Starwood Sues Hilton and Two Former Starwood Executives for Corporate Espionage,
Theft of Trade Secrets, Unfair Competition
Theft of Trade Secrets, Unfair Competition
Starwood Hotels and Resorts Worldwide, Inc announced that it has formally filed a lawsuit against Hilton Hotels Corporation and senior executives Ross Klein and Amar Lalvani. The lawsuit says that Klein, who was former president of Starwood's Luxury Brands Group and Lalvani, former Senior Vice President of Starwood's Luxury Brands Group, stole massive amounts of confidential information in regard to Starwood's marketing strategies. They believe that the stealing of information aided Hilton in opening the "lifestyle hotel" market and thus crippled Starwood's market share. They are accused of stealing more than 100,000 electronic files both before and after joining Hilton. Among the files were confidential plans regarding their W Brand, which Hilton used illegally to develop their own Denizen brand. Starwood is seeking preliminary and permanent injunctive relief and compensatory and punitive damages from Hilton, Klein and Lalvani. They are also seeking a court order demanding that Hilton refrain from using or benefiting from Starwood's confidential information and requiring that they immediately return all of the obtained information.
I believe this was a really shady move on Hilton's part. It is very suspicious that they recruited the men after they began giving Hilton information and continued to wrongfully use Starwood's ideas and strategies to develop their own brand and attempt to get ahead in the "lifestyle hotel" market. I think that the courts should rule in favor of Starwood as they seem to have adequate evidence to prove that what was done was illegal and that it severly crippled Starwood as a result.
Hotel Online
http://www.hotel-online.com/News/PR2009_2nd/Apr09_StarwoodHilton.html
I liked your review of this article and the subject matter is intriguing. On the face of this article, it appears that Hilton is guilty by association due to hiring the former executives of Starwood; however the response fails to ponder the other side of the coin. Particularly considering the fact that Hilton normally is advanced in it's marketing to new industries. It is quite possible that Hilton was working on its own type of "lifestyle" theme for hotels and the new executives just advanced the ideas further. In any event, it is important to allow for the courts to be the triers of fact and not the media or public. It will be interesting to see how the case turns out.
ReplyDeleteI agree with Frannie that this was a very wrong thing by Hilton to do, both from a business standpoint and an ethical standpoint. What is more concerning is that it would not be surprising if Hilton paid the executives a large sum of money to leave Starwood to come work for them; almost as if they stole them AND Starwood's confidential files/documents. It would have been bad enough if they had simply just brought in the Starwood executives by paying them a large amount of money, but the fact that the executives stole confidential documents that were essential to the marketing of Starwood hotels is pathetic. Starwood employed these people, paid them, and I am sure treated them very well for several years and they repay Starwood by giving away their strategies. I am sure Hilton is sorry that they were caught in taking this information and realize that these two former Starwood executives probably would have done Hilton very well even WITHOUT all the confidential files.
ReplyDeleteI believe that Hilton should pay Starwood a significant amount of money and continue to pay them over the next years a percentage of the revenue from the brands developed with the Starwood strategies.