensing fee. A true and correct copy
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`of the CSA is attached hereto as Exhibit 1.
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`10. The CSA specified that, except for certain custom portions to which
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`Ford was specifically assigned ownership in written assignment orders, Versata
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`“retain[ed] all rights, title and interest in and to the software and/or related
`
`documentation provided to [Ford] by [Versata], including, without limitation, the
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`Non-Custom Elements … and all copyright, trade secret and other rights relating
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`thereto.” (Ex. 1 at 2).
`
`11. Ford also acknowledged in the CSA that “the ‘Non-Custom Elements’
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`include[d] … the know-how, technique, concepts, methods, coding, designs,
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`
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`22
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`Page 22 of 56
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`FORD 1003
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`

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`2:15-cv-10628-MFL-EAS Doc # 59 Filed 10/28/15 Pg 23 of 56 Pg ID 1360
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`inventions, procedures or other subject matter of the Developed Software, whether
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`or not included in the Custom Portions, if such subject matter is not specific to, or
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`can be made nonspecific to, [Ford].” (Ex. 1 at 3).
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`12. Ford further agreed to “restrict access to [Trilogy’s] Confidential
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`Information only to owners, employees, and contractors who (i) require access in the
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`course of their assigned duties and responsibilities, and (ii) have agreed in writing to
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`be bound by provisions no less restrictive than those set forth in [the CSA].” (Ex. 1
`
`at 3).
`
`13.
`
`In 2004, Ford and Versata entered into a second comprehensive license
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`agreement for use of a new software technology known as the “Automotive
`
`Configuration Manager” (“ACM”). Like the earlier software that Ford licensed from
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`Versata, the ACM technology was developed by Versata, which then licensed this
`
`propriety technology to Ford.
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`14.
`
`In December 2004, Ford and Versata entered into a Master Subscription
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`and Services Agreement (“MSSA”), governing Ford’s licensing of the Versata’s
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`proprietary ACM technology. A true and correct copy of the MSSA is attached
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`hereto as Exhibit 2.
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`15. Like the CSA, the MSSA granted Ford a license to use Versata’s
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`proprietary ACM software. It did not, however, grant Ford any ownership rights in
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`this software or the underlying technology. While Ford owned the rights to certain
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`
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`23
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`Page 23 of 56
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`FORD 1003
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`

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`2:15-cv-10628-MFL-EAS Doc # 59 Filed 10/28/15 Pg 24 of 56 Pg ID 1361
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`minor customizations of the software, it did not own the underlying ACM
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`technology. Versata’s ACM software was the engine that drove Ford’s entire
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`configuration process. And just as a Ford Taurus would not run without a Ford
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`engine, Ford’s configuration and financial forecasting systems would not run
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`without Versata’s ACM software.
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`16. The MSSA made plain that Versata retained all rights to its proprietary
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`ACM technology.
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`17. For example, in Section 6 (“Ownership”), the MSSA specifically
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`provides that “[b]y signing this Agreement, Ford irrevocably acknowledges that,
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`subject to the licenses granted herein, Ford has no ownership interest in the Software,
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`Deliverables that are owned by [Versata] pursuant to Section 1.8, or [Versata]
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`Materials provided to Ford.” (Ex. 2 at 5).
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`18. The MSSA further specified
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`in Section 7.4 (“Ownership of
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`Confidential Information”) that “[n]othing in this Agreement shall be construed to
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`convey any title or ownership rights to the Software or other [Versata] Confidential
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`Information to Ford or to any patent, copyright, trademark, or trade secret embodied
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`therein, or to grant any other right, title, or ownership interest to the [Versata]
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`Confidential Information.” (Ex. 2 at 5).
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`19. The MSSA also contained a number of additional safeguards to protect
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`Versata’s Confidential Information.
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`
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`24
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`Page 24 of 56
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`FORD 1003
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`2:15-cv-10628-MFL-EAS Doc # 59 Filed 10/28/15 Pg 25 of 56 Pg ID 1362
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`20. Like the CSA, Ford agreed in Section 7.5 that it would “at all times use
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`Reasonable Care in preventing the disclosure of Confidential Information belonging
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`to [Versata].” Ford further agreed “to restrict access to [Versata’s] Confidential
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`Information only to those employees and third-party contractors or agents who (i)
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`require access in the course of their assigned duties and responsibilities and (ii) have
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`agreed in writing to be bound by provisions no less restrictive than those set forth in
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`the [MSSA].” (Ex. 2 at 5).
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`21. Ford agreed in Section 1.7 that “[i]n no event shall Ford disassemble,
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`decompile, or reverse engineer [Versata’s] Software or Confidential Information …
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`or permit others to do so.” (Ex. 2 at 2).
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`22. Ford also agreed that “Ford may use [Versata’s] Confidential
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`Information solely in connection with the Software and pursuant to the terms of this
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`Agreement.” (Ex. 2 at 2).
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`23.
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`In order to ensure that Ford would comply with the restrictions on its
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`use of Versata’s Confidential Information, Versata negotiated the right to conduct
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`verification audits at Ford.
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`24. Under Section 3.5 of the MSSA, Ford agreed that “[Versata] may, upon
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`thirty (30) days prior written notice, enter Ford’s premises to verify Ford’s
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`compliance with the provisions of this Agreement at [Versata]’s expense.” (Ex. 2 at
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`4).
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`
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`25
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`Page 25 of 56
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`FORD 1003
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`

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`2:15-cv-10628-MFL-EAS Doc # 59 Filed 10/28/15 Pg 26 of 56 Pg ID 1363
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`25. Ford also agreed in Section 12 (“Ford Obligations”) that “Ford [would]
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`upon reasonable request, reasonably make available to [Versata] certain of its
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`facilities, computer resources, software programs, networks, personnel, and business
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`information as are required to perform any Work, service, or other obligation
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`hereunder.” (Ex. 2 at 7).
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`26. Finally, the MSSA provides in Section 1.3 that, unless it was terminated
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`by one of the parties, the license agreement would “automatically renew for
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`successive twelve-month periods (“Annual Renewal Periods”) upon issuance of a
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`valid Ford purchase order to Versata. (Ex. 2 at 1.3).
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`27. Between 1998 and 2014, Versata and its corporate parent, Trilogy,
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`provided configuration software, technical documentation, and limited amounts of
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`source code to Ford.
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`28. Through this process, Versata disclosed certain trade secret and other
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`confidential information that it developed and owns, including its proprietary
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`technology for configuring, designing, pricing, and comparing vehicles (the
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`“Confidential Information”), pursuant to the terms of a series of agreements between
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`Ford and Trilogy.
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`B.
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`Ford becomes dependent on Versata’s technology
`29. Versata’s ACM proved immensely valuable to Ford.

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