A lawsuit says Twitter is pressing the software vendor for $8 million remaining on the contract

The lawsuit says Twitter failed to pay an invoice for $1,092,000 in a software contract that does not expire until late 2024, and that the Elon Musk-led company apparently intends to oblige the seller for another $7 million in payments.

Imply Data, Inc. Twitter sued in California Superior Court for San Francisco County, alleging breach of contract. The lawsuit was filed on Tuesday (see complaint) and was reported to Bloomberg today.

“For more than four years, Imply licensed its proprietary software to Twitter, and Twitter implicitly paid more than $10 million,” the suit said. “Twitter has always been very pleased with the Imply product and its associated maintenance and support services, so, in mid-2021, the parties extended the term of the software license and service agreement for an additional three years from October 1, 2021, through September 30, 2024.”

In May, a few weeks after Musk struck a deal to buy Twitter, the company notified Imply Data that it would not renew the contract again but “acknowledged that the license agreement will continue in full force and effect” until the end of its term on September 30, 2024.

The payments stopped after Musk took over

Twitter continued to make quarterly payments on the contract until Musk completed the purchase in late October. However, shortly after closing Musk’s purchase of Twitter, Twitter refused to pay the outstanding quarterly invoice, which was due November 30, 2022, and Twitter waived any obligation to pay any future invoices from Imply, despite clear language in the software license. and a service agreement that requires Twitter to do so.”

Imply creates open source Apache Druid based database as well as products to manage and monitor druid clusters.

The New York Times reported on November 22 that Twitter was cracking down on some sellers. Embley’s complaint refers to press coverage of Twitter refusing to pay sellers and says, “This lawsuit involves one of these egregious cases.”

The $1,092,000 invoice was uploaded to the seller’s Twitter portal, the lawsuit said, and Twitter approved the invoice on October 5. “On November 28, 2022, when I tacitly entered the seller’s portal, I tacitly learned that Twitter had deleted the invoice and closed the license agreement,” the lawsuit said.

“We will not pay implicitly anymore.”

Imply says Twitter has also “uploaded an internal email thread to the vendor portal to support these actions.” That email chain, the lawsuit said, included a message from Martin O’Neill, Twitter’s head of global strategic sourcing, which read, “Alert we will no longer be paying Imply. If we can flag them in our AP system that none of their invoices are forwarded for approval, That’s great, thank you!”

The Twitter executive who received the email, Christina Bravo, “sent this email to other Twitter employees and wrote: ‘Can you cancel all Imply invoices currently pending at Oracle (if any) and deactivate the supplier using the email below as evidence?'” suit said.

After reviewing these emails, Imply asked Twitter about the status of the payment due on November 30. [Imply’s] Twitter Business Partner. I have tacitly reached out to Twitter to discuss rescinding the invoice; however, Twitter has not yet responded in substance to this communication.”

He tacitly seeks monetary damages for breach of contract. “Twitter’s breach is implied to be expected to continue, with the notional amount increasing each quarter until the end of the term of the license agreement… Twitter’s breach has and will by implication harm an amount that will be proven in trial, but is likely to exceed $8 million,” Embley told the court.

The dispute over whether Twitter can terminate the contract

The suit also alleges breach of a pact of good faith and fair dealing, and prior divorce. The latter term describes when a party to a contract declares that it does not intend to fulfill its contractual obligations.

“Twitter has expressly, unequivocally, and categorically rejected and relinquished the License Agreement by implicitly declaring that Twitter will not pay and instructing its employees not to approve any invoices and implicitly deactivating the Reseller Portal. In doing so, Twitter has violated the License Agreement,” the lawsuit said. .

Twitter may argue that it has the right to terminate the contract early. Imply’s complaint said there was a dispute between the companies over “whether Twitter had the right unilaterally to terminate the license agreement before the end of its term.” Implicitly seeks an interpretive judgment that Twitter does not have this right.

We contacted Twitter about the lawsuit, but the company reportedly dismantled its PR team after Musk took over.