RealNetworks sues ex-staffer, alleging theft of source code

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http://seattletimes.nwsource.com/cgi-bin/WebObjects/SeattleTimes.woa/wa/gotoArticle?zsection_id=268448455&text_only=0&slug=realnetworks14&document_id=134274339

by Monica Soto
Seattle Times technology reporter
Wednesday, March 14, 2001

Streaming-media giant RealNetworks has alleged a former employee stole
crucial business secrets and gave them to LockStream of Bellevue to
develop competing products, court records show.

Seattle-based RealNetworks, which makes the most widely used software
to play audio and video via the Internet, filed a lawsuit in King
County Superior Court last week, claiming Chad Storey gave its
competitor access to a wide, potentially damaging array of
confidential information, including source code, strategy reviews,
marketing plans and "detailed systems overviews" for new and existing
products.

David Goodman, chief executive of the privately held LockStream, which
develops software that encrypts audio and video content, said his
company was working independently on the technology in question long
before it hired Storey. It filed for patents, not yet granted, to
protect the technology, he said.

Goodman called the lawsuit an "employee issue" between Storey and
RealNetworks. "Our technology has been on the exact same path," he
said. "(RealNetworks) is being very heavy-handed relating to this
issue."

Storey could not be reached for comment.

Meanwhile, RealNetworks won a temporary restraining order against
Storey and LockStream, barring them from disclosing or destroying any
information protected by a confidentiality agreement Storey signed at
RealNetworks.

The order also allows a RealNetworks consultant to inspect Storey's
desk at LockStream and a computer server for any possible source code
maintained there.

RealNetworks hired Storey in September 1997 as a network programmer,
according to court documents. He was promoted to technical operations
engineer, and served as a team leader. He worked on various
technologies and was given access to certain source code.

Storey resigned in November. He went to work for LockStream three
months ago as vice president of product development.

RealNetworks claims he violated a non-compete order that barred him
from working for a competitor for a year.

Like other high-tech companies, RealNetworks requires employees to
sign confidentiality and non-compete agreements that prevent them from
working for a competitor for a set amount of time.

Court records show the extent to which RealNetworks goes to protect
its proprietary information. Employees with access to source code must
wear unique user identifications and have passwords to access the
code, records show.

The company also restricts employee access to proprietary information,
including source code, "to those with a need to know." Most of the
information is contained on an Intranet, with no access point outside
the company.

In a declaration to the court, Michael Christopherson, a former
RealNetworks software test engineer, wrote he provided RealNetworks
with copies of documents retrieved from Storey's computer at
LockStream, such as RealNetworks' "product plans, features,
architecture, analyses and strategy reviews." The documents also
included "status meeting agendas for RealNetworks executives in charge
of development projects" and "detailed system overview documents," he
wrote.

"Mr. Storey and another LockStream employee are both using
RealNetworks proprietary and confidential information, including
certain RealNetworks source code, to develop competitive products at
LockStream," Christopherson wrote.

RealNetworks associate general counsel Bill Way said he could not
comment on the potential impact on RealNetworks until all the facts
come out.

"For a technology company, source code is its most fundamental trade
secret," he said. "Anytime you get an allegation that someone is
taking your confidential information, you take steps to protect it."

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