Datto Sues Slide: An Exclusive Investigative Report

What happens when a founder returns to disrupt the company he built — and that company sues him for stealing its secrets? That’s the collision at the center of Datto v. Slide, a Delaware trade-secret case that forces MSPs to pick sides in a fight between two BCDR vendors — one backed by billions in private equity, the other led by the engineer who started it all. Kaseya, which owns Datto, claims Slide misappropriated the proprietary technology behind hardware-independent restore. Slide says it built everything from scratch, took extraordinary precautions, and that Datto’s lawsuit is a distraction from a simple truth: better products win. I did the work on this. I purchased court filings from Delaware at forty six dollars a document. I sat down with Slide’s founders, Austin McChord and Michael Fass, for an on-the-record interview. I brought in a law professor and a trade secrets expert to break down what the allegations mean — and what they don’t. And I bring my own channel analysis expertise. Kaseya declined to comment, citing ongoing litigation.

This isn’t a press release. This is investigative reporting: the legal claims, the technical details, the market context, and the strategic implications for MSPs navigating a consolidating industry where litigation is increasingly used as a competitive strategy. By the end, you’ll understand what’s really at stake — and why this case matters whether you’re a Datto partner, a Slide customer, or neither. This is a special report from the Business of Tech.

The Case

Here’s the case in plain English, grounded in the filings and correspondence. Datto LLC, now owned by Kaseya, sued Project Orca Inc. doing business as Slide in the Delaware Court of Chancery. Case number 2025-0975-LWW. Datto’s verified complaint alleges four counts: trade secret misappropriation under Delaware’s Uniform Trade Secrets Act, deceptive trade practices, tortious interference with prospective business relations, and unfair competition. At the center is Datto’s Hardware Independent Restore or HIR.
According to the complaint, Datto describes HIR as a compilation of proprietary source code, algorithms, configuration parameters, libraries, methods, documentation, and know-how that enable near-instant recovery, booting a protected system’s backup as a virtual machine across different hypervisors with minimal downtime. Datto says HIR does three things automatically and behind the scenes: injects the appropriate storage and network drivers to match the target VM’s virtual hardware for example, swapping a physical RAID driver for KVM’s Vert.IO stack, avoids relying on the original system’s native boot volume by using an automated bootloader process tailored for virtual environments, apply specific registry and configuration changes including Edge case fixes accumulated over years to ensure the restored VM consistently boots.

Datto claims these combined processes are closely guarded trade secrets protected by access controls and employee confidentiality agreements. It alleges Slide, founded by Datto’s former CEO and founder Austin McChord and former general counsel and Chief People Officer Michael Fass, misappropriated those secrets to fast-track a competing BCDR platform. Data points to several items it says shows access and intent. Slide’s public restore docs that list installing Red Hat signed Vert.IO drivers, VioStore and NetKVM and setting Windows SAN policy to online all. Slide’s roughly two-year build a timeline and a statement characterizing the spend to reach launch as vanishingly small and Slide’s hiring of former Datto engineers. Datto also highlights public positioning and marketing. McChord’s engagement with the phrase Datto minus Kaseya equals Slide, Slide’s pitch that MSPs need a better BCDR and an August event where McChord theatrically destroyed the Datto hardware and offered to swap attendees Datto gear for Slide’s. Datto frames this as disparagement and an attempt to trade on Datto’s brand while converting its customers.

Slide’s answer denies misappropriation and the non-trade secret claims. Slide says its product was independently developed from the ground up over more than 18 months at significant cost with active steps to avoid the Datto code trade secrets or confidential information. It argues the specific HIR concept Datto elevates is not even useful for a modern BCDR platform and that the boot volume changes and Vert.io driver installs Datto sites are standard, transparent engineering practices for KVM-based virtualization, not evidence of using Datto’s proprietary methods.

On marketing and positioning, Slide acknowledges the August demonstration but characterizes it as light-hearted showmanship, denies disparaging Datto and says customer wins are due to Slide’s product quality and service rather than any misuse of Datto IP. Legally, Slide raises defenses including failure to state a claim, preemption of the non-DUTSA TSA counts, adequate remedy at law, failure to mitigate justification slash privilege, unclean hands, no extraterritorial application and independent development.

Datto move to expedite on August 27th, 2025, arguing irreparable harm and requesting trial within six months. The court has asked parties to propose a schedule with trial beginning around April 20th, 2026. If expedition is granted, the court will likely enter protective orders and compress discovery timelines. I’m releasing public versions of court-filed documents purchased from the Delaware docket, such that should you wish to read and verify any of my work, you can do so with primary source documents.

If you’ve never done this process, know that it’s both kludgy and costly. The court charges $20 just to search and yes, they even charge you to search and that’s per search. Then six documents at $46 each. Added interviews, experts in editing, this kind of coverage isn’t cheap, but that’s why the business of tech exists to deliver real investigative reporting in the IT channel, not press release recycling, but independent analysis vendors don’t always want out there.

Court Documents

The Datto Complaint, filed September 3, 2025 in the Court of Chancery of the State of Delaware

The Slide Answer to Datto Complaint, filed September 17, 2025 in the Court of Chancery of the State of Delaware

The Motion to Expedite Proceedings, filed August 27, 2025 in the Court of Chancery of the State of Delaware

Interviews

Interview with Austin McChord & Michael Fass

Slide’s founders agreed to sit down with me to respond to the allegations. Austin McChord is Slide’s co-founder. He’s also the founder and former CEO of Datto, the company now suing him. Michael Fass is Slide’s co-founder and CEO. He was Datto’s former general counsel and Chief People Officer. Before we get into the interview, context matters here. I reached out to Kaseya, Datto’s parent company, for comment on this lawsuit. They declined citing the ongoing legal matter. That means you’re about to hear one side of this story. Keep that in mind. I’m not here to litigate the case or determine who’s right. That’s what the courts are for, but Slide’s response to these allegations matters. MSPs are evaluating whether to bet on this platform and they deserve to hear directly from the founders. Did they use Datto’s trade secrets? What safeguards did they put in place during development and why should MSPs trust them now that this lawsuit is public? I asked those questions. Here’s what they told me.

