Drut Technologies Sues Microsoft Over Cloud-Based Server Trade Secret Misappropriation

A lawsuit filed in Seattle, Washington says that Microsoft Corporation misappropriated plaintiff Drut Technologies’ valuable and unique software and hardware after allegedly conning them into a partnership while ultimately seeking to obtain broad intellectual property rights for nominal fees.

The technology at issue concerns a set of computer algorithms and a configuration of software and hardware components Drut designed to reduce inefficiencies in cloud-based servers, the complaint says.

Issues arose when Microsoft engaged Drut, purportedly after recognizing the value of its solution, in 2019. The parties signed two agreements, a Master Supplier Services Agreement (MSSA), which was subsequently informed by a Statement of Work (SOW). The goal of the parties’ project was to “provide for disaggregation of cloud-based resources by pooling them to be available as necessary, and to reduce waste and redundancy in existing architectures,” Drut explains.

The companies allegedly developed economic modeling for servers to be constructed by Drut for Microsoft, reflecting hundreds of millions of dollars of licensing revenue to Drut, if it were to license its technology to Microsoft. According to the complaint, “[n]either of the people negotiating or forming the business dealing between the parties actually believed or understood that Drut had licensed any technology to Microsoft, except the limited items arising from the paid work.”

However, the filing says, Microsoft deliberately misappropriated Drut’s work by engaging in a pattern of “frustrating Drut’s ability to perform under the MSSA and SOW by requiring changes, constricting time and monetary resources, and refusing to compensate Drut for the work it had done, all while mining Drut’s confidential information and while stringing Drut along to develop, in parallel, a cloud-based server based on the information Microsoft had accessed from Drut, and Microsoft’s use of Drut’s technology during The Project.”

The complaint points to a video Microsoft published in April 2020, touting the outstanding results that Drut achieved as Microsoft’s own. As such, Drut says that filed suit to end Microsoft’s misappropriation of its trade secrets and to prevent the company from wrongfully using Drut’s confidential information to further develop and enhance its cloud-based servers. 

The complaint also states causes of action for breach of contract, specifically for Microsoft’s alleged failure to perform under the parties MSSA and SOW, Microsoft’s misuse of an amendment to the MSSA and SOW, and its refusal to pay Drut for the work completed.

Drut is represented by Williams Kastner & Gibbs PLLC and Shlansky Law Group LLP.