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Firm says Epicor wants to 'monopolize' services market for its ERP software

Epicor had accused Alternative Technology Solutions of "hijacking" its software in order to sell add-ons and services

An IT services firm recently sued by Epicor has responded, calling the claims "unwarranted" and part of an attempt on Epicor's part to "monopolize" the services market for its ERP (enterprise resource planning) software.

Epicor sued Alternative Technology Solutions in March, alleging that the company illegally used Epicor's software to create and sell "bolt-on" products and services. Such add-ons can't be created without access to Epicor's applications, but Alternative has never licensed the software, nor has Epicor given a third party permission to give Alternative access, according to the suit filed in U.S. District Court for the Central District of California.

Instead, Alternative has "duplicated" the software or managed to access it illegally, violating Epicor's intellectual property as well as software license agreements between Epicor and customers, according to the suit. Alternative has also given customers the erroneous impression that it is an authorized Epicor partner through the use of Epicor trademarks, the suit alleges.

A number of Alternative employees, including CEO Vivian Keena, once worked at Epicor.

"Our customers came to us because they sought the services or solutions they knew we could provide," Keena said in a statement. "We've enabled them to gain greater value from their Epicor investment -- which means they remain on Epicor maintenance and remain an Epicor customer."

Alternative's response to the suit, which was filed last week, denied the company used Epicor's software in an illegal manner. It also said Alternative provides implementation services as well as "customized solutions" that fill gaps in ERP functionality, but that it "does not program using Epicor source code and has not and does not create software patches, add-ons, 'bolt-ons' or standalone programs."

Epicor claimed Alternative consultants remotely used copies of Epicor software in a sandbox environment, and alleged Alternative provided these consultants with "unlimited access to Epicor's current product literature and training manuals."

Alternative's response rejects the latter charge and states that customers' end-user license agreements authorizes servicing through remote access test environments.

The dispute between the parties extends back more than three years, when Epicor's general counsel sent Keena a letter that claimed she was using Epicor's "proprietary information without authorization," according to Alternative's filing.

Alternative responded to the letter in October 2009 but Epicor subsequently "remained silent" until December 2012, when it sent Alternative a cease-and-desist letter, according to Alternative. In between, Epicor and Alternative "engaged in a close business relationship," it adds.

In fact, Epicor and Alternative engaged in discussions about the authorized partner program in 2010 and Alternative received written and verbal confirmation that it could join, according to the response.

But negotiations subsequently dragged on and in April 2012 Epicor asked Alternative to put a disclaimer on its website regarding the "non-affiliation" of the two companies, the response adds.

In December 2012, a former controller of Epicor, Laura Modlin, interviewed for a similar position at Alternative, according to the response.

"Alternative's third party recruiter, unbeknownst to Alternative at the time, shared with Modlin certain aspects of Alternative's overall success, growth, and profitability," it states.

Subsequently, Alternative's profitability "became known to Epicor" and sparked the lawsuit as well as an effort to force Alternative out of the Epicor support business, the response alleges.

After Epicor filed the suit, company officials contacted Alternative employees and offered them jobs, according to Alternative's response. Epicor also reached out to Alternative customers and contractors, telling them that Epicor would not work with Alternative "in any manner," the filing adds.

Epicor has "attempted to coerce its customers into using only Epicor Authorized Partners to provide services for the Epicor 9 platform," despite the fact that customers' contracts allow the use of consultants such as Alternative, "by threatening to void the customer's warranty if the customer chooses to use Alternative," according to the filing.

Epicor also allegedly began requiring independent contractors to stop working for nonauthorized Epicor partners. One independent contractor Alternative had been working with quit an ongoing project as a result, causing Alternative "significant damages" as it searches for a replacement, according to its response.

Ultimately, Epicor has a "stranglehold" on the market for Epicor 9 services and therefore, "a dangerous probability of achieving a monopoly for those services that are otherwise lawfully permitted under the Copyright Act," the filing alleges.

While focused on ERP implementation and development services, the Epicor-Alternative dispute has some echoes of the ongoing debate over third-party software maintenance, in which a customer goes off vendor-provided support and contracts instead with a company such as Rimini Street for bug fixes, regulatory updates and tech support.

Third-party maintenance providers say they charge much less and deliver better service, although customers no longer receive ongoing new releases of the software.

In 2007, Oracle sued SAP and its former subsidiary, TomorrowNow, which provided lower-cost support for Oracle software. SAP admitted liability for wrongdoing on the part of TomorrowNow employees, but the case is still tied up in appeals by both parties.

Oracle is also suing Rimini Street, which has denied wrongdoing and says it acts within the boundaries of customers' license agreements with Oracle. Rimini has countersued Oracle, alleging that it is trying to quash the third-party software support market.

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


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