FBI raid sparks Akamai v. Speedera court battle
Why can't we all be friends?
Speedera confirmed yesterday five FBI agents raided the company's offices in Santa Clara, California early Monday morning. Reports said Day's computers and data were seized, though Speedera would not confirm this. The FBI declined to confirm or deny the existence of an investigation.
"The FBI search was as a result of an affidavit filed by Akamai," said Gordon Smith, Speedera's marketing director. He said that the search warrant was under seal, but that supporting documentation indicated information from Akamai was responsible for the raid and the investigation.
An Akamai spokesperson declined to comment on its involvement in the criminal investigation. But the company filed a civil lawsuit in the San Francisco Superior Court on Tuesday that seems to back up Smith's claim. Akamai says it has evidence of the misappropriation of data over the internet from Day's Mountain View apartment.
Akamai alleges that Speedera co-founder and CTO Day has been illegally accessing Akamai's confidential data from the Keynote Systems Inc's computers since at least February this year. Speedera has used that data to identify which potential customers Akamai is pitching to, and to pursue those companies itself, Akamai's lawsuit claims. Speedera denies the claims.
Keynote is a web site performance measurement company that both Akamai and Speedera use to gauge the speed of potential clients' sites both with and without their content delivery network services. The data is then used to improve the value proposition the companies make in their sales pitches.
"Richard Day gained access to Akamai's proprietary information stored on the Keynote database on at least 33 separate occasions," Akamai claims. "Defendants obtained Akamai's secret password by hacking the Keynote website, or through the participation of one or more unidentified accomplices who aided and abetted this unlawful scheme."
When asked if this is true, Speedera's Smith responded "No. There's no hacking." Speedera CEO Ajit Gupta said that Speedera is also a licensed user of Keynote Systems and that whatever information Speedera allegedly obtained from Keynote is not confidential or protected.
Smith added: "Akamai has thrown everything in the legal book at us. They are trying to stifle competition. They're losing customers to us, profitability is nowhere in sight, they're a desperate company." Privately held Speedera said Monday it will be profitable in the next 90 days, comparing its target to Akamai's 2003 EBITDA breakeven target.
Smith said that under the terms of Keynote's client contract, all data belongs to Keynote, so no data on its systems was proprietary to Akamai. Keynote spokesperson Dan Berkowitz said: "The data does belong to Keynote, but it should only be accessible to the company that paid for it." He declined to reveal Keynote's involvement in the FBI probe.
An Akamai spokesperson refused to comment on when and how Akamai discovered Day's alleged activities. He also declined to comment on what specific damages Akamai may have suffered.
At about the same time as Akamai filed its suit Tuesday, Speedera sued Akamai, alleging unfair competition, false advertising, trade libel and intentional interference with prospective business advantage. According to Smith, these claims are based partly on marketing material Akamai has been circulating to prospective customers.
The documents "misrepresent everything about us from our financial situation, our customer base and the performance of our technology" Smith said. He claimed Akamai has told users Speedera does not have a network operations center, that one customer, iFilm, makes up more than 50% of its revenue, and that Speedera has never delivered a live streaming event. Smith said all these claims are "outrageous" untruths.
Akamai president Paul Sagan responded to this lawsuit in a statement: "This is an attempt to draw attention away from Akamai's much more serious allegations against Speedera and the FBI raid of Speedera's offices. We believe Speedera's claims have no merit and we intend to vigorously defend Akamai."
However, the suit mirrors closely parts of previous complaints Akamai has filed against Speedera. In a suit filed earlier this year, Akamai's said its US patents on CDN technology are being infringed in Speedera's services. In the same suit, Akamai alleges that Speedera has been using false advertising to lure Akamai's existing and potential customers away from it.
It's an increasingly nasty battle between two companies that clearly despise each other, and it's remarkable that either party tries to claim the moral high ground. The Akamai-Speedera battle seems set to be one that will ultimately be played out in courtrooms on both coasts of the US, rather than in the marketplace.
At a hearing yesterday afternoon in the San Francisco Superior Court, a judge issued an order for Speedera to show why the requested injunction should not be entered against Speedera. The court granted Akamai's request for expedited discovery and set a hearing date for July 24. Akamai seeks an injunction and damages. The case continues.