MSI Data Corp. on Wednesday vowed to defend itself vigorously against a $100-million lawsuit filed this week by its major competitor charging the Costa Mesa electronics company with bribery.
In his first public response to the suit brought by Telxon Corp. of Akron, Ohio, President Charles Strauch admitted in a statement that MSI did receive Telxon documents from a newly hired consultant in MSI's London office. But Strauch claimed that MSI voluntarily returned the materials before the suit was filed and tried to "resolve this dispute amicably."
Strauch's statement said it was MSI's belief that the consultant, Carl Brandt, was leaving Telxon's employ when he was hired by MSI last December. MSI said it paid Brandt $24,000 to work for a four-month period.
Still on Payroll
But Telxon, in its suit Monday, said that Brandt was still on its payroll as a consultant, and charged that the $24,000 MSI paid to him was actually a bribe to obtain customer lists, marketing strategies and pricing schedules of Telxon's European operations. Telxon officials additionally claimed that the payment was made with the full knowledge of at least some high-ranking MSI executives.
Brandt, who lives in the Netherlands, is no longer employed by either firm.
The suit increases the business tensions that have been building between the two makers of hand-held data-collection devices. MSI pioneered the market 18 years ago but has seen its dominance slip in recent years. Telxon, meanwhile, has been gaining market share and this year expects to surpass MSI in sales for the first time.
Strauch acknowledged that the competition between MSI and Telxon has become fierce and said that his company is committed to "gaining information about its competitors by all lawful means."
But he accused Telxon of turning the dispute into a public incident by announcing its lawsuit to the press in "inflammatory terms that distort what really happened." Strauch particularly objected to Telxon's use of the word "bribe" as "simply inaccurate and unsubstantiated."
Strauch conceded that Brandt "brought with him certain documents relating to his former employer." And Fredrick Fortier, MSI's corporate secretary, defended the circumstances which found MSI in possession of the documents.
"It's fairly common in business that you take some sort of documents with you when you change jobs," Fortier said.
Strauch said that when MSI learned last month that Telxon considered some of those documents confidential, MSI officials reviewed the materials and returned them. He further claimed that MSI only learned this week that the consultant at the center of the dispute was also doing consulting work for Telxon at the same time he was on MSI's payroll.
"While MSI does not believe it acted unlawfully or improperly in hiring (the) consultant or in receiving the documents, the company acted promptly in returning them to Telxon," Strauch said in a prepared statement.