March 19, 2008, 12:00 AM

Harry and David sue IBM for $6 million in software ownership dispute

Fruit and gift basket retailer Harry and David Holdings is suing IBM for breach of contract and fraud over patent ownership of the software and hardware manufacturer’s WebSphere application.

Fruit and gift basket retailer Harry and David Holdings Inc. is suing IBM Corp. for breach of contract, breach of warranty and fraud over patent ownership of the software and hardware manufacturer’s WebSphere e-commerce platform application. The suit alleges that IBM misrepresented its ownership of patents on software that Harry and David bought and implemented and later was called to account for by the patent holders.

The suit, filed in U.S. District Court in Oregon, charges that IBM knew it was infringing on patents for software owned by NCR Corp. and software developer Charles E. Hill & Associates and that, because Harry and David unwittingly used the unlicensed application, the retailer was forced to pay both companies for the right to use their software.

The suit further claims that IBM reneged on an agreement to defend Harry and David against patent infringement litigation. Harry and David has asked for a jury trial and for damages of $6 million to cover its legal fees in litigation with Charles Hill & Associates and licensing fees paid to Hill and NCR. Harry and David’s suit seeks to recoup costs associated with the settlement of a suit brought by Charles Hill and licensing agreements with the providers.

The suit refers to several versions and predecessors of IBM’s WebSphere Commerce technology, which Harry and David purchased or upgraded to in 2001 and 2005.

NCR and Charles Hill separately notified Harry and David that the retailer was using unlicensed software, the suit says, which led to settlements with both application providers. NCR developed cataloging technology and Charles Hill data caching software.

Both Harry and David and IBM declined to comment.

Harry and David is No. 75 in the Internet Retailer Top 500 Guide. Barbara Hurd, the retailer’s senior manager of Internet business development, will be speaking at the Internet Retailer Conference & Exhibition, June 9-12 in Chicago in a session titled Affiliate marketing: Why you can`t set it and forget it.

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