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OutlookSoft Patent Infringement Litigation FAQs

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ATTORNEY-CLIENT COMMUNICATION -- PRIVILEGED AND CONFIDENTIAL

03-24-05

Statement from Hyperions press release: SANTA CLARA, Calif. December 10, 2004 Hyperion Solutions (Nasdaq: HYSL), the global leader in Business Performance Management software, announced today that it has filed a Federal court action against OutlookSoft Corporation, charging that OutlookSoft is infringing two Hyperion patents relating to its financial consolidation, reporting and analysis applications, Hyperion Financial Management and Hyperion Enterprise. Hyperion is asking for damages for past infringement, including treble damages for willful infringement, and an injunction against further infringement. The lawsuit was filed in the U.S. District Court for the Eastern District of Texas. We are committed to protecting our intellectual property and maximizing the benefits of our technology for our customers, partners, and shareholders, said John Kopcke, Hyperions Chief Technology Officer. We will vigorously protect our intellectual property. Q: Why did Hyperion sue OutlookSoft? A: Hyperion invented technology now employed by Hyperion Financial Management. Hyperion protected that technology by patenting it. Additionally, OutlookSoft subsequently hired former Hyperion employees, and it appears that they may have taken Hyperions patented technology with them and copied it into OutlookSofts Everest product. Hyperion now is protecting its technology from copying by OutlookSoft. Hyperion believes that any self-respecting company would do the same thing. Hyperion certainly doesn't mind competition from OutlookSoft, but it ought to be done on a level playing field, not in circumstances where OutlookSoft copies/steals Hyperion technology. Q: How serious is this? What are Hyperion's chances of winning? A: This is deadly serious. Before filing suit, Hyperion spent months conducting an extensive investigation to make sure it had 100% certainty it would win. This investigation included a very careful comparison of Hyperion's patents to OutlookSoft's product. Hyperion also anticipated that OutlookSoft would file counter claims alleging that we infringe OutlookSoft patents this is a routine reaction of a defendant in patent litigation, regardless of whether their legal claims have merit. Hyperion confirmed it has absolutely no exposure to any OutlookSoft patent. Hyperion's history shows that it is not a litigious company. The cost to Hyperion for this suit will run into the millions of dollars, and Hyperion would not have started it, if we didn't feel we had to stop OutlookSoft's blatant infringement of our intellectual property, and if we didn't know that we would win on our claims and successfully defend against their anticipated counterclaims. Q: What will Hyperion get if it wins the case? A: Hyperion has no interest in a cash settlement. Its sole objective is to enforce its patent rights against a competitor. The U.S. patent laws give the patent owner exclusive rights meaning that the patent owner has the right to prevent others from using the patented invention. Thus, Hyperions objective is to prevent OutlookSoft from infringing Hyperions patent rights in selling and supporting Everest. This means that assuming Hyperion prevails, which we are confident we will, OutlookSoft will be stopped from selling and supporting Everest from the day the trial ends (mid 2006) until January 29, 2008. OutlookSoft won't survive effectively sitting around doing nothing for over a year and a half. We believe that unless OutlookSoft comes up with a product that does not infringe Hyperions patent rights, it will go out of business.
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Q: How does the litigation impact prospective OutlookSoft customers? A: The bottom line is this assuming Hyperion wins the litigation, which it will, all Everest customers will likely have to change their software because OutlookSoft will no longer be able to sell or support Everest. The consequences of such a change are dramatic, including the cost of new software, employee re-training, and severe business disruption. If Im a potential customer, Im not going to take this risk. Q: Some say Hyperion sued because it can't compete with OutlookSoft? A: That is completely false. Hyperion invented this technology, it patented it, and OutlookSoft stole it. Hyperion is simply protecting its intellectual property rights. Hyperion certainly doesn't mind competition from OutlookSoft, but it ought to be done on a level playing field, not in circumstances where OutlookSoft copies/steals Hyperion technology. Q: Didnt OutlookSoft counter-sue Hyperion for patent infringement? A: As Hyperion expected, desperate companies will look anywhere to counter-attack when threatened. OutlookSoft only has a few patents and we expected them to counterclaim with those patents. However, unlike Hyperion's pioneering patents, the OutlookSoft patents are very recent and very narrow, and are not specific to financial consolidation. (The OutlookSoft patents relate to particular techniques for dealing with slow networks.) We do not infringe these patents, and would not have filed suit against OutlookSoft if we had any concerns about their patents. Further, even if OutlookSoft were to somehow prove the validity and infringement of their patents, the patents do not protect a fundamental feature and can easily be designed around. Q: But what would be the impact if OutlookSoft won on its patent counterclaims? A: OutlookSoft won't win and it wouldn't matter anyway. Even if Hyperion had to, it could re-write its code in a matter of days/weeks. Thus, there will be absolutely no interruption of Hyperion Financial Management irrespective of the outcome of OutlookSoft's counterclaims. In other words, unlike investing in Everest, there is absolutely no risk to investing in Hyperion Financial Management. Q: Why does OutlookSoft so desperately want a statement from a customer? A: We have learned that Outlooksoft is effectively trying to purchase a statement from a customer (regarding this litigation) by giving away $1M of software. This tells us something -- OutlookSoft clearly feels like it must have the statement. Why else would it give away $1M worth of software? Obviously, OutlookSoft's other potential customers are getting cold feet and OutlookSoft hopes to warm them with a statement from a major customer. If OutlookSoft was so convinced of its case, why does it feel the need to forfeit $1M to buy a statement. The fact of the matter is, OutlookSoft is in deep trouble and its actions show its true thoughts and fears about this case. Q: Why does OutlookSoft claim it is not concerned about this case? A: Thats what it has to say in hopes of staying in business. Their efforts to minimize the seriousness of this lawsuit is not unexpected for a company whose flagship software product is being threatened. But, OutlookSofts actions speak louder than its words. If OutlookSoft isnt deeply concerned about this case, why did it counter-sue Hyperion, and why is it trying to give away $1M of software for a bogus customer statement. Q: Im confused... Whats the bottom line? A: There is one key, indisputable fact to all of this. That is, there is a major risk in purchasing OutlookSoft right now, with no corresponding risk to purchasing Hyperion. Simply put, do you want to run the risk of purchasing software that likely won't be around in a year or so.

