SuccessFactors Alleges it Was Scammed by Halogen

Update: SuccessFactors has issued a statement noting that both sides in the suit have stipulated to a restraining order prohibiting Halogen from disclosing or using any of the information it may have gained via the Magnus Group.  SuccessFactors President Doug Dennerline said:

Although we would rather devote all our energy to building great products and providing great services to our customers and more than 8 million users, we have a responsibility to take action to protect SuccessFactors, including our employees, customers, investors and partners, in the face of such a blatantly fraudulent and unethical attack. We plan to vigorously pursue this lawsuit.”

Fool me once, shame on you. Fool me twice, shame on me.

That adage came to mind this weekend after the news broke that SuccessFactors is suing Halogen Software alleging it had been scammed by its Canadian competitor in the HR software business.

Whether or not the claims made by SuccessFactors are true, it’s the second time in the last two years the San Francisco Bay area vendor has gone to court alleging it was pimped by a competitor.

In March 2008 it sued Softscape (since acquired) over a disparaging PowerPoint that was supposedly created by an unhappy SuccessFactors’ customer and circulated to clients of the company.

In the latest legal battle, the technology news service IDG reported Friday that SuccessFactors claims Halogen created a dummy company with a sham website in order to trick SuccessFactors into providing detailed company and product information, including confidential pricing information.

By fraud and deceit, says SuccessFactors, Halogen obtained proprietary information it otherwise couldn’t get, which “will cost (SuccessFactors) considerable, untold sales,” the IDG report says. A copy of the SuccessFactors complaint is here.

Halogen’s legal response asks that the suit be dismissed outright. IDG quotes this from the Halogen documents:

“SuccessFactors is embarrassed about what it has done, and it has brought suit alleging untenable claims that are all superseded by California’s Uniform Trade Secret Act in an effort to punish Halogen for SuccessFactors’ own failings … SuccessFactors fails to identify any ‘property’ that has been permanently deprived by Halogen, any instance in which its information was used or disclosed by Halogen, any specific ‘economic relations’ that have been interfered with, or any lost sales or profits as resulting from the conduct complained about.”

A Halogen spokeswoman said the company “will not comment” on the suit, though she noted, “The claims put forth by SuccessFactors are not proven.”

A SuccessFactors spokeswoman said the company would email me a statement, which hadn’t arrived when this post went live.

HR technologist and strategy consultant Naomi Bloom tweeted about the suit over the weekend, telling her nearly 2,900 followers: “I wouldn’t presume to know the legalities, but if #Halogen has done what is alleged, they they’ve been at a minimum stupid and unethical.”

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She added: “Courts will resolve legalities of #SuccessFactors v #Halogen, but #Halogen prospects should take a hard look at the complaint against them.”

While the allegations, if true, would certainly make something of a mockery of Halogen’s corporate social responsibility declarations, the whole episode does make me wonder about how SuccessFactors vets its leads and prospects.

Not assuming the worst about the companies that contact you is not only excusable, but admirable. However, somewhere along the line it would seem reasonable to do a little research on a prospect that claims to be a 500-employee business process management consulting firm.

According to the IDG report of the suit, SuccessFactors said the prospect company called itself The Magnus Group. Its now-gone website listed it as located in Valparaiso, Indiana.

A Google search now turns up dozens of Magnus-related listings, but nothing for a company in Valparaiso. Nor is there anything on LinkedIn, either for The Magnus Group or SuccessFactors’ contact, Anna Rodriguez, with whom the vendor had multiple meetings.

Perhaps if SuccessFactors hadn’t been the victim of a scam before, not doing the basic homework on the client might be just embarrassing, as the Halogen legal response says. But that apparently didn’t happen until after Ms. Rodriquez informed the sales staff that The Magnus Group was no longer interested in the product.

“Fool me twice, shame on me.”

John Zappe is the editor of TLNT.com and a contributing editor of ERE.net. John was a newspaper reporter and editor until his geek gene lead him to launch his first website in 1994. He developed and managed online newspaper employment sites and sold advertising services to recruiters and employers. Before joining ERE Media in 2006, John was a senior consultant and analyst with Advanced Interactive Media and previously was Vice President of Digital Media for the Los Angeles Newspaper Group.

Besides writing for ERE, John consults with staffing firms and employment agencies, providing content and managing their social media programs. He also works with organizations and businesses to assist with audience development and marketing. In his spare time  he can be found hiking in the California mountains or competing in canine agility and obedience competitions.

You can contact him here.

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10 Comments on “SuccessFactors Alleges it Was Scammed by Halogen

  1. Hmmmm. I do not know if Halogen is “good” or “bad”. At the same time time, I’d be suspicious of any company that trumpets how “good” they are.

    Keith “Won’t Be Fooled Again” Halperin

    “Hypocrisy is the homage vice pays to virtue.”
    -Francois de La Rochefoucauld

  2. A Rare Public Display of Stupidity and Pomposity. (well maybe not that rare) I am not a lawyer either, even a lil’ ol’ country lawyer, but I can read.

    It doesn’t take a rocket scientist or even a people scientist to see that Success Factors appears desperate to keep its pricing and related services private and confidential. Hmmmm. I wonder why? Do you suppose that they are so shockingly low and hyper-competitive that they are concerned they will be overwhelmed by new business they can’t handle? Naaa. Taking this very public legal action can only turn a dirty little secret into general public knowledge in a way that Halogen (being the relatively smaller competitor) could never have done on its own. Therefore, the plantiff should sue itself. That’s the stupid part.

    The pompous part is well exposed in the Halogen request for dismissal, which appears to this non-lawyer as all too obviously the only sane thing to do. Fair enough, Halogen should have polled some user groups or done a little blogging to secure the information from Success Factor clients and not gone into the deception business. But we have all seen the big competitors and endless shouting of the bulls, supporting by large marketing budgets, deliver shoddy goods at inflated prices so the C-Suite can buy a new condo in Aspen. It just about shut the whole economy down in 08. They want to keep their secrets, but how does that advance the common cause? (i.e. US competitive position and future economic health). I prefer the “Power of Pull” that comes from transparency, communication, and collaboration where the best idea wins, not the biggest blowhard or the meanest lawyer.

  3. @Dr. Janz:
    “I prefer the “Power of Pull” that comes from transparency, communication, and collaboration where the best idea wins, not the biggest blowhard or the meanest lawyer.”
    Are you some kind of a SOCIALIST?

    As far as the continuing serial of “Sucker Factor” vs. “Holds All the Gin”, what’s not to like?
    Two companies advertise their cravenness and ineptitude for all to see and some attorneys get a new condo in Aspen.
    If that’s not in the finest tradition of American business, I don’t know what is…..

    Cheers,

    Keith

  4. People seem so suprised and Naomi Bloom acts as if this is not common place in the industry or any industry. ALmost every industry out there tries to see what the competition is doing. Right or wrong, it is common place. I’ve heard stories for years of vendors getting demos from competitors and acting as if they are an interested prospect. Vendors need to focus on creating and not trying to adapt to their competition.

    Mike Brandt
    BrightMove Recruiting Software

  5. Some people call it ‘mystery shopping”. Others competitive intelligence. Still others unethical conduct. I’m not a judge but, if true I agree with Tom Janz that it makes Halogen a Hypocrite and raises more questions about Success Factors. This wasn’t the developer’s code we’re talking about here but the price of the product. Give me a break.

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