Editing Versata (section)

=== Patent infringement and "poison pill" lawsuits with Selectica ===

The legal disputes with Selectica began in 2004 (before Trilogy acquired Versata in January 2006) and lasted until 2010. While there were many suits and counter-suits, they largely centered around three issues:

* 2004–2006: Patent infringement in [[configure, price and quote|configure, price, and quote (CPQ)]] software

* 2005–2007: Patent infringement in [[contract lifecycle management|contract lifecycle management (CLM)]] software

* 2008–2010: The [[shareholder rights plan|"poison pill"]] lawsuit

In 2004, Selectica and Trilogy had competing CPQ software: Selectica sold Solutions Advisor and Deal Optimization, while Trilogy sold Selling Chain. In April of that year, Trilogy Software sued Selectica for patent infringement. In 2005, before the court ruling, Trilogy made several offers to buy Selectica, but the board rejected them.<ref>{{cite news |title=Tech shareholder activism on the rise |url=https://www.cnet.com/tech/tech-industry/tech-shareholder-activism-on-the-rise/ |access-date=20 April 2025 |work=CNET |date=September 14, 2005 |archive-url=https://web.archive.org/web/20240821122137/https://www.cnet.com/tech/tech-industry/tech-shareholder-activism-on-the-rise/ |archive-date=August 21, 2024}}</ref> In January 2006, the court ordered Selectica to pay Trilogy $7.5 million in damages.<ref>{{cite court |litigants=Trilogy Software, Inc. v. Selectica, Inc. |litigants-force-plain=yes |court=United States District Court for the Eastern District of Texas |date=2006-01-20 |url=https://www.courtlistener.com/docket/4690638/trilogy-software-inc-v-selectica-inc/}},</ref><ref name=Varallo>{{cite news |last1=Varallo |first1=Gregory |last2=Werrett |first2=Jacob |title=Delaware Supreme Court Sanctions Use of 4.99 Percent NOL Poison Pill Using ‘Unocal’ Analysis, as Modified by ‘Unitrin’ |url=https://www.rlf.com/wp-content/uploads/2020/05/Unocal_101310.pdf |access-date=20 April 2025 |work=Bureau of National Affairs |date=October 13, 2010 |archive-url=https://web.archive.org/web/20240703194554/https://www.rlf.com/wp-content/uploads/2020/05/Unocal_101310.pdf |archive-date=July 3, 2024}}</ref>

Four days after the January 2006 judgment in the first lawsuit, Trilogy announced its acquisition of Versata for an undisclosed amount.<ref name=TrilogyAcquires />

In 2005, Selectica had acquired the Determine CLM software platform, which included features that overlapped with some offered by Versata. In October 2006, Versata filed a second patent infringement lawsuit. The case was settled in 2007, with Selectica agreeing to pay Trilogy and Versata $10 million, plus up to $7.5 million in additional contingent payments.<ref name=Varallo />

In 2008, Versata began acquiring Selectica stock. By December, Selectica's board amended its [[shareholder rights plan]] to adopt a "poison pill" with an unusually low trigger threshold: if any shareholder acquired more than 4.99% of company stock, their ownership would be diluted. The board explained that the move was meant to protect Selectica’s [[net operating loss|net operating losses (NOLs)]], which were tax-deductible if the company returned to profitability. Under [[Internal Revenue Code section 382|IRS Section 382]], a significant change in stock ownership could cause those NOLs to be disqualified.<ref name=Varallo /><ref name=Webber>{{cite journal |last1=Webber |first1=Sarah J. |last2=Davis-Nozemack |first2=Karie |title=NOL Poison Pills: Using Corporate Law for Tax Purposes |journal=Journal of Taxation |date=March 22, 2016 |volume=117 |pages=1–12 |url=https://ecommons.udayton.edu/acc_fac_pub/57 |access-date=20 April 2025 |issn=0022-4863}}</ref>

Versata intentionally triggered the poison pill and also offered to sell back the stocks at a profit ([[greenmail|greenmailing]] them),<ref name=Webber /> which prompted a legal dispute over whether Selectica’s board had the authority to set such a low threshold and whether defending NOLs justified triggering shareholder dilution. The case ultimately reached the [[Delaware Supreme Court]], which upheld the poison pill in October 2010, ruling in favor of Selectica.<ref>{{cite court |litigants=Selectica, Inc. v. Versata Enterprises, Inc. |litigants-force-plain=yes |vol=5 |reporter=A.3d |opinion=586 |court=Supreme Court of Delaware |date=2010-10-04 |url=https://courts.delaware.gov/supreme/oralarguments/download.aspx?id=5002}}</ref><ref name=Varallo /><ref name=Webber />