California-Based Software Suite Company Zoho sues Freshworks for Theft of Trade Secret

Every company or enterprise has certain non-public information which may include formulas, designs, strategies, financial or other essential details, etc, which may suffice as an economic benefit to that particular company or enterprise over its competitors. Such non-public information is termed as “Trade Secret” and the same is protected by legal system in various jurisdictions. The protection of such exclusive information lasts as long as the confidentiality of such information rests without any statutory limitation. However, once the information is leaked out to the public or enters the public domain, the trade secret protection ends. A similar case recently came into the limelight when the California-based, computer software suite company, Zoho filed a suit against the 10-year old help-desk software company, Freshworks Inc. on account of theft of confidential business information.

Founded in the year 1996 by Sridhar Vembu and Tony Thomas, Zoho is an Indian company providing online web-based suite software including but not limited to, word processing, presentations, data bases, web conferencing and other similar applications. Presently, Zoho holds headquarters across seven nations including one in Chennai, India. Primarily engaged in business tools and information technology, this company has over 9800 employees at present.

On March 13th, Zoho filed a lawsuit before the U.S. District Court of the Northern District of California accusing Freshworks Inc., for violating the Defense of Trade Secrets Act, the Californian Uniform Trade Secrets Act, the Intentional Interference with Prospective Economic Relations along with Conversion and Unjust Enrichment.

The lawsuit was filed against former Zoho employees and founders of Freshworks, Girish Mathrubootham and Shah Krishnasamy. Factually, Mathrubootham was the Vice-President of Product Management for ManageEngine, a Zoho’s IT Software and therefore, he was in possession of specialized and relevant secret information used in providing efficient customer support. In this regard, the 24-year old IT company contended that, Freshworks expanded its business operations through theft and misuse of Zoho’s non-public information and thereafter, started recruiting Zoho’s ex-employees for scaling up their business. In addition, Mathrubootham at the initial stage manipulatively included the confidential revenue figures of Zoho in investor pitch with an intention to secure funding and at the same time boasted about being as successful and renowned as Zoho.

The lawsuit stated that, “It is using Zoho’s confidential customer and competitive marketing information, planning press releases to coincide with Zoho’s undisclosed product launch dates, and pressuring Zoho’s business partners to divulge confidential customer information”.

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