March 2008 — News
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Desire2Learn CEO Makes Case Against Blackboard Patent, Court Ruling
Baker: I think there's two things. One is from a financial perspective: $3.1 million is a lot of money, but it's certainly not putting us in any financial jeopardy whatsoever. We've been very fortunate to have incredibly strong clients over the years, some of which pay almost that much money as an individual client. So we've been very, very fortunate to have good clients and good cash flow--no debt--we've got a very strong cash position. So we could pay that, without actually skipping a beat, and continue to be profitable this year and going forward. So from a financial perspective, it's one of the concerns people have raised over [the course of the trial]. In the early days, $3.1 million was a lot of money for us. Today it doesn't even come close to our R&D budget within our organization.
So we're quite comfortable; we're still hiring a lot of people; we still intend on growing; we've obviously launched new products; and we're actually going to be launching more later in the year. So we're intent on keeping our innovative edge and [focusing on] the clients and client success.
What's interesting is we actually think that by all of our clients moving to 8.3, it'll actually result in us having to support less versions of our application. Instead of being like Blackboard, where they're probably supporting about 20 different versions of the application, at tremendous cost, we're going to be supporting one, which will probably shave millions off of our costs [which will be applied to] new projects, new technology. We're going to better support our existing clients. Or to focus our energy on the next version, the 8.4 version, or the 9.0. So we're actually quite excited. We're actually trying to find the silver lining in this and put ourselves in a better position than we were [in at the start of this]. Now, it's not what we wanted to go through, but we can afford to pay it.
And then, what might happen is that if we lose on appeal, there's nothing else we have to pay. We've got that workaround put in place. So that one-time cost for us is something that we can absorb. Some of the things we're going to be asking the judge to do is to reduce that as well, if he doesn't eliminate it altogether.
That's from a financial perspective. From the industry side of things, we can't lose. We have to--we have to--win here. Otherwise it puts all of our other competitors in jeopardy. If we lose, Blackboard's patent becomes stronger. Their stated intent [is] to go after others. That's why they were seeking the injunction ... to allow them to go after others and seek royalties or injunctions against them. And we don't want to let that happen.
We're in a very fortunate position to be probably No. 2 behind Blackboard in the marketplace, and we've got enough financial strength to continue this fight. And we need to because there are a lot of very small [organizations] that are just not capable, programs that are just getting started. There's a lot of individual institutions that don't have the protection of the vendor in front of them. And we don't want to let Blackboard go after any of the institutions or any of the other players in this space.
What we're hoping is that other competitors of ours or others in the industry will continue to help us fight Blackboard in what is a very important patent battle. We really don't believe that patents are bad. It's something that comes up a lot. We don't think patents are bad. We actually respect intellectual property. We create our own intellectual property, and we hope others will respect ours.
But what we do have a lot of lack of respect for is a company that is trying to enforce what is an incredibly bad patent just to contain and control the marketplace so that they can build a monopoly. Blackboard's representative at that trial said with a straight face that if [Desire2Learn] weren't here, [Blackboard] would have the entire market. They have 90 percent market share, and [Blackboard] would get the other 10 percent if Desire2Learn weren't here. That's what they were saying at trial. We don't want to allow Blackboard to have a monopoly because you know what happens with monopolies. One thing that they've been trying to do is raise pricing on clients and to control the marketplace.
All we want to do is say: "Blackboard, agree to this workaround." And then we can compete fairly on our own merits: on support, on services for our clients, on great products and innovation, building partnerships and relationships. And so that we can get back to what we really want to do, which is improve human potential, to help build better teaching and learning environments, to launch ePortfolios that would get people highly engaged in the learning experience. That's what we want to get back to. We want to focus all our energies on that.... We want this distraction to end.
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About the author: David Nagel is the executive editor for 1105 Media's online education technology publications, including THE Journal and Campus Technology. He can be reached at dnagel@1105media.com.
Proposals for articles and tips for news stories, as well as questions and comments about this publication, should be submitted to David Nagel, executive editor, at dnagel@1105media.com.
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