Social media startup CultureSphere has accused Noida based IT company HCL, of using their confidential information in building a rival product. HCL on the other hand, is refusing the allegations labeling them “totally baseless”. The global market witnesses many tales of failed acquisitions, but this is a pretty serious case of things gone wrong.
CultureSphere was launched in July 2015 and it enabled and encouraged employees to share content on social media.
As per the lawsuit, HCL’s BEYONDigital unit and CultureSphere met in the summer of 2016, to discuss a potential acquisition. The talk spread out to the extent that CultureSphere volunteered to tell “the inner workings of their proprietary platform” which HCL agreed to treat with high confidentiality.
The information “far exceeded any other disclosures that CultureSphere made to any other company that expressed interest in a potential acquisition.” states the lawsuit.
The litigation states that the startup and BEYONDigital settled on “key details” at the meeting; with an acquisition price of around $20 million and a closing date of September 15. But later, BEYONDigital stopped communicating with CultureSphere and continued telling that the deal was being delayed due to broader corporate considerations.
In a moment of candor, [HCL executive Anand] Birje explained [via email] that HCL was now exploring whether it could build the same platform itself and any acquisition discussion would have to occur in mid to late October.
According to the lawsuit, HCL told CultureSphere in September that they can’t continue with the deal. But, in November, they saw a tweet from an HCL executive about the launch of a product which sounded similar to theirs.
The lawsuit complains that HCL could have not created the product that they are claiming to have created (and that according to CultureSphere, resembles their own) from the ground up in merely 2 months. It also alleges that HCL,
induced CultureSphere to reveal its confidential and propriety materials and information through false promises of confidentiality and non-use restrictions and the promise of acquisition that, with the benefit of hindsight, HCL and BEYONDigital never intended to honor.
In the lawsuit filed by the startup, it is striving for undefined compensatory damage and “injunctive relief”, to prevent HCL from releasing the product to the public. HCL on the other hand, will now have to prove that it did not steal CultureSphere’s technology and use it to create its own product.
An HCL spokesperson merely stated;
It is inappropriate for us to comment on pending litigation, however, we believe the allegations in the lawsuit to be totally baseless.
