Nutanix catapults IP theft sueball at DBaaS startup Tessell

Claims former staff ripped off IP and even did demos for their new company on Nutanix computers

Nutanix has brought a lawsuit against database-as-a-service startup Tessell, an outfit founded by three of its ex-employees, alleging the upstart's products are rip-offs of Nutanix's own Era database management product.

In a Wednesday court filing [PDF], Nutanix claimed the now-former staff “used Nutanix facilities, equipment, services, and even the Nutanix Era source code when developing the Tessell product.”

Nutanix alleges the three “planned, developed, obtained initial financing for, and demonstrated prototypes of the competing product—all using Nutanix computers and while they were employed by Nutanix. One of the Tessell prototypes they demonstrated actually ran on Nutanix servers.”

The three accused Tessell co-founders thus allegedly lifted the source code for Era and used it to build their own products.

Nutanix said it didn’t notice the activities detailed above, though after the trio left and launched Tessell, the IT giant became concerned by “the speed with which [Tessell] came to market with features strikingly similar to Era.” A forensic investigation followed and uncovered the IP theft, it is claimed.

The filing, submitted to a federal district court in northern California, describes the three accused as “inventors of key Era features and methods,” alleges they were contractually bound to assign all their work to Nutanix, and claims they did not disclose some of their efforts which they “instead traded to Tessell in exchange for their shares in the company.”

Nutanix is therefore fighting on two fronts: One against its three former employees for that alleged breach of contract, and another against Tessell for the alleged use of copyrighted code without authorization as well as patent infringement in its products.

The filing argues Tessell knew the three former Nutanix employees – Bala Kuchibhotla, Kamaldeep Khanuja, and Bakul Banthia – were under contract and should have left alone material that was Nutanix’s property.

“Tessell’s copyright and patent infringement is knowing and willful,” the filing states. “Tessell’s ongoing interference with Nutanix’s contractual rights has been carried out by fraud and concealment.”

One of the three employees named in Nutanix’s complaint – Kuchibhotla – previously settled an insider-trading complaint in 2022 with a US financial watchdog after, as Uncle Sam put it, trading Nutanix shares ahead of a quarterly results announcement that included news of poor financial performance.

The Register has asked Tessell and Kuchibhotla for comment and had not received a response at the time of publication.

"It has been shocking to learn of the behavior of these former employees during their employment, the scope of what they took from Nutanix, and the steps they took to hide their use of Nutanix resources to found their company," Tyler Wall, chief legal officer at Nutanix, alleged in a canned statement.

"Nutanix believes strongly in fair competition and its importance and value to the industry overall, and it is with deliberate and thoughtful consideration that we have decided to file this lawsuit. The facts that our investigation uncovered were egregious. We look forward to presenting our evidence and proving our claims in the litigation." ®

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