On October 12th, AirWatch (the plaintiff) initiated a lawsuit (case number: 1:12-cv-03571) in the United States District Court for the Northern District of Georgia against a primary competitor, MobileIron (the defendant). The filing includes serious allegations which very clearly articulate MobileIron's intent to convert trade secrets belonging to AirWatch to its economic benefit. Central to the lawsuit is the violation of the federal Computer Fraud and Abuse Act (CFAA - 18 U.S.C. §1030) and misappropriation of the Georgia Trade Secrets Act (GTSA), which prohibits "disclosure or use of a trade secret of another without express or implied consent" as well as "improper means to acquire knowledge of a trade secret".
The lawsuit is centered on the activities of at least two MobileIron employees who fraudulently (under the guise of working for a fictitious company and using aliases) obtained a free trial and access to AirWatch’s software. These employees proceeded to discuss technical details and the competitive landscape with an AirWatch representative during the course of its trial period. Additionally, the MobileIron employees gained access to AirWatch’s Resource Portal and were able to obtain sensitive and proprietary information which is central to AirWatch’s marketing and pricing strategies.
Specifically, AirWatch is seeking compensatory damages for MobileIron's:
AirWatch is also seeking attorneys' fees and costs related to initiating its lawsuit.
It seems as though MobileIron has conducted an internal investigation into the matter, and has taken undisclosed actions (the lawsuits sole exhibit, an email from MobileIron's CEO to AirWatch's Chairman and CEO contained this tidbit). However, it seems as though AirWatch was not satisfied with MobileIron’s actions and has decided to take legal action.
Trade secret litigation has been on the rise, and is not surprising given the fierce competition that is prevalent in the mobile ecosystem (data from the Gonzaga Law Review shows that trade secret cases doubled in the seven years from 1988 to 1995, and doubled again in the nine years from 1995 to 2004 – their study indicates that at the projected rate, trade secret cases will double again by 2017¹). The allegations as stipulated in the filing appear to be very damning for MobileIron. Indeed, this lawsuit is an unfortunate development, and is not only embarrassing, but will likely have monetary and potential personnel-oriented consequences for MobileIron.
MobileIron has been enjoying significant success with its 100% channel strategy – the company’s trajectory has been impressive, particularly when considering they have only been in operation since 2007. While this lawsuit is likely to be the result of a “few bad apples”, it has the potential to create bad publicity and will not perceived as favorable by customers and partners. However, organizations that engage in deceitful business practices not only run the risk of alienating perspective customers, but also in enhancing competitive threats.
A spokesperson from MobileIron offered the following statement:
“The complaint filed by AirWatch alleges conduct by a few individuals that is not the type of conduct that is authorized by MobileIron, nor does it reflect our high ethical standards.”
We believe that it is very likely that this matter will be resolved expeditiously out of court.