Emptoris and Ariba — The Final Judgment is Complete

Note to Spend Matters readers: An earlier version of this post had incorrect judgment numbers. The numbers are now updated and correct as of 7:55 AM CST 12/17/08.

Update 1:35 PM CST: According to an Ariba Press release posted twenty minutes ago, "The Court also ordered Emptoris to pay Ariba’s costs incurred during the suit, which have not yet been calculated." I have heard from other sources that Emptoris will not have to pay Ariba's legal costs. Clearly, there are some nuances around this point that have not entirely surfaced yet or that are eluding me. In addition, an Ariba spokesman claimed in same release that "we expect that the court's injunction will make it plain that [the] infringing functions must be completely removed by Emptoris and cannot be included in any future offerings" which might suggest a judge could rule a patch or work-around insufficient.

Earlier today, a judge issued his final award settlement in the Ariba / Emptoris patent litigation case. Based on the finding of willful infringement of one of the patents in question, it looks like Emptoris will owe an additional $1.5 million (give or take) in penalties plus interest unless they choose to appeal. This amount was based on an enhanced judgment on one of the patents and is in addition to the approximate $5 million already awarded. So in total, Emptoris is on the hook for $6.5 million. While this may sound like a large number, Emptoris faced a significantly higher bogey hanging over its head in the form of a larger ruling and the prospect of being forced to pay Ariba's legal fees (which they are not responsible for under this final ruling). This could have brought the potential liability to in excess of $20 million. So one could argue that they actually got off fairly well.

But "well" is a relative statement. After reading the case and a cursory glance at the judgment numbers, it looks like the only parties who really profited on a cash basis were the attorneys. It appears like Ariba spent somewhere the mid/high seven to possible low eight figures on this litigation which might have accounted for a material -- if not the entire -- portion of the final judgment (maybe even more). Emptoris probably spent a number in the same league. From a marketing perspective, Ariba has gained the bragging rights to saying they defeated a chest-thumping opponent in court (which, I’ll admit, must feel especially good given how much Emptoris taunted Ariba over the years in downright childish press releases and through field FUD). But at the same time, I also know that Ariba has offended the sensibilities of at least some customers (not to mention Emptoris customers).

So net, net maybe Ariba’s won something. And it’s clear without question that Emptoris has come out a loser in this litigation. But the only clear victors are the lawyers. As Michael Corleone said in one of the Godfathers, "I don't need tough guys. I need more lawyers." In the case of Ariba, one wonders whether a few dozen additional tough guy developers would have been a better long-term investment than lawyers. Who knows. But more important, who am I to doubt the Don? Or Bob, for that matter ...

Need the full scoop on the case? Check out the following posts in the Ariba/Emptoris patent soap opera:

The Emptoris Sourcing Patch -- What it Means for Users

A Few Additional Thoughts on the Emptoris/Ariba Patent Settlement

Ariba Prevails in Patent Litigation Against Emptoris

Ariba Files Patent Infringement Suit Against Emptoris

- Jason Busch

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