Software vendor says partnership with SAP led to stolen trade secrets

It's the latest turn in a long-running dispute between Wellogix and SAP

Former SAP partner Wellogix is accusing the vendor of stealing its trade secrets and swindling it out of lucrative software projects, according to a lawsuit Wellogix filed last week in U.S. District Court for the Southern District of Texas.

It's the latest twist in a feud between the companies that stems back to a 2005 marketing agreement Wellogix and SAP signed regarding Wellogix's electronic "purchase to pay," or P2P software, which helps oil and gas companies procure goods and services for well drilling projects.

Wellogix's software is "a highly valuable tool, capable of saving oil and gas operators and service companies millions of dollars per year, which leads to an increase in production of millions of dollars per year," the complaint states. "Wellogix was originally the only company capable of providing this type of software technology."

In 1999, BP America hired Accenture to help it "create a paperless (i.e. electronic) process in oil field services," it adds. "After a thorough review of over twenty vendors, including SAP, Accenture recommended Wellogix."

In January 2002, Wellogix and BP signed a software and services agreement, it adds. But Accenture then obtained confidential trade secrets from Wellogix and passed them along to SAP, according to the complaint.

SAP knew Wellogix's software had an "extremely high value," and around September 2002, the companies began discussing a potential partnership around P2P that would use "SAP software as the basic solution and Wellogix's P2P software for the complex services portion," the complaint adds.

While SAP already had an SRM (supplier relationship management module) that could handle some procurement tasks, it was inadequate for "complex services," according to the complaint. "Wellogix had a working version of this software, and SAP was aware that it worked in a large client environment such as BP."

In March 2005, the companies signed a partnership agreement that "explicitly recites that each party retains full ownership and control of its own intellectual property," and requires that confidential information be protected, the complaint states.

After the deal was signed, a number of SAP employees visited Wellogix's offices for a few days in order to "kick-off the NetWeaver Partner Agreement and perform [SAP's] due diligence on Wellogix for the purpose of either investment in or the acquisition of Wellogix," it adds. "During the workshop, employees of SAP went through Wellogix's P2P software code in person with Wellogix personnel disclosing parts of the code structure."

The companies later created joint marketing materials, and during presentations, SAP salesmen made clear the company was partnering with Wellogix because it didn't have a full range of P2P functionality, it adds.

But instead of following through with the partnership, SAP used Wellogix's trade secrets to "replicate the capabilities" of its software and incorporated them into its own SRM products, according to the lawsuit.

Even as SAP officials met with Wellogix during the March 2005 office visit, a deception was underfoot, the complaint alleges.

"On or about the morning of March 23, 2005, SAP employee, Manfred Heil, met with Wellogix personnel in Wellogix's offices," it states. "During that meeting, Heil reaffirmed SAP's commitment to marketing and implementing a joint electronic P2P solution for BP, including the use of Wellogix's P2P software."

But later that day, Heil met with BP officials at an office in Texas where he said that "SAP would provide a complete solution, including complex services, without the input and knowledge of Wellogix, even though Heil knew that SAP needed Wellogix for complex services."

Heil told the BP officials "that he had seen what Wellogix had to offer and that SAP's SRM software would contain all of the required functionality that would have otherwise been provided by Wellogix," it adds.

SAP later told customers, among them BP, that it had developed "a plan to divert the entire complex services business away from its partner, Wellogix by replicating the Wellogix technology in its own software products," the suit claims.

After Heil's meeting with BP, SAP told its engineers to duplicate Wellogix's software, according to the suit. Wellogix continued its partnership activities with SAP unaware that the vendor intended to cut out Wellogix from any software projects gained through their joint efforts, it states.

Wellogix is asking for unspecified amounts of actual and exemplary damages, according to the suit.

SAP spokesman Andy Kendzie declined to comment on the specifics of Wellogix's allegations. "We are aware of the filing and our attorneys are reviewing it," he said.

Wellogix also sued Accenture in 2008, and won a $94 million jury award against the company earlier this year. Last month, a judge lowered the award by $50 million and told Wellogix it could either accept the new amount or hold a new trial.

SAP was also named in the 2008 action, but the court dismissed it from the case on grounds of improper venue. In addition, SAP has filed a number of lawsuits against Wellogix, seeking declaratory judgments that it is not in violation of patents Wellogix holds.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's e-mail address is Chris_Kanaracus@idg.com

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