BSkyB wins in £709m lawsuit against HP-EDS

BSkyB has won at least a substantial part of its £709 million lawsuit against EDS, over a failed £48 million customer system implementation.

A spokesperson at HP said that given the judge had nevertheless dismissed "the majority" of the allegations, HP would seek permission to appeal the judgements that are against it. BSkyB said, "the final amount of costs and damages will be determined by the Court in due course. However, based on the judgement, Sky anticipates that EDS will be liable to pay Sky an amount of at least £200 million."

The lawsuit alleged that EDS, now owned by HP, had fraudulently misrepresented itself in a sales pitch in 2000 for the system, leaving Sky to pick up the pieces and take on heavy costs as it implemented the system itself. EDS, on the other hand, said Sky did not know what it wanted, and kept introducing new requirements, making it difficult to deliver.

HP today defended its position. It added: "While we accept that the contract was problematic, HP strongly maintains EDS did nothing to deceive BSkyB."

The judgement is expected to change the legal basis for sales pitches and contracts. It is likely to mean that IT services companies will have to be very careful about what they suggest they are able to do during sales meetings, as they may be held accountable even if discussions are informal.

The judgement took 17 months to reach from the end of the trial inJuly 2008, partly because it is seen as setting a precedent, and also because hundreds of paper files and thousands of emailed documents were dragged up to substantiate and counter the claims.

Nigel Roxburgh, former research director at the National Outsourcing Association, previously told Computerworld UK that if the case is upheld in favour of BSkyB, “it could lead to a real scratching of heads, particularly among lawyers”.

“If other representations become more important than contracts themselves, it could indicate that contracts effectively have no value,” he said. It also potentially risks Entire Agreement Clauses, which exist in most supplier contracts and insist that only terms in the contract are legally binding, rather than any other representations.

Both parties have racked up between them what is thought to be legal costs of over £40 million.

Amanda Bucklow at mediation firm In Place Of Strife said that even “a long and extraordinary mediation process would have taken only a few days and cost a lot less” than the legal fees spent by both parties.

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Copyright © 2010 IDG Communications, Inc.

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