EDS loses vital court case against BSkyB

The High Court ruled that EDS misled BSkyB

In a landmark legal ruling, EDS has lost its court case with BSkyB after the British High Court ruled that the HP-owned company had lied about its expertise.

The court ruled that EDS had misled BSkyB over its skills, and that the contract and a clause limiting EDS' potential damages to £30m were invalid. The ruling leaves EDS liable to at least £200m in damages.

"It is probably the decision that service providers have been dreading," Alan Owens, a litigation partner at Morrison & Foerster LLP in London, told The Wall Street Journal.

"We can expect a drastic change in behaviour among sales teams bidding for major contracts."

The saga began in 2000 when EDS won a £48m contract to build a customer relationship management system for BSkyB's operations in Scotland. The project was beset with problems and cost overruns, and BSkyB eventually sacked EDS and finished the project itself at a cost of £265m.

BSkyB said that EDS had misrepresented its skills, and that it would have gone with an alternative bid from PricewaterhouseCoopers if it had known about the problem.

"We are pleased that the court dismissed the majority of the allegations made," an HP spokesman said in a statement.

"While we accept that the contract was problematic, HP strongly maintains that EDS did nothing to deceive BSkyB. HP will be seeking permission to appeal. "