Google-backed UK startup Yieldify is settling with the company that accused it of copying code
The accusations, levelled by US competitor Bounce Exchange, prompted an ugly year-long legal battle, complete with counter-suits, threats targeting customers, and name-calling.
But it's finally all over. Legal filings show the two companies have recently come to an undisclosed settlement.
"Yieldify and Bounce Exchange have come to a mutual agreement, with each party granting the other licenses," Yieldify CEO Jay Radia said in an emailed statement. "Contractually, we are unable to discuss the terms, but Yieldify is pleased to have arrived at a constructive outcome."
A Bounce Exchange spokesperson declined to comment.
How did all this start?
Founded in 2012, Yieldify builds e-commerce software that helps online retailers convince people to buy products online by tracking customer behaviour and providing prompts where necessary. In June 2015, it received $11.5 million (£8 million) in venture capital investment, with the round led by Google venture capital arm Google Ventures (now called GV) and Softbank.
Also in 2015, New York-based competitor Bounce Exchange filed a suit against Yieldify in a New York federal court, accusing it of copying its code and infringing its patents.
It alleged that after Bounce Exchange provided Yieldify execs with a product demonstration in 2013, they "copied hundreds of lines of code and generally replicated the overall structure, sequence, and organization of the Bounce Exchange Software."
Yieldify denied this, countering in court filings that "in March 2013, Mr. Jay Radia, Defendant's Chief Executive Officer, and Mr. Meelan Radia, Defendant's Chief Technical Officer, met with representatives of Plaintiff. At that meeting, Plaintiff demonstrated certain public-facing aspects of its behavioral marketing automation software. Plaintiff did not reveal any confidential information to Defendant, and did not show Defendant any of its source code, either at this meeting or otherwise."
Yieldify did change its code after Bounce's initial complaint. But it says it made the change only "in the interest of resolving this matter quickly and without needless litigation."
The New York case was just the start.
With the first case still underway, Bounce then followed it up with a second - this one filed in a Texas court in April 2016 - repeating these allegations, also accusing Yieldify of patent infringement and of copying "marketing information," and also adding some of Yieldify's customers as defendants. The customers (alongside Yieldify) were accused of "actively inducing others to infringe and/or contributing to the infringement [of Bounce Exchange's patents]."
Yieldify denied all these allegations - and then, with the help of a "patent troll," went on the offensive.
It sued its rival in a third lawsuit, also in a New York federal court, accusing it of infringing on one of its patents. But the patent wasn't originally Yieldify's.
Instead, the marketing-tech startup had purchased it from a company called Intellectual Ventures (IV), an organisation that CNET once described as "the most hated company in tech," in order to open up a new front in its battle.
The patent was first submitted for approval to the US Patent and Trademark Office back in 2005 by IV. The company holds tens of thousands of patents, and has been accused of being a "patent troll" - an organisation that squats on patents and sues anyone who inadvertently infringes upon them. (The company disputes this characterisation.)
The rhetoric got nasty too.
At one point, Bounce also sent legal threats to Yieldify's customers, Yieldify's court filings alleged: "Bounce sent letters to hundreds of Yieldify's customers, globally, threatening to take legal action against those customers if they did not agree to stop doing business with Yieldify within two weeks."
In March 2016, Yieldify also laid over just over 10% of its employees from across a range of departments. The company said that these layoffs were unconnected to the ongoing legal battles.
Reached for comment by Business Insider about the third lawsuit in May, the rhetoric got ugly. Yieldify CEO Jay Radia called Bounce Exchange a "tyrant organisation," accusing it of "[bringing] forward frivolous and unfair claims and [misusing] legal systems for their advantage."
Bounce Exchange CEO Ryan Urban countered that the third suit was a "diversionary tactic [from Yieldify] when faced with a losing lawsuit."
The two companies have finally come to a "mutual agreement."
Despite this heated rhetoric, the companies have since come to an agreement, and are dropping their various suits targeting one another.
From Radia's statement, we know that "each party [is] granting the other licenses" to their intellectual property, but the other terms of the settlement are unclear.
We don't know, for example, whether either company is paying the other a cash settlement; or if that ongoing payments from either company will play a part in this licensing agreement.
Either way, the conclusion of this bitter fight will likely come as a relief to those involved.
Here's the statement from Yieldify CEO Jay Radia again:
"Yieldify and Bounce Exchange have come to a mutual agreement, with each party granting the other licenses. Contractually, we are unable to discuss the terms, but Yieldify is pleased to have arrived at a constructive outcome."