A hot Silicon Valley data storage startup that’s looking to double its staff faces a challenge that goes beyond the tight talent market: Some of its recruits are being sued by their former employer.
After reportedly losing 30 employees, EMC Corp. has gone to court, the Boston Globe reports. The company is suing some former employees and their new employer, Pure Storage Inc., based in Mountain View, Calif.
Pure expects to add 300 workers next year. The company’s website says it is hiring in Boston, New York, Dallas/Houston, London, Charlotte, Baton Rouge and other cities, seeking talent in sales, engineering, marketing and business development.
EMC claims several highly paid salesmen jumped ship for Pure and took customer records, confidential materials and other proprietary information with them. That violates the work agreements they signed at EMC, the company says.
The suit alleges that Pure Storage is “raiding EMC of its valuable employees, all in an effort to increase Pure Storage’s presence in the marketplace at the expense of EMC,” according to the Globe.
Such suits aren’t unheard of, though some states, such as California, make non-compete agreements hard to enforce.
“This can get really nasty,” said industry analyst Rob Enderle. “Years ago I had to bail a friend out of jail in the middle of the night because her employer, thinking she was planning to quit, filed felony [intellectual property theft] charges against her.”
“It’s certainly no surprise that a company sues its competitors when they poach highly prized employees,” said Deni Connor, founding analyst at Storage/Systems Strategies Now. “HP did it when EMC hired Mark Lewis away and EMC in turn did it when HP hired Dave Donatelli. It’s also not uncommon for a company to sue to protect their intellectual property, which in this case is what EMC did.”
Pure and EMC are competitors in the fast-growing flash-storage business. EMC is an established player, which this week reported $5.5 billion in third-quarter revenue, up about 5 percent over the same period in 2012.
Pure is a venture-backed startup that has raised $245 million, including a $150 million round in August. The four-year-old company is pre-IPO, giving it a strong inducement for attracting talent.
EMC is known as a hard-charging company where top salesmen might earn $500,000 per year. It said one of the employees it is suing earned $1.1 million over a four-year period.
In a statement, Pure denies the allegations. EMC did not respond to requests for comments, the Globe said.