Event
Summary
"SAN JOSE,
Sept 13 /Business Wire/ -- Business Objects (NASDAQ: BOBJ) and Brio Technology
(NASDAQ: BRYO) today announced the settlement of their pending patent litigation
involving Business Objects' United States patent number 5,555,403 entitled "Relational
Database Access System Using Semantically Dynamic Objects." Under the agreement,
the detailed terms of which are confidential: -- Brio acknowledges the validity
of Business Objects' US patent number 5,555,403 -- Brio will pay an undisclosed
sum of money to Business Objects for rights to use the Business Objects' US
patent 5,555,403. In addition, Brio will dismiss its pending lawsuit against
Business Objects alleging infringement of Brio's US patent number 5,915,257."
Market
Impact
Business Objects
and Brio Technology are two of the top three vendors in the Business Intelligence
marketplace. This finding of law means that Brio Technology will be forced to
license key technology for their major product from one of their largest rivals.
(The "semantic" layer in a query tool is a very important market differentiator.
It allows users to issue queries that return accurate results without knowing
the Structured Query Language (SQL) which must be generated to actually retrieve
the data.)
Since the terms
of the agreement were undisclosed, it is unknown what the duration of the license
granted to Brio by Business Objects will be. Given that Business Objects has
had much larger revenues over the past three years, and that Brio Technology
reports an accumulated deficit of $18.8 million USD as of 3/31/99, this finding
has a very negative impact on Brio's business model. (Business Objects ended
FY 1998 with $71 million in cash and equivalents and no long-term debt).
User
Recommendations
Prospective
customers considering Brio Technology's products should press for answers on
the duration of the license granted to Brio for the use of the patented technology.
It is an unfortunate situation when one vendor has to rely on a rival in the
same market space for required technology. If the license expires and Brio is
not prepared with replacement technology, future releases of the product could
be significantly delayed.
Customers should
also ask Brio to explain how this finding will affect their pricing model. Brio
will incur increased costs whether they decide to replace the patented technology,
or pay Business Objects to license it. It is likely that this price increase
would be passed on to the customer.
Finally, all
potential customers should investigate the long-term financial viability of
Brio Technology given their current financial situation, and use the result
of the lawsuit as a lever in product negotiations.