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Salesforce Sues UpShot
Prior to filing the lawsuit, Salesforce.com says it privately challenged UpShot advertisements through the National Advertising Division of the Council of Better Business Bureaus Inc.
Posted Jul 14, 2003
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Salesforce.com has filed a complaint in the United States District Court for the Northern District of California against UpShot Corporation. The complaint alleges that UpShot's recent advertising claims are violations of state and federal laws against false advertising, unfair competition, and unfair business practices. "We want to create an industry where people fight fair, act fair, and do the right thing," says Marc Benioff, CEO of Salesforce.com. "This type of false and misleading advertising brings the poor ethical values of the software industry into our new industry, and we want to keep clear of that. Prior to filing the lawsuit Salesforce.com says it privately challenged UpShot advertisements through the National Advertising Division (NAD) of the Council of Better Business Bureaus Inc., the advertising industry's self-regulatory forum. The NAD concluded that UpShot's headline, "The Better CRM Online Solution," and its claim that it was the "leading web-based, sales-focused CRM solution," were false and misleading, and should no longer be run, according to Benioff. The NAD also concluded that UpShot failed to reasonably support that it has more medium and large business customers or comparable customer volume compared to Salesforce.com. "In light of UpShot's false advertising claims and its failure to withdraw these claims when challenged, we are pursuing this issue through the courts. UpShot has yet to produce evidence that substantiates its claims, and is misleading the market. As yet we have not seen anything from UpShot that would challenge salesforce.com in terms of customers, service, or profitability," Benioff says. Benioff says that the company will seek compensation for damages suffered by the false ads, but says the exact amount has not been decided. Meanwhile, UpShot says it has no plans to halt its current marketing campaign. "Salesforce.com is not beating us in the marketplace," says Keith Raffel, founder and chairman of UpShot. "We haven't lost a 50-seat deal to them since January. This is bully-boy tactics and intimidation that simply will not work. We will continue to run the ads.
"It's almost comical," he adds. Benioff says that if UpShot is actually the leader, it should release sales numbers that prove it. "We are bigger than all our competition combined," Benioff says. "If UpShot are leaders, why won't they release their numbers? Where are these customers they are talking about? The truth is, they are not leaders, they are followers." Mike Doyle, chairman and CEO of Salesnet, another ASP CRM solution, told CRM that he feels this type of infighting can only hurt the ASP image. "Salesnet, UpShot, and Salesforce.com have been the founding fathers of next generation CRM," he says. "It's disappointing that the latter two have chosen to focus their energy on squabbling for attention, rather than delivering value to their customers. There's more than enough market share to go around. Analysts have predicted that this is going to be over a $17 billion market by 2006. It's time to refocus energies. Let's get back to delivering the next generation online CRM solutions that today's companies need to succeed."
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