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 user 2007-06-05 at 1:39:00 pm Views: 91
  • #18326

    Dell calls on HP to investigate spying charges
    HP says it discussed allegations that employees spied on rival, but Dell wants more thorough investigation
    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’s sister site, CNET — 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

    HP faces claims of spying on Dell
    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.
    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

    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

    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, 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
    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 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
    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.