August 21, 2000
Battle lines are being drawn on a lawsuit that could set an important precedent for people leaving companies to join startups.
At issue is a problem that is becoming more commonplace. A big company, Alcatel SA claims a former employee, Alex Mondrus, has stolen secrets to set up his own router startup, IPOptical Inc.
On the other side, the little guy, Mondrus, says Alcatel is merely trying to stifle competition. “All Alex Mondrus did was to start his own company. He tried to do something innovative and instead got hit with litigation” says Scott Roberts, a lawyer with Sullivan Weinstein & McQuay, who represents Mondrus. “He didn’t steal any trade secrets or breach any contracts."
It has to be said that Alcatel has a particularly active legal department (see Alcatel Sues Hoosier Hackers, Judge Denies Alcatel Injunction, and Cisco Snagged in French Suit). But it denies being a bully. "We’re not warmongers trying to stifle competition. That’s just not true” says Chris Cole, VP and assistant general counsel for Alcatel, contending that his company has actually helped some ex-employees launch startups.
Cole acknowledges, nevertheless, that Alcatel is “vigilant” about protecting its intellectual property. “When the facts indicate that our intellectual property is being compromised, we have obligations to our shareholders to protect the company’s assets."
Alcatel’s side of the story was covered in Light Reading a few weeks ago (see Alcatel Sues Former Employee). At the time, we couldn’t get a response from Mondrus, but now his lawyer has come forward with his side of the story.
The case, which is expected to go to trial sometime next year, centers around one central question: Did Mondrus steal trade secrets in an effort to develop a product that competes against Alcatel’s newly introduced 770 RCP (Routing Core Platform)?
Alcatel’s supposed smoking gun is a document recovered from Mondrus’s hard drive, labeled “IPOptical Organization”, according to the original complaint filed on June 15. This document, which supposedly is a direct copy of an Alcatel document called “Xantium Organization”, allegedly reveals critical information about the process and development of the Xantium product, the code name for the terabit router platform, says Alcatel’s Cole. The complaint accuses Mondrus of simply cutting and pasting the IPOptical name in places where the Xantium logo appeared. According to Alcatel, this is hard proof that Mondrus was stealing and copying the Xantium product.
Mondrus’s lawyer Roberts has a different take. Although he doesn’t deny that his client used the document, he does dispute its relevance and importance. He says the document in question, which is submitted into evidence and is sealed to the public, is not the elaborate “Process of Design Implementation” that Alcatel claims, but simply an organizational chart with names and titles. In the early days of coming up with the idea for his company Mondrus supposedly showed the document to a potential investor as a possible corporate structure for his own company. “This is not a design document. It isn’t a blueprint,” says Roberts. “It’s simply an organization chart.”
As for the other claims against Mondrus, those too are arguable. Mondrus had a standard Principles of Business agreement with Alcatel. This contract states that, while working for Alcatel, “no employees shall be employed by or perform any services for, any competitor, customer or supplier of the company, whether or not compensation is received thereof, when such employment or services create a divided loyalty or the appearance of one," etc.
Roberts argues this point on two counts. First, IPOptical was not officially a company until it was incorporated in Delaware in May 2000, the month after Mondrus and Alcatel parted ways. Although Mondrus's wife had registered the name in the spring of 1999, the company had no employees, funding or assets. And even though Mondrus had done some preliminary work on his ideas on his own time, he did not officially begin hiring employees until the company was incorporated, says Roberts. What’s more, Mondrus claims that his new company will not directly compete with the 770 RCP router from Alcatel. Even though he doesn’t deny that he plans to use standard routing protocols such as BGP (border gateway protocol), OSPF (open shortest path first), and MPLS (multi-protocol label switching), he says that the product he is developing is very different from Alcatel’s because its fabric will be optical instead of electrical.
Alcatel has also accused Mondrus of raiding staff and has used old emails with resume attachments and discussions of certain employees as evidence that Mondrus was planning to take key Alcatel employees with him when he left. But this is also debatable, considering the fact that Mondrus had never signed a non-solicitation agreement with Alcatel, which would have prevented him from hiring people from Alcatel for a certain period of time. So whether employees sent him resumes on their own or he solicited them may not matter.
-- Marguerite Reardon, senior editor, Light Reading, http://www.lightreading.com
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