EMC sues former executive

HOPKINTON — Hit by a wave of recent defections, technology giant EMC Corporation is suing a former executive who resigned to work for one of its chief rivals.

Long-time employee James Petter quit the Hopkinton-based data storage company earlier this year to work for competitor Pure Storage. EMC is now seeking to claw back company stock it granted to Petter, who was previously senior vice president and managing director for EMC’s operations in the United Kingdom and Ireland.

Petter’s departure is the most recent installment in what EMC describes as a “deliberate scheme” by Pure Storage to poach EMC employees, stealing away the company’s top talent and obtaining proprietary information in the process.

In a lawsuit filed Feb. 27 in the U.S. District Court in Worcester, EMC accuses Petter of violating his employment agreements and swiping sensitive customer information on his way out the door.

EMC believes as many as 150 of its technical engineers and sales professionals have similarly decamped over the last four years for positions with Pure Storage, a startup based in Mountain View, California that produces competing storage devices.

EMC sued Pure Storage in November 2013, alleging the company has engaged in a “pattern of collusion" with EMC employees, inducing them to violate legal agreements and take confidential information.

“These talented former EMC employees possess confidential knowledge and information about EMC’s technologically superior storage systems and the particular implementations of those systems at some of EMC’s most strategically valuable customers,” the company’s lawyers wrote.

The legal wrangling comes as both companies vie for a share of the growing market in flash-based storage devices.

EMC, valued at around $50 billion, established its foothold in the industry with equipment that uses traditional hard disks, storing computer data on spinning metal platters.

Pure Storage has sought to corner the market on newer flash-based hard drives for corporations, raising $470 million from investors. EMC recently introduced a competing flash device, which became the fastest-growing product in the company’s 36-year history after it was launched in late 2013.

Petter, a former military officer, previously oversaw a team that managed EMC’s global accounts across Europe, an area where EMC saw some of its largest revenue growth last year. The company posted annual revenue of about $24.4 billion in 2014, with sales in Europe, Africa and the Middle East accounting for more than one quarter of it, according to its filings with the U.S. Securities and Exchange Commission.

In his leadership role, Petter had access to information ranging from marketing strategies to records about EMC’s customers and their buying patterns, according to the suit. Just weeks before his resignation, Petter also requested a special spreadsheet containing “extremely detailed and competitively sensitive information” about EMC’s clients abroad, the suit alleges. Petter announced his intention to resign from EMC on Jan. 15, only days after returning from a summit for the company’s top executives in Boston, according to the lawsuit. 

EMC now is asking a judge to rescind 8,721 shares in EMC stock that Petter received in the six months prior to his resignation. Shares in EMC Corporation were trading at about $25.50 on Tuesday, putting the theoretical value of the stock in question at more than $200,000. The company is also asking a judge to block Petter from receiving additional stock he was set to gain in February.

EMC alleges Petter violated his contractual obligations by entering job negotiations with Pure Storage while he was still on EMC’s payroll. EMC also examined Petter’s computer at its Southborough office and discovered that in November 2014 – around the same time he allegedly began negotiating for a new position with Pure Storage – Petter researched how to export contacts from Microsoft Outlook, EMC’s corporate email program, and exported two files labeled “contacts.” Those files contain confidential information about EMC’s customers, employees and business partners, EMC alleges.

Petter has also filed legal action against EMC regarding his stock in the company. Reached by phone Tuesday, Petter’s attorney, Michael Sheetz, said he was not authorized to speak on the record about the case.

EMC’s attorneys at the Boston firm Choate, Hall & Stewart could not be reached for comment Tuesday. Calls to EMC’s headquarters in Hopkinton were not returned.

Pure Storage characterized the lawsuit against Petter as an attempt by EMC to stifle competition.

“We look forward to watching this dispute get resolved in James' favor,” reads a statement released by the company. “The broader question is: When will EMC bring competition out of the courtroom and back on the playing field where it belongs and where customers benefit?"

Jim Haddadin can be reached at 617-863-7144 or jhaddadin@wickedlocal.com. Follow him on Twitter: @JimHaddadin.