Cisco Calls Out HP For Suing Former Employees Who Leave HP To Work For Cisco

from the sullying-the-hp-brand dept

We've written, in great detail, about the research that shows that the ability for employees to switch jobs freely almost certainly contributed massively to the huge success of Silicon Valley. Multiple studies, looking at multiple different factors, have shown that a simple legal issue -- the fact that non-compete agreements are unenforceable in California -- was the key driving factor in Silicon Valley's success. Sure, other things were important: good universities, investors, etc. But other areas had that too. What set Silicon Valley apart was the fact that employees switch jobs much more frequently.

As for why that has such a massive impact on innovation and economic growth, it has to do with the sharing of ideas. While traditional economic theory might suggest companies are better off hoarding information on new products, that's not true in many cases. Take, for example, an emerging market where multiple players are on the verge of key breakthroughs -- but the market won't really emerge until that breakthrough is complete. What studies have found is that the more minds thinking about a problem and cross-pollinating ideas, the faster it is that the necessary breakthrough can happen. Now, companies may not work directly together on solving the challenge, but when employees shift regularly between companies they act to pollinate the ideas from one organization to another, helping those organizations reach the breakthrough point sooner, creating those large new markets. This isn't a bad thing. Speeding up the process of innovation and creating large new markets is a non-zero sum game, so the fact that an employee leaves can actually help spur a huge market that the employee's former company can take advantage of too. At the same time, it allows companies, who might be upset about losing certain employees, to similarly hire people away from other competitors.

So, it always strikes me as a bit strange when companies get so worked up about an employee leaving to join a competitor -- especially in California. However, Cisco General Counsel Mark Chandler is directly calling out HP for a series of lawsuits against employees who left HP (a company clearly in turmoil) to go to Cisco. Chandler highlights the fact that noncompetes are unenforceable in CA, but notes that (even though both companies are headquartered not far from each other in California), HP has used the fact that it has locations elsewhere to file lawsuits against former employees three times. And the stories suggest that HP is really going overboard in these efforts:
In the first of the three cases, HP was so persistent in the litigation and so threatening, that the individual, who had retired from HP months before even talking to Cisco, withdrew. There seemed to be little concern with the stress that a big company turning its legal guns on an individual can cause. In another case, an employee who worked in HP’s financial services group was sued to block her from working in Cisco’s customer finance group, even though there was no argument whatsoever that relevant intellectual property at stake. She persisted and HP relented. In the most recent case, just last week, the employee, who’d given HP over two decades of loyal service, had moved to California before starting work at Cisco. He asked a California court to declare that he was protected by California law and that HP could therefore not enforce its non-compete. A court hearing was scheduled in California, we notified HP and HP retained counsel. Cisco also reached out to senior legal staff at HP to try lay out some voluntary steps to avoid further litigation and to give further reassurance that the employee wouldn’t even inadvertently leverage any HP confidential information.

HP’s reply was to file an action in Texas against the employee and schedule an “emergency” hearing to try to enjoin the employ from working with Cisco, seeking to have a judge issue the injunction with no notice and no opportunity for the employee to be represented. Fortunately, an eagle-eyed Texas lawyer working for the employee saw the filing appear on line and showed up in court. Given that the matter was already in front of a California court, with HP fully represented, in a hearing scheduled for two hours later, the judge in Texas was not impressed by HP’s effort to get her to act without a hearing. She refused to proceed. And the California judge issued an order allowing the employee to begin his new career at Cisco.
There's no way to look at this and not wonder what is going on at HP. The company is flailing. It's been firing CEOs left and right -- and paying them ridiculous sums for failing in the process. Why not just spend some of the money that's being wasted in these silly and damaging lawsuits to actually innovate? In his post, Chandler also notes that HP has been on the other end of similar fights, which makes this even more bizarre. He closes with a pledge that, no matter where they are, Cisco will not use litigation to stop employees from working elsewhere, and challenges HP to do the same:
Cisco’s promise to those looking to work in the networking industry is that no matter which of the fifty states you live in and work for Cisco, if you come to work for us we will apply California’s rule in favor of employee mobility nationwide. We know that employee retention is a matter of fair compensation and career opportunity, not litigation. And we challenge HP, with new leadership deeply steeped in Silicon Valley’s environment of mobility and opportunity, to step up and support employee freedom and stop suing employees just for leaving.


Reader Comments (rss)

(Flattened / Threaded)

  •  
    identicon
    Donnicton, Nov 23rd, 2011 @ 3:59pm

    This is what happens when corporations stop treating their employees like people, and more like property.

    The very fact that personnel is now called "Human Resources" reflects this quite a bit. In many corporations, physical property like a computer is referred to as an "asset", but employees are a "resource"?

    ...When was the last time you saw a corporation have a company picnic?

     

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      PlagueSD (profile), Nov 23rd, 2011 @ 4:43pm

      Re:

      Our company picnic was 5 or 6 months ago. We have one every year in the spring/summertime.

       

      reply to this | link to this | view in chronology ]

    •  
      identicon
      Anon, Nov 23rd, 2011 @ 7:51pm

      Re:

      My company has a picnic every year. Lots of food and a band.

      We also have a company pot luck, where people bring food, we all got 14lbs premium turkeys for Thanks Giving, handed out in person by VP/CEO. They shake our hands and thank us for our hard work.

      We have a lot of corp events.

       

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    identicon
    out_of_the_blue, Nov 23rd, 2011 @ 4:18pm

    Mystified Mike, doesn't actually know anything practical.

    "There's no way to look at this and not wonder what is going on at HP. The company is flailing."

    Simply put, corporations become senile, especially when rich for a long time. There should be a time limit on all corporations -- not least because otherwise immortal -- but mainly to break them up and create a ferment that lets new ideas in. I suggest 30 years tops. Then we'd be rid of HP, GM, Microsoft, Apple, and numerous other deep pools of stupidity. As is we're stuck with them forever. ... But when comes to anything that could actually upset corporations, Mike is QUITE a reactionary, so he won't embrace the notion of ANY limits.

     

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      Grae (profile), Nov 23rd, 2011 @ 4:46pm

      Re: Mystified Mike, doesn't actually know anything practical.

      I actually agree with the idea here, perhaps not the details, but as corporations are currently immortal "people" with extra-legal rights that citizens do not enjoy, I do feel that after a certain point--whether it's time or better: company size--corporations should be broken up to prevent stagnant monoliths from growing in our economy.

      I don't really find your perceptions of Mike to be relevant to the idea you put forth though, seems like you're always QUITE reactionary to many things Mike says. :P

       

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        identicon
        Anonymous Coward, Nov 23rd, 2011 @ 6:36pm

        Re: Re: Mystified Mike, doesn't actually know anything practical.

        There is an easy way to do it, attack all the monopoly laws that allow them to operate in that fashion and they will be no more.

        Attack exclusive contracts and make them useless and other competitors will come in, attack IP laws and others will be allowed to enter.

        Then it doesn't really matter who is on the top he will have to do a good job or face the consequences.

        But that needs to be addressed at the legislation level first and to do that people need to create the forums that they will use to create the new laws needed for it to happen, so they know exactly what they should ask to anyone wanting to get a seat in congress.

         

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      hmm (profile), Nov 24th, 2011 @ 12:07am

      Re: Mystified Mike, doesn't actually know anything practical.

      Small typo there didn't you mean HP is FAILING?

      Collapsing stock price, internal strife (with lawyers desperately running around trying to keep the true state of the company away from general employee's and shareholders).

      High up HP board knows the company is critically failing with unbelievably massive cash flow issues but it's fingers-in-ears time LALALALAL NOT HAPPENING!!!! LALALALALA

       

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        TheBigH (profile), Nov 24th, 2011 @ 5:20pm

        Re: Re: Mystified Mike, doesn't actually know anything practical.

        I think flailing, as in waving your arms around in desperation, is just the right word.

         

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      nasch (profile), Nov 24th, 2011 @ 11:05am

      Re: Mystified Mike, doesn't actually know anything practical.

      Then we'd be rid of HP, GM, Microsoft, Apple, and numerous other deep pools of stupidity.

      lol, nice turn of phrase, I like it!

       

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    identicon
    Wayne, Nov 23rd, 2011 @ 4:25pm

    oh Cisco the White Knight coming to save the day, BS

    Cisco can shove their holier than thou attitude.

    Does anyone know this name?

    Peter Alfred-Adekeye??

    Ring any bells? This sorta is the pot calling the kettle black. Agreed what HP is doing is disgusting, but I don't think we should canonize Cisco yet.

     

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    Frost (profile), Nov 24th, 2011 @ 6:26am

    Silliness of a money-based society again.

    Without the artificial "we must make money!" boundaries, those people could be working cooperatively towards creating great new tech, and instead we now have corporations suing other corporations because they can't hoard their data and employees sufficiently jealously. Stupidity made manifest, much like the patent system, copyright and other advancement- and culture-retarding mechanisms...

     

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    identicon
    Anonymous Coward, Nov 24th, 2011 @ 12:03pm

    There are circumstances where some form of a non-compete is appropriate, but to employ them without asking "Is this such a circumstance?" is counterproductive and just plain silly.

    Even is California a non-compete can be lawful, but the circumstances where this would be so are very, very narrow, and typically turn on trade secret law.

     

    reply to this | link to this | view in chronology ]


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