LITIGATION LOGISTICS
Q: When will the Court rule How imminent is OutlookSofts demise? A: There could be a decision as early as 12 months. Hyperion expects to file summary judgment motions, which could produce a result sooner. Q: A: When and where did Hyperion sue OutlookSoft? Hyperion sued OutlookSoft on December 10, 2004 in the Federal District Court for the Eastern District of Texas.

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Q: Why did Hyperion file suit in the Eastern District of Texas? A: OutlookSoft sells products into that District and the federal court there is known for its patent expertise and for quickly pushing cases to trial. Hyperion values its intellectual property rights and anticipates that the district court in Texas will be able to quickly resolve the issues regarding Hyperions enforcement of its patents. Q: Will OutlookSofts counterclaims slow the resolution of the suit? A: The counterclaims were filed by OutlookSoft in our action in the Eastern District of Texas and will progress as part of our infringement case against them. We do not expect the addition of these counterclaims to affect the court's schedule to resolve this matter in the next year or so. Q: Why did Hyperion wait so long to file suit? A: Frankly, Hyperion did not know for a long time that OutlookSoft had copied its patented technology. After we found out, we sued.

PATENT DETAILS
Q: What exactly did Hyperion patent? A: There are many details to Hyperions patented technology, but basically the patent relates to various aspects of financial consolidation software, precisely one of the features in OutlookSoft Everest. Q: When do Hyperions patents expire? A: Not until January 29, 2008, which means no one can copy Hyperions patented technology for roughly another twoand-a-half years. Q: I read Hyperions patents, they relate to a product called FASTAR. I thought this was about Hyperion Financial Management? A: FASTAR was a product from a company called Corporate Class Software that was granted the initial patent. This was one of the reasons that Corporate Class Software was acquired by Hyperions predecessor, IMRS. Hyperion's patent claims are not tied to FASTAR, but instead apply to many of the core concepts of financial consolidation that are being delivered today within Hyperion Financial Management, and in OutlookSofts Everest product. In short Hyperion, and its predecessors, invented some fundamental building blocks for consolidation software and patented them. Ex-Hyperion employees went to OutlookSoft, may have taken Hyperion's patented ideas with them, and copied them into Everest. You can't do that. It's that simple. Q: I hear Hyperion's patents are old. A: Hyperions patents date back to 1987, when the foundation of computer-based financial consolidation was being laid. While consolidation has been around for a long time now, so have Hyperions patents. In fact, Hyperions patents and inventions may be characterized as pioneering in this field. The Patent Office agreed that Hyperions consolidation techniques were patentable. The Patent Office issued Hyperion's patents after a rigorous review by skilled patent examiners. This is why the patent laws require that courts and juries "presume" during trial that issued patents are valid. This creates a very high, difficult hurdle to OutlookSoft's attempt at invalidating Hyperion's patents. The fact that these patents are old is precisely what makes them fundamental, and why OutlookSoft will not have a viable product when they are ordered by the court in the next year or so to stop infringing.

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