Thomson Reuters must remove technology developed by FaceTime Communications from its instant messaging (IM) service following a legal ruling over a late licensing payment.
The Reuters Messaging Compliance Manager is used by around 100 financial institutions to ensure compliance with SEC and Sarbanes-Oxley regulations for logging, archiving and retrieval of electronic communications regarding transactions.
Reuters has been using FaceTime source code in its IM service since 2006 after agreeing a two year licence deal worth around $1.3 million.
The financial information vendor could have bought a perpetual licence by paying an additional $150,000 when the initial deal ended on 31 January. But the group didn't make the payment until two weeks later on 15 February - after being warned the licence had expired.
FaceTime says attempts to renegotiate the contract failed, leading it to file suit against Reuters to protect its intellectual property rights.
Thomson Reuters now has to stop using the technology by Friday following a ruling by the US District Court for the Southern District of New York in favour of California-based FaceTime.
The ruling from US District Judge Colleen McMahon will be a bitter blow to Thomson Reuters and could have serious consequences for the customers.
In a court filing, Eran Barak, global head of strategy, collaboration services, Thomson Reuters, claims the potential revenue impact of losing the case "could be severe, perhaps even in the several millions of dollars for 2009 alone".
"If Thomson Reuters were suddenly unable to make use of the Reuters Messaging compliance product, Thomson Reuters' customers would be crippled in their day-to-day business operations," says Barak.
In a blog on the ruling, Kailash Ambwani, president and CEO, FaceTime, says: "While FaceTime is understandably pleased that our intellectual property is protected, we are very concerned about what this outcome means to customers' compliance status."
Update
In a statement Thomson Reuters says it has overhauled its IM service and the FaceTime component has been replaced in-house and in conjunction with an ongoing Thomson Reuters technology partner.
The vendor says Reuters Messaging will continue to offer a hosted compliance service.
"To date, customer migration has been completed and was at all times compliant with any regulatory guidelines," says the statement.