TycoIS sues ISC; N.J. integrator files counterclaim
TOMS RIVER, N.J.—Claims of trade secrets stolen, employees poached and counterclaims that Tyco is trying to run a much smaller competitor out of business fill two lawsuits—one filed by Tyco Integrated Security at the end of May and a counterclaim filed by Integrated Security & Communications on June 24.
At the center of the lawsuit are three former employees of SST: Thomas Catagnus, John Pichola and Joel Richman. SST was the platform for ADT (now Tyco Integrated Security) to launch into the systems integration business. ADT acquired SST in April 2008.
Integrated Security & Communications is a $15 million systems integrator based here. Michael Thomas, a Honeywell vet, launched ISC in 2007.
Catagnus, Pichola and Richman were laid off by Tyco in 2012. They now work for ISC.
In a suit filed in U.S. District Court for the Eastern District of Pennsylvania, Tyco alleges that the three men violated non-compete and non-solicitation agreements; that they stole information such as “business and sales strategy, product cost structure, pricing models, customer lists, new prospective accounts [and] sales data”; and that they’ve poached employees from TycoIS.
Tyco said that it was alerted to problems earlier this year when the company “noticed that a number of its key personnel were resigning in order to … join a competitor, ISC.”
“Ultimately … Catagnus, Pichola and Richman, with ISC’s full knowledge and support, have used the millions of dollars that Tyco IS provided to ensure that they would not solicit TycoIS’ customers and employees to create a competitor less than 10 miles from TycoIS’ doorstep,” the lawsuit alleges.
The headquarters for TycoIS is in Princeton, N.J.
In its counterclaim, ISC denies all allegations of wrongdoing and alleges that TycoIS is maligning ISC in an attempt to drive ISC out of business.
“This action is a transparent anti-competitive attempt by Tyco [which has revenues of $1.8 billion] to crush a small, innovative competitor [which has less than $15 million in revenues],” the counterclaim says.
One of the main issues in the lawsuit is when the three men’s non-compete agreements with Tyco expired. Tyco said it’s three years and ISC said it’s six months.
ISC said that the men have also honored a two-year non-solicitation agreement.
“Defendants have not done business with and do not intend to do business with Tyco’s customers except as permitted by [law],” the suit says.
The counterclaim also says that former Tyco employees who have joined ISC were not pursued by ISC, but that those employees sought employment with ISC after their positions were terminated by Tyco.
In a statement provided to Security Systems News, ISC CEO Michael Thomas said, “Any former TycoIS employees who have reached ISC seeking opportunities and were subsequently hired were brought on board based on their character, work ethic, skill and unique fit for the needs of ISC as it continues its growth.”
Thomas said that he “supported TycoIS from the manufacturing side of the business for many years, before starting ISC in 2007 (a year prior to the acquisition by TycoIS) and knows these people [the named defendants] personally.”
Jean Pierre Nogues, a partner at Mitchell Silberberg & Knupp, told SSN in an email interview that the case presents a number of issues involving non-compete agreements and trade secrets that are often raised when key employees leave one company and go to work for a competitor.
“Defendants contend that they have done nothing to violate those covenants for several reasons, that the covenants have expired, and that Tyco has waived those provisions. These are all issues that will have to be resolved by the court in determining whether there has been a breach,” he said.
Nogues noted that non-compete agreements are treated differently under the laws of various states. “For example, in California, they are generally not enforceable unless they are part of an agreement to sell an interest in a business,” he said.
In terms of trade secrets violations, Nogues said that most states have adopted the Uniform Trade Secrets Act. That act defines trade secrets as information that “derives independent economic value from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use … and, is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Customer lists, strategies and product development information can all qualify for trade secret protection, provided that they meet these requirements,” he said.
He said that actual disclosure or use of trade secrets is prohibited, and threatened disclosure may be prohibited. “However, many jurisdictions reject the notion that someone who has trade secret information will ‘inevitably disclose’ that information if employed by a competitor of his former employer, which is one of Tyco’s allegations in this case.”
Contacted by SSN, Brett Ludwig, director of external communications for Tyco, said “as a matter of policy, Tyco Integrated Security does not comment publicly on matters of ongoing litigation.”