Borland sues Microsoft over brain drain

Microsoft is hiring away key employees in order to put Borland out of business, the software maker says.

Mike Ricciuti Staff writer, CNET News
Mike Ricciuti joined CNET in 1996. He is now CNET News' Boston-based executive editor and east coast bureau chief, serving as department editor for business technology and software covered by CNET News, Reviews, and Download.com. E-mail Mike.
Mike Ricciuti
3 min read
Saying that he "just wants Microsoft to leave us alone," Borland International (BORL) CEO Delbert Yocam today filed a lawsuit against Microsoft (MSFT), claiming that the software giant is hiring away Borland's key employees to put it out of business.

Borland claims that in the past 30 months, Microsoft has hired 34 of the ailing software developer's key employees by offering "large signing bonuses of several millions of dollars and other incentives," according to the suit. "It's like we're in the desert, and Microsoft is stealing our water bottle," said the executive, clearly frustrated by Microsoft's recruiting operations.

The suit claims that many of those former employees now hold strategic positions at Microsoft that mirror their former roles at Borland. Yocam said Microsoft is targeting key employees who can use their knowledge to improve Microsoft's products.

A prime example is Paul Gross, formerly Borland's vice president of research and development, now vice president of Microsoft's Developer Tools Division. To date, Gross is the highest-ranking Borland defector.

Yocam maintains that Microsoft is luring personnel away with huge signing bonuses, some in excess of $1 million. "They have the audacity to send limos to Borland's headquarters to take Borland employees out to lunch. I mean, this has got to stop."

Borland executives stressed that the suit is being filed to stop Microsoft recruitment efforts, not to limit employee opportunities. No current or former Borland employees are named in the suit.

But the company, which will seek an injunction preventing current employees from taking positions at Microsoft, will clearly restrict employee mobility, given that Microsoft is the largest employer among development tool makers.

Borland executives said the injunction will only be temporary and for a "specific period." But Yocam declined to specify how long the injunction would be in place.

"Until we can resolve this issue and until they stop luring our employees," he said.

Yocam claims that Microsoft has engaged in "a systematic and unfair effort to impair our company's ability to compete," he said.

Borland is seeking unspecified financial damages and an immediate end to what it terms as Microsoft's "unfair practice of targeting Borland employees in order to hamper the company's ability to compete" in the development tools market. The company is struggling to gain a foothold in the tools market after reporting a $108 million loss in its last fiscal year, which ended March 31.

Yocam said the recruitment has hurt Borland, but he declined to place any monetary figure on the alleged damage. "Of course employees leaving hurt Borland. You can't lose 34 people in key positions without doing some damage." Yocam said the company will "make a specific damages request eventually."

A Microsoft representative said the company has not received a copy of the lawsuit and could not comment on specific points raised by Borland. She did, however, confirm that the company has recruited 34 employees from Borland in the past 30 months, as Borland claims.

But the representative said Microsoft has no plan to single out Borland in its recruitment efforts. Microsoft has more than 2,000 current job openings and has also hired more than 2,000 employees over past nine months, most in highly technical areas, she claims.

The suit is the latest in what has become a common practice among increasingly competitive high-technology companies.

In a case similar to the Borland-Microsoft suit, database software maker Informix Software in January pursued but failed to secure, a temporary restraining order against rival Oracle after 11 of Informix's software engineers jumped ship to Oracle.

Last month, Symantec filed a copyright infringement suit against arch rival McAfee. And the Santa Clara County district attorney's office filed suit against software developer Avant claiming that the company stole trade secrets from rival Cadence Design.

Microsoft is also not the first company to prey on a weaker competitor in search of development and marketing talent. The same charges have been leveled against many other technology companies, including Oracle, Sybase, Computer Associates and others seeking highly skilled software developers who are in short supply.

Ironically, Borland disclosed its lawsuit against Microsoft at the same time as it announced a licensing deal with the Redmond, Washington-based software giant. Borland plans to ship Microsoft's Internet Explorer 3.0 Web browser with its Delphi 3 development tool, which was announced this week.