Kinaxis files counterclaim against Arizona-based Blue Yonder in U.S. court

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Ottawa supply-chain management software powerhouse Kinaxis has asked a U.S. court to dismiss a lawsuit filed against it by an Arizona-based competitor and has launched a counterclaim alleging the U.S. firm misappropriated Kinaxis trade secrets.

In the patent infringement lawsuit filed in U.S. District Court in December, Blue Yonder claims Kinaxis used solutions invented by the Arizona firm “to circumvent the development process and investment necessary to develop new products.”

In a statement issued late Monday, Kinaxis denied the allegations. The company claims the six patents Blue Yonder cited in the lawsuit are invalid, alleging they “simply take generic computer technology and apply it to decades-old concepts like sourcing a bill of materials or allocating manufacturing resources.”

Kinaxis CEO John Sicard said the Ottawa company has spent thousands of hours developing its technology and “will not bow to legal threats.”

“Blue Yonder has resorted to litigation to compete where they have otherwise failed,” he said in a statement. “They are using lawyers instead of engineers to play catch-up in the marketplace, where even Blue Yonder acknowledges significant losses to Kinaxis, including several very recent competitions that were in flight at the time of their initial filing.”

Alleges federal law violations

In addition, Kinaxis has filed its own claim against Blue Yonder, alleging its U.S. competitor violated federal and Texas law by “misappropriating certain of Kinaxis' trade secrets.” Kinaxis has also filed a motion asking the U.S. District Court to force Blue Yonder to “return or destroy confidential Kinaxis documents, and to stop using those documents in the case or in competition.”

The presiding judge has not yet ruled on the motions but did agree to Kinaxis’s request to seal the complaint, the statement said.

None of the allegations have been proven in court. Kinaxis did not elaborate on the nature of its claims, and a spokesperson said Tuesday the company "cannot comment beyond what is in the news release."

In an email to OBJ Tuesday afternoon, Blue Yonder vice-president of corporate communications Jolene Peixoto said the company “will not be issuing any comment at this time.”

The legal wrangling comes as Kinaxis is riding a massive wave of growth during the pandemic.

The company’s shares have jumped nearly 70 per cent since last March as customers ramp up use of its platform that helps them keep track of inventory in real time.

The Ottawa company ​– which counts Ford, Nissan and Proctor and Gamble among its customers ​– is projecting revenues of between US$220 million and $223 million for fiscal 2020, up from $192 million last year.

Sicard, who was named Ottawa’s 2020 CEO of the Year, said last year the firm’s RapidResponse software has become essential for companies scrambling to adjust to wildly fluctuating market forces that have seen some products flying off store shelves while demand for other merchandise has cratered.

“We’ve probably never been more relevant as a company than we are now,” he told OBJ last fall. “It’s only recently we’ve sort of come out of the shadow of other giants, I will say, and people recognize what we’re truly doing.” 

Blue Yonder, meanwhile, is one of Kinaxis’s fiercest corporate rivals. Founded in 1985 as JDA Software, the Scottsdale, Ariz., company rebranded itself last year after acquiring German AI firm Blue Yonder in 2018. 

The privately held company’s 3,300-plus customers include Best Buy, Coca-Cola and Home Depot. On its website, Blue Yonder says it brought in more than US$1 billion in revenues in 2019 and now employs in excess of 5,500 people.

Kinaxis shares closed the day down $1.07, or less than one per cent, to $169.90 on the Toronto Stock Exchange.