Wal-Mart Settles Case Against Amazon.com

Wal-Mart Stores Inc. has agreed to drop a lawsuit charging that Amazon.com Inc. raided its staff for key technology executives and database secrets, the companies said Monday.

Settling a heavily publicized case that underscored the threat posed by the Internet to traditional retailers, Amazon.com and its affiliate Drugstore.com Inc. agreed to reassign some former Wal-Mart employees and vendors to jobs different from those they performed for Wal-Mart.

As part of the settlement, Amazon.com agreed to drop a countersuit against Wal-Mart, and Wal-Mart dropped charges against former executive Richard Dalzell, now Amazon.com’s chief information officer, and against venture capital firm Kleiner Perkins Caufield & Byers.

No damages will be paid by any party, the companies said.

“The terms of the agreement provide us with the assurances of confidentiality we were seeking,” said Robert Rhoads, Wal-Mart’s general counsel. “We also make this agreement with the good-faith knowledge that our computer systems and business processes are protected as all of our companies move forward.”

Wal-Mart filed suit in October in its headquarters of Bentonville, Ark., sending a ripple of fear through the technology industry. A successful suit could have hampered efforts to recruit badly needed employees with experience using technology in business.

The suit later was moved to King County Superior Court in Seattle.

The settlement allows Amazon.com and Drugstore.com to continue hiring “the most talented and qualified individuals,” said Bill Curry, spokesman for Amazon.com.

Seattle-based Amazon.com owns a 46% stake in Drugstore.com, which is based in nearby Redmond, Wash. Drugstore.com opened its virtual doors in February with a menu of prescription and nonprescription drugs, toiletries, perfume and other items.

“Neither company has any interest or desire to obtain proprietary information or trade secrets from another company,” Curry said. “We are glad to put this issue behind us so we can keep our focus where it belongs--on our customers.”

Wal-Mart is the undisputed U.S. retailing leader with $138 billion in annual sales and is well-known for its massive Retail Link database of product information.

But Amazon.com contended in its countersuit that when it comes to the Internet, Wal-Mart’s technology is lacking and the company is behind the curve.

“Wal-Mart and other land-based giants are finding that land-based dominance is not translating to success on the Web,” Amazon.com said in the filing.

Amazon.com also noted that Wal-Mart is a major retailer of books, videos and music, all categories targeted by Amazon.com, which sold $250 million worth of products in its most recent quarter.

Wal-Mart shares were up $2.13 to close at $95.38 on the NYSE. Amazon.com was up $15.50 to close at $186.50 on Nasdaq.