Australian company Zeptonics, which produces high-speed high-speed devices for financial trading, has been found by the Federal Court to have used technology in its devices which belonged to Zomojo, where Zeptonics founder Matthew Hurd had previously worked as head of IT development and co-managing director.
The court found the technology used in the Zeptonics ZeptoLink, ZeptoNIC, ZeptoAccess KRX and Crosswise ATS products was not its own and has ordered the company to cease sales and support of these devices. The company’s ZeptoMux product is acknowledged to be the work of Zeptonics, and won’t face the same conditions.
“We were disturbed when we realised Mr Hurd had taken our intellectual property when he left,” said Zomojo Director and co-founder Dr Greg Robinson, in a statement posted on the company’s website. “We were further disappointed to learn that he had also been actively working on the establishment of his own company and the exploitation of our IP for some time before he left Zomojo.”
“We are pleased the Federal Court has clarified these matters in such a clear cut decision, and hope we can now put this disappointing saga behind us.
In handing down its judgement, the court described Hurd’s actions as a “flagrant and deplorable attempt to appropriate benefits for himself which were properly those of his employer.” It described his conduct as “blatant” and “deliberate”. The court found Hurd had been working on Zeptonics as early as September 2010, when he took sabbatical leave from the company following a souring in his relationship with Zomojo co-founder Ian Heddle.
During this time the court found Hurd had registered the domain name www.zeptonics.com, and had also started to speak with potential customers and suppliers about the Opticast, a product which splits optical fibre signal into multiple paths to replicate network traffic and has a low latency; beneficial for financial trading.
Zeptonics won the major prize at last year’s Tech23 competition after pitching its network switching devices
Hurd’s resignation took effect on 11 February 2011, although concerns about potential legal obligations to Zomojo were discussed just a few days later. On 17 February, he responded to an email from Robinson which suggested coming to an arrangement whereby he might become a consultant to Zomojo, or be given the budget and ability to launch new business projects. He rejected the offer, saying, “I fully understand my ongoing legal obligations including those with respect to confidential information including patents and trade secrets.”
Robinson later replied: “You mention that you fully understand your legal obligations regarding confidential information and trade secrets. In my view there are other issues that we need to resolve/understand, including the non-compete obligations in your employment contract, but perhaps more far-reaching, your obligations to Zomojo as a former director.”
Zeptonics, which took out the major prize at last year’s Tech23 startup awards, said it plans to appeal the decision.
“We are complying with the court orders but believe there are substantial grounds for appeal, which we are currently exploring. Zeptonics takes pride in our integrity, people, processes and technology and will continue to do so,” it said in a statement this morning.
“Our products are a result of the technical excellence of the Zeptonics team whose experience, skills and expertise are reflected through products that have been acknowledged and laudednot only by customers but also in a number of public forums such as trade shows, Tech23 and interactions with media.”
The damages owed by Zeptonics will be determined by the Court in a hearing commencing July 2013.