Informix Denies Patent Infringement Allegations by IBM

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Event Summary

"MENLO PARK, Calif.-February 7, 2000-Informix Corporation (NASDAQ: IFMX), the technology leader in the software infrastructure for the i.Economy, announced that International Business Machines Corporation has filed an action against Informix in the United States District Court for the District of Delaware alleging infringement of several United States patents owned by IBM.

Informix strongly believes that the allegations are utterly devoid of merit and intends to defend the action vigorously and to assert such claims against IBM as may be appropriate."

IBM accuses Informix of patent infringements in several of its database-related products, including Informix-OnLine and Informix-OnLine Dynamic Server, two of the company's staple software brands.

According to sources, IBM is filing to get a court order that could prevent Informix from shipping products that contain technologies IBM claims infringe upon its inventions. IBM is seeking unspecified compensatory damages in the suit, which it wants tripled because of what it considers Informix's willful violation. The patents involve distributed processing and data compression technology.

A spokesman for IBM stated on Wednesday that "no comment" would be the official position for the time being. On Tuesday, Informix chief executive Jean-Yves Dexmier denied any patent infringement.

Informix's stock was down 11 percent on Tuesday, but has since recovered much of the loss.

Market Impact

Informix was already in a state of flux due to its reinvention of itself as an "i.commerce" company (see "Informatica Morphs Into Decision Support Vendor", January 3, 2000). Additional instability was added by the company's purchase of Ardent Software (see "Informix to Acquire Ardent Software-Another Vendor's Attempt at End-to-End Data Warehousing", December 14, 1999), a transaction that was expected to close this month. The additional turmoil that has been added by this development is bound to distract Informix from its mission critical objectives.

If Informix loses the lawsuit, their products will be deeply affected and the company will suffer a great deal of financial damage. However, it is quite possible that Informix is correct in their statement that they are "much convinced that IBM is concerned about our momentum and progress, and they're trying to shut it down" by suing over patents that all pre-date 1993.

User Recommendations

Customers evaluating both Informix and Ardent software offerings should be especially cautious until more is known about the nature and scope of the lawsuit. Since the lawsuit appears to affect Informix's core database products, if IBM wins the suit Informix will have to expend research & development dollars on a non-productive effort to remove and rewrite the offending code, or will have to pay licensing fees to IBM.

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