Accel-backed BrowserStack dragged to court by US-based rival Deque Systems

Browserstack dragged to US court by Deque Systems.

BrowserStack, a mobile and web software testing Software-as-a-Service (SaaS) unicorn, has been dragged to the US District Court by Virginia-based rival Deque Systems over Intellectual Property (IP) theft allegations.

Deque Systems had filed a lawsuit based on a series of allegations including copyright infringement, breach of contract, and false advertising, sources aware of the development told Moneycontrol.

The firm has filed a complaint with the US District Court for the Eastern District of Virginia in March of 2024.

According to Deque Systems' complaint, BrowserStack entered the accessibility testing market in 2023 with a replica of 'axe DevTools browser extension' which is part of Deque's proprietary accessibility testing product.

Accessibility testing is a process of making web and mobile applications easily accessible to people with disabilities such as visual, hearing, mobility, and cognitive impairment.

As per a recent report by Straits Research, the global accessibility testing market size is expected to reach a valuation of $ 606.46 million by 2027 growing at a CAGR of 4.1% during the forecast period of 2022 to 2030.

In an interview with New York-based financial media platform TearSheet, Deque Systems' founder and CEO Preety Kumar said that BrowserStack initially purchased the accessibility testing tool and then obtained the access code.

However, industry sources say that it is common for companies to check out rival products to evaluate the market size and to understand the product.

"BrowserStack is not the only company that checks the products that are out in the market, every company evaluates products through this process," said an industry source requesting anonymity.

Deque Systems has also said that BrowserStack tried to purchase a subscription to the product with a generic email like “test@browserstack.com”.

BrowserStack and Deque Systems did not respond to Moneycontrol's queries till the time of publishing this story.

This is the second such instance of an Indian SaaS firm being dragged to the US court by its rival firm.

Softbank and Peak XV-backed Whatfix, a business-to-business digital adoption platform, was dragged to the United States District Court in August 2023 for breach of contract of accessing customer details and for violating California's competition laws.

Founded in 2011 by Ritesh Arora and Nakul Aggarwal, BrowserStack was bootstrapped for 7 years, raising $50 million in Series A from Accel in 2018.

Deque Systems was started in 1999 by Preety Kumar and the firm produces accessibility testing software in addition to offering accessibility consulting services and training.

BrowserStack is presently valued at above $4 billion after it raised $200 million in its Series B funding round led by Mary Meeker's BOND, with participation from Insight Partners and existing investor Accel.

"BrowserStack will probably submit their response to the court and this matter will take another two-three months to resolve. A complaint like this usually is settled off-the-court, However, being one of the market leaders in the space, it is common to face such allegations by rivals," another source aware of the developments told Moneycontrol.

Indian SaaS industry has been facing a slowdown due to macroeconomic pressure like high inflation and an overall push to reduce costs by reducing the usage of software tools.

However, as artificial intelligence-enabled tools have attracted several SaaS customers, the market seems to have been picking up.

BrowserStack has been profitable since its inception and provides software testing on the cloud, with more than 50,000 customers and 4 million developer signups. Its customers include Google, Amazon, Microsoft, Twitter, Tesco, IKEA, Spotify, Expedia, and Trivago.

"This will not likely impact BrowserStack's operations or financials, however, the sooner the matter gets resolved the better. The SaaS industry is just getting back to normalcy after nearly two years of slowdown and any disruption can impact a company negatively," another industry source said.