UK HC turns down Satyam appeal in Upaid case

Srinivas Vadlamani, Chief Financial Officer, Satyam said the London case against UPAID is pertaining to jurisdiction. He added that UPAID versus Satyam is not be heard in Texas in 2009 and he is confident of winning the case in Texas. “We have provided UPAID with all possible documentation pertaining to services provided. We do not see big financial setback if the case is lost. The work done for UPAID amounts to USD 8-10 million,” he said.

Simon Joyce, Chairman and CEO of UPAID is pleased with the court proceedings. "The issues in the Texas proceedings are issues of forgery and fraud. We are obviously pleased after nine months of the London case, which tried to frustrate our efforts in Texas, to be able to get on with addressing which we believe are the substantive issues, which are UPAID intellectual property, our title to it, our patents and uncovering wrong doing," he said.

Excerpts from CNBC-TV18's exclusive interview with Srinivas Vadlamani and Simon Joyce:

Q: Could you give us a clear idea of what Satyam’s way forward now is and how big a blow this decision is?

Vadlamani: This particular decision is on the jurisdiction, so the main subject matter is yet to come in front of the courts. So as per the agreement we had with UPAID, this case belongs to 1997-1998 timeframe. At that time as per the agreement the jurisdiction is London court. Accordingly we said that this has to be settled in the London court, but UPAID Systems took it up in Texas. Now the London courts have, based on the agreement we entered into in 1997-1998 with the then subsidiary company Satyam Enterprise Solution, said that it can be taken up in Texas. So now at this point in time we are in touch with our lawyers and we will take an appropriate decision.

Q: Everything seem to be okay as you and UPAID had signed agreements earlier in 2005, the problem seems to be when UPAID tried to enforce this patent that they had on this mobile payment technology in Texas and then they were rejected on the basis of some forged papers which they are blaming on you since you helped them in developing this technology, is that largely correct?

Vadlamani: No, there is no truth at all. As a software solution provider, our responsibility is to deliver whatever specifications the customer gives and whatever documentation the customer wants, it is a responsibility of the customer. All that we have done as per the contract and also we were paid for and the customer pays us only when he is fully convinced about the quality of the product we delivered and also the documentation. We have done whatever they wanted.

Q: Do you still hold any equity in UPAID because at some stage when there was a transfer of intellectual property some report said that there were some transfer of equity as well and there was some bickering over a board seat on UPAID what is the status vis-à-vis that right now?

Vadlamani: There is no equity at all and there is no board seat, it is basically a normal vendor customer relationship.

Q: UPAID says that by Satyam’s own admittance there are large sums of money involved, can you give us a figure on what kind of damages UPAID is seeking?

Vadlamani: We have not spoken about any damages, any amount whatsoever at this point in time, the discussion is on the jurisdiction. The subject matter had not come for discussion at all and it is posted somewhere in the middle of 2009. We are very confident keeping in view the role we have played in this, we are very clear about our position and we will be able to defend our case.

Q: Is this also a lesson for Indian IT companies such as yourself, which are developing IP for other companies or in conjunction with their global clients to have more watertight agreements in the future?

Vadlamani: I agree with you. But whatever agreements we have had with UPAID also they are very watertight. We are very clear about what are our deliverables and we alone acted as an offshore solution provider and as per the agreement we have developed the application. The most important point here is that we are not claiming any rights on the application we developed. As per the agreement we have developed it for UPAID and we gave all the rights to UPAID. If that patent is not approved then it is something different, it has nothing to do with the rights here. So whatever rights are there we have passed on to them.

Q: Could you give us a brief idea of what sums are involved as far as damages being sought by your company?

Joyce: This is something that ultimately will be determined by a jury in Texas and not by me. So I would not wish to try and comment on whatever decision they will come to. Obviously the sums of money involved are very large indeed and that is certainly what my expectation would be.

Q: There are some reports as well that there were disputes between UPAID and Satyam also over some equity that Satyam held in your company in exchange for IP (Intellectual Property) that was transferred over maybe board seats, is there any truth to any of that and does Satyam still hold any such interest in Upaid?

Joyce: On whether Satyam holds interest in UPAID or not, it is probably best that you address that question directly to them, but certainly there have been issues between the companies in the past and most of the issues had been resolved quite a long time ago. Of course not the current issue in play in Texas, which relates to forgeries, which were discovered subsequently.

Q: Could you give us a slightly clear idea of what these forgeries are? The company discovered them while trying to enforce this patent against some other third parties in Texas and that is when you discovered this forgeries?

Joyce: It was not us who discovered the forgeries, it was the other party in the patent infringement case that discovered the forgeries towards the end of 2006. It was a result of those forgeries being uncovered that the infringements suit in Texas that was proceeding at the time was done. That infringement suit obviously was no longer valid in view of these forge documents, which had been sent as part of a patent application process.

Q: Are these alleged forged documents related to the patent itself in product specifications or to the transfer of intellectual property?

Joyce: They are infact related to both.

Q: How does your company take this case forward from here on? Has all the IP completely being transferred to you as of now? What is the status of the intellectual property itself?

Joyce: I think the status of the intellectual property itself is something that ultimately somebody more learned than I will have to decide upon the issue. And we are pleased after nine months of the London case, which tried to frustrate our efforts in Texas, to be able to get on with addressing we believe to be the substantive issue which are UPAID intellectual property, our title to it, our patent and uncovering wrong doing.