Microsoft Hits Salesforce With Patent Infringement Suit

Salesforce is accused of infringing on nine Microsoft patents, but what they are exactly is not disclosed.

Microsoft on Tuesday filed a patent infringement suit against Salesforce.com, accusing the on-demand CRM trailblazer of violating nine Microsoft patents.

Details are scarce. Microsoft (NASDAQ: MSFT) has not commented beyond the initial announcement of the suit. Horacio Gutierrez, corporate vice president and deputy general counsel of Intellectual Property and Licensing at Microsoft, said in a statement that his company "has been a leader and innovator in the software industry for decades and continues to invest billions of dollars each year in bringing great software products and services to market. We have a responsibility to our customers, partners, and shareholders to safeguard that investment, and therefore cannot stand idly by when others infringe our IP rights."

Salesforce (NYSE: CRM) is not commenting.

The 10-page complaint, filed in the U.S. District Court for the Western District of Washington has since been posted online (here in PDF format). In its complaint, Microsoft requests a preliminary and permanent injunction against Salesforce in its request for relief, along with a trebling of damages.

Some of the patents date back to the late 1990s, before Salesforce was founded, and includes protections for "Method and system for mapping between logical data and physical data," "System and method for providing and displaying a Web page having an embedded menu" and "method and system for stacking toolbars in a computer display."

The two companies have been increasingly crossing paths lately. Microsoft is getting into the software-as-a-service (SaaS) space on its own terms -- to much derision by Salesforce CEO Marc Benioff -- and has its own CRM software, Microsoft Dynamics, which is sold as on-premises and on-demand. They also compete for developers; Microsoft with xRM and Salesforce with Force.com.

In March, Microsoft began the third community technology preview of its Dynamics CRM product, codenamed "CRM 5." In November, Microsoft also announced price cuts for its hosted Online Services business in what was seen at the time as an attack on Salesforce and Oracle. Microsoft has also been pressing hard into cloud computing with its Windows Azure initiative, a broader initiative aimed at delivering compute resources and storage online to enable cloud applications -- an effort on a collision course with Salesforce's moves to position Force.com into a full-fledged cloud-based application platform of its own.

Salesforce may have known a legal showdown was coming. In a January, Salesforce filed a risk factors form along with a Form 8-K with the Securities and Exchange Commission that mentioned a potential lawsuit, though it did not name the company that might be behind it.

"During fiscal 2009, we received a communication from a large technology company alleging that we were infringing upon some of their patents. We continue to analyze the potential merits of their claims, the potential defenses to such claims and potential counter claims, and the possibility of a license agreement as an alternative to litigation," Salesforce said in its 8-K. "We are currently in discussions with this company and no litigation has been filed to date. However, there can be no assurance that this claim will not lead to litigation in the future. The resolution of this claim is not expected to have a material adverse effect on our financial condition, but it could be material to the net income or cash flows of a particular quarter."

InternetNews Contributing Writer Stuart Johnston contributed to this article.

Andy Patrizio is a senior editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.




Tags: Microsoft, CRM, Salesforce, lawsuits, on-demand


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