Lenovo Sued for Allegedly Copying Confidential Code

On May 19, Texas software company Khoros, LLC filed a breach of contract complaint against Lenovo Singapore PTE, Ltd., alleging that it misappropriated trade secrets involving “Studio Tool,” a community platform creator. The case was filed in the Northern District of California before Magistrate Judge Donna M. Ryu.

According to the complaint, Khoros’ Studio Tool is accessible “by [the company’s] customers under strict obligations of confidentiality.” Keeping the tool a secret is important for Khoros since it “would provide an unauthorized user with a multi-year head start in developing and optimizing its own community platform, with associated cost savings in the hundreds of millions of dollars.”

Computer manufacturing giant Lenovo is a former Khoros customer and had access to its Studio Tool. In 2007, Lenovo entered into a contract agreement with Khoros’ successor Lithium, agreeing not to copy or reverse engineer the company’s software. Despite accepting these terms, Lenovo is accused of reverse-engineering the Studio Tool. The complaint says, “the components that make up the Lenovo community-site (i.e., the menus, options, categories of information, taskbars, query sections, etc.) match nearly exactly components that have been aggregated and constructed in Khoros’s Studio Tool.” The plaintiff alleged that the back-end HTML would have also been stolen by Lenovo, thereby leveraging “one trade secret to reverse engineer another.”

In an attempt to prevent further misappropriation of trade secrets, Khoros sent Lenovo a cease and desist letter on March 16. The letter instructed Lenovo to decommission its newly developed community platform, allegedly created with Khoros’ source code, by March 23. According to the complaint, Lenovo neither responded to nor acknowledged the letter. Khoros also sent a preservation letter instructing Lenovo “to preserve all data associated with…[its] creation, development, and implementation of its self-hosted community platform.” Lenovo allegedly disregarded this letter as well and began “destroying evidence of its wrongdoing.”

As a result of Lenovo’s alleged breach of contract, Khoros seeks an award for compensatory damages and a permanent injunction preventing the company from further misappropriating trade secrets.