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Pegasystems, Inc. v. Appian Corporation and Business Process Management, Inc.

United States District Court, D. Massachusetts

December 5, 2019

PEGASYSTEMS, INC., Plaintiff,
v.
APPIAN CORPORATION and BUSINESS PROCESS MANAGEMENT, INC., Defendants.

          MEMORANDUM AND ORDER

          Hon. Patti B. Saris Chief United States District Judge.

         INTRODUCTION

         In May 2019, defendant Business Process Management, Inc. (“BPM.com”) published a “white paper” titled “Market Report: Analysis of Process Automation Investments and Total Cost of Ownership (TCO): Appian, IBM, and Pega” (the “Report”). Co-defendant Appian Corporation (“Appian”) highlighted on its website the results of the Report, which were more favorable to Appian than to plaintiff Pegasystems, Inc. (“Pegasystems” or “Pega”). Though not publicly disclosed, Appian commissioned BPM.com to publish the Report.

         In the present suit, Pegasystems alleges Defendants made false and misleading claims, in violation of the Lanham Act, 15 U.S.C. § 1125(a)(1)(b); Mass. Gen. Laws ch. 93A; common law unfair competition and false advertising; and common law commercial disparagement. Appian and BPM.com brought motions to dismiss all counts under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted.

         After hearing, the Court DENIES the motions to dismiss [Dkt. Nos. 15, 18] as to Counts I, II, and IV and ALLOWS the motions as to Count III.

         FACTUAL BACKGROUND

         The following facts come from the first amended complaint and must be taken as true at this stage. See Newman v. Lehman Bros. Holdings Inc., 901 F.3d 19, 25 (1st Cir. 2018).

         I. Parties

         Pegasystems is a publicly held software company incorporated and headquartered in Massachusetts. Pegasystems develops and licenses, among other products, “business process management” software. Business process management software helps businesses to create custom applications that can automate and improve their business processes.

         Appian also develops business process management software and is a major competitor of Pegasystems. Appian is a publicly held company incorporated in Delaware and headquartered in Virginia.

         Business Process Management, Inc. operates the website BPM.com. It is headquartered in Massachusetts. BPM.com holds itself out as “the leading destination for research, white papers and community forums on BPM and process automation.” Dkt. 55-1 at 3.

         II. The BPM.com Report

         BPM.com published the Report in May 2019. The Report was commissioned by Appian. This commission is not disclosed anywhere in the Report or any public communications about it. The Report's stated purpose is to “understand how automation software is being used to improve and automate mission-critical processes” and to “identify the differences in both success rates and ownership costs.” Dkt. No. 55-1 at 3. The Report focuses on the “Top 3 vendors adopted: Appian, IBM, and Pega.” The Report provides its methodology on the first page. BPM.com sent out an online survey and received 500 responses. BPM.com “eliminated any non-compliant entries, such as those from organizations deemed too small or from firms engaged in the sale, development, or specific services involved with this type of software.” Id. BPM.com also conducted follow up interviews to ensure that the surveyed customers were “verified end user organizations.” After this process, BPM.com was left with 104 “verified projects.” Of those respondents, 17% used Appian and 10% used Pega.

         The Report found that “Organizations that run on Pega have spent the most - approximately 2.5 times more than the average, at $46 million. . . . Appian customers have reported the lowest total upfront costs on average, at $4 million.” Id. at 7. The Report also found “those using IBM or Pega cited requiring an average of 4-6 times more outside consultants than those using Appian” and “Appian customers report on average 3 times faster application delivery compared to the overall market, and notably 3-5 times faster than what IBM or Pega customers have reported.” Id. at 8-9. The Report concluded “Appian was distinguished as the clear leader” based on its low total cost of ownership combined with faster time to market. Id. at 11.

         III. Appian's Distribution of the Report

Appian created a page on its own website allowing visitors to request a copy of the Report by inputting their contact information. The page is reached from Appian's homepage by clicking the link for “Analyst Reports” under the “Resources” tab. From there, users can access over thirty reports, most categorized as “Analyst Reports.” The BPM.com Report is categorized as a “Whitepaper.” Appian summarizes the Report's findings as follows:

         Through approximately 500 responses, BPM.com found that on average:

• Appian customers build complete enterprise solutions 5 times faster
• Appian customers use 79% fewer resources
• Appian has more than 2x customers who've reached ROI in 2 years

Dkt. No. 55-2 at 2.

         Appian also created a second page on its website, titled “Appian vs Pega: Discover Why Enterprises Choose Appian.” Dkt. No. 55-3 at 2. It features large graphics reading: “5x FASTER To Build an App”; “79% FEWER Resources Used”; and “2x MORE Customers Reach ROI in 2 Years.” A red box with smaller hyperlinked text says, “READ THE 2019 BPM.COM REPORT.”

         MOTION TO ...


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