September 1 would've been just another day in Silicon Valley. But Eugene Wang had to drop the bomb.
At a mid-morning meeting, the Borland International
executive was visibly choked up as he told a roomful of staffers he was resigning as vice president. And that was the good news. What Wang haltingly offered next was incredible: He was leaving to take up a similar post at Symantec Corporation - one of Borland's archrivals in the software business.
When he finished, Wang covered his face and rushed out of the room.
"We were absolutely freaked watching Geno stand there, practically crying and saying he would always remember us. A lot of us just looked down at the floor," said a staffer. "But none of us had any idea about what would happen next."
And so begins one of the most bizarre imbroglios to hit the nation's software industry - a raging tempest in the Silicon Valley teapot between Eugene Wang, his former employer, Borland, and his new boss, Symantec CEO Gordon Eubanks.
The whole thing broke just a day after Wang's tearful defection, when Symantec announced that software giant Borland was sending the FBI and Santa Cruz County Police after Wang and Eubanks. Borland claimed the two were conspiring to steal trade secrets, and that it had proof: a dozen electronic mail messages left on Wang's computer.
Now in the custody of the Santa Cruz County District Attorney's office, the messages were sent to Eubanks' electronic mailbox during Wang's last ten days at Borland, according to court documents.
According to Borland, the messages contain product marketing plans, recruitment prospects, advertising calendars and other documents labeled "Borland Confidential." Strangely, the mailed documents also contain a copy of Borland's interview with the Federal Trade Commission regarding Microsoft Corporation's alleged monopolistic trade practices.
Based on the contents of these messages, Borland filed suit against Wang, Eubanks, and Symantec in Santa Cruz County Superior Civil Court for the misappropriation of trade secrets and unfair competition. And Borland didn't stop there. After an all-night coffee-and-doughnuts powwow with county investigators, executives decided they had enough to pursue criminal charges as well. The next day, a Santa Cruz County judge issued search warrants for the homes and offices of Wang and Eubanks.
:In a move that shocked the Valley, FBI agents and county police were soon swarming the premises. Found among the items seized in Wang's tri-level home in the Santa Cruz mountains: a laptop computer and a receipt allegedly showing that it was purchased for Wang by Symantec in July, a locked briefcase containing a listing of Borland
employees' salaries, and a note reading: "I know the technology, the products, the players...."
In Eubanks' even ritzier Northern California homes (one in Pebble Beach and one in Saratoga), FBI agents discovered copies of the same e-mail messages found a day earlier on Wang's PC - proof, Borland says, that Eubanks received them. The agents also found a few dozen floppy disks in a bathroom trashcan.
Investigators spent five months poring over the contents of computer files, various documents, and scores of floppy disks. Ironically, they used Symantec's popular Norton Utilities data retrieval program to restore information possibly erased from the home and office computers of both Eubanks and Wang. The evidence they uncovered led a California grand jury in March to drop a bomb of its own: criminal indictments. Wang faces 21 counts of conspiracy and trade secret violation. Eubanks faces eleven counts of conspiracy and receiving stolen property. Both men face maximum penalties of up to six years in prison and fines of up to $210,000.
The Other Side of the Story
It's true, of course, that Silicon Valley is an incestuous place where executives hop ship on a dime. Accusations of trade-secret theft are hardly rare - fortunes can be made from easily copied bits of code.
But never before have computer industry executives at so high a level in companies this large been so publicly accused of such misdeeds. Never before has a computer company claimed it had e-mail documents as proof. And never before have two major software executives been indicted with criminal trade theft charges as a result. "What makes this case so unusual are two things: the stature of the personalities involved, and the fact that it's risen to the level of a criminal investigation," commented Tom Villaneuve, an intellectual property attorney with Brobeck, Phleger & Harrison in Palo Alto, California, and one of countless lawyers closely watching the case.
Symantec refused to comment on the allegations during the prolonged investigation, opting instead to issue four prepared statements, all of which chalk up the controversy to Borland harassment tactics.
"We believe this is an attempt by Borland to inhibit others from hiring Borland employees," proclaimed Robert Dykes, Symantec's chief financial officer, in one prepared statement. "The activity is clearly calculated to create publicity and to harass."
After the indictments came down in March, however, Eubanks and Wang readily spoke to the media, claiming innocence. "We're very, very confident that we are innocent," Eubanks said.
Though he doesn't deny the existence of the messages, he says they contain nothing of a scientific or technical nature - nothing that, under the California penal code, classifies them as "trade secrets." Symantec's goal is to show that the criminal charges are unjustified by getting the court to make the contents of the messages and other seized documents public. (Borland resists on the basis that the documents are in fact trade secrets.)
