Palantir’s third black eye: i2 lawsuit settled

For a company named after a magical talisman of vision, Palantir didn’t seem to see what was coming these past few weeks.

The secretive data-analysis startup, based in Palo Alto, Calif. and backed by early Facebook investor Peter Thiel, has suffered a number of blows to its public image of late. The most recent is the settlement of a lawsuit filed by rival i2 Group, based in McLean, Va., over accusations that Palantir employees fraudulently obtained i2 software and used it to design competing products.

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Since Palantir touts itself as the product of fraud-detection technologies pioneered at PayPal, the payments startup Thiel cofounded, those charges present ironies, as i2’s lawyers eagerly pointed out in their initial complaint.

Separately, Palantir CEO Alex Karp issued a public statement apologizing for his company’s role in preparing a plan for Bank of America to strike back at Wikileaks, the Internet-based nonprofit group famed for obtaining and releasing sensitive documents into the public domain. The company also placed employee Matthew Steckman on leave after hackers released emails showing he was involved in preparing a similar plan for the U.S. Chamber of Commerce to damage ThinkProgress, a pro-labor publication.

Mitch Derman, an i2 spokesman, and Palantir general counsel Matt Long both declined to comment on the settlement of their companies’ dispute, citing an agreement in the settlement not to discuss the case further.

i2’s original complaint, however, makes claims that are embarrassing to both companies. The short version: According to i2, Palantir employee Shyam Sankar obtained i2 software representing himself as a principal of SRS Enterprises, a company registered under the names of his parents in Florida. Sankar then allegedly proceeded to analyze i2’s software and use the results to develop tools to import data from i2’s software for use in Palantir’s analytical tools. (For its part, Palantir responded by alleging that i2 had “unclean hands” because it purportedly used information about Palantir’s products obtained through a company i2 acquired.)

Even lodging this complaint posed an image problem for i2: The company said the claimed fraud went on for four years, right under its nose. Derman, the i2 spokesman, did not directly answer a question about whether i2 used its software in its own operations to detect fraudulent customers. Instead, he noted that i2 has a wide range of customers in law enforcement and other parts of the public sector.

One could make the same critique of Palantir. In a statement provided by Long, the company said that the kind of dirty tricks proposed against Wikileaks and ThinkProgress were “contrary to Palantir’s ethics, culture and policies.” If Sankar and Steckman did conduct themselves improperly, and Karp, the Palantir CEO, had to apologize for the company’s actions in the Bank of America brouhaha, how effective is Palantir at detecting breaches of its own policies before they burst into the public eye? And should its public-sector customers, some of them engaged in critical national-security activities, trust it?

Here’s i2’s original complaint against Palantir:

i2 v. palantir – 080910 http://d1.scribdassets.com/ScribdViewer.swf

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And here’s Palantir’s response:

http://viewer.docstoc.com/
i2 v. Palantir: Palantir’s Answer to Complaint