Start-up companies often don’t challenge market giants. Other than the risk of losing a trade secret or other intellectual property dispute, struggling companies fear the costs involved. Small companies sometimes muster the backing and determination to do battle anyway.
California company TechForward — which failed to stay afloat and was sold in 2012 — was not a long-standing or profitable company when it decided to take on electronics retail giant Best Buy. Yet the company scored a multi-million dollar victory in a trade secrets dispute.
Best Buy was recently ordered to pay damages totaling $27 million for swiping software secrets the retailer used in an ill-fated “Guaranteed Buyback” program. TechForward received a $22 million award. The rest of the damages were punitive to deter the company and others like it from ever stealing trade secrets again.
The dispute surrounded the launch of a 2011 Best Buy program that would allow consumers to trade in old electronic goods for credit on new purchases. The company spent $30 million in program preparation, plus $3 million for a Super Bowl ad.
The only problem was that Best Buy’s software was incapable of rolling out the “Guaranteed Buyback” program in time. The trade secrets complaint said Best Buy hired and later fired TechForward after the start-up shared its software secrets with the retailer. The companies had signed a confidentiality agreement.
The “Guaranteed Buyback” program was a failure. Best Buy closed down the program a little more than a year after it began. TechForward’s award more than covered what the retailer had promised the start-up in the partnership.
Companies are advised to be vigilant in the defense of intellectual property. Failing to confront a corporate thief invites more theft and depletes the integrity and value of robbed businesses.
Source: startribune.com, “For Best Buy, buyback program was a costly dud,” David Phelps, Dec. 29, 2012