As to why the grand jury (which did see the documents) recommended the indictments, Eubanks quipped: "A grand jury would indict a ham sandwich if a DA asked it to. That's not the issue. The DA is trying to test (trade secret) law, and that's frightening."
"There's a big difference between a mistake in judgment and the commission of a felony," he continued. "Borland is intent on putting me in jail. . .they want to keep all the evidence secret."
To Borland's extreme annoyance, that argument has been gaining a lot of ground around Silicon Valley. Many people - particularly Borland competitors - have been siding with Symantec, Eubanks, and Wang. And privately, some stop just short of calling Borland CEO Philippe Kahn a bully.
At an industry conference held about a week after the story broke, a Microsoft vice president reportedly chastised Kahn for turning the whole thing into a publicity stunt, saying that pursuing the matter was "bad form."
Yet another Microsoft vice president, John Lazarus, agrees. "It's bizarre. In my opinion, Borland is doing everything it can to drag this on. As long as [Borland CEO Philippe Kahn] can't be sued for false prosecution, he's safe. He can use this lawsuit as a sponge for time, to slow down Symantec as his competition. . .I would be very surprised if the e-mail messages are as indicting as everyone says."
But Symantec did seem to be worried about something. According to court documents, Wang and Eubanks refused to answer questions in civil depositions taken last November - both men exercised their Fifth Amendment rights on the grounds that their answers might incriminate them in the criminal investigation.
While it's true that pleading the Fifth is by no means an admission of guilt - the strategy is designed, after all, to protect innocent people in the face of seemingly damning evidence - "this definitely makes them look bad," said one Silicon Valley attorney who requested anonymity. "And it sounds awful."
What sounds even worse is a vicious rumor that's been flying around the Valley since Wang's defection: Microsoft was involved. At the heart of the rumor are transcripts of the Borland interview with the FTC regarding Microsoft (Microsoft is a Symantec partner in some fields and a Borland rival in most). A lot of people speculate that Microsoft solicited the FTC document from Wang, and that the rest of the documents were just gravy. Microsoft officials call this theory outrageous.
The Biggest Symantec Hater Around?
Like a demented horde of soap fans, people around the Valley can't get enough of the controversy - and not just because Borland and Symantec are two of the largest software companies in the world.
It's the individual players in this dispute - Gordon Eubanks, Eugene Wang, and Borland CEO Philippe Kahn, all of them well-known characters in the software industry - that have so many people glued to the business pages.
Among them, there seem to be two distinct camps: Those who believe Kahn is trumping up the allegations in order to make Symantec look bad, and those who think Wang and Eubanks were up to something really sleazy.
Some people who know Wang say they have a hard time believing the latter. They describe him as a raving perfectionist so obsessed with his career that he'd never do anything to jeopardize it.
"Geno is a brilliant guy whose career meant everything to him," said Patti Flynn McKenzie, one of Wang's long-time associates. "It just doesn't make sense that he would risk everything for a new job. He already had a great job."
"I've worked with him for years, and here's what I can't figure: Gene was the biggest Symantec hater around," said another former associate at Borland. "He thought their products sucked. He was always cutting them down."
But Borland insiders say that Wang was bitter after being passed up for a promotion last July. And according to people who know him well, Wang isn't a man accustomed to stagnation.
Wang, 35, was widely considered to be a marketing genius when Borland hired him away from Gold Hill Computer in 1988. He moved rapidly up the Borland ranks - rising from a marketing manager position to that of vice president in just two years - though not without ruffling some feathers.
"He moved so fast that he definitely made some enemies. And he had a hot temper, which was a big problem to a lot of people," said one Borland employee. "He could be great if he liked you. But he would be very cruel with people he didn't like. And he was especially rough with subordinates."
Wang started acting especially strange after his associate, Rich Schell, became his boss in July, sources say. Always prone to temper tantrums, Wang became even more moody. One day, he threw a stack of paper at a subordinate during a minor dispute.
"He started demanding things. For instance, about three weeks prior to quitting, he requested a copy of everyone's salary in his division," said one Borland employee familiar with the happenings there. It was requests like these that led several employees to approach Borland executives after Wang had his tearful meeting, saying that they had transferred sensitive documents to him in the weeks prior to his resignation, sources say.
One employee confessed to using MCI mail - a computerized messaging service that uses phone lines to let members send messages to one another - to send Wang confidential documents. On hearing this, Borland executives decided to examine Wang's MCI mailbox - which keeps copies of all messages sent or received unless the user deletes them. Apparently, Eugene Wang did not tidy up after himself.
