DELL ALLEGES HP OF CORPORATE ESPIONAGE

[Anonymous]

Dell calls on HP to investigate spying charges
HP says it discussed allegations that employees spied on rival, but Dell wants more thorough investigation
A
corporate shoving match has begun between HP and Dell following new
allegations that HP robbed Dell of trade secrets.Fortune magazine
reported this week that it had unearthed information that appears to
support claims made by Karl Kamb Jr, a former HP vice president. Kamb
said in legal documents filed in January that in 2002 HP paid a former
Dell executive to snatch trade secrets about Dell’s printer
business.After the story, a Dell spokesman said HP had yet to respond
to requests that the company investigate Kamb’s accusations. HP is
suing Kamb for allegedly stealing some of its technology.In legal
documents, HP denied spying on Dell. HP said in a statement that it has
responded multiple times to Dell’s requests.”In January and February
2007, HP responded to letters from Dell’s general counsel,” HP said in
the statement. “In addition, Dell’s outside counsel and HP’s outside
counsel have spoken and met numerous times and continue to remain in
contact in an effort to address any lingering concerns surrounding
these issues.”

Dell suggested that HP is missing the point. Dell
wants an investigation to determine whether its trade secrets were
stolen.”We have a simple request that we have made twice and will
continue to make,” Dell said in a statement. “We have specifically
asked HP to conduct a full and thorough investigation. We have been
waiting to learn the results of their investigation, or to receive an
explanation of why they have chosen not to investigate this matter.
Instead, we have heard nothing.”We do not know what investigation they
undertook, what witnesses they spoke to, what conclusions they reached
or what actions they intend to take in response to these allegations.
At Dell, we believe corporate espionage is unacceptable and we take
allegations of this nature very seriously.”If true, Kamb’s claims would
contradict HP’s assertions that the hunt for a boardroom leak last year
was an isolated event.Several HP executives, including Patricia Dunn,
HP’s former chairman, were rebuked by a congressional committee after
the executives acknowledged that spying on board members, employees and
journalists — including three from ZDNet.co.uk’s sister site, CNET
News.com — had occurred. HP investigators are also accused of tricking
phone company employees into turning over private phone records
belonging to journalists and board members, a practice known as
pretexting.On Friday, an HP representative declined to say whether the
company had launched an investigation into Kamb’s allegations, citing
the court order that prevented HP and Kamb from discussing their case
publicly.

HP faces claims of spying on Dell
Former
executive says the company paid to obtain confidential information
about Dell, while HP accuses him of stealing trade secrets
A former
HP executive accused by the company of stealing trade secrets is now
saying that he was instructed by the company’s management to spy on
rival Dell.Karl Kamb, previously HP’s vice president of business
development and strategy, was named as a defendant in a federal lawsuit
filed by HP in 2005. It alleges that onetime HP employees illegally
started a rival flat-screen TV company while still working at HP and it
is claiming up to $100m in damages.
Kamb, who has denied any
wrongdoing, filed a countersuit in US District Court for the Eastern
District of Texas on Friday, according to legal documents. Among Kamb’s
allegations are:
    * In 2002, HP hired Katsumi Iizuka, a president
of Dell Japan until 1995, to supply information on Dell’s plans to
enter the printer business.
    * That “senior HP management” signed off on the payments to Iizuka.
   
* HP obtained Kamb’s private phone records through pretexting, the
practice of obtaining information by masquerading as someone else.
Among the defendants in Kamb’s suit are former HP chairman Patricia
Dunn and former HP attorney Kevin Hunsaker.

In a statement on Wednesday, HP denied Kamb’s accusations.
“This
counterclaim is wholly without merit,” HP said. “It’s a blatant attempt
to delay the prosecution of the original case… We intend to
vigorously pursue our original claim and to defend ourselves against
this action.”The countersuit, which seeks unspecified damages, comes
only a few months after an embarrassing episode in HP’s history, in
which the company engaged in illegal pretexting to obtain the private
phone records of journalists, employees and company board members as
part of an effort to uncover a news leak on the board. Former HP
chairman Patricia Dunn has been charged with four felony counts and has
pleaded not guilty.

