MSPs locked in legal battle over alleged client poaching

Trusted Cloud, the managed service business of TPG Telecom, has launched an intellectual property action against a company established by former staff for allegedly using confidential data to poach customers.

Trusted Cloud was established by managing director Michael Amira in 1998, under the name Wavenet. In 2008, ASX-listed provider IntraPower acquired a 51 percent stake in the company. Wavenet was rebranded as Trusted Cloud when TPG Group acquired IntraPower in 2011.

Between 2012 and 2014, Amira and a number of his Trusted Cloud colleagues joined Core Desktop, an MSP established by another former IntraPower employee that specialises in virtual desktop infrastructure based on Cisco and VMware.

Trusted Cloud lodged the action in the Federal Court in Sydney on 20 August 2014.

According to submissions to the court, as many as nine customers had left Trusted Cloud and moved to Core Desktop; Trusted Cloud alleges that Core Desktop used confidential information to poach these customers.

Trusted Cloud is seeking that Core Desktop "be restrained from using, disclosing or reproducing" the offending data; deliver "originals and copies" of any files that infringe copyright or contain confidential information; and pay damages.

In a series of submissions, the parties have been exchanging volleys over the way in which evidence was obtained.

According to documents lodged by Trusted Cloud's legal team, in July this year, one of Trusted Cloud's managed services clients, the Melbourne Institute of Plastic Surgery (MIPS), informed the supplier that "it no longer wished to use Trusted Cloud's services". The court documents also say that by this time, MIPS was preparing to engage Core Desktop as its new supplier.

MIPS, which first awarded its managed service contract to Wavenet in 2009, was one of up to nine customers to have switched to Core Desktop. Other clients mentioned in court documents include United Petroleum, Melbourne Dermatology Group, Sokol Designer Furniture and Tisher Liner. None of the clients are accused of any wrongdoing.

In preparing to disengage MIPS, one of Trusted Cloud's techs noticed files being synced between MIPS' MediWiz software, which was hosted on the Trusted Cloud servers, to a "remote IP address" – a NAS drive operated by Core Desktop.

On investigation, this tech noticed that other files on this third-party NAS drive had the same naming conventions as Trusted Cloud's files and proceeded to download a list of files.

This information is understood to include a 2011 Trusted Cloud pricing list; a list of employee salaries; and a 2011 customer list, according to documents heard in court.

Trusted Cloud has claimed it had legitimate access to the files as part of its managed services contract with MIPS and was investigating the synchronisation to the remote NAS drive as part of "what appeared to be a serious breach of security".

Core Desktop is attempting to shoot down these claims, accusing Trusted Cloud of "unauthorised access of Core Desktop's password-protected server" and said the case should be thrown out because of the way in which this evidence – the file list – was obtained.