The catty battle over hiring ethics between retailing mammoths Amazon.com and Wal-Mart is finally over.
On Monday, the two stores said they settled outside court. No damages will be awarded, but some Amazon employees will be reassigned to different jobs.
Charges were also settled concerning the other defendants named in the suit: online pharmacist drugstore.com; venture capital firm Kleiner, Perkins, Caufield & Buyers; and Amazon's chief information officer Richard Dalzell. The settlement included Amazon's countersuit brought in February.
In October, bargain store giant Wal-Mart Stores sued Amazon.com (AMZN), drugstore.com, and Kleiner Perkins, accusing them of systematically cherry-picking employees to get to Wal-Mart's trade secrets. In particular, Wal-Mart said that the Web upstarts were trying to jumpstart their logistics expertise by hiring away the geeks who ran its proprietary electronic data-warehousing and merchandise-management systems. These systems are what lets Wal-Mart (WMT) offer merchandise at a discount.
Amazon.com owns about 46 percent of drugstore.com, and both got financial backing from Kleiner Perkins.
Amazon is now the retail king on the Net, selling books, movies, and music. As Wal-Mart brings more business online, the two companies could butt heads more often.
In its countersuit, Amazon accused Wal-Mart of anticompetitive behavior, libel, slander, and interference with prospective employees.
As part of the settlement, one Amazon staff member will be reassigned to a different job title, but Richard Dalzell will "absolutely not" change his job, said Amazon's spokesman Bill Curry. Jimmy Wright, formerly Wal-Mart's operations boss who became Amazon's chief logistics officer in July, also will not change his job. Other employees in the information systems department will be given "some exclusions as to the type of project they can do."
None of the three employees in question at drugstore.com will change positions or job descriptions, said Debby Fry Wilson, spokeswoman. "We can continue to hire the best people from anywhere we like -- including Wal-Mart."
Wal-Mart has "lost a series of court rulings," said Curry. "The settlement comes at a time [when Wal-Mart was] under order to turn over specific trade secrets to us."
Wal-Mart spokeswoman Betsey Reithemeyer said any trade secrets would have been disclosed in court under certain protections.
During the discovery period, Wal-Mart learned that "Amazon.com had thousands of pages" of Wal-Mart's documents in their possession, she said. "Quite a bit" of those documents dealt with Wal-Mart's "proprietary or trade secrets," she said.
Amazon.com and Drugstore.com have both agreed not to actively recruit at Wal-Mart, she said. But if they hire anyone out of Wal-Mart's information systems department, those workers "will have restrictions placed on them."
Most likely "Wal-Mart convinced Amazon.com they could show [the] employees would inevitably use Wal-Mart trade secrets in their new positions," said Dan Johnson, head of trade secrets practice at McKenna and Cuneo in Washington, DC. "Many courts have concluded that an employee can be prevented from working in a position at a new company" if it were inevitable they would disclose trade secrets, he said.
