Computer Associates Sues Quest

Wednesday, July 10th 2002, 12:00 am
By: News On 6

NEW YORK (AP) _ Computer Associates International Inc. has filed a lawsuit accusing rival Quest Software Inc. of stealing trade secrets and using them to build some of its software products.

Computer Associates submitted a complaint July 2 asking a United States District Judge in Chicago to bar Quest from selling any products based on the alleged stolen software blueprints. The Islandia, N.Y., giant is also seeking to recover any profits Quest made from these products.

A spokeswoman for Quest, which is based in Irvine, Calif., said the company had received the complaint Monday and it was being reviewed by the company's lawyers.

In its lawsuit, Computer Associates alleges copyright infringement and misappropriation of trade secrets. It claims four Quest employees stole the blueprints, or source code, for a database management software they had been working on while at Platinum Technology International Inc.

These individuals joined Quest after Platinum was acquired by Computer Associates in June 1999 and then copied Platinum's code to develop similar product for Quest, called Quest Central for DB2, the complaint states.

Shares of Quest finished at $9.38 Tuesday on the Nasdaq Stock Market, down $3.03, or 24.4 percent, on heavy volume.

News of the lawsuit was earlier reported by Bloomberg News.

It's not clear how much revenue, or profits, Quest gets from its Quest Central suite of products.

Quest's software license revenue increased 37 percent to $174.1 million in 2001. In a filing with the Securities and Exchange Commission, the company says the increase was due, in part, to the successful introduction of new products, such as Quest Central for DB2.

Damian Rinaldi, an analyst at First Albany Corp., estimates that Quest Central for DB2 accounts for no more than 5 percent of Quest's revenue.

``The mainframe market is a place Quest had considered an attractive area of expansion, and Quest Central is one of the products it planed to build around,'' says Rinaldi.