Tippr Gets Injunction for Alleged Trade Secret Theft by BuyWithMe, Also Launches Patent Lawsuit

2/23/11Follow @curtwoodward

Kashless, the parent of Seattle-based group deals site Tippr, is accusing New York- and Boston-based BuyWithMe of improperly obtaining insider information from a Tippr employee in a civil lawsuit filed in Seattle.

Kashless’s lawsuit, filed in King County Superior Court, alleges that BuyWithMe founder Andrew Moss successfully solicited financial information from a Tippr salesman, Andrew DeLorenzo, who had been looking for another job.

In an injunction signed Feb. 4, King County Superior Court Judge Steven C. Gonzalez found that it “appears likely that BuyWithMe ‘misappropriated’ the information” under state law, and that there is a “substantial likelihood” that evidence in the case will show BuyWithMe’s actions constituted theft under state law.

Under “findings of fact,” the judge’s order says that last October, Moss e-mailed DeLorenzo to ask: “Do you think you can find out how much $$ is left in the bank, and how much he is spending every month in overhead, personnel, etc?… Do you have these same reports by city?”

The judge’s order also finds that DeLorenzo sent Moss Kashless’s total gross sales revenue, weekly and monthly cash burn rates, and its total expenses, along with a table showing performance by salespeople and Kashless’s total number of subscribers.

The order then says Moss sent along a report on this information to other BuyWithMe senior officers, and that they indicated plans to “significantly disrupt Tippr.”

Subsequent e-mail traffic also indicated that the BuyWithMe officials knew the information might be confidential, the order says. One e-mail quoted by the order says Moss suggested BuyWithMe should “Stop sharing our details to all salespeople [because] they will do this same thing.”

Gonzalez’s injunction also says the information at issue must be sent to the defendants’ lawyers and purged from the defendants’ possession while the case proceeds.

In a court filing Tuesday, BuyWithMe and Moss demanded a jury trial. They declined to comment Wednesday, citing the ongoing litigation. Tippr’s founder and chief executive, Martin Tobias, also declined comment.

In his own court filing, DeLorenzo, the former Tippr salesman, says he did not intend to harm the company by sharing any information, which he describes as being widely distributed within the company and to potential clients.

“I am surprised to hear that Tippr considers the information to be confidential, much less to constitute trade secrets,” DeLorenzo wrote.

DeLorenzo also says he doesn’t recall signing a non-disclosure agreement with Tippr covering the period in question, as the company alleges.

The lawsuit against BuyWithMe, Moss, and DeLorenzo came to light Wednesday through a separate court filing: Kashless also is suing BuyWithMe and another competitor, New Jersey-based DealOn, for infringing on a suite of patents. That lawsuit seeks an injunction and unspecified damages.

Kashless launched Tippr early last year after acquiring the patent portfolio of former Bellevue, WA-based dot-com Mercata from Paul Allen’s Vulcan Capital. Tobias has previously touted the firm’s intellectual property and has said he wants to be the “arms dealer” for group-buying sites.

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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