When execs at Alcatel SA first started developing the 770 RCP (Routing Core Platform), they most likely pegged Cisco Systems Inc. and Juniper Networks Inc. as their most menacing competitors (see Alcatel Boxes Clever ).

Little did they realize that the biggest threat wouldn't come from outside the company but from one of their own senior engineers working on the project, who allegedly stole Alcatel trade secrets and staff to build a competing product.

Alcatel filed suit against Alex Mondrus, the former employee, and his new company, IPOptical Inc., last month in U.S. District Court in the Eastern District of Virginia.

The court documents read like an episode of Court TV accusing Mondrus of stealing intellectual property, breaching his contract by establishing a competing company, copying the design of the new router straight from an Alcatel presentation, and raiding the Alcatel staff for individuals with software expertise---and all of this supposedly happened while Mondrus was still working for the company.

How did Alcatel get most of the goods on Mondrus? Through emails and files retrieved from Alcatel computers and servers. "This guy seems to have handed Alcatel a loaded gun," comments one industry observer who has been following the case.

From February 1998 to April 2000, Mondrus worked for Alcatel as a senior engineer involved with the IP switch router internally known as Xantium-later introduced as the 770 RCP at last month's Supercomm tradeshow. Mondrus worked closely with other engineers to prepare specifications, requirements and design documents for the Xantium optical IP router.

"Alcatel reposed a special trust in Mondrus," states the complaint filed by Alcatel, "and entrusted him with its most sensitive proprietary information including trade secrets and confidential information relating to Alcatel's numerous communications systems."

While Mondrus was working on the development of the Xantium system, he was also forming a venture of his own, according to Alcatel. Documents show that IPOptical was incorporated in May of 1999 in Virginia and was initially registered under Mondrus' wife's name using his home address. Alcatel points to emails sent from Mondrus to business partners and investors that prove he was using company property and resources to work on his new venture for almost a full year.

The complaint also says that Mondrus recruited Xantium team members Benjamin Abarbanel, who specializes in Border Gateway Protocol (BGP) routing code, and Thong Ngyuen, an expert in Multi Protocol Label Switching (MPLS), to work with him on creating an IP switch/router. As early as May 1999, emails between Mondrus and Abarbanel reveal that the two had been discussing the design and development of the IPOptical switch router using technology that was developed for the Xantium switch router.

In June 1999, Mondrus allegedly made an unauthorized copy of Alcatel's "Xantium Organization" document, which reveals the design, development and manufacture of the Xantium system. A document entitled "IPOptical Organization" was recovered from the memory of Mondrus' company issued laptop. According to the complaint, a side by side comparison shows striking similarities between the two plans. "In addition to being almost visually identical, Defendant's IPOptical Organization document even contains the label Xantium NE as part of the IPOptical architecture."

Not only is Alcatel accusing Mondrus of being disloyal to the company and also stealing proprietary information, it also is accusing him of raiding Alcatel staff in an effort to recruit for IPOptical. Once again old emails are haunting Mondrus. Throughout the summer of 1999, several Alcatel employees working on the Xantium project sent their resumes via email to Mondrus. And in a business plan dated September 19, 1999, which was sent to potential investors, a list of possible Alcatel recruits names individuals to be targeted as well as certain key Alcatel engineering positions listed by title. These included chief architects from the Packet Engine PowerRail 52000 routing switch and the IP Core Switching systems project and customer managers with close ties to Uunet.

So far, IPOptical's plan to compete with Alcatel haven't come to fruition. A temporary injunction has been placed on IPOptical to prevent Mondrus and his team from further development and exploitation of Alcatel intellectual property. Currently no information is available on the IPOptical Web site. Neither Alex Mondrus nor anyone who works for IPOptical would return Light Reading's calls for comment.

This isn't the first time that Alcatel has played hard ball when it comes to its intellectual property. The company sued Monterey Networks when engineers left the Alcatel facility in Richardson, TX, to work at the nearby start-up. Cisco inherited the case when it bought Monterey last summer and the matter is still pending in court.

In January, Alcatel settled a case that it had brought against Samsung Electronics Co. for poaching key employees and stealing trade secrets (see Cisco Snagged in French Suit).

And last month a U.S District Court Judge in Texas denied Alcatel's request for a preliminary injunction against Chiaro Networks Ltd. that would have prohibited Chiaro from hiring any Alcatel employees or continuing its development of optical technology (see Judge Denies Alcatel Injunction).

All in all, the details of the case have cast a dark shadow over the start-up community. "Things like this really give all start-ups a bad name; it hurts the whole industry," says one CEO from an optical start-up. "The thing is you don't need to steal to get a good idea."

by Marguerite Reardon, senior editor, Light Reading, http://www.lightreading.com