Trial Date Set in Vision-Maxava Case

October 1, 2012 Alex Woodie

An April trial date has been set in the false advertising and trade libel case that IBM i high availability software maker Maxava brought against its rival Vision Solutions and the reseller Sirius Computer Solutions. A jury in a Los Angeles courtroom will decide the case next spring–unless the two sides agree to a settlement or the trial is delayed once more.

Maxava and Vision have been going at it since December 2009, when Maxava filed its false advertising lawsuit in U.S. District Court Central District of California Western Division, based in Los Angeles. Maxava (which at that time went by the name Maximum Availability) initially alleged that Vision distributed advertising materials that contained false information about Maxava’s business and its products, and that these materials damaged its business. The court granted Maxava a temporary injunction against Vision in the middle of 2010.

In October 2010, Maxava widened the suit to include allegations of trade libel, interfering with prospective economic advantage, anti-competitive, monopolistic behavior in violation of the Sherman Act, and Lanham Act violations. It also succeeded in adding Vision’s business partner Sirius to the lawsuit after an earlier attempt had been rejected by the court.

Vision and Sirius deny all of the charges, and have repeatedly asked the court to dismiss the case for lack of evidence. Attorneys for the companies say Maxava has failed to prove key aspects of its case, including whether Vision’s alleged actions had a “significant adverse effect” on Maxava’s business. By Maxava’s own admission, Vision argues, Maxava’s market share has grown while Vision’s has eroded. The defendants have also accused the plaintiff of abusing the discovery phase of the lawsuit by using it as a means for finding evidence that will make their case. Maxava says it needed discovery to find out how widespread Vision’s misconduct was.

The allegedly misleading statements were contained in several pieces of marketing material that Vision admits it gave to direct-sale prospects for its iTera Echo2 software, and provided for resellers like Sirius to use with their prospects. Maxava says it believes the materials were used from the middle of 2007, and perhaps earlier, and it didn’t discover them until late 2009, the company says in court filings.

In particular, Maxava says the following statements made by Vision about Maxava’s products and business were false: that 80 customers have replaced *noMAX (now called Maxava HA) with Vision’s software; that Maxava has a limited support staff in New Zealand and an immature partner network; that Maxava doesn’t offer 24/7 global support; that *noMAX takes more than 30 minutes to manage every day; that *noMax requires custom coding; that *noMax is built for small and midsize businesses, and not enterprises; that *noMax takes more than 30 days to install; that more than half of *noMax customers don’t know if they are ready for a role swap; and that more than 80 percent of customers have never done a role swap test.

While Vision admits to writing and distributing the documents, it says they didn’t have a big impact on its competitor. In particular, Vision says Maxava can’t identify any customer or sale that it lost because of the alleged false representations; can’t prove that the claims in the documents are false; can’t prove that any “reasonable” consumer would be swayed by its alleged false statements; can’t prove that Vision’s salespeople were “deceptive” or malicious; and can’t prove that their actions were material.

A November 2011 trial date was initially set, but the trial was delayed. In December 2011, Judge George Wu issued a tentative ruling in favor of Vision and Sirius on most of the claims in Maxava’s suit. In particular, he favored Vision’s argument that none of the six customers that received misleading material from Vision–including Roger Cleveland Golf, Silverleaf Resorts, Hyundai Information Services of North America, Kingston Technologies, Panda Restaurant Group, and Bradley Corp–were actually deceived. In fact, four of those customers went on to buy *noMAX licenses. “There is no evidence in this case that any of the alleged misrepresentations made by Vision had any impact on any customer’s or potential customer’s purchasing decision,” Judge Wu wrote in his preliminary ruling.

Activity in this case has waxed and waned over the past year. Several months will go by with no new documents filed, and then there will be a flurry. Many of the documents filed lately have been sealed (at the requests of the plaintiff and defendant) to prevent the prying eyes of the press from seeing them. Several IBM i shops that were in the market for HA software have been called in to testify, and customer lists have been discussed. The seal was approved, ostensibly to protect the privacy of these customers.

Attempts at mediation and out-of-court settlements–which is how 90 percent of civil lawsuits end–have failed to generate a deal that is amenable to both parties. If the course of the lawsuit doesn’t change between now and April 2, Maxava will finally have its day in court.