This article is based on reporting originally published by CRN Australia in January 2020.
Overview
A Delaware federal jury ruled against VMware in January 2020, finding that the virtualisation giant had infringed on two software patents held by Densify, a Canadian cloud optimisation software company formerly known as Cirba. The verdict required VMware to pay approximately US$236 million in damages. The jury also found that VMware had engaged in unfair competition that caused measurable harm to Densify’s business.
Background: The Case Against VMware
Densify filed its patent infringement and unfair competition complaint in the United States District Court for the District of Delaware against VMware in April 2019. After a nine-day trial, the jury decided in Densify’s favour on 24 January 2020.
The dispute centres on VMware’s vRealize Operations (vROps) software, specifically versions 7.0 and 7.5, as well as a capability called Predictive DRS. Densify alleged these products infringed on two of its patents:
- US8209687 — covering virtual guest-host placement services
- US9654367 — also covering virtual guest-host placement services
Broadly, these patents cover technology for optimising how software applications utilise computing resources across cloud environments and on-premises data centres. Densify alleged that vROps 7.0 introduced an “automated host-based placement” feature that directly competed with a Densify product that VMware had prior knowledge of, and that vROps 7.5 similarly replicated Densify’s patented predictive analytics capabilities.
Trademark Infringement and Unfair Competition Claims
Beyond patent infringement, Densify also alleged trademark infringement, claiming that VMware used the Densify name in association with its own products in ways that created consumer confusion and damaged Densify’s business. As a specific example cited in the complaint, VMware reportedly labelled a vROps feature as “Workload Optimization – Densifying to Repurpose Hosts.”
Densify argued in the complaint that “VMware uses the marks to increase the commercial value of its products and services by creating an association with Densify’s award-winning optimization products.”
What Is Densify?
Densify is a privately held, venture-capital-backed software company headquartered in Canada that specialises in infrastructure optimisation for virtual, cloud, and container environments. Its core product is built around a Cloud-Learning Optimization Engine — internally called Cloe — which uses machine learning to continuously align infrastructure supply with application resource demands.
The company’s stated value proposition includes:
- Predictive analytics to optimise hybrid cloud workloads in real time
- Reduced cloud and infrastructure costs
- Improved application performance through automated resource alignment
- Lower operational risk through increased automation
Densify had previously maintained a technology integration partnership with VMware. Over time, however, Densify alleges VMware evolved from a partner into a direct competitor by building features that replicated Densify’s core intellectual property. According to the company, this lawsuit was its first time pursuing patent litigation.
Densify CEO Gerry Smith commented at the time of filing: “We’ve built an innovative and rapidly growing business that provides our many enterprise customers critically-needed technology. Unfortunately, VMware, a great company, made a bad mistake, and used Densify’s intellectual property. Like any small, successful technology company, the only way we can effectively compete with larger companies is by having a fair and level playing field where intellectual property rights are respected.”
VMware’s Response
VMware disputed the jury’s findings and indicated it would pursue all available legal remedies. In a statement provided to CRN USA, a VMware spokesperson said:
“While we appreciate and respect the judicial process, we continue to strongly believe that we do not infringe the patents asserted against us in this case, and intend to vigorously pursue all legal remedies that are available to us to prove that we are not liable here.”
VMware also stated that it is “proud of its history as an innovator and leader in the enterprise software space.”
Market Impact
Following the verdict announcement, VMware’s stock dropped approximately 5 percent. On 24 January 2020, the stock reached US$155.20 per share in morning trading before falling to approximately US$146.80 per share by Monday afternoon — a level not seen since September 2019, according to CRN’s reporting at the time.
Despite the drop, VMware — majority-owned by Dell Technologies — retained a market capitalisation of approximately US$60 billion. Analysts remained broadly optimistic about the company’s long-term prospects given its strategic focus on security, Kubernetes and container innovation, and a broader transition toward subscription and Software-as-a-Service business models.
Key Takeaways for DevOps and Infrastructure Teams
This case carries several implications worth noting for engineering and platform teams:
- Workload placement and optimisation IP is contested territory. The features at the heart of this dispute — automated host-based placement and predictive resource analytics — are increasingly common in modern infrastructure platforms. Teams evaluating competing tools should be aware that this space is actively litigated.
- Vendor partnerships can complicate competitive boundaries. Densify and VMware had an existing integration relationship before the dispute escalated. Engineering teams relying on co-developed or closely integrated tooling should monitor how vendor roadmaps evolve relative to third-party solutions.
- Patent verdicts do not always result in immediate product changes. VMware indicated it would appeal, meaning vROps customers should track post-verdict developments before drawing conclusions about product availability or feature continuity.
Note: Legal proceedings evolve over time. Readers should verify the current status of any appeals or settlements related to this case, as outcomes may have changed since the original January 2020 verdict.