Alcatel -Samsung trial opens

(BUSINESS)
Jennifer Files

12/07/1999

The Dallas Morning News Page 5D Copyright 1999
Information Access Company. All rights reserved. COPYRIGHT 1999 The Dallas Morning News, L.P.

Samsung Electronics Co. hired key employees from DSC Communications Corp. in an effort to steal its trade secrets and become a global telecommunications powerhouse, lawyers for DSC's new parent company told jurors Monday at the start of their $425 million trial.

Lawyers for Alcatel USA Inc., which bought Plano-based DSC last year, sought to portray Seoul, South Korea-based Samsung as a company threatened by deregulation in its home country, struggling to find a product that would help it capitalize on the fast-growing telecom industry.

Samsung disputed those allegations, claiming that rather than stealing from DSC, it was building on products it had developed internally. Samsung also said that DSC had already killed the program it now says was so valuable, that the trade secrets were public knowledge and that the employees quit DSC because of poor working conditions.

Alcatel is seeking $425 million - a sum that Samsung said is unreasonable. The jury was told that DSC's lawyers, who are being paid on a contingency contract, could receive as much as $130 million.

The trial, which centers around systems that make next-generation telecom networks operate more efficiently, is expected to last into February, and each side took almost three hours to present its opening arguments.

Portions of the proceedings will be closed to spectators who don't sign confidentiality agreements. But the courtroom was open the first day, and so many observers showed up that some were seated along the wall behind the court reporter, close to state District Judge David Evans' bench.

The companies used multimedia presentations and ringing telephones to translate the arcane technical language into plain English. One presentation showed Alexander Graham Bell with his world-changing invention. "Some called it a toy. We call it the telephone."

Alcatel and Samsung spent a total of about $1 million to renovate the courtroom and adjacent space in the George L. Allen Sr. Courts Building, adding computer wiring and monitors, including one that takes up a large part of a wall. The opening statements included snippets of videotaped depositions with outside experts and workers at the two companies. "This is a case about how one company that was far behind in the technology used deception and theft to acquire the technology from another company," said Tom Melsheimer , beginning Alcatel 's three-hour opening argument. "What Samsung did in this case is no different from a burglary or a stickup."

He said that at the same time Samsung told DSC it wanted to cooperate on technology, it was trying to find a way to hire "local experts" who could jump-start its telecommunications program. Months after DSC worker Jim Bunch made a presentation to Samsung, he was offered a job. Mr. Melsheimer said that Samsung methodically hired away other DSC workers, keeping its plans secret, and that Mr. Bunch asked Samsung to promise to pay his legal bills if DSC sued him for hiring former colleagues. Samsung lawyer R. Laurence Macon, however, said Mr. Bunch and the other employees had the right to change jobs. "This case is about whether individuals can go to another employer and take with them their experience and know-how. These are just the bullying tactics of a corporation out to make a quick buck."

Mr. Macon sought to personalize the workers, who were sitting at the back of the courtroom. He asked each one to stand, some with their spouses, and told their stories.

Mr. Bunch, for example, had been stripped of his job title and hadn't been promoted in years, Mr. Melsheimer said. In a videotaped deposition, Mr. Bunch said, "I felt like my career had come to an end. The project I'd been working on had been canceled."

Other employees said they left because of "bullying" or because they weren't working on the kinds of projects they wanted to. Weak financial performance, constant reorganization and repeatedly announcing, then killing, new projects contributed to a morale problem at DSC, Mr. Macon said.

"One could interpret that the message we are sending to our employees is that we don't know what we are doing or want to do," said a 1996 memo from a DSC human resources executive.

Besides, Mr. Macon said, DSC employees made speeches at industry conferences about the products on which they were working. "What's now claimed as a trade secret was made public by DSC," Mr. Macon said.

The lawsuit was filed in 1996. After Monday's proceedings, Mr. Bunch said, "I'm glad the trial's started. I want to get it over with - and be vindicated."