Ruling Boosts Ability to Hire From Competitors
Broadcom Corp. won a key courtroom ruling Friday in defending itself against claims by giant computer chip maker Intel Corp. that the Irvine firm had stolen trade secrets by hiring three Intel employees.
A judge in Santa Clara, Calif., rejected Intel’s demand for an order barring the employees from working at Broadcom until a trial on the issues is over, a process that could take years.
The ruling in the well-watched case could chill for now any ideas that California companies might have of stopping competitors from hiring employees who have sensitive information about products in the pipeline and trade secrets.
The issue is especially critical in the high-technology industry, where there is fierce competition for talented workers, who often are quick to jump to the next higher-paying job.
A number of companies, especially established ones, are reluctant to bring such lawsuits for fear they will someday find themselves “on the other side of these cases,” said lawyer Brett Williamson, who specializes in intellectual property law.
The broad ruling by Superior Court Judge William F. Martin had both sides claiming at least a partial victory.
In siding with Broadcom on the three employees it hired, Martin said the long trend in the law has been to allow workers to move freely to new jobs despite concerns that trade secrets might be disclosed to new bosses. The three involved are former Intel product manager Greg Young, former engineering manager Martin Lund and former software engineer Steven Lindsay.
His decision allows the case to continue the long process toward trial, but the practical effect allows the three to continue working for Broadcom, the leading maker of chips for digital cable-television set-top boxes.
But in a partial victory for Intel, the world’s largest computer chip maker, Martin said he will issue an order temporarily barring Broadcom from hiring a fourth Intel employee, Bradley Gunther, who may have provided Broadcom executives with trade secrets during a job interview.
The judge said that, in dealing with the fourth employee, Broadcom displayed an attitude toward Intel’s trade secret that was “extremely cavalier,” and he called testimony by Broadcom Chief Executive Henry T. Nicholas III “unpersuasive and not credible.”
In an interview before Friday’s ruling, Nicholas said, “My belief is that employees are not property and should be free to move from company to company. We believe slavery was outlawed some time ago.”
The case draws on the legal concept of “inevitable disclosure,” which presumes that a worker will tend to disclose information from a previous employer. It’s a presumption that the California Supreme Court has rejected, though such states as Florida and New York embrace it, Williamson said.
Broadcom lawyer Rico Rosales, of Wilson, Sonsini, Goodrich & Rosati in Palo Alto, trumpeted the ruling.
“The judge felt that these three individuals were trustworthy, credible and would not disclose trade secrets,” Rosales said. “It is a tremendous victory for workers in California because the court has said that the right of employees to change jobs and the right of employers to seek talent in the marketplace is paramount.”
Intel spokesman Chuck Mulloy also claimed victory for his side.
“We wanted them to respect our trade secrets, and that’s what the judge ruled,” Mulloy said. “We were not seeking to prevent [Broadcom] from hiring these people. We were only seeking to prevent Broadcom from putting these employees in a position where they may be required to disclose trade secrets.”
