Yahoo Wins First Round in IP Theft Case

Yahoo won a restraining order against wireless content company MForma late Wednesday, preventing the seven former Yahoo employees it hired from disclosing or using any proprietary Yahoo code. The search giant had accused the seven of stealing code before assuming their new jobs at MForma.

Yahoo sued MForma on Monday, asking the court to step in on the matter. The company also demanded MForma reveal how any of its proprietary code had been used. The small company shot back, with its CEO Jonathan Stacks calling Yahoo hypocritical.

Yahoo was sued in September of last year by Nuance Communications over charges of intellectual property theft.

Stacks also said the legal move was out of jealousy, noting the company was losing employees with several years in the mobile industry. He characterized MForma as "the company of the future."

Much of Yahoo's case is based on archived instant message communications between the engineers. Some of the conversations were through non-Yahoo instant messaging clients, which the suit alleges was an attempt to avoid detection.

The defections began with one employee who recruited the six others, which Yahoo said was a violation of his contract. Allegedly stolen was Yahoo financial forecasts, business plans and source code.

It appears that at least initially, the court is siding with the search engine in what is to surely be a long court battle between the two companies. However, Sacks said in a statement Wednesday night that the hired Yahoo engineers would continue working for the company throughout the duration of the case.

"While we understand it's always unpleasant to lose talent, Yahoo! has gone too far in wrongfully accusing us of a conspiracy that doesn't exist," he argued. "If they are having problems retaining engineers, they should be looking at the internal sources of employee dissatisfaction rather than trying to cover that up with this legal action."