Orca v. Wiz: Cloud's Latest Patent Fight
Two of the hottest startups in cloud security are about to clash in court over the technologies that have brought them swift success.
On Wednesday, July 12, Orca Security filed a complaint in the U.S. District Court in Delaware for patent infringement against rival Wiz, accusing Wiz of “flagrant, ongoing, and unauthorized use of Orca’s patented technologies.”
First, a word about those technologies: Both companies claim to offer an agentless approach to scanning virtual machines in a read-only fashion to identify a host of cloud vulnerabilities, including malware and misconfigurations that can lead to security breaches. Both claim to offer precise and contextual information about those vulnerabilities. And both claim patented innovations.
Orca was first on the market in 2019, founded by Israeli tech veterans Gil Geron (CEO) and Avi Shua. (Chief Innovation Officer). It claimed to grow 1,000% in revenue in its first year of business, garnering a fleet of high-profile tech customers, including Cisco, Dell, IBM, Oracle, Splunk, and Symantec. Since its founding the company has raised over $700 million from a raft of investors that includes CapitalG, Redpoint Ventures, GGV, ICONIQ Capital, Lone Pine Capital, Stripes, Adams Street Partners, Willoughby Capital, and Harmony Partners. Its most recently published valuation in 2021 was $1.8 billion.
Wiz was founded in 2020 by another group of Israeli engineers that included Assaf Rappaport, Ami Luttwak, Yinon Costica, and Roy Reznikthat. By 2022, Wiz claimed to hit $100 million in annual recurring revenue (ARR) from customers including BMW, Morgan Stanley, Salesforce, Slack, Colgate, and Blackstone, to name a few. By February 2023, it had raised $900 million from Sequoia, Lightspeed Venture Partners, Index Ventures, Insight Partners, and others, and it was valued at $10 billion.
Orca’s Allegations
Orca claims that its trouble with Wiz started before Wiz was formed. It began, Orca says, with a presentation by Orca CEO and founder Avi Shua to a group of engineers at Microsoft that had worked before on a security startup later sold to Microsoft. Orca claims that it was no coincidence that by January 2020, the same group had left Microsoft to found Wiz. Orca’s complaint reads:
“Wiz was birthed from the very beginning as a counterfeit copy of Orca’s ideas—Mr. Shua had presented Orca’s Platform to Wiz’s founders at Microsoft in May 2019…. Within months, the Wiz founders left their lucrative careers at Microsoft to start Wiz, build a clone of Orca’s technology, and compete directly with Orca.”
Worse was to come: Avi Shua had hired a small firm of lawyers to help file Orca’s patents. In 2021, Orca said it discovered that the same attorney who’d helped him file was also working with Wiz on its patents. Orca’s outside counsel went to work for Wiz. States Orca:
“Wiz has hired former Orca employees and worked with third parties to acquire Orca’s confidential information relating to current and future product plans, marketing, sales, prospective customers, and prospective employees, and has used that confidential information in furtherance of its efforts to copy and to compete unfairly with Orca.”
Wiz Denies, Orca Asks for Trial
We contacted Wiz for comment on the complaint and got this response: "We are keeping our focus on our customers and our business. Orca is pursuing less innovative methods in their attempts to compete; these claims are baseless."
Orca, for its part, wants extensive reparations and a jury trial.
Patent disputes are nothing new in the tech field. Google has had several lawsuits filed against it by smaller innovative competitors – who won their cases. Cisco settled a lawsuit in 2018 against Arista Networks for $400 million, after the U.S. International Trade Commission ruled that Arista had infringed three patents. Palo Alto and Juniper in 2014 settled a long-running patent disputes on firewall technology, with Palo Alto paying Juniper $175 million. The list goes on.
What’s interesting about this case is that it features two sizable startups, not a big tech company preying on a smaller one or two big tech firms tangling. The litigation could go on for years, or until one party is unwilling to continue. It could even result in a merger or acquisition. Stranger things have happened.