The new allegations leveled at HP by Kamb do
not appear to be directly tied to the boardroom leak hunt. However,
Kamb has pointed to some of the evidence that surfaced during last
autumn’s investigation into HP’s pretexting, and a timeline indicates
that the company had already employed pretexting for phone records
around August 2005.Kamb was a vice president of business development at
Compaq Computer when that company merged with HP in April 2002 and was
fired sometime in the autumn of 2005, Kamb said in his suit. He was
living in Japan for much of that time, and was assigned to research new
technologies and to build ties with “computer industry experts”,
according to the suit. Today he’s the US chief executive of Byd:sign,
the flat-panel TV company he’s accused of founding unlawfully.HP claims
in its lawsuit, filed against Kamb, Byd:sign, and other former
employees, that Kamb had threatened to quit until he received a
substantial pay raise.HP asserts that Kamb owned, along with several
associates, a significant share of Byd:sign, but failed to tell anyone
at HP.”While still employed by HP, these former high-level employees
and their co-conspirators covertly organised and began operating a
competing business venture using HP’s resources, contacts and trade
secrets,” HP claims in court documents.More specifically, HP charges
that Kamb was “siphoning” research and development funds from HP for
Byd:sign’s benefit.In his filing, Kamb vehemently denied diverting any
funds.Besides Kamb and Byd:sign, HP also named as a defendant Katsumi
Iizuka, the former president of Dell Japan.Kamb acknowledges meeting
Iizuka in 2001 as part of his mission to build links with computer
experts, according to court records. But Kamb characterises it merely
as a business relationship that benefited HP.

Allegations of corporate espionage
The
most incendiary allegations come in the new countersuit, which claims
that HP executives became concerned with rumours that Dell was
preparing to make a foray into manufacturing printers, one of HP’s most
lucrative businesses.As a member of HP’s imaging and printing group’s
“competitive intelligence team”, Kamb said he was in a position to know
that HP senior executives signed off on a plan to pay Iizuka to obtain
details of what Dell was up to. Iizuka turned over the information to
Kamb and he passed it along to HP, Kamb claimed.Kamb alleges that
Iizuka declined to receive any money but instead requested that the
money be paid to a company called “Dinner Inc”. Payments were to be
handled by a third party. “Iizuka then obtained information on Dell’s
anticipated launch of its printer business,” Kamb claims. (Iizuka had
left Dell in 1995 to start his own company.)HP’s version of the story
confirms some details, but doesn’t discuss the alleged corporate
espionage or senior management involvement.HP’s version, in its own
lawsuit, goes like this: in October 2002, Kamb arranged for HP to hire
Iizuka as a consultant to provide market research regarding unnamed HP
competitors. In addition, Kamb arranged……for additional consulting fees
totaling about $10,000 a month to be funnelled to Iizuka through a
consulting firm called “Imagine That”, which was run by one of Kamb’s
paramours.Among the documents Kamb included in his filing were emails
he says were exchanged between himself, Iizuka and various HP
employees.In a pair of emails from January 2003, Iizuka appears to be
exchanging information on Dell’s upcoming printer lineup with HP
employees. In one dated 16 January, 2003, Iizuka says he has met the
person responsible for managing printer sales for Lexmark, the company
that builds Dell’s printers. He adds: “I could try to get some
information about Dell/Lexmark and Dell-branded product over there.”In
a 20 February, 2003, email exchange that appears to be between two HP
employees, one of the employees said: “Dell will introduce three
printer models in the late March/Early April timeframe,” according to
the filing. The email includes prices and specifications of Dell
printers.Dell printers made their debut in March 2003. A Dell spokesman
declined to comment about the court cases, but did say that Iizuka left
Dell eight years prior to the company’s entry into the printer
business.Both HP and the defendants named in its original suit are
accusing each other of civil offences. HP alleges trade secret
misappropriation, fraud, civil conspiracy and violations of the federal
Computer Fraud and Abuse Act and the Racketeer Influenced and Corrupt
Organizations Act (RICO). For his part, Kamb said HP is liable for
breach of contract, civil conspiracy, invasion of privacy (because of
pretexting), and also violations of the Computer Fraud and Abuse Act,
and RICO.If any of the allegations are substantially true, prosecutors
could bring criminal charges as well. Pretexting may violate state laws
and common law rules prohibiting fraud. Trade secret misappropriation
can be a federal crime under the federal Economic Espionage Act of
1996, and punishable by up to 10 years in prison.

