Ex-HP VP Pleads Guilty To Stealing IBM Trade Secrets

Charges were filed in June 2007 against Malhotra, of Santa Barbara, Calif., in U.S. District Court, Northern District of California, San Jose. According to court documents, from Nov. 17, 1997, to April 28, 2006, Malhotra was employed by IBM as director of sales and business development in output management services for IBM Global Services.

In pleading guilty, Malhotra admitted that on March 15, 2006, while employed at IBM, he requested and received confidential information concerning IBM Global Services, CC Calibration Metrics. The trade secret information, marked "confidential" on each page, included data concerning product costs and materials that IBM used to compete in the marketplace, according to court documents.

In providing the requested information, a pricing coordinator at IBM Global Services directed Malhotra not to distribute the information due to its sensitive nature, said a press release from the court that was issued on Friday.

In May 2006, Malhotra became a vice president of imaging and printing services for HP. According to court documents, shortly after starting in his new position at HP, Malhotra shared IBM trade secrets with his superiors. On July 25, 2006, Malhotra sent an e-mail to an HP senior vice president with the subject, "For Your Eyes Only," and attached the trade secret information for which he is charged with sharing. Two days later, on July 27, 2006, he sent an e-mail to another HP senior vice president with the subject, "For Your Eyes Only and#8212;confidential," and attached the same trade secret information, the documents state.

The court documents also reveal that in the e-mail message, Malhotra noted that knowledge of this information would help specific HP sales teams better understand their competitors' goals as the teams determined pricing for prospective deals.

When senior officials at HP got wind of Malhotra's activities it fired him that September.

"The activity with which Malhotra is charged was in direct violation of clear HP policies, including HP Standards of Business Conduct," said an HP spokesperson in a statement at that time. "HP detected this activity, conducted an internal investigation, terminated Malhotra's employment from HP, and reported the activity to appropriate enforcement agencies and to IBM."

When contacted Monday, HP said it had no further comment on the issue.