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By Nick Wakeman

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Nick Wakeman

MicroTech launches legal fight with HP

Hewlett-Packard has Tony Jimenez’s money, and he wants it back.

Through his company, MircoTech, Jimenez filed a lawsuit Monday against HP because the company isn’t honoring a reseller agreement that MicroTech signed with Autonomy, a software company, that HP acquired in October 2011.

MicroTech has filed suit in the U.S. District Court for Northern California asking HP to return the $16.5 million that MicroTech says it paid to Autonomy for a software key. The key was never delivered – or at least, there isn’t proof it was delivered.

Jimenez has offered an olive branch to HP – if it hands over the key and allows MicroTech to market the software to recoup its $16.5 million, there would be no need for the lawsuit, and it would be withdrawn, said Lanny Davis, MicroTech’s attorney.

He said the suit is a “simple case of breach of contract.”

But of course, it isn’t that simple. After acquiring Autonomy, HP contracted a serious case of buyers remorse and quickly realized it overpaid at $11.7 billion. Less than a year after the deal closed, HP wrote down Autonomy’s value by $8.8 billion.

The company is now suing Autonomy executives for $5.1 billion, accusing Michael Lynch, Autonomy’s founder, and Sushovan Hussain, a former chief financial officer, of inflating the company’s revenue. The lawsuit is filed in the United Kingdom.

MicroTech is one of the resellers that HP claims participated in “contrived” transactions to inflate Autonomy’s revenue for its software to search unstructured data. It’s an allegation Davis strongly denied during a briefing with reporters about the MicroTech lawsuit.

“We deny categorically the word contrived if someone accuses us of that, prove it because it is false,” he said.

One of the transactions at the heart of the dispute is a project with the Vatican Library to digitize 80,000 manuscripts. The second transaction, ironically, was a sale to HP before it acquired Autonomy.

In the lawsuit, MicroTech says it became an Autonomy reseller in 2006 and completed multiple transactions. It describes how the transactions occurred. Autonomy would reach an agreement with an end user to sell its software through MicroTech as its reseller. MicroTech would issue a purchase order to Autonomy for the software, and Autonomy would invoice MicroTech.

MicroTech would pay for the software. When the deal closed and the software was delivered, MicroTech would get back what it paid Autonomy, plus a 10 percent profit.

In the Vatican and HP transactions, MicroTech paid Autonomy believing the deals were complete, but because the transactions never closed, MircoTech was never paid. It also never received the software.

In the lawsuit, it is asking for either: the money plus interest and fees, or the software so it can market it and recoup the money it paid.

Meanwhile, MicroTech continues to have reseller relationship with HP. In fact, there is a page on its website where MicroTech describes itself as an HP specialist in the federal market.

An HP spokeswoman declined to comment because the company hasn’t seen the lawsuit.

During the MircoTech press briefing, Davis said that MicroTech is taking no position on the fight between HP and the Autonomy execs.

“Don’t take it out on us if you are having an argument with Autonomy,” Davis said.

Posted by Nick Wakeman on May 18, 2015 at 9:32 AM

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