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Alcatel Lawsuit Targets Investors

By Kurt Hubler KERA 90.1 Reporter

Dallas, TX – Kurt Hubler, KERA 90.1 Reporter: Ken Lewis, the President and CEO of Chiaro Networks Limited, says his Richardson company - an internet router - was dealing with a lawsuit before it could install its office phone lines. His former employer, Paris-based Alcatel, claims Chiaro recruited Alcatel employees in an attempt to gain trade secrets. Lewis, who estimates 20% of his staff consists of former Alcatel workers, denies the charges.

Ken Lewis, President and Chief Executive Officer, Chiaro Networks Limited: We exert an overabundance of caution to make sure that we follow legitimate practices and that there would be no way that we would be targeting people. If we extend an offer to an employee, the offer letter specifically says, ?Do not bring anything from your former employer or any other third party.? And it is grounds for dismissal if they bring anything in.

Brian Murphy, Spokesperson, Alcatel: Intellectual property is one of Alcatel?s most valuable assets.

Hubler: Alcatel spokesperson, Brian Murphy.

Murphy: What we are doing here is protecting our assets, and we have about 6,500 employees in the area - most of them are happy working for Alcatel, and we plan to keep them that way.

Hubler: Alcatel filed for a preliminary injunction to stop Chiaro from conducting its business until a verdict had been reached. A judge rejected the request. That, according to Chiaro?s attorneys, could be a reason why Alcatel filed another lawsuit, this time against Chiaro?s primary investors, Dallas-based Centerpoint Ventures. Alcatel maintains the investors are also helping Chiaro steal Alcatel?s trade secrets by recruiting their employees. It?s a move the company?s managing general partner, Bob Palluck, says he has never seen before.

Bob Palluck, Managing General Partner, Centerpoint Ventures: Venture capitalists don?t get sued. What we try and do is enjoy the American free enterprise and build companies of value.

Hubler: Attorney Jamie DuBoise, who represents both Chiaro and Centerpoint, says Texas start-ups are vulnerable because there are no laws that protect their growth. In California, for example, the legislature enacted a law that discourages companies from having ?no compete? clauses with employees - the theory being, the more competition, the better the local economy. DuBoise says an absence of such laws in Texas could dampen investors? enthusiasm for North Dallas? Telecom Corridor.

Jamie DuBoise, Attorney for Centerpoint and Chiaro: Well, if I fund this company in Texas, do I want to include in my budget - and the cost I?m going to need to fund this company?s start up activities - a million or two million dollars of legal expenses?

Hubler: One way to recoup those legal expenses is through more litigation. Both Centerpoint and Chiaro plan to countersue Alcatel, should they win. Jury selection for the federal trial of Alcatel versus Chiaro is scheduled for July 9th in Texarkana. The case between Centerpoint Ventures and Alcatel will be tried in state court in McKinney sometime next year. For KERA 90.1, I?m Kurt Hubler.