False IDOL claims reach High Court: Lynch mob launched 'new' SPE Autonomy product to fake sales, says HPE

Plus: Barristers spar amid reading comprehension test

Autonomy Trial Former Autonomy CEO Mike Lynch oversaw the launch of what was purported to be a new product line in order to fraudulently pad its revenues, HPE’s lawyers have alleged.

In 2009 Autonomy unveiled its Structured Probabilistic Engine, SPE. This was an extension of the Brit biz's Intelligent Data Operating Layer (IDOL) product, an archiving suite for unstructured data. HPE alleges that far from being a groundbreaking new product, “the launch of SPE was a pretense,” and that it was “merely a repositioning of existing IDOL functionality” to help Autonomy artificially swell its sales figures to make it seem more successful than it really was.

I just got here – what's it all about?

In 2011, HP bought Autonomy, a maker of software to keep track of unstructured data, founded by Mike Lynch in the UK for $11bn.

After the buyout, the US IT titan wrote down the value of Autonomy by $8.8bn, claiming the British firm had "misrepresented" its value. Lynch, Autonomy CEO at the time of the biz gobble, denies this.

HPE is now suing Lynch and Autonomy financial chief Sushovan Hussain at the High Court in London, England, seeking $5bn in damages regarding the debacle. Over in the US, prosecutors are pursuing a separate criminal fraud case against Lynch and Autonomy bean-counter Stephen Chamberlain. All three men deny any wrongdoing.

For more backstory, see Register passim.

At London's High Court on Thursday, HPE barrister Laurence Rabinowitz QC asked Lynch if he would agree he had changed his position on SPE from, in Rabinowitz's summary of his defense, the software being "not a new standalone product but it was new technology," to instead SPE being simply "the marketing name for a set of functions which had been developed to handle structured data?”

“No, I don’t,” replied Lynch. “It is new technology… SPE is part of IDOL 7.5. IDOL 7.5 is new technology.”

I can read – can you?

At several points Rabinowitz and Robert Miles QC, Lynch’s barrister, clashed over whether Lynch was properly answering questions asked of him by Rabinowitz. Trial judge Mr Justice Hildyard was not amused, acidly remarking to Lynch as the barristers squabbled: “I’m so sorry. There’s been an argument between counsel as to whether you should or shouldn’t be allowed to answer a question.”

Later, when Lynch began answering another question about whether he could see something in a document shown to him in court, Rabinowitz, perhaps unwisely, told the Autonomy cofounder, “just say ‘yes’ and then you can explain.” Miles shot to his feet, and with a rising voice spluttered: “You cannot tell the witness what to say!”

Coldly, Mr Justice Hildyard said: “Mr Rabinowitz, it’s obvious that that’s what it says ... because I can read.”

The trial continues. Lynch is expected to be in the witness box until the end of July. ®

Bootnote

Sushovan Hussain, Lynch's co-defendant in these ongoing civil proceedings brought by HPE in the UK, has won a small procedural step towards gaining his full freedom after being found guilty in that country of criminal fraud over his part in the Autonomy acquisition debacle.

The US Ninth Circuit Court of Appeal ruled yesterday that his appeal against that conviction "raises a 'substantial question' of law or fact that is 'fairly debatable,' and that 'if that substantial question is determined favorably to defendant on appeal, that decision is likely to result in reversal or an order for a new trial of all counts on which imprisonment has been imposed'."

Hussain's appeal continues to work its way through the US legal system. He is understood to be out on bail at present.