Defendant Slams TransPerfect Trade Secrets Lawsuit as 'Farcical'
TransPerfect's suit stems from the leading translation-services firm's forced sale in 2017.
June 26, 2019 at 06:11 PM
4 minute read
The original version of this story was published on New York Law Journal
Lionbridge Technologies Inc. on Wednesday slammed as “farcical” a lawsuit alleging that it and private equity firm H.I.G. had made a sham bid to buy rival TransPerfect Global Inc. in order to obtain its trade secrets.
In a 32-page filing, Lionbridge and H.I.G.'s middle-market arm asked U.S. District Judge Denise L. Cote of the Southern District of New York to dismiss TransPerfect's suit, which seeks hundreds of millions of dollars in damages stemming from the leading translation-services firm's forced sale in 2017.
The complaint, filed in April, accuses Lionbridge and H.I.G. of using the court-ordered auction to steal TransPerfect's proprietary information. According to the filing, Lionbridge was able to download lists of TransPerfect's top clients, pricing information, commission schedules, employee files and sales strategies, and then used the data to revamp its business.
TransPerfect, which has asked for at least $100 million in restitution, said Lionbridge has ignored its demands to return or destroy any information it allegedly obtained from its data room.
On Wednesday, attorneys for Lionbridge and H.I.G. said the complaint offered no support to TransPerfect's contention that the information it viewed in the bidding process had actually qualified as trade secrets. TransPerfect, they said, had not cited any steps it took to preserve the confidentiality of its data or to establish the value of the allegedly “proprietary information.”
“Plaintiff's complaint is legally defective in virtually every respect,” Kirkland & Ellis attorney Aaron Marks wrote in the filing.
The motion also highlighted what it called TransPerfect co-founder and CEO Philip Shawe's “unhealthy obsession” with a auction process that he ultimately won. His winning bid of $770 million was ultimately approved by the Delaware Court of Chancery and later upheld by the state Supreme Court.
Shawe, however, has unleashed a series of lawsuits directed at his co-founder's attorneys, the Delaware judge who presided over his case and the custodian appointed to oversee the sale. In December 2017, a Delaware federal judge issued a “strike two” against Shawe over his litigation tactics and threatened a nationwide filing injunction if he continued to attack the Delaware rulings.
“Now, in a flagrant effort to retaliate against a competitor for participating in the auction process, Shawe has initiated this action alleging, without any basis, the farcical claim that H.I.G./Lionbridge … participated in the auction only in order to access TransPerfect proprietary information and to compete unfairly,” Lionbridge said in its filing.
Martin Russo, an attorney for Shawe and TransPerfect, noted that Shawe was not a party to the current lawsuit. He said Lionbridge and H.I.G. were simply attempting to distract “from their own alleged misconduct, which is alleged in the complaint, and trying to prejudice the federal judge.”
A spokesman for Lionbridge, meanwhile, blasted Shawe as a “serial litigant who is afraid of fair competition.”
“TransPerfect's April filing against Lionbridge is the most recent example in a series of nuisance suits arising from the extraordinary forced sale of the company ordered by a Delaware Court that was precipitated by Shawe's serial and egregious misbehavior,” spokesman Paul Caminiti said in a statement.
“TransPerfect's action is filled with false and meritless claims and we look forward to prevailing in both court and the market,” he said.
Russo, in response, dismissed the allegations of “frivolity,” saying Lionbridge's attorneys could have brought a claim if they had “enough confidence in their rhetoric to do so.” In a statement, Russo said, Lionbridge still held TransPerfect's confidential information and had yet to issue a denial to the company's claims.
“Having resorted to unfair competition through the misappropriation and use of TransPerfect's trade secrets, Lionbridge nonetheless continues to fall behind as TransPerfect advances. Cheaters never win,” he said.
TransPerfect is represented by Russo and Sarah Y. Khurana of Kruzhkov Russo and Andrew Goodman of Garvey Schubert Barer.
Lionbridge and H.I.G. are represented by Marks and Michael Murray of Kirkland & Ellis and Scott M. Kessler and Jason S. Oletsky of Akerman.
The case is captioned Lionbridge v. TransPerfect.
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