A longtime Silicon Valley tech executive claims in a new lawsuit that a Mountain View, California, financial-technology firm stole intellectual property from its San Francisco rival so easily that every startup should fear the same thing happening to them.
Scott Ellison of Palo Alto, California, alleges in his lawsuit filed Tuesday that he was wrongfully fired from Mountain View firm Stampli after reporting to its CEO that a newly hired executive had misappropriated documents from his former employer — a competitor in San Francisco named Front — and had given the materials to Stampli along with live links providing access into Front’s internal systems.
“This to me is not just beyond wrong, it’s so brazen,” Ellison said in an interview.
After finding the alleged live links, Ellison “wanted to throw up,” he said. What upset him most was realizing that he was looking at a vulnerability he believes is widespread among Silicon Valley startups, including Stampli, Ellison said.
Stampli and Front did not immediately respond to requests for comment.
The alleged thefts also highlight the risk to companies’ trade secrets and intellectual property in an industry where skilled technologists jump frequently from one company to another. “We trust people not to take documents, not to take links,” said Ellison, who has worked in the region’s tech industry for decades, including about six years as a director at San Jose’s PayPal.
Lawsuits claiming employees stole intellectual property and brought it to new employers arise regularly in Silicon Valley, with occasional prosecutions. Former Google engineer Anthony Levandowski was pardoned by former President Donald Trump after being sentenced to 18 months in prison for stealing self-driving car technology from the Mountain View company before heading up Uber’s rival unit.
“It’s very easy for an employee to walk out with literally gigabytes of information on a thumb drive and it’s almost impossible to detect, really, until it’s put in use,” said Lawrence Hadley, an attorney specializing in intellectual property law at Glaser Weil in Los Angeles. “There are ways to bypass protections that employers put into place.”
Ellison, 55, was hired at Stampli, an Israeli company with its U.S. headquarters in Mountain View, in June 2021 as its director of competitive intelligence and market analysis, according to the lawsuit. In January of this year, the company replaced the marketing chief with David Prager, whom Stampli CEO Eyal Feldman said he’d hired away from the same position at Front, according to the lawsuit filed in Santa Clara County Superior Court.
Eight days after Prager came aboard at Stampli and became Ellison’s direct supervisor, he emailed Ellison documents clearly identified as belonging to Front, one of them marked “Internal!” in large bold font, the lawsuit claimed.
Attempts by this news organization to reach Prager and Feldman by phone and email through Stampli were not immediately successful.
In a video meeting two days later, Prager casually told Ellison and other Stampli employees he had “swiped” the documents from Front, the lawsuit alleged.
Ellison went to Stampli’s head of human resources, who agreed that Prager’s actions violated Stampli policies and California law and said Feldman as CEO should be informed.
After Ellison met with the HR director, he reviewed materials Prager previously sent to him and other employees, and discovered many contained live internet links connecting directly into at least four software platforms used by Front, bypassing log-in authentication, and giving access to Front documents and other materials in real time, in some cases showing comments, edits and instructions from Front’s CEO and top executives, the lawsuit claimed. “Prager’s plan and intent included continuing to learn about Front’s developments in real time to copy and implement them at Stampli,” the lawsuit alleged.
Ellison reported to Feldman that Prager had allegedly taken documents illegally from Front and that Stampli was vulnerable to legal action by Front, the lawsuit claimed. Ellison advised Feldman to contact Stampli’s lawyers, the lawsuit alleged.
Feldman angrily told Ellison, “Don’t try to involve me in this,” and, “Whatever Dave (Prager) may have taken from his former company is between him and them, it has nothing to do with me or Stampli,” the lawsuit alleged. Feldman told Ellison he must continue working under Prager and must “make him happy,” the lawsuit claimed. “In response, Ellison asked, ‘Do we have Front’s permission to use their intellectual property?’ Feldman refused to answer,” the lawsuit alleged.
Feldman began sending messages to Ellison criticizing his performance, despite Ellisons’ superiors, including Feldman, having praised his work throughout his employment. Ellison’s lawyer wrote to Feldman warning that retaliating against Ellison would break the law, but Prager fired Ellison “with Feldman’s apparent consent,” the lawsuit claimed.
Intellectual property lawyer Hadley said the Levandowski case has helped highlight the risk in Silicon Valley of employees stealing trade secrets and bringing them to new jobs. Such thefts remain “fairly prevalent,” Hadley said, but “employers have gotten much smarter about taking steps to try to prevent the problem and employees have learned that there are very serious civil and criminal consequences.”
But, Hadley added, “typically companies are a bit reluctant to put high-level management from the CEO down through the same types of security practices that other employees are subject to.”
