October 16, 1998 4:20 PM PDT

Wal-Mart sues Amazon, others

Wal-Mart said today that it has filed a lawsuit against Amazon.com, Kleiner Perkins Caufield & Byers, Drugstore.com, and others, alleging violation of an Arkansas trade secrets law.

The lawsuit is one of the most tangible signs yet of the battle brewing between brick-and-mortar stores and emerging Internet companies for business.

"The purpose of the lawsuit is to bring an immediate stop to what appears to be a wholesale raiding of its proprietary and highly confidential information systems by Amazon.com and others through the use of former Wal-Mart associates," Wal-Mart said in a statement.

"We have not been served with the suit yet. We can't react until they serve the suit on us," said Amazon spokesman Bill Curry, declining to comment further.

Drugstore.com executives also said they had not yet seen the lawsuit. But Drugstore.com vice president for marketing Suzan Delbene said: "We are such a tiny start-up company that I'm surprised we could have any measurable impact on Wal-Mart at all."

Kleiner Perkins had no immediate comment.

Wal-Mart wants the court to issue an injunction against Amazon.com and other Kleiner Perkins companies "forbidding them to utilize any Wal-Mart systems knowledge or transferring that knowledge to other companies."

Wal-Mart said it is also seeking to mandate that they "stop targeting Wal-Mart associates and vendors in an effort to duplicate proprietary business systems."

One analyst who requested anonymity said he was surprised this issue was coming up now, because one of the former Wal-Mart information technology professionals hired by Amazon was hired more than a year ago.

In August 1997, Amazon appointed former Wal-Mart information systems vice president Richard Dalzell to the position of chief information officer. Then, in July, Amazon hired Jimmy Wright as vice president and chief logistics officer. Wright worked for Wal-Mart for 13 years, serving as a "key logistics leader," according to Amazon.

Observers say Wal-Mart, one of the world's largest retailers, prides itself on its computerized supply chain and retail management system and is aggressive in protecting it.

The complaint alleges that "by hiring these individuals to gain the specific knowledge and programs developed at Wal-Mart's expense, Amazon.com is improperly trying to obtain trade secrets, as well as other confidential information, that are unique to Wal-Mart."

The lawsuit was filed in the Chancery Court of Benton County, Arkansas, where Wal-Mart is based.

 

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