Yahoo Inc. filed a lawsuit against Mforma Group Inc., claiming the mobile game-maker is stealing company secrets as it hires seven former Yahoo employees.
The Internet giant is suing both Mforma and the former workers, saying it will seek an injunction in a California Superior Court to prevent the employees from using Yahoo technology designed to deliver content to wireless phones.
The suit also seeks unspecified monetary damages.
Judge William J. Elfving granted Yahoo an early victory in the case last week, issuing a temporary restraining order that prevents the employees from accessing or using Yahoo’s proprietary technology.
Former Yahoo employee Michael Temkin, who is named in the lawsuit, was recently installed as Mforma’s vice president of engineering. The mobile publisher, which denies the allegations, responded to news of the suit by issuing a statement touting its new hires.
“Mforma has the most compelling and forward-looking vision of any player in the mobile content industry-and what motivates me as an engineer is to be with a company that is looking to the future, as opposed to the past,” Temkin said in a prepared statement, taking a thinly veiled swipe at his former employer. “We could not resist the opportunity to work here and be part of this very special team.”
Yahoo filed a 38-page complaint against Mforma, claiming that Temkin and six others last year “began plotting to systematically and illicitly acquire and misappropriate Yahoo’s trade secrets, and illegally raid Yahoo’s employee base through a targeted campaign.” The document includes excerpts from more than two dozen instant-messaging conversations the company claims took place between the defendants during their tenure at Yahoo.
At the heart of the case is Yahoo’s new server-side platform designed to deliver mobile-optimized, updateable content to phones in a way that simplifies the development process. Mforma, lacking such technology, began recruiting Yahoo manager David Chang, who had access to proprietary data concerning the platform, according to the filing.
Chang accepted a position at Mforma and, in leaving Yahoo, “surreptitiously copied over two gigabytes (comprising tens of thousands of pages) of confidential and proprietary Yahoo! Mobile documents, data, communications and contacts” onto his personal computer, Yahoo claims. Chang then moved the data onto his laptop, according to the complaint, and began recruiting Erik Pavelka, a Yahoo manager, and Temkin, who oversaw development of the proprietary technology.
Temkin, while still at Yahoo, began to recruit those working under him, Yahoo claims.
“I have a question for you which you can’t really talk about,” Temkin wrote in an instant message to a subordinate in December, according to the complaint. “How open would you be to going to a startup?”
The lawsuit claims Temkin and his subordinates “took significant efforts to conceal their actions from Yahoo,” including switching to AOL’s instant- messaging service to discuss sensitive matters. And the document cites instant messages between Chang and Pavelka regarding negotiations between the two companies.
Yahoo sells several Mforma titles on its Internet storefront for mobile content, including X-Men Legends 2: Rise of the Apocalypse and The Italian Job.
“Don’t go into a new agreement with Yahoo-it will take forever,” Pavelka allegedly wrote to Chang in December. “Also, economics w/ Mforma are really good for Mforma right now…. So, keep it that way if possible.”
Most of the communication between defendants cited in the complaint took place over Yahoo Messenger, the company’s public instant-messaging service. A spokeswoman said all communication between Yahoo employees on company networks and computers are archived and can be reviewed.
The service has an optional archiving feature with three settings for public users. Members can opt to save messages over the course of a conversation, save all messages or save none.
Mforma’s Sacks accused Yahoo of hypocrisy, noting the Internet behemoth’s recent legal squabble with Nuance Communications. Nuance filed suit after Yahoo hired a team of its executives in a case that was settled earlier this month.
“While we understand it’s always unpleasant to lose talent, Yahoo has gone too far in wrongfully accusing us of a conspiracy that doesn’t exist,” Sacks said in a prepared statement. “If they are having problems retaining engineers, they should be looking at the internal sources of employee dissatisfaction rather than trying to cover that up with this legal action.”
