Accenture Sues Guidewire for Alleged Patent Infringement

Yesterday afternoon Accenture filed a lawsuit alleging that San Mateo-based Guidewire Software, a rival in the insurance claims software market, has infringed the U.S. patent protecting the Accenture Claim Components solution and has misappropriated trade secrets related to the design, coding and implementation of the Accenture software. In a preliminary response issued late last night, Guidewire denied the allegations and has followed up with further statements refuting the charges made by Accenture.

An Accenture statement referred to the company's belief that "Guidewire willfully and deliberately developed, manufactured, used and sold ... computer software and services used for insurance claims management that are covered by Accenture U.S. Patent 7,013, 284." Accenture also claims that Guidewire "willfully and maliciously obtained Accenture trade secrets without authorization" as part of an ongoing effort to compete against Accenture in the claims software market.

The statement quotes Pierre Nanterme, Accenture's group chief executive for financial services, saying, "As part of our ongoing efforts to defend vigorously our intellectual property rights around the world, we intend to take actions like this lawsuit to be sure that our intellectual property is not unfairly exploited."

Guidewire responded some hours later saying that Accenture had never communicated any concerns or allegations about infringement or misappropriation of intellectual property, and that Guidewire was not even aware of the patent in question (known as the "284" patent). The vendor said that its policy was to respect the intellectual property rights of all third parties and denied any misappropriation of trade secrets or any awareness that it had infringed any patents. Guidewire's statement mentioned that it had not yet been served or otherwise provided with the Accenture complaint, but that it will issue a timely response once it has received the complaint.

"Guidewire did not and would not misappropriate trade secrets or willfully infringe on any patents," said John Raguin, Guidewire's CEO in a statement. "We conduct our business with the utmost integrity. We will review the details of the allegations and respond in the appropriate manner."

Accenture's allegations are based on what partner John Del Santo characterizes as good reason to believe that Guidewire had access to Accenture's confidential information. "We carefully compared our U.S. patent to the information available about the Guidewire system and concluded that they not only infringed the patent but that they must have gotten access to our trade secrets at a client somewhere," Del Santo says. "We believe that their product development trajectory was just too fast to result in the kind of product that they have, which looks fairly similar to ours. From our view that's too much of a coincidence, so there has to be a trade secret violation here, in our opinion."

Del Santo noted that Claim Components is the result of more than a decade of development and the investment of tens of millions of dollars. Of the more than 450 patents Accenture has been issued, this is the first one that the company has defended via litigation. "We have an obligation to our clients and our shareholders to make sure we defend them," Del Santo says. "This is one [instance of a breach] that we thought was pretty straightforward."

Guidewire vice president of marketing Brian Desmond says he takes Del Santo's comments about Guidwire's speed-to-market as a compliment, adding that Accenture is not alone in remarking on the speed at which the vendor has been able to get products to market. In addition to the speed advantages owing to the vendor's sole focus on the P&C industry, "Guidewire uses agile development... which allows us to develop rapid designs, rapid prototypes, and most importantly work with our customers to rapidly accelerate the products," Desmond says. "We feel that's a competitive differentiator for Guidewire, relative to other software vendors."

With regard to Del Santo's comments to the effect that Guidewire is likely to have deliberately and improperly appropriated Accenture's intellectual property, Desmond comments that, "those claims do not sound credible to us and we look forward to reinforcing our reputation in the marketplace. Integrity is of the utmost importance to Guidewire. We live and breathe it at a company level and at every individual level. So we are utterly committed to defending our reputation in the marketplace."

Both Accenture and Guidewire have enjoyed success in the insurance claims software market to companies domestically and abroad, notes Donald Light, a Palo Alto, Calif.-based senior analyst with Celent. "Accenture sells software mostly to the biggest insurers, while Guidewire sells to insurers of all sizes," he says. "Guidewire is also growing rapidly."

Intellectual property suits have been common in the software industry as a whole but not in the insurance software market, according to Light. "This lawsuit is a sign that there is a new front in the intellectual property wars: software that makes insurance companies better at executing their core functions," he comments.

From an industry perspective the Accenture/Guidewire suit is significant for several reasons, according to John MacPete, a patent litigator at Locke Lord Bissel & Liddell LLP (Atlanta). "First, I think it's a notice to the industry that they need to look at their software to determine whether they should have infringement concerns about the 284 patent or, frankly, any other patents that may be out there that are similar in nature to the 284," he comments. "Second, I think it's a notice to companies that either have licensed software or are in the process of licensing software in the insurance space to carefully examine or negotiate for broad non-infringement representations and indemnity language in their contract for third party infringement claims from their software providers."

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio