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Finally, Facts Unsealed In Aristotle - NGP Court Cases

BY Nick Judd | Monday, July 19 2010

Aristotle and NGP Software, two of the political technology industry's top service platforms, have for years been in a long-drawn-out court battle in which each seeks a federal court's intervention in the other's advertising practices — and late last month, much of that battle finally became a matter of public record.

Newly unsealed documents in the case, in U.S. District Court in Washington, D.C., provide documentary evidence that NGP had an agreement with another firm, Capitol Advantage, allowing Capitol Advantage to license NGP software under its own label to "right-leaning political groups" — meaning 527s. Aristotle took NGP to court in 2005, arguing that this agreement gave the lie to NGP marketing materials that claimed the company served only Democrats.

The case isn't as clear cut as all that. NGP retained the ability to veto any licensing agreement it didn't agree with, and NGP President Stu Trevelyan told me Capitol Advantage has not sold NGP-based products to any right-leaning 527. What's more, he argues, the phrase "527" didn't have the same ominous ring to it then that it does now. Aristotle says groups that Capitol Advantage sold to gave more money to Republicans than Democrats, but Trevelyan counters that those were nonpartisan trade associations, and NGP has advertised that it works for corporate and trade association PACs since before the lawsuit.

There was enough dispute over the facts in the case to persuade a District Court judge to send parts of Aristotle's claim and of the NGP counterclaim to trial. A bench trial date is set for Nov. 8.

NGP's counterclaim alleges that Aristotle was placing ads that made false and misleading claims about both firms' software, and targeting NGP customers with marketing materials intended to draw them to Aristotle. Like Aristotle, NGP is seeking court action that would stop Aristotle from continuing to do this. A relatively easy-to-understand summary of exactly what's going on with both NGP's and Aristotle's cases is contained in this recently unsealed memorandum opinion, written by a District Court judge in March 2010.

Among the highlights from other filings from both sides:

  • An internal Aristotle survey from 2004 revealed more good feelings among NGP's customers than among Aristotle's, and indicated that "[t]he primary reasons for this appear to be perceptions that Aristotle tech support takes longer to reach and the software isn't as flexible or customizable to specific customer needs as is the case with NGP." (Aristotle CEO John A. Phillips says the software has come a long way since then.)
  • In a newly unsealed filing from NGP, the company documents a half-dozen Democrats who either switched to NGP from Aristotle or chose to go with NGP over its competitor. Curiously, the document also reveals people who broke the other way. Examples: In 2007, according to a deposition from Aristotle Vice President of Sales Buck Stoll, one NGP user courted by Aristotle said Aristotle's prices were "way out of line" with what he pays for anyone else. On the other hand, according to an e-mail exchange between Aristotle CEO John Phillips and Vice President for Marketing Brian Williams, Rep. Frank Pallone (D-NJ) chose Aristotle over NGP because of dashboards, blast email tracking, and being able to manage more than one committee at the same time, among other reasons. (Trevelyan says Pallone switched to NGP in recent months.)
  • In a 2007 deposition, Nathaniel Perlman, NGP's founder, was asked about some of NGP's marketing materials. As the 2007 presidential primaries started up, he was asked: "You work just as hard for the smaller clients as you do for Senator Clinton?" Perlman's reply, surely tongue-in-cheek: "Unfortunately."
  • In the course of the court battle, how each company fared in Personal Democracy Forum surveys about opinions of each company's software was held up as evidence of who had the better product.

Next to none of the supporting documents were public until late last month, and we mostly had to rely on claims and counterclaims from both sides made in press releases and phone conversations. The whole kerfuffle is bewilderingly complex and, frankly, more useful to illustrate how cutthroat this industry can be than for any other purpose.

"Aristotle competes very hard on price, service, ease of use, product benefits, innovation (FEC rulings and patents-pending) and happy references," Phillips, Aristotle's CEO, wrote to me in an email. "But we do not tolerate a competitor engaging in misleading or deceptive marketing, which is, by the way, against the law."

Which is a complicated position to take when Trevelyan's firm also has a claim against Aristotle that makes similar allegations of deceptive advertising.

It also has an element of irony: While both firms have products in the areas of financial compliance and disclosure, as Luke Rosiak of Sunlight Labs noted a year ago, this case was largely in the dark, for years, at the participants' request.

Capitol Advantage is now owned by CQ Roll Call Group, but the relationship between it and NGP — for a product Capitol Advantage markets as "PACBuilder" — is still around. Trevelyan told me that the contract has been revised since the court case began. The argument the company has made in public before is that it makes no secret of its relationship with Capitol Advantage and that it has refused to allow its software to by sold by Capitol Advantage to a Republican group in the past.

Additional back-and-forth is available for your perusal in the federal court system's PACER archive (account required).

And if you're wondering how these two companies did in our latest round of surveys in March, our network of online politics professionals gave NGP Software an overall rating of 3.56 out of 5 (62 respondents), and Aristotle an overall rating of 2.54 out of 5 (43 respondents).

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