Tuesday, March 06, 2007, 3/06/2007 09:34:00 AM

Raytheon Files Trade Secrets Suit Against Rival Flir Systems

By Todd
Military contractor Raytheon Corp. has filed a lawsuit against Flir Systems, a major rival, alleging Flir Systems hired more than thirty (30) Raytheon employees who took trade secrets and patent information with them upon their departure and used it to Raytheon's competitive disadvantage.

The suit was filed Friday in the United States District Court for the Eastern District of Texas. Raytheon seeks damages, disgorgement of Flir's alleged unjust enrichment, an injunction mandating the return of certain files, and its attorney's fees and costs.

In March of 1996, a high-level Raytheon executive quit and started a company called Indigo, allegedly to provide consulting advice to companies like Raytheon. Raytheon claims that instead of consulting with Raytheon to develop infrared cameras and detectors, Indigo planned to become a competitor of Raytheon and intended to use Raytheon's research and development in the process. The suit alleges "Indigo embarked on a calculated course of action to jump to market by undertaking a systematic effort to hire away key scientists and technicians from Raytheon in each of the critical research and design disciplines where Indigo lacked the knowledge necessary to compete." Flir Systems acquired Indigo Systems in 2004.

Our comment is that this case represents a high-profile "employee raiding" case with all of the relevant elements to make it interesting and a challenge for the court: (a) departure of a significant number of important employees to a single competitor; (b) confidential and trade secret information allegedly in the possession of those departed employees; (c) loss of customers or bids to that competitor; and (d) lots of money at stake.

We'll keep an eye on this one for you.

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