United States v. Malhotra, No. 5:08-CR-00423-JF (N.D. Ca.)

Former Hewlett Packard vice president Atul Malhotra today pleaded guilty in federal district court in San Jose, California to one count of theft of trade secrets. In an information filed on June 27, 2008, the United States charged Malhotra with violating the Trade Secrets Act, 18 U.S.C. § 1832(a)(2), by disclosing to HP certain confidential pricing information he obtained while employed at IBM. Specifically, the government charged that in his capacity as director of sales and business development for output management services for IBM Global Services, Malhotra obtained trade secret information regarding the IBM Global Services “CC Calibration Metrics.” This information concerned products costs and materials that IBM used to compete in the marketplace for printers and other output devices. Accordingly the document was stamped “IBM Confidential” on each page.

Approximately two months after obtaining the confidential IBM information, Malhotra accepted a position as vice president of imaging and printing services at Hewlett Packard in Palo Alto, California. Shortly thereafter, the government alleges, Malhotra sent e-mails to two separate HP senior vice presidents entitled “For Your Eyes Only,” and attached the IBM Global Services CC Calibration Metrics. An HP statement at the time indicated that HP conducted an internal investigation, terminated Malhotra’s employment, and reported the activity to law enforcement and to IBM.

Malhotra faces up to ten years in prison and a $250,000 fine on the single count of theft of trade secrets. Sentencing is scheduled for October 29, 2008, before District Judge Jeremy Fogel.