MercuryGate International Inc. has responded to a $3 million lawsuit by J.B. Hunt Transport Inc. (JBHT) with a $5 million-plus counterclaim of its own. The software company charges the intermodal giant with “poor planning” in the transition from a legacy software package, with “dramatically” shifting its expectations along the way, and with illegally using MercuryGate’s intellectual property.
JBHT filed suit last month alleging the transportation management software (TMS) installed by MercuryGate is “virtually useless” in serving its Integrated Capacity Solutions (ICS), or brokerage, division. JBHT alleges breach of contract and negligence, according to the filing in U.S. District Court in Arkansas.
MercuryGate, in its Monday response, argues that the software met the company’s obligation, and then some. But the original plan—to purchase a “buy-it” or off-the shelf software package to manage the brokerage division—fell apart because JBHT “was unable to manage its user community” who resisted the “state-of-the-art” MercuryGate solution. Based on this user reaction to the contracted package, JBHT’s “relatively new” Information Services Department (IS) moved instead toward a rebuild of the familiar, outdated software.
“Piece by piece IS tried to get MercuryGate to revise its [software] to replicate the features and how their features functioned on the legacy software,” the filing states. “In total, [JBHT] submitted 1,481 tasks during the course of this relationship, which is almost ten times the number of the 152 tasks MercuryGate was obligated to undertake.”
Indeed, MercuryGate says it told JBHT that it would not rewrite the legacy software, and that the changes being requested were “inconsistent” with the new platform.
“The net result was after entering into a ‘buy-it’ relationship, [JBHT], against MercuryGate’s advice, sought to accommodate the reluctant user community and make MercuryGate’s [software] look like and integrate with the system that it was supposed to replace.” The filing cites an example of such a workaround that was "a complete circle" designed to bypass the new system.
The counterclaim also alleges that JBHT information technology executives traveled to India beginning in March 2014 to recruit and hire software developers who would “incorporate MercuryGate work product and property” into the company’s own systems. The resulting JBHT system, lauded in the company's 2014 annual report, “is very similar to some of the functions available using MercuryGate’s [software],” the court document says.
Throughout, MercuryGate believed it would become “a long-term customer” and so negotiated several invoices favorably for JBHT and “absorbed and never billed” nearly $1 million in services. MercuryGate says it expected to earn $4 to $6 million in subscription fees from a 10-year or 15-year relationship with JBHT.
“[JBHT] has compounded its wrongful conduct by publicly revealing on the World Wide Web MercuryGate’s critical confidential business information, causing MercuryGate long-term and significant damage potentially in the tens of millions of dollars,” the response adds. “By these counterclaims, MercuryGate seeks to vindicate its contractual and intellectual property rights and to punish [JBHT] to the full extent permitted by law.”