JDA Settles Lawsuit With Dillard’s Over i2 Software

December 5, 2011 Timothy Prickett Morgan

The acquisition of supply chain specialist i2 Technologies may have helped drive the revenues and profits of JDA Software in the past year, but the acquisition cost JDA perhaps more than it expected.

JDA tried to buy i2 back in August 2008, the belly of the Great Recession, for $346 million, but four months later, when it was unable to line up the financing, it called the deal off. Then in November 2009, when the economy had improved a bit, JDA took another run at i2, shelling out $396 million to acquire the company, adding it to its already-acquired set of supply chain software from Manugistics. JDA had bought Manugistics in the summer of 2006 for $213 million. The combination of the three companies created a retail-supply chain powerhouse with 38,500 customers and an opportunity to cross-sell to retailers, distributors, and manufacturers.

JDA closed its acquisition of i2 in January 2010, and at the time i2 was in the middle of a legal dispute with the Dillard’s department store chain over some software. Dillard’s sued i2 in the District Court of the State of Texas for the County of Dallas, and in June 2010 a jury came to the conclusion that i2 had not met its software license agreements and awarded $246 million in damages. The jury in the case awarded Dillard’s $8 million to cover the cost of two i2 programs it installed and then an utterly stunning $238 million in additional damages. JDA was of course stunned by this ruling, and had been in the middle of appealing it.

Under the settlement agreement that JDA and Dillard’s entered into last week, JDA will pay the department store chain $57 million to settle the matter. Luckily for JDA it had sued Oracle for patent infringement and had been awarded $37.5 million in that case. JDA had already posted a $25 million bond to cover the costs of the Dillard’s suit and had expected $3 million to come from its insurance, so when you add all that up, JDA is still coming out ahead. (Well, the lawyers did.)

“While we remain confident in the strength of our legal position, we entered into the settlement agreement to bring this matter to a conclusion,” explained Hamish Brewer, JDA’s president and chief executive officer in a statement. “With this settlement, and the $37.5 million favorable patent infringement settlement earlier this year, we have now concluded all known, material outstanding litigation related to i2. We are focused on completing a very successful year and continuing to execute on our strategy of enhancing long-term customer and shareholder value.”