Evaluating Technical Claims: Interview with Bob Zeidman

So to help evaluate the technical claims in this case, I brought in Bob Zeidman. Bob is a software forensic expert and the founder of Software Analysis and Forensic Engineering. He’s testified as an expert witness in over 100 intellectual property cases, including trade secret disputes in the software industry. Bob has developed methods and tools for comparing source code and determining whether one piece of software was copied from another or independently developed. He literally wrote the textbook on this. His methods have been peer reviewed and are used by courts and corporations worldwide.
Now, for this story, I’m not asking Bob to evaluate the specific code in this lawsuit. He hasn’t been hired by either side and doesn’t have access to the proprietary materials. Instead, I want his help understanding the technical questions at the heart of trade secret cases like this one. What makes technology protectable? How do experts distinguish between independent development and misappropriation? And, can an engineer with domain expertise build similar technology without crossing legal lines? Bob, thanks for joining me.

Evaluating the Legal Claims: Professor Camilla Hrdy

To put this lawsuit in context, I asked Professor Camilla Hrdy, a trade secret law expert, to explain some of the key legal principles at play. She provided written answers, which I’ll read here.

That was Professor Camilla Hrdy explaining how trade secret cases are framed. The takeaway: these disputes often hinge on secrecy and burden of proof, and most of them never reach trial — they settle along the way.

Why this fight matters for MSPs and IT services companies

This lawsuit doesn’t exist in a vacuum. There’s important context about where both companies stand financially and strategically. Kaseya in particular is reported to be carrying around $4 billion in debt, as reported in Channelholic. That’s not a small burden. Debt service on that scale makes aggressive innovation harder. It crowds out R&D spending, and it creates an incentive to protect what you have, to defend incumbency rather than take risks building the next thing MSPs actually want.
Meanwhile, Datto itself was taken private in 2022. Its stock had stagnated and declined. The public markets had rejected Datto as a growth story, which made it ripe for acquisition. That’s a weaker backdrop than either side wants to admit, but it helps explain why the company might prefer a courtroom fight to a product one.

Here’s the uncomfortable truth. In a consolidating market, litigation itself becomes a competitive tool. For incumbents, lawsuits can stall challengers, create fear, uncertainty and doubt in the market, and reassure investors that leadership is defending the moat. For challengers, public fights can boost visibility and cast them as underdog innovators taking on entrenched powers. For MSPs caught in the middle, the fight offers little tangible benefit. Courtroom outcomes rarely deliver the innovation or partner experience that service providers actually need. You don’t get better backup technology because lawyers argued well in Delaware.

Slide’s Rising Risk Profile

Slide was pitched to the market as a clean, innovative partner-first disruptor. In my own vendor brief, I flagged challenges like execution, integration maturity, and scaling support. I did not list legal jeopardy as a threat. That has now changed. For MSPs, this creates a new dimension of vendor risk. Even if Slide is right on the merits, litigation is distracting and expensive. An injunction, even a temporary one, could shake customer confidence or slow roadmap delivery. Early adopters need to weigh not just the technology, but whether the company has the runway to navigate a prolonged fight.

Some lessons for MSPs on Operations and Law

This case isn’t just about two vendors fighting in Delaware. It’s also a cautionary tale for service providers themselves. There are practical takeaways in both operations and legal posture.

Contracts Beat Secrets.

One of the striking aspects of the Datto complaint is what’s not there. There are no claims of breached contracts. That suggests Slide’s founders and hires respected those restrictions. For MSPs, the lesson is simple. A strong contract is far easier to enforce than a trade secret claim. Don’t rely on unwritten understandings. Put protections in writing.

Most IP isn’t IP.

Many MSPs believe their workflows or tools are unique, when in reality they’re industry standard. The legal bar for trade secrets is high. Information must be secret, valuable, and actively protected. Most providers would struggle to prove their special sauce qualifies. To qualify as a trade secret, information must be secret, have economic value from that secrecy, and be subject to reasonable measures. Providers should document these measures if they intend to claim protection. That doesn’t mean execution isn’t important. It just means don’t assume legal protection where none exists.

Litigation is a distraction

Even if you have a solid claim, lawsuits drain money, time and focus. Watching two well-funded vendors spend millions on discovery and experts is a reminder for MSPs. Growth comes from execution, not legal battles. Put resources into productized services, customer relationships and innovation, instead of counting on courts to secure an advantage.

Optics matter as much as facts

Slide’s public relations campaign, interviews, unfinished business messaging, even stunts like burning Datto hardware, is about shaping perception. MSPs should note. When you face a crisis, whether legal, technical or reputational, owning the narrative is as important as winning the argument. Your partners and customers respond to confidence.

Dave’s Analysis

I expect this case to settle. Trade secret cases almost always do. Slide may face distraction in some legal costs, but I don’t see lasting damage. The absence of contractual claims suggests their team was careful, and the reliance on technology dating back to 2007 highlights how much the industry has already moved on. For Kaseya, the reputational cost is higher. At a moment when they want to be seen as more channel-friendly under new leadership, this lawsuit makes them look defensive. Rather than demonstrating innovation, it signals that protecting turf through litigation is the priority.