Property Management Software Giants Trade Allegations of Trade Secret Theft
The Pacific Coast Business Times is reporting that two of the largest property management software firms in the nation are locked in a court battle over alleged corporate espionage.
In January, Goleta-based Yardi Systems sued Texas-based competitor RealPage in federal court in Los Angeles. Yardi alleges that RealPage used stolen login information to break into an internal Yardi website and dowload proprietary information.
In late March, RealPage fired back with allegations that Yardi planted a mole in RealPage’s executive suite and tried to strong-arm big clients into not doing business with RealPage. Both companies are disputing each other’s claims, and RealPage has agreed to amend some of its antitrust allegations.
On May 9, both sides agreed that a trial would probably take about six weeks. Outside experts told the Business Times the case is likely to cost millions in legal fees because it is so complex.
Yardi and RealPage are giants in the property management software space. Founded nearly three decades ago, privately held Yardi employs about 415 people in Goleta and many more worldwide to manage 7 million residential units and 7 billion square feet of commercial real estate. RealPage is much younger — it formed in 1998 and went public in a $135 million initial public stock offering last year — and has expanded to manage 5.6 million multi-tenant real estate units.
The competition between the firms is ferocious, and it shows in court papers. In its complaint, Yardi paints a picture of RealPage as having snapped up a consulting firm whose employees had deep knowledge of Yardi’s products not long before Yardi’s internal website was infiltrated. In its counter complaint, RealPage paints a picture of Yardi as an incumbent that throws around its market weight rather than invest in systems that would compete with RealPage. RealPage has agreed to amend some of those claims.
In its complaint, Yardi alleges that RealPage bought a consulting firm that specialized in helping customers install Yardi’s software. Those consultants had access to an internal Yardi website andd support materials that, in the right hands, could provide insight into how Yardi’s software works, the company alleged.
Yardi alleges that it cut off the consulting firm’s access to the site when it heard the firm would be acquired by RealPage. Yardi then claims the site was accessed using Yardi employee credentials — including those of a senior vice president — from IP addresses belonging to RealPage offices. The intruders, Yardi claims, penetrated “the Vault” — the innermost sanctum of Yardi’s internal website where sensitive pricing information was located and user credentials could be modified.
RealPage disputes the claims. In its counterclaim, RealPage alleges that it hired Joe Hendrix as its chief information officer. In that position, RealPage claims, Hendrix worked with top-level executives on important sales and technology discussions. RealPage alleges that Hendrix abruptly left the firm and signed on with Yardi, helping plan and launch an Internet-based system that would compete with RealPage’s offerings. RealPage also claims Yardi tried to intimidate clients into staying away from RealPage.
Yardi provided the Business Times a prepared statement: “In answering Yardi’s complaint, RealPage admitted to accessing Yardi’s password-protected internal website and to downloading Yardi information. Simultaneously, RealPage asserted a number of meritless counterclaims; it has since decided to amend those counterclaims after Yardi pointed out their flaws.”
A RealPage company spokesman declined to comment and pointed to the company’s counter complaint and a published statement on its website.
“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,” the RealPage counter-complaint reads.
In January, Goleta-based Yardi Systems sued Texas-based competitor RealPage in federal court in Los Angeles. Yardi alleges that RealPage used stolen login information to break into an internal Yardi website and dowload proprietary information.
In late March, RealPage fired back with allegations that Yardi planted a mole in RealPage’s executive suite and tried to strong-arm big clients into not doing business with RealPage. Both companies are disputing each other’s claims, and RealPage has agreed to amend some of its antitrust allegations.
On May 9, both sides agreed that a trial would probably take about six weeks. Outside experts told the Business Times the case is likely to cost millions in legal fees because it is so complex.
Yardi and RealPage are giants in the property management software space. Founded nearly three decades ago, privately held Yardi employs about 415 people in Goleta and many more worldwide to manage 7 million residential units and 7 billion square feet of commercial real estate. RealPage is much younger — it formed in 1998 and went public in a $135 million initial public stock offering last year — and has expanded to manage 5.6 million multi-tenant real estate units.
The competition between the firms is ferocious, and it shows in court papers. In its complaint, Yardi paints a picture of RealPage as having snapped up a consulting firm whose employees had deep knowledge of Yardi’s products not long before Yardi’s internal website was infiltrated. In its counter complaint, RealPage paints a picture of Yardi as an incumbent that throws around its market weight rather than invest in systems that would compete with RealPage. RealPage has agreed to amend some of those claims.
In its complaint, Yardi alleges that RealPage bought a consulting firm that specialized in helping customers install Yardi’s software. Those consultants had access to an internal Yardi website andd support materials that, in the right hands, could provide insight into how Yardi’s software works, the company alleged.
Yardi alleges that it cut off the consulting firm’s access to the site when it heard the firm would be acquired by RealPage. Yardi then claims the site was accessed using Yardi employee credentials — including those of a senior vice president — from IP addresses belonging to RealPage offices. The intruders, Yardi claims, penetrated “the Vault” — the innermost sanctum of Yardi’s internal website where sensitive pricing information was located and user credentials could be modified.
RealPage disputes the claims. In its counterclaim, RealPage alleges that it hired Joe Hendrix as its chief information officer. In that position, RealPage claims, Hendrix worked with top-level executives on important sales and technology discussions. RealPage alleges that Hendrix abruptly left the firm and signed on with Yardi, helping plan and launch an Internet-based system that would compete with RealPage’s offerings. RealPage also claims Yardi tried to intimidate clients into staying away from RealPage.
Yardi provided the Business Times a prepared statement: “In answering Yardi’s complaint, RealPage admitted to accessing Yardi’s password-protected internal website and to downloading Yardi information. Simultaneously, RealPage asserted a number of meritless counterclaims; it has since decided to amend those counterclaims after Yardi pointed out their flaws.”
A RealPage company spokesman declined to comment and pointed to the company’s counter complaint and a published statement on its website.
“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,” the RealPage counter-complaint reads.
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