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EMC sues Donatelli over HP move

To compete or not to compete

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EMC and its ex-executive VP David Donatelli are entangled in legal disputes over him joining HP and competing with EMC.

Donatelli suddenly resigned from his position as president of EMC's storage business and is set to join HP on May 5th as an executive vice president in charge of its servers, storage, and networking. He has filed a law suit in California that attempts to render a non-compete clause in his EMC employment contract null and void.

EMC then retaliated by filing its own suit in Massachusetts that would enforce the non-compete clause and prevent him joining HP.

EMC spoksperson Michael Gallant said: "Mr. Donatelli's key employee agreement with EMC contains a non-competition clause and other protections that we intend to enforce."

A non-compete clause typically aims to limit a key employee's freedom to take a job with a competing firm and disclose trade secrets, customer information, and so forth. The two firms have to be rivals for the non-compete clause to apply. In the case of HP (which makes and sells storage hardware and software, amongst other things) and EMC (which also makes and sells storage hardware and software), that would seem to be incontrovertible.

The legal support for non-compete clauses varies in USA states. California, for example, where Donatelli is suing EMC, does not uphold them at all. But Massachusetts does.

In 2001, EMC won a non-compete law suit in Massachusetts against Doron Kempel who was leaving EMC to become CEO of SANgate Systems. He had to wait almost a year before taking up his appointment. Kempel later became chairman and CEO of a deduplication vendor, Diligent, which was acquired by IBM, where he now works.

Donatelli is a 22-year EMC veteran with intimate and up to date knowledge of EMC's operations, storage roadmap, partnership with Cisco, strategies concerning VMware, and product and technology roadmaps. Knowledge that would be intensely valuable to HP.

These legal moves must surely have been foreseen by HP's legal counsel as part of the due diligence involved in the recruitment of Donatelli. An HP spokesperson said: "HP does not comment on other companies' litigation."

Maybe Donatelli will relocate to California. ®

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