FaceTime Wins Lawsuit Over IM Code

Starting Friday, users of Reuters instant messaging services could have been in a predicament. The IM service will operate, but the deal that provided their built-in message archiving and compliance features will have expired.

For global financial users who depend on the IM service, the expiration could have meant that they wouldn't be able to use the service because their messages wouldn't be archived as required by law. Now, according to a Reuters spokesman, no disruption will occur.

The issue would have been a possible legal glitch, not a technical one.

On Tuesday, a U.S. District Court judge in the Southern District of New York ordered Reuters to stop using the message archiving and compliance features because the contract that provided the related code expires tonight at midnight.

Reuters, which is now known as Thomson Reuters since merging with the Thomson Corp., was sued by Belmont, Calif.-based FaceTime Communications Inc., which provides the archiving and compliance code for the Reuters Messaging client software. Reuters originally launched its Reuters Messaging service in 2002.

The code, which is part of the Reuters Messaging Compliance Manager, helps companies comply with Securities and Exchange Commission and Sarbanes-Oxley regulations for logging, archiving and retrieval of electronic communications regarding financial transactions conducted through IM communications.

Reuters signed a US$1.3 million, two-year contract with FaceTime in 2006 to license code that provided compliance features for its customers, according to the lawsuit. The contract expired Jan. 31, 2008, but it included a six-month transition period in which the service would continue to run.

FaceTime says it filed the lawsuit to protect its intellectual property rights after efforts to renegotiate a new contract failed.

Jim Obrien, general counsel for FaceTime, said his company filed the suit because the contract expired and Reuters wouldn't stop using the code. He said FaceTime is concerned for Reuters IM users who won't have the compliance services from FaceTime's code after today. "We are concerned that it might play out that they have fewer choices," he said.

Joe Christinat, a spokesman for New York-based Thomson Reuters, said there will be no service disruptions for their users.

"We have been off the FaceTime product ... since Tuesday," Christinat said, after technicians brought in an application that was developed in-house to provide the needed archiving and compliance services. The application was brought in on a parallel network last Sunday and was running alongside the FaceTime service to ensure its proper operation, he said.

"By Tuesday, we unplugged the FaceTime portion, which was one part of the messaging component," he said. The new services have been up and running since and "there haven't been any problems," he said. "The end users didn't know the difference until we notified them of FaceTime's aggressive push" with the lawsuit, Christinat said.