Former HP Executive Pleads Guilty to Stealing Trade Secrets

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A former vice president of imaging and printing services at Hewlett-Packard has pleaded guilty to stealing trade secrets from IBM, the U.S. Department of Justice said.

Atul Malhotra, age 42, of Santa Barbara, California, was charged June 27 with one count of theft of trade secrets, and he pleaded guilty Friday in U.S. District Court for the Northern District of California in San Jose. Malhotra worked as director of sales and business development in output management services for IBM Global Services from November 1997 to April 2006, before moving to HP in May 2006.

In March 2006, while still employed at IBM, Malhotra requested and received confidential information about product costs and materials, the DOJ said. The memo he received was marked confidential on each page, and a pricing coordinator at IBM Global Services told Malhotra not to distribute the information, the DOJ said.

Shortly after starting work with HP, Malhotra shared the IBM trade secrets with superiors, the DOJ said. In July 2006, he sent e-mail messages containing the IBM information to two senior vice presidents at HP, the DOJ said. Malhotra noted in the e-mail that knowledge of this information would help HP sales teams better understand their competitors' goals as they determined pricing for prospective deals.

HP and IBM cooperated fully with the investigation, the DOJ said. HP has said Malhotra's actions were in "direct violation of clear HP policies." The company conducted an internal investigation and fired Malhotra, and it reported the incident to IBM and law enforcement, it said.

Malhotra faces sentencing on Oct. 29. He faces up to 10 years in prison and a fine of US$250,000.

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