Business Logic v. Ibbotson*
Background:
Business Logic (BL) was a small software company in Chicago with about 20 employees and annual revenue of $4 million. BL had contracted with Ibbotson Associates (IA) to build software infrastructure that allowed pension fund managers to manage their investments online. The relationship was successful for many years and was predicated on contracts that prevented reverse engineering of the software and strongly protected BL’s trade secrets. Morningstar later acquired IA and cancelled the contract, preferring to build the software internally. However, Morningstar’s product was virtually identical in direct contravention of their contract. BL had essentially become insolvent by pursuing the litigation, which is when a litigation finance firm became involved. Not only did the litigation funder provide capital to allow BL to pursue the case, but it also provided working capital to restore BL’s solvency. IA ended up settling for over USD$60MM.
Case Characteristics
Jurisdiction: Illinois, USA
Case Stage: Late stage
Case Type: Contract breach & trade secret misappropriation
Case Economics:
Proceeds: ND*
Investment: ND*
Multiple of Capital: ND*
Case Overview:
Litigation: Plaintiff sued defendant for breach of contract and violation of trade secret laws
Damages: Lost profits
Stage: Litigation finance got involved at the later stage of the case, pre-trial, and made additional legal representation a condition of their financing
Manager Assessment:
Case Merits: similarity of software and functionality had been established and discovery uncovered irrefutable evidence of breach
Representation: Manager brought on Yetter Coleman to assist with Plaintiff’s representation
Collectability: large financial services company, ultimately acquired by Morningstar
Case Outcome:
Plaintiff settled for an amount in excess of $60 million. At the time the case represented the 9th largest trade secrets settlement in history and remains the largest in Illinois.
Business Logic has renamed Next Capital and employs 150 people
* Source: The Future Of An Industry: A Look At How Far Litigation Finance Has Come And How It Will Continue To Evolve, Above the Law, Stephanie Wilkins, Sept. 27, 2019. ND = Not Disclosed