In what promises to be a high profile non-compete and trade secrets dispute, Geekwire is reporting that has sued its former vice president in charge of global sales for Amazon Web Services to enforce a non-compete and to prevent him from becoming Google’s director of cloud platform sales.  In that lawsuit filed in Kings County, Washington against Daniel Powers, Amazon has also cited a severance agreement in which Amazon paid Powers $325,000 as a further contractual basis for its claims.  A PDF copy of the complaint is attached below.

According to a post describing the lawsuit on TechCrunch, Amazon says it hired Powers from IBM and taught him the business from “top to bottom,” and provided him with Amazon’s strategic road map, customer information, and pricing strategies in Amazon’s cloud computing business.   Amazon claims that “[a]s a consequence, Powers, perhaps more than any other single employee, acquired extremely confidential, competitively sensitive information about Amazon’s cloud computing business.”

The complaint also hints at Powers’ likely substantive defense — that he and Google have undertaken steps to safeguard Amazon’s confidential information, at least according to Amazon’s account of its dialogue with Powers’ lawyer.  This defense has had some varying degree of success (see my posts regarding the use of this defense in IBM v. Visentin and Aspect Software v. Barnett). 

In addition, there may be a dispute over which law applies, which could determine who prevails.  Although the complaint alleges that Powers is a resident of Washington (a state that does enforce non-competes), Google is headquartered in California, a jurisdiction that rejects the enforcement of non-competes against employees in most circumstances.  Last year, for example, Cisco and HP tangled over whether Texas or California law applied in connection with the hire of a technologist named Paul Perez.  HP claimed Perez was a Texas resident but Perez had apparently moved to California and filed his own lawsuit to challenge the HP non-compete (Perez and his new employer Cisco ultimately prevailed).

Given the entry of many tech heavyweights into the cloud computing sector, this lawsuit will likely generate significant interest.  According to Amazon’s complaint, Google is marketing and selling its cloud computing offerings to many of the same market sectors and groups that are targeted by Amazon.  Amazon alleges that Google offers or has announced its intention to offer cloud computing products and services that will directly compete with Amazon’s offerings, including Google App Engine, Google Cloud Storage and Google Compute.

I will keep you posted on any further developments.

Amazon v. Powers.pdf (1.71 mb)