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Plea Bargain for Theft of Cisco Secrets

Light Reading
News Analysis
Light Reading
3/26/2001
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The man charged with taking intellectual property from Cisco Systems Inc. (Nasdaq: CSCO), his former employer, fessed up last week.

Peter Morch, a former R&D team leader at Cisco, pleaded guilty to federal charges that he downloaded proprietary optical networking product information from Cisco’s computers and later copied that information onto a laptop at Calix Networks.

When Light Reading first reported the charges against Morch, it was then discovered that Calix, a startup in Petaluma, Calif., is led by a number of former Cerent Corp. employees, including CEO Mike Hatfield. Board members include former Cerent executives Ajaib Bhadare and Cisco’s Carl Russo (see Theft Case Shines a Light on Calix ). Calix dismissed Morch in January 2001.

Morch was arrested in November after an FBI search of his home uncovered some CD-ROMs with proprietary software code and information about projects he'd worked on at Cisco. At that time, several documents containing Cisco project information were found on a laptop issued to Morch by Calix, his new employer.

In the FBI's affidavit, Morch told agents that he'd downloaded proprietary software from Cisco to use "as a reference" for his new job with Calix. According to the U.S. attorney's office in San Francisco, the maximum penalty Morch would have faced for trade secret theft, if convicted, was 10 years imprisonment and a fine of $250,000 plus restitution.

Thanks to a plea agreement, Morch will avoid the maximum sentence, since he admitted to lesser charges of taking confidential information, according to an Associated Press report.

Morch will receive three years probation and pay no fine. His sentencing is scheduled for June 27.

-- Phil Harvey, senior editor, Light Reading http://www.lightreading.com

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Belzebutt
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Belzebutt,
User Rank: Light Beer
12/4/2012 | 8:40:46 PM
re: Plea Bargain for Theft of Cisco Secrets
Whoa, 3 years probation and no fine vs. 10 years in jail and $250,000!! It's no wonder he quickly pled guilty, who wouldn't. This will make anyone think twice about copying stuff from their previous employer, or at least keeping the CDs at home and getting caught.
Rugger
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Rugger,
User Rank: Light Beer
12/4/2012 | 8:40:45 PM
re: Plea Bargain for Theft of Cisco Secrets
Was this info the reason he was hired? Was it a condition for being hired? If so, Calix should be investigated. Otherwise, BIG DEAL.
light_on_dude
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light_on_dude,
User Rank: Light Beer
12/4/2012 | 8:40:45 PM
re: Plea Bargain for Theft of Cisco Secrets
In a case like this, property stolen, will the company who hired an employee be investigated to? I'm not trying to justify the guy stealing intellectual property, but don't you think he probably shared it with some coworkers? I guess my question is, will Calix as a company be investigated? Do you think they should be? Are companies "co conspiritors" when the hire a "Bad Apple" from a competitor? would like to hear what people think?
drone387
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drone387,
User Rank: Light Beer
12/4/2012 | 8:40:44 PM
re: Plea Bargain for Theft of Cisco Secrets
Cadence and Avant![?] are in engaged in a pitched battle over intellectual property [IC CAD SW] taken [allegedly] when the Avant! founders left Cadence. It's been dragging along for a while in both civil and criminal court and is currently stalled. A company has more money and resources than an individual.

The other question is just how transferrable the software was? CPUs, Chip Sets, RTOSs, Interfaces, etc all change so that a major rewrite would probably be required. It would be more productive to start from scratch. The company hires you for the IP in your head and what you learned from the previous jobs. I can't see Calix hiring the guy for the actual code.
jsailor
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jsailor,
User Rank: Light Beer
12/4/2012 | 8:40:36 PM
re: Plea Bargain for Theft of Cisco Secrets
" Are companies "co conspiritors" when the hire a "Bad Apple" from a competitor? would like to hear what people think?"

Some employers have new hires sign statements declaring that they do not have in their possession at home or elsewhere any work from their former employer as well as statements indicating their understanding that the company is not interested in accessing any confidential information from any company. So it seems some companies are taking measures to protect themselves and any employee performing such practices is in on their own should a lawsuit ensue.

stuartb
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stuartb,
User Rank: Light Beer
12/4/2012 | 8:40:30 PM
re: Plea Bargain for Theft of Cisco Secrets
I've heard from a few different sources that Calix is also facing a suit from Alcatel over intellectual property issues.

Granted, Alcatel is very "litigation-happy" but there seems to be something very slippery about these guys.

-Stu
entropy
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entropy,
User Rank: Light Beer
12/4/2012 | 8:40:29 PM
re: Plea Bargain for Theft of Cisco Secrets
The Alcatel suit is really about possible recruitment of Alcatel employees by an ex-Alcatel Calix employee. There is no real basis for it as far as I can tell.

I have worked with the Calix people, and worked for DSC before Alcatel bought them (DSC). Alcatel is indeed "lawsuit-happy" -- it seems that they have retained DSC's legal team as a profit-center.

Calix is absolutely not at fault in the Cisco thing, and they are far from "slippery" I know them to be ethical and honest.

And no. I don't work at Calix.

-Entropy

> I've heard from a few different sources that Calix is also facing a suit from Alcatel over intellectual property issues. Granted, Alcatel is very "litigation-happy" but there seems to be something very slippery about these guys.
laserbrain
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laserbrain,
User Rank: Light Beer
12/4/2012 | 8:40:17 PM
re: Plea Bargain for Theft of Cisco Secrets
It's pretty clear from this announcement that the guy did nothing wrong and by extension, Calix is in no trouble either. He plea bargained under the "hacker statute" because they could find nothing else wrong - (ever saved your email when you left a company?)

Cisco's dilemma was that when someone mentioned he copied files on his way out, they MUST call the cops to protect themselves when someone actually takes something of value. Its all rather silly actually. No big corporate espionage story here.
DCITDave
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DCITDave,
User Rank: Light Beer
12/4/2012 | 8:40:15 PM
re: Plea Bargain for Theft of Cisco Secrets
Agreed -- From what I've learned, Calix had no idea what Morch was bringing in when they hired him. And Cisco was just going by the book when they phoned the fuzz.
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