It seems that a major war between affiliate network software companies is brewing. Earlier this year, WebApps DBA HitPath filed a lawsuit against Cake Marketing and three former Hitpath customers who had left the software company to move to another software platform. According to the lawsuit, HitPath claims that these three customers, when leaving, provided Cake Software with access to data that they were not entitled to. The three customers, AffiliateWise, Affiliate Venture Group and EmpyreMedia have all responded that this is complete bullshit and that they only provided access to Cake Marketing to the API in order to export the data that they own to the new platform.

Cake Marketing, believing that they have done nothing wrong and that they were just supporting customers moving to a “better software”, has responded with an aggressive campaign through their attorneys as the Superstar Technology and Investment Law Firm of Wilson Sonsini GoodRich & Rosati.

According the the CounterSuit filed in Federal Court, Cake Marketing claims that Hitpath has engaged in an “unlawful, months-long campaign to sabatoge the efforts of its customers to leave…Hitpath software and transition their business to Cake Marketing.”  The claim that the original lawsuit is “nonsensical” and that the only access that Cake had was through the login provided to the networks.

In fact, Cake Marketing goes as far in the Counter-Claim to allege that Hitpath when finding that their customers were moving over to Cake Marketing, did not provide any assistance in these networks in retrieving the data.

According to Cake Marketing’s counterclaim, “WebApps’s war on its own customers must end. Cake Marketing welcomes free, fair, and open competition – but not frivolous lawsuits and attacks on customers who merely seek to exercise free choice in the marketplace… Cake Marketing has its own independently developed and vastly superior software. Cake Marketing introduced numerous important features such as data validation and distribution for host and post functionality to its software in January 2010. WebApps/HitPath did not offer similar features until spring 2011. Moreover, Cake Marketing could not possibly have stolen the underlying HitPath software by acting as an agent for customers to retrieve customer data through HitPath customer login accounts.”

This lawsuit brings to attention a serious issue in the industry: What happens when a company refuses to allow a customer to leave its affiliate software or affiliate program? Whether or not HitPath actually prevented their customers from leaving the solution to Cake Marketing will be decided by the courts. However, the facts are obvious: that the customers did want to leave, and as part of that attempt to leave, they were sued.

Personally, it is my opinion that HitPath is taking the completely wrong step and wasting money with this lawsuit. I’ve expressed this opinion to Sam Prokop, the CEO of HitPath, and made it clear that lawsuits like this do nothing but hurt the industry. I agree that it’s unlikely that Cake Marketing learned anything whatsoever from having a login that anyone could get as a customer from Hitpath. Hitpath in my opinion, is pissed that they are losing customers to Cake, a company that is gaining customers every week from other solutions.

Instead of filling a lawsuit, especially against their clients, perhaps Hitpath should have taken the higher road and offered a solution to make those clients happy. They were leaving for a reason: they didn’t like the current solution offered by Hitpath and felt Cake Marketing was better. Instead of offering them perhaps a few months free, and offering to change the system to fit what their clients needed, they took an unnecessary path of a lawsuit.

The result of HitPath actions is simple: they have hurt their reputation even more. Other networks with HitPath have most likely started to wonder why HitPath is suing their customers, if they need to worry about their data not being portable, and more importantly, if Cake is a better solution than HitPath. From people I’ve talked to, the vast majority of the industry thinks HitPath’s actions sound almost desperate and ridiculous.  If a lawsuit is the only way to prevent customers from leaving, what does that say about HitPath?  To HitPath’s credit, it should be noted they have told me that they will assist all customers with leaving them, and porting the data over.

Still, why a lawsuit against their customers? I can’t imagine how this is good for HitPath or the industry. I can’t help thinking there was a far better solution for HitPath, or at least one that would have been better for their reputation.

Notable Links:
HitPath
Cake Marketing
Interview with Jeff McCollum of Cake Marketing

Disclosure: All of the Three Networks mentioned are advertisers with this publication, but this has not influenced my opinion that this is a crap lawsuit.

Written by Pace Lattin

Pace Lattin is one of the top experts in interactive advertising, affiliate marketing. Pace Lattin is known for his dedication to ethics in marketing, and focus on compliance and fraud in the industry, and has written numerous articles for publications from MediaPost, ClickZ, ADOTAS and his own blogs.

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