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Judge grants injunction to Intel in Broadcom suit

A judge grants a preliminary injunction in Intel's suit against Broadcom that will force Broadcom to more closely monitor competitive information it obtains from new employees.

A judge granted a preliminary injunction in Intel's suit against Broadcom that will force Broadcom to more closely monitor information it obtains from new employees about competitors.

The action, filed in Santa Clara County Superior Court in California, revolves around what could become a legal flash point in years to come: How can companies control intellectual property in an economy where employees switch jobs frequently?

In late 1999 and early 2000, Broadcom recruited three key employees from Intel's networking division. Intel subsequently filed a suit in March alleging that Broadcom improperly gained access to the company's trade secrets through the new employees.

In the injunction, the court found that the three former Intel employees have not apparently disclosed any confidential information to Broadcom. The court further concluded the employees seemed credible and were able to take on their new job duties without compromising Intel's interest.

But the court also found that Broadcom used the job interview process to try to extract trade secrets, and it sharply criticized CEO Henry Nicholas' explanation of the interviews as "not credible."

In one instance, Broadcom interviewed a fourth, now former, Intel employee to obtain protected intellectual property, the court found.

"At the very least, Broadcom's approach in this instance to protecting Intel's trade secrets was extremely cavalier," the court wrote. "Broadcom's assurances and explanation in this regard, including the testimony of Broadcom's CEO, Dr. Nicholas, were unpersuasive and not credible. These were clearly not employment interviews."

Under today's order, Broadcom will have to set up a training program to ensure that employees recruited from competitors do not disclose the private information of former employers. A third party will monitor the training program.

The injunction does not mean Intel will prevail on its claims. Rather, by granting the injunction, the court is effectively stating there is a likelihood Intel could be damaged if Broadcom's conduct is not limited during the trial.

For its part, Broadcom's attorney termed the ruling a victory for his client. Intel had asked the court to force Broadcom to get rid of the three employees. "They didn't get an order that would require Broadcom to remove them," said Rico Rosales, an attorney with Wilson, Sonsini, Goodrich & Rosati.

Rosales further added that the injunction will not force Broadcom to shift the three employees out of any projects.

Interestingly, Intel was an early investor in Broadcom.