Olympus Sues ArthroCare ENT, Alleges Sales Manager Poaching

While not likely to attract the attention given the recently concluded ArthroCare shareholder fraud case, that company was back in court last week, this time defending against allegations that its ear, nose and throat (ENT) division lured a high-ranking sales manager into jumping ship in violation of his non-compete agreement.

In a suit filed in the Pennsylvania Eastern District Court, Olympus America Inc. (Center Valley, PA) alleges that after Clayton Williard resigned from the company as a ENT territory manager in May, he breached his field sales management contract by working for ArthroCare (Austin, TX), where Olympus says he worked in the same position, selling similar and competitive products in the same sales territory in New Mexico, even calling on the same customers.

Olympus also alleges that ArthroCare "tortiously" interfered with Williard's contract with Olympus and has "exhibited a pattern of interfering with the valid non-competition agreements of its competitors."

The plaintiff also accuses Williard of downloading the contents of his entire Olympus customer contact list on his work computer and sending it to his personal email address five days before he resigned.

Williard had agreed not to work at a competitor in the same job and region for one year after his employment with Olympus, according to the suit. In the non-compete clause, he also agreed not to disclose trade secrets or confidential information, or solicit any of Olympus' customers or prospective customers for one year, the suit says.

Erin Coe, reporting for Law360.com, says that after Williard told Olympus would be leaving for a position at ArthroCare, "Olympus conducted an investigation and learned that ArthroCare was potentially gearing their ENT marketing efforts toward Olympus customers and planning to showcase the advantages of at least one of its products over a competing Olympus device."

According to Coe, "Olympus said it reached out repeatedly to Williard and ArthroCare to reach a deal where Williard could work for ArthroCare in a capacity or geographic territory that wouldn't violate his agreement, but the defendants delayed and avoided its calls and allegedly proposed a 'sham solution' that would allow Williard to compete and solicit customers within the New Mexico area indiscriminately."

Stephen Levy is a contributor to Qmed and MPMN.