Tuesday, November 20, 2007, 11/20/2007 09:37:00 AM

Trade Secrets Battle in Detroit - MSC Software Corp. vs. Altair Engineering Inc. and Seven Former MSC Employees

By Todd
Crain's Detroit Business is reporting that Troy, Michigan-based Altair Engineering Inc. wants a federal judge to appoint a programming expert to determine whether any computer codes link Altair's new prototype simulation software to a competitor's.

The competitor, Santa Ana, Calif.-based MSC Software Corp., is suing Altair and seven former MSC employees in U.S. District Court in Detroit, alleging theft of trade secrets in two software products Altair launched this year. No date has been scheduled for U.S. District Judge John Feikens to review the matter.

MSC filed the lawsuit in July and agreed to dismiss one of the eight former employees from the suit in September."It was people who all worked previously at MSC and moved to the Altair offices," said attorney James Hermon of Dykema Gossett P.L.L.C., one of MSC's attorneys. "They all came out of the Ann Arbor office where this product originates."

The suit alleges that Altair hired more than "20 percent of the MSC Software Adams Group," developed a product using trade secrets and "undertook an aggressive program to induce Adams/Car customers to abandon Adams/Car and adopt Altair MotionView."

Strictly a coincidence, said attorney C. Thomas Ludden of Bloomfield Hills-based Lipson, Nielson, Cole, Seltzer & Garin P.C., who represents the employees. He contends that his clients left MSC at varying times for varying reasons."Our position is — and we've stated as much in the pleadings — that we deny any theft of trade secrets," Ludden said. "We deny that we've done anything to break any laws or even violate a noncompete or confidentiality agreement. The clients moved for all the usual reasons you might change employers."

Larry Saylor, co-counsel for Altair Engineering and a principal at Miller Canfield Paddock & Stone plc, said Altair's newest developments were driven by customer demand and not a bid to steal MSC program code or its customers.

We here at Womble Trade Secrets are seeing more and more of these "employee raiding" cases pop up in the reported cases. The allegations are generally tracking the following paradigm: (a) Business A's employees are unhappy and willing to jump ship for a better opportunity at Business B; (b) Business B is happy to take on the new campers and aggressively uses them to compete with Business A; (c) Business A claims the mass departures make competition difficult and that Business B's actions are unfair competition; and (d) Business A says that its former employees have disclosed trade secrets to Business B, thus explaining Business B's newfound success in the marketplace.

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