More claims of HP pretexting
Following
the alleged espionage campaign, Kamb says in his filing that someone at
the company erroneously concluded that he was pocketing some of the
money meant to pay off Iizuka. He was ordered back to the US.Some of
the details at this point are sketchy. What is clear is that Kamb’s
then-wife, Susan Michelle Kamb, filed for divorce on grounds including
adultery and sent HP a subpoena on 4 August, 2005, asking for
information about her husband’s involvement with Byd:sign.As a result,
according to Kamb, sometime in August 2005, HP “engaged in clandestine
acts” to obtain his private telephone records including pretexting
attempts aimed at T-Mobile, which were unsuccessful, and Sprint, which
were successful. On 31 August, 2005, his attorney sent Hunsaker, then
an HP attorney, a demand that the company stop spying on him.In a
written response a few days later, Hunsaker denied that HP had ever
tried to obtain his phone records. Hunsaker, who is also facing
criminal charges arising out of the pretexting of journalists —
including three reporters from CNET News.com, ZDNet UK’s sister site —
was a senior HP lawyer and its chief ethics officer.Kamb says that last
autumn’s investigation into HP’s attempts to unearth a news leak
demonstrate that HP attempted to spy on Kamb.Last August, when it
became clear that the public was to be made aware of HP’s attempts to
uncover a news leak, the company hired attorneys to interview everyone
involved. Hunsaker was interviewed on 25 August, 2006.”Hunsaker first
learned that HP had used pretexting to obtain phone records in July
2005 in connection with an unrelated HP investigation,” attorneys
working for law firm Wilson, Sonsini, Goodrich and Rosati wrote in
their report, a copy of which was released by the congressional
committee investigating HP. “One of the subjects of that investigation
was going through a messy divorce.”A call to Hunsaker’s attorney was
not returned Wednesday, but he has said in the past that his client was
misquoted by the Wilson, Sonsini attorneys who interviewed him.Kamb is
now living in Las Vegas. A local Fox News affiliate, Fox 5, announced
earlier this month that it has retained him as a “Dream Team” member to
provide commentary on how to get more from new “products and
innovations to suit the Vegas lifestyle”.

HP denies spying on former employee
Computing
giant admits firing former ethics attorney Kevin Hunsaker amid fallout
of pretexting scandalIn a court filing on Tuesday, Hewlett-Packard
denied allegations that it pretexted a former employee with whom it is
engaged in a legal dispute.In 2005, HP sued Karl Kamb, a former vice
president of business development and strategy, alleging he stole
company trade secrets. In January, Kamb countersued HP alleging that
his phone records were improperly obtained and also charging that he
was instructed by HP management to spy on rival Dell.”HP denies that
the so-called pretexting alleged by Kamb in the counterclaim occurred,”
the company said in a filing made Tuesday with a federal court in
Tyler, Texas. “HP denies that any so-called pretexting activities were
part of a widespread pattern or practice at HP.”

While HP denies
pretexting Kamb, the company has said that as part of a separate — and
now infamous leak probe — it obtained or tried to obtain the phone
records of more than a dozen people including current and former
directors, employees and journalists, including three reporters from
ZDNet UK sister site CNET News.com.Last month the judge handling the
case, District Court Judge Michael Schneider ordered Kamb to withdraw
his countersuit and issued an injunction barring both sides from
publicly discussing the case. Schneider said that Kamb could refile the
case under seal.Significant portions of HP’s filing Tuesday were also
made under seal.Among the things the company did note publicly, is the
fact that former ethics attorney Kevin Hunsaker was terminated by HP.
The company confirmed in September that he had left the company’s
employ, but declined to say whether he resigned or was
terminated.Hunsaker has emerged as a central figure in both cases. In
the leak probe, he faces felony charges over his role in allegedly
overseeing the investigation, including the pretexting. In the current
case, Kamb alleges that Hunsaker initially denied pretexting Kamb, but
later admitted that HP did pretext him.In its filing Tuesday, HP denied
that Hunsaker “ever acknowledged that HP had engaged in so-called
pretexting against Kamb”.

HP’s Dirty Tricks Look Practiced: Fortune
Fortune
magazine has been poking around those court-sealed charges that HP
bought Dell’s printer plans from a former senior Dell executive before
Dell entered the printer market and got a previously mum Dell to say
that “The more we look into it, the more concerned we become.”Those
claims, you’ll remember, were made in a countersuit by ex-HP VP Karl
Kamb, the guy HP is suing for theft of trade secrets and plain ole
theft of money along with a lot of other stuff.But in Fortune’s
opinion, “As outlandish as Kamb’s charges seem…independent evidence
suggests that the wildest of his accusations – that HP sleuths obtained
confidential information about Dell and that HP pretexted him – are
true.”This after the magazine says it examined 1,500 pages of court
filings, exhibits, e-mails and hearing transcripts and interviewed 20
lawyers or participants in the Kamb saga.

[Author]

June 5, 2007 at 1:39 PM