Carrollton, Texas-based multifamily software and services provider RealPage fired back at litigation adversary Yardi Systems this week, alleging that its Santa Barabara, Calif.-based competitor has engaged in misappropriation of trade secrets and violations of the Sherman Act and California Cartwright Act that restrict anti-competitive business practices.
In a 60-page document filed this week with the U.S. District Court, Central California division, RealPage largely denies the allegations regarding hacking, data breaches, and intellectual property theft made by Yardi in its January 15 suit filing. RealPage contends that any access of Yardi systems conducted by the firm was done within its contractual and legal rights to act as an agent of the clients that it provides hosting and IT consulting services for and followed the letter and spirit of Yardi licensing agreements as they existed at the time.
“We believe that clients are interested in innovation, not litigation,” RealPage said in a statement posted to the company’s website in conjunction with the court filing, which largely argues that Yardi is attempting to derail RealPage’s cloud computing initiatives. “We are confident in the position stated in our filing [that] rather than innovate and invest in a superior architecture and the infrastructure to offer its own viable cloud platform, Yardi is trying to impede the advance of a more efficient and desirable technology platform and sabotage the growth of RealPage through a wide-ranging campaign of client interference and intimidation. We look forward to resolving this matter.”
In its filing, RealPage additionally has alleged that former company CIO Joe Hendrix, hired to RealPage from San Diego-based Fairfield Residential following that firm’s early adoption of RealPage’s cloud computing services option, was in fact simultaneously working to create similar systems architecture for Yardi during the build-out of its Dallas office. Hendrix became director of client services for Yardi in that office in 2009, and RealPage alleges that his tenure as CIO was a surreptitious cover for mole activities that included the gathering of confidential trade secrets regarding disaster recovery, change management and release management processes, and confidential bids made to Yardi users.
“We are pleased to see that in its answer to Yardi's lawsuit, RealPage admitted to critical allegations: that RealPage broke in to Yardi’s password-protected internal website and downloaded Yardi's copyrighted, confidential, and proprietary materials,” said Yardi in a statement on the filing provided to Multifamily Executive. “But we are disappointed that RealPage chose to bury this important confession behind 40 pages of retaliatory, false, and self-contradictory allegations. We will continue to enforce our intellectual property rights, and promote free and fair competition as we always have.”
Yardi did not otherwise address any of the cross-allegations made by RealPage in the filing.
Yardi’s specific reference to page 40 of the RealPage document points to a section where RealPage admits to using Yardi “Client Central” credentials to access password-protected areas and download information, but argues that in those instances the downloading was a lawful action conducted on behalf of a RealPage client, was accidental and innocuous, or concerned materials that were not trade secrets. RealPage also contends that Yardi suffered no harm from any of the instances where the firm accessed Client Central.
In its complaint, RealPage asks for damages that the firm says it has suffered from cancelled or lost contracts due to Yardi’s alleged anti-competitive business practices. RealPage is also asking for punitive damages, attorney and court costs, and has requested a trial by jury. Should the litigation progress to that stage, jurors will likely be immersed in a discussion of cloud services, including differences between self-hosted, ASP, SaaS, and cloud computing, which RealPage argues is at the core of the current dispute.
Indeed, RealPage dedicates a majority of its current filing to those issues and argues that Yardi, in essence, has initiated legalities as part of a broader campaign against RealPage’s cloud computing division. RealPage executives were not available to comment on the issue beyond the filing and statement posted on the company website.
Yardi, for one, appears unmoved by the cloud computing twist to the ongoing legalities. “Yardi has had an unwavering commitment to the real estate industry for nearly 30 years. During this period, Yardi has built its reputation based on integrity, innovation, and customer service,” the statement reads. “We will continue our commitment to software development, customer service, and cloud computing and look forward to offering innovative cost effective solutions for the Real Estate [sic] industry.”