Nutanix Files Theft of Intellectual Property Lawsuit Against Tessell, Inc.

Rhea-AI Summary

Nutanix files lawsuit against Tessell, alleging willful copyright and patent infringement, theft of source code and resources. Tessell founders, former Nutanix employees, accused of using Nutanix Era1 source code to develop their product. Nutanix seeks return of stolen IP, injunction, restitution, and damages, initiating arbitration proceedings as well.

Insights

Legal Expert

In the realm of intellectual property law, the allegations made by Nutanix against Tessell are severe and carry significant legal implications. The intentional misappropriation of trade secrets, such as source code, can lead to substantial financial penalties and injunctive relief. The fact that the former employees are accused of not only stealing the code but also attempting to erase evidence, if proven, exacerbates the severity of their actions. The legal process will involve detailed examination of digital footprints and contractual obligations stemming from the employee agreements. The outcome of this case could set a precedent for how similar cases are handled in the tech industry, particularly regarding employee mobility and intellectual property rights.

Financial Analyst

From a financial perspective, the lawsuit filed by Nutanix could have notable repercussions on the company's market valuation. Intellectual property, especially in tech companies, is a cornerstone of their competitive advantage. If the allegations of theft are substantiated, it might signal vulnerabilities in Nutanix's internal controls, potentially impacting investor confidence. On the other hand, the aggressive action to protect its assets might be viewed positively, showcasing the company's commitment to safeguarding its intellectual property. The financial impact will also depend on the costs associated with the lawsuit and any potential settlement or restitution, which could affect the company's financials in the short to medium term.

Market Research Analyst

Understanding the market dynamics, the theft of source code from Nutanix, a significant player in the hybrid multicloud computing space, could have broader market implications. Source code is the lifeblood of software companies and its theft could lead to unfair competitive practices if used to accelerate a rival's product development. This incident may prompt other companies in the industry to re-evaluate their security measures and protocols for protecting intellectual property. Additionally, the lawsuit and subsequent arbitration proceedings will be closely watched by competitors, investors and customers alike, as they may influence market perceptions and trust in Nutanix's ability to protect its technological assets.

Nutanix asserts willful copyright and patent infringement, including theft of Nutanix resources and its database service source code

SAN JOSE, Calif.--(BUSINESS WIRE)-- Nutanix (NASDAQ: NTNX), a leader in hybrid multicloud computing, today announced that it filed a lawsuit in the U.S. District Court in San Jose, alleging that Tessell, Inc. engaged in willful copyright and patent infringement, including theft of Nutanix’s source code and intellectual property related to the Company’s database service offering.

As alleged in the Federal complaint, Tessell’s founders include former Nutanix employees Bala Kuchibhotla, Kamal Khanuja, and Bakul Banthia. The complaint against Tessell alleges that, during their employment with Nutanix, these former employees covertly designed, built, demonstrated, and secured financing for the future Tessell product, using Nutanix source code, servers and other resources. The complaint alleges that they took Nutanix Era¹ source code with them to Tessell, which used it.

The complaint further alleges that they schemed to remove all indicia of Nutanix branding from their prototype, and then tried to cover their tracks by wiping their Nutanix laptops. Nutanix is seeking the return of its stolen intellectual property, an injunction to stop further infringement, restitution for the Nutanix resources taken by the three former employees for the founding of Tessell, and money damages in an amount to be proven. Nutanix also announced that it is commencing separate arbitration proceedings against the Tessell founders per their Nutanix employee agreements.

“It has been shocking to learn of the behavior of these former employees during their employment, the scope of what they took from Nutanix, and the steps they took to hide their use of Nutanix resources to found their company,” said Tyler Wall, Chief Legal Officer at Nutanix. “Nutanix believes strongly in fair competition and its importance and value to the industry overall, and it is with deliberate and thoughtful consideration that we have decided to file this lawsuit. The facts that our investigation uncovered were egregious. We look forward to presenting our evidence and proving our claims in the litigation.”

Nutanix believes in innovation, but stealing intellectual property and source code is not innovation. Nutanix does not have a history of suing companies or people. The facts found in this situation were too nefarious to ignore. Nutanix Database Service is a valued part of the Company’s product portfolio, and unfettered theft of its intellectual property and source code cannot go unaddressed.

About Nutanix

Nutanix is a global leader in cloud software, offering organizations a single platform for running apps and data across clouds. With Nutanix, companies can reduce complexity and simplify operations, freeing them to focus on their business outcomes. Building on its legacy as the pioneer of hyperconverged infrastructure, Nutanix is trusted by companies worldwide to power hybrid multicloud environments consistently, simply, and cost-effectively. Learn more at www.nutanix.com or follow us on social media @nutanix.

© 2024 Nutanix, Inc. All rights reserved. Nutanix, the Nutanix logo, and all Nutanix product and service names mentioned herein are registered trademarks or unregistered trademarks of Nutanix, Inc. (“Nutanix”) in the United States and other countries. Other brand names or marks mentioned herein are for identification purposes only and may be the trademarks of their respective holder(s). This press release is for informational purposes only and nothing herein constitutes a warranty or other binding commitment by Nutanix. This release may contain express and implied forward-looking statements, which are not historical facts and are instead based on Nutanix’s current expectations, estimates and beliefs. The accuracy of such statements involves risks and uncertainties and depends upon future events, including those that may be beyond Nutanix’s control, and actual results may differ materially and adversely from those anticipated or implied by such statements. Any forward-looking statements included herein speak only as of the date hereof and, except as required by law, Nutanix assumes no obligation to update or otherwise revise any of such forward-looking statements to reflect subsequent events or circumstances.
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¹ Nutanix Era is now called NDB, Nutanix Database Service

View source version on businesswire.com: https://www.businesswire.com/news/home/20240320090560/en/

Media Contact

Jennifer Massaro, VP of Corporate Communications

pr@nutanix.com

Investor Contact

Richard Valera, VP of Investor Relations

ir@nutanix.com

Source: Nutanix

FAQ

What lawsuit did Nutanix file recently?

Nutanix filed a lawsuit against Tessell, alleging copyright and patent infringement, theft of source code, and resources.

Who are the founders of Tessell accused in the lawsuit?

The founders accused in the lawsuit are former Nutanix employees Bala Kuchibhotla, Kamal Khanuja, and Bakul Banthia.

What actions did the former employees take according to the complaint?

The former employees allegedly designed, built, and secured financing for Tessell's product using Nutanix source code and resources, removing Nutanix branding and wiping their laptops.

What is Nutanix seeking in the lawsuit?

Nutanix is seeking the return of stolen intellectual property, an injunction, restitution for resources taken, and money damages.

Why did Nutanix decide to file the lawsuit?

Nutanix believes in fair competition and decided to file the lawsuit due to the egregious behavior of the former employees.

What is Nutanix's stance on innovation and intellectual property theft?

Nutanix believes in innovation but states that stealing intellectual property and source code is not innovation.

What is Nutanix Database Service's significance?

Nutanix Database Service is a valued part of the Company's product portfolio, and theft of its intellectual property cannot go unaddressed.