Maxava And Vision Reach Settlement in Lawsuit

April 21, 2014 Alex Woodie

IBM i high availability software vendors Maxava and Vision Solutions have reached a settlement in their four-and-a-half year legal fight. By giving up on the accusations of violation of state law, Maxava is now free to appeal a judge’s earlier decision to throw out the part of its lawsuit relating to violations of federal law.

In late December 2013, Maxava and the three defendants in the case–Vision Solutions, Sirius Computer Solutions, and former Vision employee Eva Succi–submitted settlement papers that Judge George Wu subsequently signed.

As part of Judge Wu’s order, Maxava withdrew its claims against the defendants relating to violations of California’s Unfair Competition Law (UCL) and False Advertising Law (FAL). Those were the only two claims left, after Judge Wu in May 2013 dismissed two other claims relating to accusations of violations of the federal Lanham Act against trademark infringement and accusations of trade libel.

In return, Vision and the other defendants agreed to abide by the May 2010 preliminary injunction that barred them distributing the advertising and marketing material that Maxava found so offensive, at least until any appeals are finished or the case returns to U.S. District Court.

Maxava’s decision to give up on the state claims allows it to go back to fighting for the federal claims, which are of a more serious nature. It is not known whether Maxava is taking steps to appeal Judge’s Wu’s May 2013 dismissal of the federal claims. The company did not respond to requests for comment by this newsletter’s deadline.

If Maxava does take this to the 9th Circuit Court of Appeals, it will need to prove that Judge Wu was wrong in siding with Vision in throwing out the claims. According to court papers, Judge Wu was not sufficiently swayed by Maxava’s argument of Lanham Act violations and trade libel. Wu wrote in 2012 that, to prove a Lanham Act violation, the burden is on the plaintiff to prove that the misrepresentations in commercial advertising or promotion denigrate “the nature, characters, qualities, or geographic origin” of the plaintiff’s products or services.

To meet this burden of proof, Maxava needed to present evidence beyond just a number of customers who may have switched from its products to Vision’s products, according to the judge. He questioned whether Vision’s marketing statements regarding Maxava’s “limited support staff” and an “immature partner network” actually damaged Maxava’s business. Instead, he labeled it “puffery” and “opinion” and not actionable as a matter of law.

Judge Wu did side with Maxava on some matters. He said that Vision’s claim that Maxava offers “little or no 24×7 support (only available in New Zealand)” is “problematic.” Wu added that Maxava had not met the burden of disproving additional statements, such as Vision’s claim that *noMAX (as Maximum Availability’s product was then known) took more than 30 minutes per day to manage.