Intellectual Property Theft: How to Stay Out of the Penalty Box
An acrimonious court case between two athletic gear companies provides strategies for discouraging intellectual property theft
March 01, 2007 — CSO —
Two years ago this month, a man named Homayoun Ghassemi—who goes by the shorter nickname, Holmes—resigned as director of hockey marketing at sporting goods company Easton Sports. The same day, Ghassemi accepted a job at Warrior Lacrosse, owned by the Boston-based sneaker company New Balance. Warrior was clearly planning to face off with Easton by purchasing Innovative Hockey, another vendor in the hockey stick business.
Eight days after he resigned, Ghassemi gathered his stuff, met with Easton execs once more and then left for good.
But his computer stayed behind, and, in a sense, this meant that Holmes Ghassemi—some past, digital version of him anyway—remained at Easton. A Shadow Holmes of sorts. The company was free to continue its exit interview with Ghassemi, in the form of a forensics investigation of his computer. This digital ghost, this Shadow Holmes, told Easton extraordinary things—that, for example, a month before he resigned, Ghassemi had forwarded a "Hockey Business Model" to Warrior from his Yahoo e-mail. The model included a projection that he could make the hockey unit a $50 million business in five years. Shadow Holmes told Easton that he had forwarded Easton files to his personal Yahoo account in the month leading up to his resignation, and that he accessed about 200 files on his office computer the day before he resigned, and dozens more on the day he left for good.
The digital Shadow Holmes told Easton enough for the company's lawyers to inform Warrior's lawyers that Ghassemi was suspected of stealing trade secrets. Warrior said it would investigate and immediately amended Ghassemi's employment offer to say he shouldn't bring anything from Easton. In a subsequent letter Warrior denied that Ghassemi "retained any documents from Easton." Easton replied with a screen shot of Ghassemi's old computer showing Ghassemi's file access on that Sunday before he resigned. Warrior lawyers wanted to be sure, so they asked Ghassemi directly if he'd taken confidential information from Easton. Ghassemi said no and submitted affidavits reaffirming the denial.
Easton nevertheless filed suit in U.S. District Court, charging Warrior with conducting a "campaign of industrial espionage, stealing Easton's trade secrets and raiding its employees." The complaint accuses Ghassemi of secretly brokering Innovative Hockey's sale to Warrior when Ghassemi knew that Easton was also pursuing Innovative. It accuses him of "soliciting" other Easton employees (some successfully) to work for Warrior. And it accuses him of forwarding documents containing Easton trade secrets to his Yahoo e-mail.