Business Objects Objects Again
Written By: M. Reed
Published On: May 2000
Business Objects Objects Again
Software developer Cognos Inc. said on May 9 that it will fight vigorously
a patent infringement lawsuit filed by arch-rival Business Objects SA,
a suit that it says is without merit.
Ottawa-based Cognos, one of the largest vendors of business intelligence
software used to access and analyze corporate data, said the patent is
"invalid" and "unenforceable". "I don't consider this to be a huge concern,"
said Brandon Osten, analyst at Sprott Securities. "Most of these lawsuits
don't go too far...patents are very difficult to defend in technology."
Business Objects filed suit on Friday in the northern district court in
California. Cognos, which has retained law firms in both Canada and the
U.S. for representation, said it believes its market leadership is a factor
in the litigation. "Unfortunately, some technology companies use litigation
in an attempt to achieve in the courtroom what they may find difficult
in the marketplace," said Cognos chief executive Ron Zambonini in a statement.
"This lawsuit is without merit and seeks to deflect attention from the
fact that Business Objects has been unable to dislodge Cognos from its
The patent refers to the process in which data is retrieved from a database
in answer to a query or question, said Cognos vice-president and general
counsel John Jussup. Business Objects filed a similar patent action against
California competitor Brio Technology Inc., which was settled in September,
he added. "The speculation was rife in the market that we would be next
on their list and since that time we've been preparing," Jussup said.
"The fundament of our defense is that we were there before...it's essentially
the been there, done that defense."
Brio Technology was forced to acknowledge the validity of Business Objects
patent (U.S. Patent 5,555,403) and settle with Business Objects (for more
Business Objects Outguns Brio Technology in Patent Dispute, September
13, 1999). Brio's 10Q statement included the following: "On September
9, 1999 Brio and Business Objects, S.A. executed a memorandum of understanding
settling Business Objects' pending patent litigation against Brio involving
patent number 5,555,403 for $10.0 million. Settlement costs of $9.1 million,
which represent the net present value of the 10 quarterly payments, are
included in non-recurring operating expenses for the nine months ended
December 31, 1999. The remaining $900,000 represents interest and will
be recognized over the payment term using the effective interest rate
will likely be forced to recognize the patent also, and will have to take
a charge against earnings in order to pay the fines. Business Objects
can argue that it holds the patents on the technology and Cognos has infringed
on them. In addition, management at Cognos will undoubtedly be distracted
for a time in dealing with the legal issues.
Customers evaluating business intelligence solutions should still include
Cognos solutions in their selection list. Regardless of the outcome of
the lawsuit, the company will continue to be a leader in query, OLAP,
and many other data warehouse solution areas. Prices should be negotiated
early in the process in case Cognos increases its price points due to
the need to pay for litigation and damages in this suit, although this
event is fairly unlikely.