The lawsuit filed this week by Digital River (DRIV) - Get Report against online software retailer Beyond.com (BYND) - Get Report is "nonsensical and without merit," says Beyond.com President and CEO Mark Breier.
In the suit, filed in state district court in Minnesota on Tuesday, online software delivery firm Digital River alleges that Beyond.com officers made false and defamatory statements about Digital River.
reported Friday on the case, which was disclosed by Beyond.com in a filing Thursday evening related to a secondary stock offering the company priced Thursday night.
"We were being dogged throughout our roadshow with claims from their lawyers that we were defaming them," Breier told
on Friday night. "We were openly asking them, 'Tell us what was wrong with what we're saying. Tell us even what offends you.' ... We got childish responses like, 'You know what you're doing. Stop doing it.' "
Bob Strawman, Digital River's chief financial officer, responded, "We are not a litigious company. However, certain statements made by Beyond.com regarding Digital River are false and misleading. And we felt this action was necessary to protect the reputation of our company. We had tried to resolve this matter outside of the courts but were unsuccessful. We hope to bring this to a very speedy resolution."
Beyond.com and Digital River compete in the area of online software sales and delivery.
Breier himself denied the allegations he said were contained in the lawsuit, which neither Beyond.com or Digital River would supply to
. Among other allegations about statements the company supposedly made in the course of its roadshow for Thursday's secondary offering, Breier said, "It was quoted I said that two customers accounted for 90% of their revenue. I never said that." What, in fact, Breier said he told people was that
U.S. Bancorp Piper Jaffray
analyst Stephen Franco reported Digital River's business was concentrated in two customers. (In fact, Franco reported in March that three customers accounted for 30% of Digital River's sales in the third quarter of 1998, and two of those accounted for 23%.) In addition, Breier said it was his personal understanding that Digital River had several weeks ago lost its business with
, the biggest of those customers.
"That's incorrect," said Strawman. He added: "We're not going to bring our clients into this matter. We don't discuss our relationships with our clients." A Corel spokeswoman said that no one at the company was available to comment before Monday.
Breier said there was nothing wrong with withholding disclosure of the lawsuit until Thursday evening, just as the company priced a $140 million secondary stock offering. "The merits of the case are not there," he said. "It's groundless and it's not material. You only need to disclose things that are material."
Digital River closed Friday at 46 3/4, up 3 3/8. Beyond.com fell 1 1/8 to close at 34 3/8.