Yahoo claims mobile publisher stole trade secrets

  • By John Borland, News.com
  • Posted Mar 1, 2006 1:27 pm PT

Portal claims former employees nabbed confidential business and tech data, repurposed info at MForma.

From News.com

Yahoo has filed a lawsuit against wireless content company MForma, charging the San Francisco-based company and a group of ex-Yahoo employees there with theft of trade secrets.

According to the lawsuit, which was filed Monday in a Santa Clara County state court, the group of seven former Yahoo employees copied large amounts of confidential business and technical data when they left the Web portal company, and brought it to use in their new positions at MForma.

Yahoo is seeking a temporary restraining order, barring MForma from using any of the business or technical data. The company wants a deeper understanding of how the information has been used before asking for damages, a Yahoo attorney said.

"We have been confronted with evidence that shows a handful of employees has abused our trust and respect," said Yahoo associate general counsel Reggie Davis. "We have been left with no recourse but to go to the courts."

In a statement, MForma chief executive officer Jonathan Sacks said Yahoo "deserves the gold medal for hypocrisy," noting that the Web company had itself been recently sued on trade secret grounds by Nuance Communications, after hiring a team of that company's employees.

"[Yahoo] is now so desperate over the fact that they are losing several experienced software engineers with years of experience in the mobile industry, that they are now taking the exact opposite legal position," Sacks said in the statement. "These cutting-edge, mobile-content engineers are leaving because MForma is a company of the future."

Drawing heavily from archived instant messaging conversations in which the former employees discuss their plans, the lawsuit highlights the deeply competitive nature of the wireless content industry, in which startups compete with giants like Yahoo for relationships with phone carriers.

According to the suit, the defection of the tight-knit group of Yahoo engineers and business development staffers began with a single employee, who then began recruiting his former colleagues, in violation of contracts he'd previously signed with Yahoo.

As the team left, they took with them financial forecasts, business strategy documents, and even Yahoo source code for technologies designed to send content efficiently to cell phones, the suit alleges.

Much of the evidence is drawn from back-and-forth instant messaging conversations conducted on company laptops. At several points, the employees switched to using similar chat software from AOL, apparently in an attempt to avoid detection, the suit claims.

MForma is an 800-person company that has focused primarily on games and music applications for cell phones, and provides content for carriers including Verizon Wireless, Cingular Wireless, Sprint, Vodafone, Orange, and others.

11 Comments

  • jonnyjd

    Posted Mar 2, 2006 1:01 pm PT

    I guess Yahoo's guys didn't want to ...uh...Yahoo! anymore.

  • LOLO_BOND

    Posted Mar 1, 2006 5:51 pm PT

    they are morrons, when you do a new programs or something that can make you rich in the time period when you are wolking for someelse your job is for them they paid you, you lose....if they make the technology about 6 to seven month after they leave yahoo well .. the new techonogy and the money can it will generate is for them

  • NeoJedi

    Posted Mar 1, 2006 4:27 pm PT

    The ex-employees of Yahoo were kinda dumb to have their messaging conversations on the company's laptop... that really made me laugh.

  • adonis2109

    Posted Mar 1, 2006 3:02 pm PT

    Only bad things happen when people who work for major companies suddenly think they're "above the law". It only worked for Seagal.

  • GyRo567

    Posted Mar 1, 2006 2:15 pm PT

    Regardless of what really happened, Yahoo is destroying their reputation for good reason: They're evil. I avoid Yahoo whenever possible. Though ironically they're tied to my DSL package... >_< Blasted good pricing.

  • miragels00

    Posted Mar 1, 2006 2:11 pm PT

    Rule #1 Never do anything on a company computer because when you leave they get the computer, and they always have access to the server to see everything that you've done.

  • Bazza123rocky

    Posted Mar 1, 2006 1:41 pm PT

    haha. tis a bit stupid if you ask me, course they were gonna get caught

  • nemes1s3000

    Posted Mar 1, 2006 1:41 pm PT

    First XFire, now MForma, oy gevult.

  • Donkeljohn

    Posted Mar 1, 2006 1:35 pm PT

    When you have talented people, sometimes the company secrets they take with them is their grey matter. No surprise someone can replicate the same processes in a new job that they did for years in their old job.

  • woohooforme

    Posted Mar 1, 2006 1:34 pm PT

    "These cutting-edge, mobile-content engineers are leaving because MForma is a company of the future." That made my day!

  • blackIceJoe

    Posted Mar 1, 2006 1:32 pm PT

    thats to bad I hope this can get done with soon.

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