Borland Sues Microsoft Over Luring Ex-Workers -- Software Giant Lures Away 34 Employees

Borland International, wielding a new weapon in its struggle against Microsoft, is taking the software giant to court, charging it has systematically lured its employees to Redmond in order to glean secrets and blunt Borland's ability to compete.

Over the last 30 months, Borland claims in a suit filed yesterday in Santa Clara County Superior Court, Microsoft has enticed away at least 34 people by offering millions of dollars in signing bonuses and then placing the new hires in the same positions they had at the Scotts Valley, Calif., company.

"I have no problem with competition, but I have a real problem with unfair competition," Borland Chief Executive Officer Delbert Yocam said. "Microsoft has specifically targeted Borland to interfere with our turnaround," he said. "You don't take people with years of experience without some transfer of proprietary information."

Yocam said he believes that Microsoft is intent on depriving Borland of the resources it needs to compete effectively against the software giant. Once a formidable software competitor, Borland is a shadow of its former self, losing $107 million last year as it ceded ground to Microsoft in software-development "tools" and sold off certain product lines.

Microsoft spokesman Mark Murray wouldn't discuss specifics because the company hadn't received the complaint, but said the claims are without merit.

Microsoft doesn't recruit employees to spy, Murray said. "We are very respectful of intellectual property," he said. "Our offer letter explicitly states that we do not want or need information from their previous employers." But Yocam insists that the hiring of people like Paul Gross, Borland's senior vice president for research and development until late last year, is a calculated move to drive Borland out of business.

The lawsuit is the latest salvo in a bitter rivalry between Microsoft and Borland, which failed to take on Microsoft directly in the spreadsheet, database and word-processing software markets.

Borland has since sold off products, slashed its work force and restructured to focus on the software-development tools market.

Hiring wars date back to 1987, when a Microsoft executive, Rob Dickerson, left to join Borland just as the companies engaged in a battle over programming languages.

Microsoft sued Dickerson for violating a nondisclosure agreement with the company. The suit was later settled with an agreement that Dickerson could not work on competing products for nine months, and that neither company would hire from each other for at least six months.

In a move considered a later payback, Microsoft in 1990 hired Borland executive Brad Silverberg to head up DOS and Windows development. Today, Silverberg is a member of Chairman Bill Gates' executive circle and heads Internet development for the company.

Information from the San Jose Mercury News, Reuters and Bloomberg News is included in this report.