Satyam Software sued for 1 billion USD - is it TRUE!?

UPAID SYSTEMS, a closely held, American based mobile and online payment specialist, with a huge number of subscribers in its pocket (in tunes of 50 million consumers) and working with a large part of Brazilian mobile service providers for Brazil as well as some parts of South America, has sued Satyam Software Services for fraud and intellectual property infringement. The purported damages asked are around USD 1 billion, and yes. Satyam Software Services (from now onwards ‘ Satyam’) is a $2.5 billion company.

A blow by blow account of the entire procedure is listed below:
* Circa 1996, Simon Joyce and Prafulla Gupta of Upaid Systems(from now onwards ‘Upaid’) develop the idea of converting any phone into a de facto pay phone through the use of a pre paid account associated with a caller identification number. To develop these idea considerable portions of core-project is outsourced to Satyam.
* In June 1998, Upaid decided to file for patent rights with US IP office and this needed the transfer of ownership and any other rights in the idea which is held by Satyam. But the MoU signed before only talks about ownership of inventions and not IP rights (or transfer thereof)
* Negotiations of transfer were going on, but Upaid filled a provisional patent application with USPTO by Sep 15, 1998
* Same year, December, a complete set of declaration forms were given by Satyam to Upaid, declaring the transfer of invention rights. Upaid alleges that Satyam showed 36 “inventor” employees in the list, while only 20 of them were existing people who were working on it.
* By the beginning of 1999, Upaid owed over 2 million USD to Satyam for the services rendered which were rendered as debt converted to equity by a swap. By Sep 1999, Satyam consolidated around 27.06% in Upaid and invested around 2.5million USD.Srini Raju, Satyam veteran was in the board of Upaid
* By 2002, the relationship was well on its way to getting soured, Upaid claimed, Satyam’s services were pathetic, Satyam complained about the non payment of the services and talked about the IP had reverted to Satyam under Services Contract. Upaid complained furthermore that Srini Raju did not act in the best interests of Upaid, while Satyam complained that, Raju was not allowed to participate in the board meetings wholly and fully. More seriously, Srini Raju has set off another company which was based on the proprietary platform of Upaid, MBiz Platform
* On November 1, 2002, the parties met in Hyderabad, and decided to call off the entire relationship with Settlement Agreement signed on and effective as from Dec 1, 2002. Settlement agreement decided under English Law. The Settlement Agreement talked in these words in Clause 3.1(b)
…Further, Satyam confirms all assignments of intellectual property rights to Upaid by it and those assignments executed by Satyam employees as co-inventors of Upaid intellectual property and such assignments will survive and shall be governed by such Assignment agreements. ..”
* What turned out murky, was when Upaid sued Verizon and Qualcomm for patents right infringement in June 2005, “on the grounds that those companies had developed software platforms and were offering network services in a manner which infringed Upaid’s 947 patent and subsequent patents.
* The two companies in question, Verizon Wireless and Qualcomm produced declarations of two former Satyam employees, Mr. Mambakkam and Mr. Govindacharyula (known hence forth as Mr. M and Mr. G) who sold their invention rights to these companies for a fee. Upon much unearthing by handwriting experts, it was found that Satyam most certainly forged the signatures on the assignment documents. Mr. M had in fact sold off his rights in the inventions to Verizon.
* Upaid asked Satyam about this, and naturally they were not forthcoming with the explanations and assistance. Upaid alleges that as a consequence of wrong allegations it had to settle of the case in a bitter pill. So Upaid is now out and out with a vengeance.
* So in effect, Upaid claims, complete return of IP rights to Upaid by Satyam and damages worth 1 billion USD to settle for what was an extremely draconian and unfavourable settlement with two of the most aggressive and heavyweight mobile players in US.

Possible consequences: If out of court settlement doesn’t happen successful then there is more likely of thing getting pretty murky for Satyam. If Satyam is held guilty then it will come as a huge financial and goodwill blow to the company. One possible way it can avert and it is trying to take that way is if Satyam is able to prove that the forgery was not done by it. Secondly Satyam looks to be pretty much in a shaky ground for the want of better evidence supporting its innocence.

It all depends on how things pan out. Presently, Satyam is pretty much downbeat for the case is being solved in Texas Court in 2009. More importantly if we are to assume, that

Satyam does in fact have to shell out, hard cash for such an infringement, then
it will be a big blow for the company.

What seems is that Upaid is out there baying for blood, so rule out any out of court settlement. But if, the war becomes long and protracted, (which again seems to be pretty much out of reason) then Upaid and Satyam both will emerge as bleeding parties. The only situation visible from here in Chennai and thousands of miles away from Ground Zero, that Satyam may have to cough up 1 billion plus damages awarded by the jury (if any), quick and fast. Strictly from a business point of view,

Satyam, which is a 2.5 billion dollar company, has a high chance of turning
bankrupt

. Although Cash reserves for IT companies are tremendously huge but it’s no where to take a toll of 1 billion USD.

So what will happen if Satyam indeed takes the bite? No body knows how it will roll, for it is almost a dramatic statement to hear the failure of Satyam, and then most probably and most certainly in short term Infosys and Wipro will have a higher market capitalization. Expect around jumps of 10-12% [speculative]. But it will need a Robert Preacher to decide about how will it affect the overall business and trust factor for US business community to reel under such a trust breach coming from such respectable software giant like that of Satyam.

source:http://jumpup.wordpress.com/2008/05/18/satyam-softwares-sued/

Not sure how true those facts are, but if they are then this is a very pathetic instance of the amount of integrity and poor levels of ethical maturity, that an IT firm in india has demonstrated.

Please keep watching this space for more updates... the Technology Tabloid keeps you updated!!!