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AppDynamics Raises $120M as CA Technologies Claims Company Misused IP

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CA Technologies announced on Monday that it has filed counterclaims against AppDynamics, alleging that “significant portions” of AppDynamics code was written while its founders were employed at CA Technologies.

According to CA Technologies, the counterclaim builds on a lawsuit pending in the US District Court for the Northern District of California which was filed in 2013. In a statement the company said that it will take every necessary step to ensure that others do not use its code or infringe its patents.

AppDynamics founders, Jyoti Bansal and Bhaskar Sunkara, claim that the amount of code in dispute was small and not stolen, according to a report by BizJournals. AppDynamics is a SaaS provider of on-premise and cloud-based application performance management. It has been downloaded more than 70,000 times.

Bansal started AppDynamics in 2008, one month after leaving his job as a software engineer at CA Technologies. Currently he is CTO at the company.

Patent infringements and violation of employment agreements can cause a lot of financial damage to companies. Recently, Palo Alto Networks was forced to hand over $175 million in cash and equity in a patent settlement with Juniper Networks. At the beginning of July, Amazon filed a lawsuit against a former employee, alleging that his move to Google violated his non-compete contract.

The lawsuit comes as AppDynamics has secured $120 million in financing as it eyes global expansion. Bansal said that this financing is a “pre-IPO growth” round. Last year, AppDynamics completed a $50 million funding round.

According to CA’s claims, Bansal and Sunkara started working on the application and business after CA acquired Wily Technologies in 2006. The claims state that Bansal and Sunkara violated obligations they had under employment agreements with CA.

CA wants a court declaration that it owns the code written prior to their departure from the company, as well as any derivative works. It also seeks an injunction against AppDynamics, prohibiting the misuse of its IP and financial damages.

With heightened competition in the application performance monitoring space, if CA wins this case, it has the potential to be fairly damaging to AppDynamics, who competes with CA and New Relic.

 

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