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Though Wal-Mart Stores Inc. and Amazon.com settled their high-profile lawsuit in April, the legal battles between Internet retailers over trade secret infringements are by no means over. In fact, just the opposite may be true.
Many e-commerce start-up companies are actively recruiting experienced executives from established retailing chains and systems integration firms. But to prevent the start-ups from gaining access to proprietary information, established companies are more likely to turn to the courts to enforce confidentiality agreements or prevent those executives from building duplicate systems if hired away.
In Wal-Mart’s case, the Bentonville, Ark.-based retailer sued Seattle-based Amazon.com last fall, claiming that Amazon.com had gained access to Wal-Mart’s advanced computer systems in hiring away executives.
But even though Wal-Mart and Amazon.com were able to settle their legal differences, more trade secret suits are likely to hit the Internet retailing industry. “Disputes in areas such as inventory management and software development will continue,” says Edward Gray, a partner and e-commerce lawyer in the Washington, D.C., office of Fitch, Even, Tabin & Flannery. “The Internet is moving along so fast that the boundaries of intellectual property and copyrights are still being set. E-commerce companies will become more proactive on not letting their trade secrets get out.”