Data Mining Startup Claims Intel Stole Trade Secrets
Executives at Zettaset Inc. thought they were on the verge of a serious bonanza.
Intel Corporation wanted a software product to help businesses capitalize on the vast, unstructured oceans of information known as Big Data — and Zettaset had one.
For months, according to a suit filed last week, Intel employees negotiated with Zettaset, met with executives at the venture-capital backed firm, and tested its "Orchestrator" product at Intel's state-of-the-art Hillsboro, Ore. software development campus.
The dance went on nearly a year, Zettaset alleges.
Then, in February 2013 Intel released a rival data mining software product that Zettaset calls a blatant and obvious copy in a suit accusing Intel of breaching a nondisclosure agreement, stealing trade secrets, and intentionally misleading Zettaset executives that the two companies would work together.
"Intel's competitive platform copied Zettaset's technology in profuse and myriad detail," wrote Zettaset's attorney Spencer Hosie of Hosie Rice in the complaint filed Thursday in Santa Clara County, Calif., Superior Court. "Across multiple functions, including security, the management console, and the basic process flow, Intel's product is Zettaset's product."
Intel declined to respond directly to Zettaset's allegations.
"We are aware of the suit and are in the process of developing plans for our defense," company spokesman Chuck Mulloy wrote in an e-mailed statement. "Beyond that, we have nothing more to say."
Called Big Data in tech circles, this sea of web user information is highly valuable for large companies' marketing strategies as well as government agencies like the National Security Agency provided, of course, they can make sense of it.
Based on open source software known as Hadoop, Orchestrator aimed to make data mining more secure, reliable and user-friendly. In 2012, SAP named Zettaset the "Best Big Data Solution," the complaint states.
Hosie seeks an injunction to stop Intel from selling its rival product, Distribution for Apache Hadoop, which he says the company has aggressively marketed to Zettaset's existing and potential customers as "a direct replacement" for Orchestrator.
It was launched, according to the complaint, just one month after the last of dozens of meetings between Intel and Zettaset executives, including co-founder Jeffrey Krone.
Zettaset "doesn't want to spend time in litigation," Hosie said in an interview on Monday. "But if it doesn't protect its intellectual property, it won't have any. The company felt it had no choice to protect its trade secrets."
Zettaset, founded in 2009, is based in Mountain View. At the center of its suit is a corporate non-disclosure agreement executed with Intel in March 2012, which prohibited Intel from making any copies of Zettaset' confidential information.
Over the course of the next 11 months, Zettaset shared more and more details of Orchestrator and provided select Intel employees with copies of its code in order to test the product, the complaint states.
When Zettaset executives expressed misgivings about sharing the code, Intel responded with assurances, the suit alleges.
In September 2012, Intel and Zettaset began discussing a potential investment in Zettaset by Intel Capital and those discussions continued into early 2013.
In January, the two companies' representatives met again. Zettaset showed a technological demonstration and answered Intel's numerous questions, the suit alleges. One of the Intel employees at that meeting, according to the suit, was "deeply involved in developing Intel's" competing product, released the following month.
Intel went so far in copying Zettaset's product it even incorporated special configuration settings that had been included in the software installed on Intel's servers for testing, the suit alleges. Zettaset had fine-tuned the software to run on Intel's solid state drives, which are more powerful than the hard disk drives used by most businesses.
To Hosie, those settings are a smoking gun.
Putting those configurations in a product for general release is "like putting jet fuel in a Prius," Hosie wrote.
Beyond making virtual carbon copies of its code, Hosie says that Intel also pilfered Zettaset's marketing strategy, which it had also disclosed at those meetings.
Hosie said he anticipates that Intel will respond to Zettaset's suit by claiming it had developed its own product internally before it began meeting with Zettaset executives.
But Hosie asks, "If Intel had invented this themselves, why did they spend a year talking to us?"