Summary
ServiceNow, Inc. (NOW) has filed an 8-K report detailing the resolution of significant patent litigation with both BMC Software, Inc. and Hewlett Packard Enterprise (HPE). The company announced on April 7, 2016, that it entered into confidential settlement agreements with both parties to resolve all outstanding patent-related disputes. These settlements include mutual releases for past claims and covenants not to sue for patent infringement for a defined period, providing legal certainty for ServiceNow and its counterparties. Crucially for investors, ServiceNow has incurred a total aggregate charge of $270 million in the first quarter of 2016 to cover all financial obligations related to these settlements. This charge represents the full cost of resolving these legal battles, and the company has confirmed there are no remaining financial obligations stemming from either the BMC or HPE agreements. This resolution removes a significant overhang for the company, allowing management to focus on operational growth.
Key Highlights
- 1ServiceNow has settled all patent litigation with BMC Software, Inc.
- 2ServiceNow has also settled all patent litigation with Hewlett Packard Enterprise (HPE).
- 3Both settlements are confidential and include mutual releases for past patent infringement claims.
- 4The settlements include covenants not to sue each other for patent infringement for a specified term.
- 5ServiceNow recorded a total aggregate charge of $270 million in Q1 2016 for these litigation settlements.
- 6The $270 million charge fully satisfies all financial obligations under both the BMC and HPE settlement agreements, with no remaining financial liabilities.