Former VP at HP faces 10 years for IBM trade secret theft

Former employee pleads guilty to sending IBM secrets to fellow HP vice presidents

A former Hewlett-Packard vice president faces up to 10 years in federal prison after pleading guilty to stealing trade secrets from his former employer, IBM.

Atul Malhotra, 42, of Santa Barbara, California, pleaded guilty to one count of theft of trade secrets Friday in US District Court in San Jose, Calif. Sentencing is slated for Oct. 29. He faces a possible 10 years in prison, along with a fine of up to US$250,000 and a three-year term of supervised release.

Malhotra was indicted by a federal grand jury late in June for e-mailing confidential IBM information to two senior vice presidents at HP. HP terminated Malhotra, who worked at the company for four months, and reported the incident to law enforcement and to IBM, according to a previous statement from Emma McCulloch, a spokeswoman for HP.

"The activity with which Malhotra is charged was in direct violation of clear HP policies, including HP Standards of Business Conduct," according to the statement. "HP has cooperated fully with the government's investigation."

McCulloch declined to disclose any further details about the case.

Malhotra was employed at IBM from November 1997 to April 2006, noted a federal charging document. He served as a director in the company's global services department. The US Attorney's office in California asserted that in March 2006, while still employed at IBM, he requested and received "trade secret" information about calibration metrics. Each page was reportedly marked "IBM Confidential."

The charging document also notes that a pricing coordinator at IBM Global Services warned Malhotra that "given the sensitive nature of the material, please do not distribute."

In May 2006, Malhotra was hired by HP as vice president of imaging and printing services, according to the papers filed in federal court in San Jose. Late in July 2006, he allegedly sent an e-mail to an HP senior vice president. The e-mail, which had the subject line "For Your Eyes Only," had an attachment that contained IBM's calibration metrics. Two days later, Malhotra sent an e-mail with the same attached information to another HP senior vice president, according to the documents.

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