In a battle over hiring ethics, online bookseller Amazon.com filed a countersuit against Wal-Mart Stores, alleging that the retailer is trying to make Amazon look bad while trying to pry into its trade secrets.
The countersuit, filed in Washington Superior Court in late February, accuses Wal-Mart (WMT) of unfair competition, violating the Washington Consumer Protection Act, interference with prospective employees, libel, slander, and business defamation and seeks damages and court costs.
"Faced with recent employee defections to Amazon.com ... Wal-Mart saw this lawsuit as a way of ... chilling the employment decisions of Amazon.com, its employees, and other potential employers throughout the United States," Amazon said in the court filing.
The countersuit also alleges that Wal-Mart is trying to "obtain information regarding Amazon.com's business and technology" through the suit.
Executives for Wal-Mart could not immediately be reached for comment on the countersuit. Bill Curry, spokesman for Amazon, declined to comment.
The move is the latest in a back-and-forth between the two companies. Wal-Mart originally filed suit on its home turf of Arkansas last October, accusing Amazon of cherry-picking Wal-Mart employees to gain access to trade secrets -- specifically secrets about Wal-Mart's gigantic proprietary electronic data-warehousing and merchandise-management systems. These systems help Wal-Mart offer products at lower prices.
Wal-Mart also named Richard Dalzell, a former Wal-Mart employee that Amazon hired as its chief information officer, Internet pharmacist Drugstore.com, and both companies' venture-capital firm Kleiner Perkins Caufield & Byers in the suit. Wal-Mart's suit asks the court to stop all parties from using Wal-Mart systems expertise, and to stop targeting its employees.
The countersuit says Wal-Mart itself is at fault for driving employees into competitors' arms. Amazon said Wal-Mart has suffered from "employee morale and labor problems for the last few years," and cited the Walmartsucks.com site.
Wal-Mart filed a second suit last January after a judge in Arkansas ruled that not all parties could be tried in Arkansas.
"It seems to me this is getting nasty," said Chip Morris, an intellectual-property attorney at Beirne, Maynard, & Parsons in Houston, Texas. The trade secrets of both companies will probably be protected by a court order, he said.
The employees Amazon hired with Wal-Mart experience are not necessarily working in the same positions, said Morris. If Amazon can prove that, and if there is no evidence of trade-secret misappropriation, "Amazon.com may win," he said.
