Over the holiday period, 2FA filed suit against Oracle and Passlogix, an Oracle subsidiary. The court document, filed 29th December in the US District Court, New York Southern District court (PACER account required to access) reads like a reflection of the recent case Oracle won against SAP and TomorrowNow.
According to the papers, which Courthouse News Service handily summarizes:
Oracle Corp. and its wholly owned subsidiary Passlogix stole confidential information to deprive a competitor of royalties, force it into bankruptcy, and use the stolen intellectual property for their own profit, 2FA Technology says in a $110 million claim in Federal Court.
No - tell me it can’t be so? What’s the background? Here’s the short version:
- 2FA had a partnership with Passlogix which allowed for the embedding of 2FA’s strong authentication code inside Passlogix single sign-on solution. The partnership went back to 2006 and to a time when Passlogix was 2FA’s only customer.
- In December 2008, 2FA filed suit against Passlogix claiming corporate theft in the same New York court. That case is pending.
- In September 2009, 2FA informed Oracle it was suing Passlogix stating that the solution it was rebranding included trade secrets it believes Passlogix stole from 2FA.
- In October 2010, Oracle announced its intention to acquire Passlogix, a business from which it had been white labeling a single sign on solution that 2FA claims includes its own strong authentication code. The Oracle/Passlogix partnership had been in existence since 2006. Passlogix is now a wholly owned subsidiary of Oracle Corp.
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In a PDF document (use Quick View search here) 2FA makes an argument against Passlogix for theft and conspiracy but pointedly refers to remarks made by Larry Ellison in the SAP/Tomorrow case:
Mr. Ellison testified under oath on November 8, 2010, “I think taking our intellectual property is a two-edged sword,” he said. “For [SAP] it means they have access to all our engineering output…” Mr. Ellison added, “The other side of that sword is running an irrational risk by taking our software. That’s a risk I certainly would never, ever undertake.”
- If 2FA is correct then Mr Ellison’s words at best sound hollow. However, in the same document, 2FA strike a reasonable tone:
“Although Oracle’s market value increased more than $1 billion the day Oracle announced the acquisition, I can only assume Mr. Ellison is completely unaware that Oracle acquired Passlogix,” said Mr. Greg Salyards, 2FA’s President & CEO. Mr. Salyards added, “We have the utmost respect for Mr. Ellison and Oracle. Once aware of this oversight, we are confident that Mr. Ellison and Oracle will do what they know is right.”
One can only assume that Oracle didn’t see things the same way because as of December 29th, Oracle is now enjoined in the 2FA/Passlogix lawsuit.
Readers will make their own minds up as to the veracity of the 2FA/Passlogix case but is anyone surprised that Oracle hasn’t taken steps to snuff out what must surely be a case bound to attract direct comparisons with SAP/TomorrowNow?
The amount being claimed by Passlogix is the Oracle equivalent of petty cash. Oracle could make this go away for less than the price SAP is paying Oracle’s lawyers for the pleasure of having taken on the Redwood Giant.
More to the point, does reputational risk matter any longer? If Oracle is prepared to let this one run and run in the hope 2FA runs out of cash before the case comes to court then I guess that’s a legitimate tactic. But then that only makes sense if your ethical compass is somewhere south of Hell and nobody cares.
