By Mike Harris Sunday, November 17th, 2024

Software giant Oracle is suing Procore Technologies, alleging that the Carpinteria-based software firm used thousands of stolen trade secrets to enrich its business.

Procore, a leading construction industry software company and Oracle rival, denied the allegations in an Oct. 31 statement.

“We believe the claims are meritless and we intend to vigorously defend ourselves,” Procore said in its statement. 

Procore’s shares have largely been unaffected by the filing; after announcing stronger-than-expected earnings on October 30 they have risen steadily and closed at $70.61 on November 11.

The suit pits one of the Central Coast’s most successful home-grown companies, with a market capitalization of $10.5 billion, against enterprise software giant Oracle, with a market cap of more than half a trillion dollars.

Oracle filed its suit Oct. 25 in U.S. District Court in Northern California near the company’s Redwood Shores headquarters.

The suit alleges that Mark Mariano, a former senior employee at Oracle, stole trade secrets when Procore hired him away in 2021.

The secrets enabled Procore to launch a software platform for construction payment management to rival Oracle’s, the suit contends.

“This case involves a theft of thousands of trade secrets that encompass Oracle’s years of hard work and many millions of dollars in investment in industry-leading innovations,” the suit says.

Such innovations include payment and compliance management solutions for construction companies and pioneering integrations with enterprise resource planning applications used by those companies, the civil filing alleges.

In its statement, Procore cited its own culture of innovation and said the suit involves only one of the services that it provides to customers.

“While our innovative solutions continue to make a significant impact for our customers and propel the industry forward, Oracle recently filed a lawsuit against Procore alleging trade secret misappropriation with respect to one of those solutions,” the statement said.

Oracle said that “the brazen misappropriation and theft of trade secrets,” was used for the benefit of Procore, which knew they were confidential, retained without Oracle’s permission and were “replete” with the software giant’s proprietary materials, the suit says.

Mariano, who led Oracle’s team focusing on integrating other companies’ software with Oracle’s payment management software, is also named as a defendant in the suit.

Textura Payment Management, a construction invoice and payment services provider that Oracle acquired in 2016 for about $663 million, is a second plaintiff in the suit.

Mariano worked at Textura before Oracle bought it, according to the suit.

At Oracle, Mariano was a senior employee who led the functional team working on enterprise resource planning integrations with Oracle’s Textura Payment Solution, the filing says.

After he left Oracle to join competitor Procore, “Mariano absconded with thousands of Oracle’s trade secret documents on two personal cloud accounts—his Google Drive, and his iCloud— and on two Oracle computers that he retained,” the suit alleges.

“These files are a roadmap to Oracle’s success in the space,” the court action says.

The trade secret documents comprised confidential details regarding nearly every aspect of Oracle’s technology and business for this industry, the suit says.

They included computer source code, implementation plans, testing data, customer information, business opportunities, research and development plans, and competitive analysis, the filing says.

The competitive analysis included details of Procore’s lack of suitable payment management solutions, the suit says.

Oracle’s Textura payment management solution, meanwhile, is hugely successful in the industry, having been used to manage subcontractor payments on construction projects valuing $1 trillion, according to the suit.

“With this information in hand, Procore, which was previously struggling in its own technology development related to the trade secrets, has been able to transform its business quickly to compete directly with Oracle in connection with the subject matter of the trade secret materials,” the filing alleges.

Not coincidentally, shortly after Mariano joined Procore with Oracle’s trade secret documents in hand, Procore finally announced the launch of its own competing platform to take on Oracle’s leading technology, according to the suit.

Procore then quickly released integrations like those that Oracle had previously released when Mariano was still working on those technologies at Oracle, the suit contends.

“Procore did not attempt to compete fairly with Oracle,” the filing charges.

Rather than develop its own technology, “Procore took a shortcut by using Oracle’s trade secret innovations,” the suit alleges.

As a result, “defendants have been unjustly enriched,” according to the suit.

In fiscal year 2023, Procore also hit record sales numbers, with $950 million in revenue.

Procore announced Oct. 30 that revenue for the third quarter was up 19% year-over-year, hitting $296 million.

Revenue surpassed expectations as analysts from Zacks estimated sales to be $287.4 million.

The company is currently on pace to hit $1.1 billion in revenue in 2024.

Oracle said it filed its suit only after discussions with Procore to resolve the issues proved fruitless.

“Procore’s lack of candor and refusal to provide critical information requested by Oracle as part of Oracle’s effort to resolve this matter short of litigation, left Oracle no viable choice but to file this lawsuit,” the civil filing says.

The suit seeks unspecified damages to be determined at trial, including Oracle’s lost revenues and profits.

It also seeks a permanent injunction requiring Procore to return all alleged stolen information and documents.

Mega firm Kirkland & Ellis, with offices around the country, represents Oracle in the litigation.

It is not immediately known who represents Procore.

Oracle did not respond to a Business Times request for further comment.

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