The Trade Secrets Blog

Following Trade Secrets Litigation

IBM Tries For A Second Bite at the Apple (or Dell in this case)

Back in June I posted on IBM’s lawsuit against it’s former M&A chief, David Johnson, here. IBM sought a preliminary injunction to prevent Johnson from performing his duties at Dell. The Judge denied the preliminary injunction on June 26, 2009, saying that it would unfairly hurt Johnson’s career.

IBM appealed the ruling. However, not satisfied, IBM also sought to revive its motion for preliminary injunction based on the discovery of new evidence against Johnson. The New Brunswick Business Journal is now reporting that U.S. District Judge Steven Robinson denied IBM again. Robinson wrote, “The court shall not allow IBM to litigate this matter through piecemeal, seriatim motions requesting the same relief.” According to Robinson, such a method “is vexatious and does a great disservice to the interests of Mr. Johnson and of the court.”

The litigation appears to center around the validity of a 2005 agreement, specifically, whether it is valid even though it wasn’t properly signed by Johnson and IBM never followed through on threats to take away his equity in the company if he didn’t re-sign it. According to Johnson, he deliberately signed the agreement in the wrong place.

Take away message: Make sure your employees sign any agreements in the correct place. There really is no reason for an employee not to do so, unless he plans on creating wiggle room for himself as Mr. Johnson has done.

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August 7, 2009 Posted by | confidentiality agreement, Intellectual Property, misappropriation, non-compete agreement, trade secret theft, Trade Secrets | , , , | 1 Comment

If Only They Were All This Easy – IBM ex-Employee Cops to Theft

Former IBM exec Atul Malhotra pleaded guilty to the theft of IBM’s trade secrets according to this article.

Key graphs:

In pleading guilty, Malhotra admitted that on March 15, 2006, while employed at IBM, he requested and received confidential information concerning IBM Global Services, CC Calibration Metrics. The trade secret information, marked confidential on each page, included data concerning product costs and materials that IBM used to compete in the marketplace. In providing the requested information, a pricing coordinator at IBM Global Services directed Malhotra not to distribute the information due to its sensitive nature.

In May 2006, Malhotra became a vice president of imaging and printing services for HP. According to plea documents, shortly after starting in his new position at HP, Malhotra shared IBM trade secrets with his superiors. On July 25, 2006, Malhotra sent an e-mail to an HP senior vice president with the subject, “For Your Eyes Only,” and attached the trade secret information for which he is charged with sharing. Two days later, on July 27, 2006, he sent an e-mail to another HP senior vice president with the subject, “For Your Eyes Only – confidential,” and attached the same trade secret information. The court documents also reveal that in the e-mail message, Malhotra noted that knowledge of this information would help specific HP sales teams better understand their competitors’ goals as the teams determined pricing for prospective deals.

They don’t get much easier than that. However, unsaid in the article is that IBM most likely had an excellent trade secrets protection plan in place for the dissemination of any information they considered to be trade secret. Further, it’s clear that their employees were well trained as the article notes that the pricing coordinator directed Malhotra not to distribute the information. All of this work beforehand made the case against Malhotra so strong that he was forced to plead guilty. Malhotra faces a maximum of 10 years in prison, a fine of $250,000 and a three-year term of supervised release. Crime doesn’t pay.

July 18, 2008 Posted by | Intellectual Property, misappropriation, trade secret theft, Trade Secrets | , , , | Leave a comment