Former Executive Says HP Spied on Dell

A former Hewlett-Packard employee facing charges that he stole company secrets from HP has claimed in court papers that HP management tried to obtain trade secrets from rival Dell.

Karl Kamb Jr., previously vice president of business development and strategy at HP, was sued by his former employer after starting up an LCD display and flat-screen TV company while stillemployed by HP.

HP is suing Kamb and others, seeking up to $100 million in damages.

Last Friday, Kamb filed a countersuit against his former employer, claiming among other things that upper management paid an executive with Dell for information about that company’s printer business plans.

Kamb also claims he was the victim of pretexting at the hands of HP executives. Some high-ranking HP officials have acknowledged they used that tactic — in which a third party obtains someone’s personal information by claiming to be that person — in a separate investigation into boardroom-level press leaks.

HP promptly denied Kamb’s allegations and described them as an effort to forestall the prosecution of the main lawsuit, which claims that former employees violated their employment agreements by starting a company that sold competitive products — namely, flat screen displays.

HP did not deny investigating Kamb’s extracurricular work, but said it did not use pretexting to do so.

“HP strongly rejects such methods of investigation and has said that those methods will not again be employed on behalf of the company,” HP said in a statement.

Back and Forth

Among the documents filed by Kamb in U.S. District Court in Texas, one indicates that HP sought to create a plan to gather “competitive intelligence” about Dell’s plans to ramp up its printer business.

After that document was drafted, Kamb helped arrange to pay former Dell Japan president Katsumi Iizuka in exchange for insight into Dell’s printer plans. Iizuka left Dell in 1995.

Dell declined to comment on these revelations.

HP, meanwhile, says a Japanese-based start up known as ByDesign — of which Kamb served as U.S. head of operations — benefited from technology secrets taken from HP by Kamb and others.

Both the company and Kamb denied ByDesign benefited from any HP-related technology. The firm was established to sell flat-panel TVs built in China, according to court papers, and claims in an affidavit that Kamb tried to interest HP in working with the firm to source low-cost TVs, but HP rejected the idea.

Kamb’s countersuit also names former HP chairperson Patricia Dunn and other executives as allegedly having used pretexting to spy on his actions during and after his tenure at HP. Kamb claims the pretexting was an effort to obtain evidence that he was pocketing funds meant for Iizuka.

In addition, HP was hoping to find evidence that it could use to deny him a severance package when he left HP in the fall of 2005, said Kamb.

At the time, Kamb was going through a divorce and his estranged wife subpoenaed HP for information on Kamb’s flat-panel TV project, about which the company said it knew nothing at the time.

Pattern of Spying?

Disputes between tech companies and former executives are not rare, with companies often using employment agreements and other means to ensure that secrets do not go out the door when a high-ranking employee leaves. For instance, most executives agree to avoid starting a directly competitive firm for a certain amount of time.

Still, for HP the issue of pretexting is a sensitive one because of the scandal that erupted over the recent boardroom leaks investigation, which led to three board members resigning and other top-level changes at the PC maker.

“HP’s experience is a reminder that companies need to know the investigation tactics being used by those they hire,” Gartner analyst Martin Reynolds told the E-Commerce Times. “The consequences oftrusting a third party or having executives not know how investigations are being conducted have been made clear over the past few months.”