How two online support partners dramatically fell out • The Register
On Thursday, a jury in federal court in Oakland, Calif., Found the biz call center 7.ai – as in, 24/7 – guilty of unfair competition and theft of trade secrets from chatbot maker LivePerson, awarding the company more than $ 30 million in damages.
The case was filed in 2014. In his complaint [PDF], LivePerson described how their partnership with 24/7 went wrong.
LivePerson provides online engagement technology, which takes the form of chatbots that corporate customers add to their websites to answer questions, collect interaction data, and reduce customer support costs.
24/7 initially offered contract call center staff to businesses, for times when a human touch is required. It then branched out into engagement technology, becoming a competitor, and that’s where the trial lies.
In 2006, when there was less product overlap, companies entered into a contractual relationship, subject to confidentiality and non-compete clauses, to provide business customers with access to automated and human support systems. – because chatbots work best with sensitive failover.
In the years that followed, 24/7 learned about LivePerson’s live interaction technology and its methods of implementing such systems on websites.
Beginning in 2012, according to the complaint, 24/7 began to abuse its insider access to copy LivePerson’s technology and proprietary data related to Capital One, Optus and Sears customers.
24/7, he claimed to have maliciously disrupted LivePerson technology on customer websites, distorted LivePerson technology, service and system performance data to promote his own service competitor, and “[injected] spyware in LivePerson’s databases, through unauthorized use of LivePerson’s copyrighted code, to gather information regarding the operation of LivePerson technology, presumably to reverse engineer LivePerson’s technology.
After 24/7 developed a competing version of LivePerson’s live interaction technology, the call center company reportedly installed its rival system on joint customer websites to sabotage the LivePerson code.
“Once the 24/7 live interaction software was installed on a website that also contains LivePerson’s technology, it appears that 24/7 incorrectly injects ‘spyware’ into LivePerson’s systems. “, indicates the complaint. “The 24/7 spyware appears to be expressly designed to capture confidential and proprietary information and data regarding LivePerson’s technology and customer relationships. “
The injected code would have derailed the LivePerson chat bots by preventing the launch of live chat sessions or by removing the “chat” button required to open a chat window.
LivePerson claims that 24/7 used its spyware to reverse engineer LivePerson’s technology, copy it and interfere with its relationships with its customers. The complaint states that customers told LivePerson staff that 24/7 disparaged their partner and that LivePerson lost important customers as a result of the whisper campaign.
In its response to the complaint [PDF], 24/7 has denied most of the allegations.
Nonetheless, after seven years of legal wrangling, the jury found the evidence – most of it under seal – credible and ordered $ 6.74 million in compensatory damages and $ 29.59 million in punitive damages. . [PDF].
24/7 did not respond to a request for comment.
In a statement to The register, Sharre Lotfollahi, partner at Kirkland & Ellis, celebrated the decision.
“It was a tremendous victory for our client LivePerson, who filed this case seven years ago to defend their intellectual property rights against a competitor,” she said. “This confirms that the significant investments made by LivePerson in its cutting-edge online customer engagement technology are valuable and protectable intellectual property and that companies that do not respect the intellectual property rights of others will be held accountable.
“We had a very engaged jury who paid close attention throughout the month-long trial and we are happy that they agreed with our client LivePerson that their technology was stolen by 24/7,” said Lotfollahi. “The jury awarded substantial punitive damages for the 24/7 conduct.” ®