EMC sues startup for stealing trade secrets through staff hires
EMC has sued Pure Storage for allegedly colluding with some of the storage giant’s former employees to misappropriate and bring to the startup confidential EMC information and trade secrets, including lists and notes on current and potential customers.
Pure Storage CEO Scott Dietzen on Tuesday described the suit by EMC as a sideshow to the real competition between Pure Storage and EMC: delivering next-generation all-flash storage that is “rapidly replacing incumbent mechanical disk systems of which EMC is the market leader.”
In a complaint in the U.S. District Court for the District of Massachusetts, EMC has alleged that “dozens of former EMC employees have joined Pure Storage and stolen tens of thousands of pages of proprietary, highly confidential and competitively sensitive EMC materials,” in violation of their employee agreements. Many of them broke their agreements with EMC by inducing team members to join Pure Storage, it added.
The materials are said to include specific information on EMC’s “directly competing” flash storage product, selling strategies for the product, and detailed information on customers and their buying patterns.
Thou shall not steal
The conduct was “apparently orchestrated by or known to the highest executive management levels of Pure Storage,” EMC said in its complaint. Various members of the board of directors of Pure Storage and significant early investors are former executives of EMC or its VMware subsidiary, it said.
In specific instances of misappropriation cited in its complaint, EMC referred to the theft of lists and notes of key decision makers at current and potential customers, besides presentations and other sales information.
EMC is objecting to at least 44 of its technical engineers and sales professionals, some of them high performers at the company, joining Pure Storage since August 2011, and who now apparently comprise over 50 percent of the startup’s sales force.
It wrote notices to the former EMC employees and to Pure Storage reminding them of obligations to EMC under “key employee agreements,” which covered return of confidential materials when leaving the company, and commitments not to disclose secret company information to outsiders.
EMC said it has already initiated litigation against not fewer than six of its former employees, and obtained injunctions or court orders requiring various of those employees to return misappropriated confidential and proprietary property. “In numerous instances, these former employees returned misappropriated EMC materials only after EMC was compelled to initiate litigation—and in several instances only pursuant to court direction,” it said.
New hires hoping to join from a competitor are asked by Pure Storage of Mountain View, California to review their existing employment agreements, confirm that they are no longer in possession of any intellectual property from their previous employer, and agree not to share or use any at the company, Dietzen wrote. Pure Storage will continue to defend the six employees already sued by EMC as well as the current suit, he added.
Dietzen said his company was looking forward to EMC’s launch next Thursday of an XtremIO all-flash array, as “competition also fuels market growth.” EMC acquired Herzliya, Israel-based startup XtremIO last year to target the all-flash enterprise storage market.
On hiring employees, Dietzen said he believed in employee freedom, and Pure Storage would continue to hire “great, ethical people” wanting to join the company.
Besides asking for damages, EMC is also asking the court to order Pure Storage to return its confidential information.