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December 3, 1998

METASTORM, INC., Plaintiff,

The opinion of the court was delivered by: SPORKIN


 This matter comes before the Court on the following four motions: (1) Defendant's Motion in Limine; *fn1" (2) Defendant's Motion for Summary Judgment; (3) Plaintiff's Motion for Summary Judgment on Count 1 of the Complaint; and (4) Plaintiff's Motion for Summary Judgment on Defendant's Counterclaim. The relevant, undisputed, facts are set forth below.

 Plaintiff, Metastorm, initiated the present action on May 7, 1997. The complaint alleges defamation, trade libel, and tortious interference with prospective economic advantage in connection with an article published by defendant, Gartner Group ("Gartner") on February 26, 1997. Gartner is a leading provider of information technology ("IT") reports and consulting services worldwide. Gartner offers its services which consist mainly of short "Research Notes" or longer "Strategic Analysis Reports" to over 28,000 individual and 7,400 organizational subscribers worldwide. Some of the information provided by Gartner is also available to members of the public via the Internet.

 Metastorm is a privately owned corporation formed in September, 1996 for the express purpose of serving as a reseller of "InForms", an electronic forms product owned by Novell. The primary users of InForms consist of state and federal agencies and large private corporations and associations that process significant amounts of paper in their daily business. InForms allows such businesses to reduce or eliminate their need for paper by generating and using electronic forms.

 Novell sold InForms directly and indirectly through various resellers from 1994 until the fall of 1996. On November 8, 1996 Novell entered into a technology and marketing agreement ("the Agreement") with Metastorm. Under the terms of the Agreement Novell retained ownership and control of InForms while Metastorm became primarily responsible for the future development, manufacturing, distribution, marketing, sales and support of the product. On December 19, 1996 Novell issued a press release announcing the Agreement, summarizing its terms and listing the benefits of the Agreement for InForms' users. Metastorm participated in the preparation of the press release by reviewing a draft prior to its publication. The press release was distributed domestically and internationally to industry analysts and specialized trade publications. It was also posted on Metastorm's World Wide Website and that of its subsidiary, Elite Federal Forms. Gartner contends members of the news and press wire services also received copies of the press release.

 Gartner received a copy of the press release on December 20, 1996 and again on January 3, 1997. Regina Casonato ("Casonato"), a leading analyst on information technology at Gartner, reviewed the press release. Casonato contacted Novell and inquired about the financial capabilities of Metastorm in preparation for drafting a preliminary Research Note ("Note"). The initial version of the Note included the statement that Novell had quit the E-form market. Casonato sent a copy of the draft Note to Sadrine Leroux ("Leroux"), a Public Relations employee with Novell, U.K. for comment. Leroux forwarded the draft to Peter Joseph, marketing manager at Novell, U.K. who marked up the draft and faxed his edited version back to Casonato. Specifically, Joseph noted that Novell had not quit the electronic forms market and that Novell would continue to support Informs customers up to and including the release of the next Informs version in early 1997. While Casonato made some changes to her draft Note based on Joseph's comments, she did not change the statement that Novell had quit the E-forms market. She then sent a copy of her revised draft Note to her supervisor, Steve Wendler, ("Wendler") at Gartner. Mr. Wendler sent Casonato's Note back with a number of suggestions. Most importantly, Wendler advised Casonato to "treat Metastorm harshly" for not providing Gartner with data as to its financial status. *fn2" Casonato again made changes to her Note based on Wendler's comments and suggestions.

 Gartner published Casonato's Note on February 26, 1997. The Note contained the following ten statements which Metastorm maintains constitute actionable defamation:

1. "The transfer of the InForms product from Novell to Metastorm means the virtual death of the product. Users of InForms should immediately begin planning migration to alternative products".
2. "Novell's support for InForms will cease by [the second half of]1998. (0.7 probability)."
3. "Through 1999, Metastorm will be unable to invest enough in InForms to maintain competitive IEFM functionality (0.8 probability)."
4. "Novell has quit the market for integrated E-form management."
5. "Significant investment is needed to keep InForms competitive against leading electronic form vendors. At this point it is not clear where Metastorm will get the money for that effort. (e.g. JetForm [a competitor] has more than 100 research and development people dedicated to E-form development)."
6. "It does not appear that Metastorm will have enough profit from current operations to provide the investments needed".
7. "This announcement with Novell creates a significant problem for InForms' users (especially outside the United States) in the short term. Novell is promising it will continue to support InForms customers up to and including InForms 4.11 but it lacks a focused strategy. Novell's support for InForms will cease by [the second half of] 1998 (0.7 probability)."
8. "Metastorm is a small company with no presence outside the U.S. government market and no clear financial sources for the investments needed to stay competitive in the IEFM market."
9. "Metastorm will work to expand new markets but its size, dependency on Novell-centric environments and strong competition will limit its growth."
10. "Bottom Line: InForms is dead. All users should consider alternatives (e.g., dedicated systems such as JetForm or E-Form ...

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