Guard Duty

BI vendors wage battles over intellectual property as analytic apps market heats up

The nascent analytic applications market has already turned vicious. Informatica Corp., the company that defined the "analytic applications" market by so labeling its suite of products that combine extract, transform, and load (ETL) with domain-specific data analysis tools, made a move interpretable as an effort to block former partner Business Objects from fully entering that market.

A mere week after July 9, the day business intelligence (BI) tools vendor Business Objects announced its plan to acquire Acta Technology Inc., a data integration software provider, Informatica filed a patent infringement lawsuit against Acta. But if Informatica's reason for filing the suit truly was to interfere with the acquisition, it may only delay the inevitable, at best.

Assuming Informatica succeeds in gaining an injunction against Acta, Business Objects is still likely to become a force for Informatica to contend with. Industry analyst Rob Tholemeier's published commentary on the topic says, "Business Objects will find a way to be in the ETL business, and it will do it at a low-low price point" (Wells Fargo Securities LLC's Electronic Research Report, "Business Intelligence Software Industry Update," July 18, 2002). And then there are the other companies that have started packaging data integration with analysis tools, not the least of which are SAS Institute Inc. and Cognos.

Of course, Informatica denies any connection between the acquisition announcement and its suit. In an unattributed written response to questions, Informatica states, "This investigation began in earnest in April of this year." The response added, "Incidentally, soon after discovering evidence, which led us to believe that certain Acta products infringed our patents, we served notice on Acta of our concerns and offered them the opportunity to license our patented technology. This occurred in May of this year [2002]. Only after receiving no response to our offer did we take action to protect our intellectual property."

Informatica also denies that it filed the suit because former contract employee Sachin Chawla cofounded Acta. But the company does say, "The fact that Mr. Chawla clearly had access to our core technology months prior to founding Acta, coupled with the similarity of the Acta products to our patented technology, is not likely to be overlooked by the court in determining the issue of damages."

Not everyone is so certain that Informatica will prevail. Michael Hartmann, an intellectual property attorney not involved in the suit, points out that the claims in the four patents Informatica defends in its complaint are very broad. (A claim is a definition of what a patent covers.) The breadth of those claims makes them especially susceptible to being invalidated by "prior art." Prior art, such as software or magazine articles, may serve as evidence that the intellectual property a patent defines cannot legally be claimed by the patent holder.

Although Hartmann knows little about the history or parties involved in this particular case, he says that in general the extensive investigation that a trial spawns in cases like this is likely to turn up other, invalidating prior art. Informatica declined to explain why it believes Acta's ETL technology infringes on Informatica's patents while other ETL products do not.

In written statements, both Acta and Business Objects proclaimed that the suit was without merit.

— Jeanette Burriesci

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