Vendor sues user in 'man bites dog' case

Technology consulting firm Computer Sciences Corp. (CSC) has filed a lawsuit against retailer Saks Inc. accusing it of misappropriating trade secrets and violating the terms of an IT services contract signed by the two companies early last year.

Analysts described the suit, which was filed June 18 in U.S. District Court for the Northern District of Georgia, as atypical, since users are usually the ones that initiate litigation against vendors when contract disputes arise. But such battles may become more commonplace as both vendors and users face growing financial and competitive pressure in today's slowing economy, according to at least one analyst.

"This is a case of man bites dog. It's an oddity," said Tom Rodenhauser, president of Consulting Information Services LLC in Keene, N.H. "You don't sue [a client] unless you've given up forever on them."

Neither El Segundo, Calif.-based CSC nor Saks, a Birmingham, Ala.-based company that operates Saks Fifth Avenue and other department store chains, would comment on the case, though both companies acknowledged that the suit had been filed.

According to a statement CSC filed with the court, Saks agreed in January 2000 to let the consulting firm take over its contract negotiations with telecommunications suppliers and computer software and hardware vendors. The move was expected to save the retailer about US$2 million in annual costs, CSC claimed.

CSC reviewed Saks' telecommunications contracts to see what kind of savings the retailer could get by purchasing the services through agreements the consulting firm has with the suppliers, the suit said. But CSC alleged that Saks used the confidential information "as bargaining tools in [its] own negotiations with telecommunication service providers."

As part of the suit, CSC is seeking compensatory and punitive damages plus attorneys' fees from Saks. Although the consulting firm didn't specify the amount of damages it's requesting, the suit claims that Saks owes CSC nearly $1.5 million plus interest for its services.

Contract disputes like this one may become more commonplace, said analyst Alden Cushman at Kennedy Information Inc. in Fitzwilliam, N.H.

As a result of the dot-com collapse and the slowdown in the economy and IT spending, some clients may be finding ways to save money on IT instead of leaving the work to a consulting firm, which could result in possible misunderstandings, Cushman said.

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