"When we saw the messages, we felt sick to our stomachs," said one Borland employee, who was present among the executives and legal staff members when they sifted through several messages in Wang's mailbox addressed and sent to one "GEUBANKS." "It was a feeling of being violated. We just couldn't believe it."
But many observers have been wondering about those messages, questioning whether Borland had the right to look in Wang's MCI mailbox in the first place. Borland sources say attorneys contacted outside legal counsel before doing so, and that checking the mailbox (which was paid for by Borland) was perfectly within their rights.
"If Borland had a clear policy that employee mail was not private and if they had made the policy known to all employees, it would have been better," commented Mitchell Kapor, founder of the Electronic Frontier Foundation, a Washington, D.C.-based public policy organization focused on computer and communication network issues. "I don't know if, in a legal sense, Borland violated Wang's privacy. That will no doubt be argued in court."
Symantec attorneys will undoubtedly claim that Borland was invading Wang's privacy by looking at the messages. And if the court deems the e-mail messages inadmissible, the results of the search warrant will be inadmissible, too - the e-mail becomes what is known in legal parlance as "the fruit of the poisonous tree."
That more than anything explains Symantec's stony silence in the matter - and why Wang and Eubanks may be pleading the Fifth. If there's no evidence admissible in court, why should Wang and Eubanks be the ones to provide investigators with evidence that is?
You'll Be Back
Given that the messages may be admissible, the truly compelling questions in this case will most likely be these: Do the missives really contain trade secrets, or simply information that anyone could have gotten? And if they contain secrets, did Eubanks solicit them?
"Law is evolutionary," commented Vern Rayburn, chairman of Slate Corp., in Scottsdale, Arizona and a former Symantec board member. "The Valley is so incestuous. . .this kind of thing goes on all the time. What's unclear is whether Borland is taking this too far, or if Gordon and Wang really went way out of bounds with this."
There is certainly no love lost between Kahn and Eubanks. The two have been vicious competitors in the programming languages market for several years. And industry insiders say Kahn has chided Eubanks more than once for building Symantec by buying companies, instead of developing hot-selling technologies on his own.
Over the last couple of years, Symantec has acquired The Peter Norton Group, The White Water Group, Zortech, and MultiScope, to name just a few. All of these companies brought technology with them that helped make Symantec a leader in the industry. Symantec's only home-grown product, Q&A, has sold well, but it pales in comparison to other products picked up through corporate acquisitions.
"Gordon really resents what Philippe and other CEOs say about him," said one Symantec employee, speaking on terms of anonymity. "He feels as if he's accomplished a great deal, and he has. Since he came to Symantec, he's liter-
ally multiplied revenues. What difference does it make if he did it by acquiring technologies and not by developing them on his own?"
Located just 25 miles apart, Borland and Symantec couldn't be more different in terms of their corporate cultures - cultures that Kahn and Eubanks are primarily responsible for creating.
Based in Scotts Valley, a sleepy mountain town near Santa Cruz, California, Borland is the sixth-largest software company in the world with estimated revenues of nearly $483 million in 1992. Kahn, its French-born mathematician - turned - CEO, founded the company in 1983.
A legendary Valley character who is as famous for playing sax at wild company parties as he is for his eccentric manner and cut-throat business sense, Kahn personifies what Borland employees call "the Borland Barbarian spirit." At Borland, he is very well-liked.
Outspoken to the extent of outrageousness, Kahn, 40, is also famous for pulling pranks against his competitors. At a tradeshow during a much-publicized lawsuit against Lotus Development a few years ago, Kahn personally slipped negative articles about Lotus CEO Jim Manzi under the hotel doors of conference goers, according to published reports.
"There's a culture at Borland, a sort of us-against-the-world thing," said one former Borland employee. "That's why Borland employees call themselves Borland Barbarians. And a good Barbarian hates two things more than anything: Symantec and Microsoft."
The eleventh-largest software company in the world (1992 revenues are estimated at $216 million), Symantec is based in nearby Cupertino but its style lies in stark contrast to Borland. While Kahn is considered almost a demigod by his employees, insiders say some Symantec employees live in fear and dread of Eubanks. A former lieutenant captain with the Navy's submarine corps, he's known for a raucous sense of humor, a taste for fine wine, and a hot temper. True to his background, he runs one tight ship.
"Eubanks once told me he resigned from the Navy because he couldn't stand the bullshit, the way the Navy treated people. But it's ironic. He's kind of turned his company into everything he hated about the Navy," said one long-time associate of Eubanks.
"He genuinely cares for the people who work with him, but you'd never know it," the source continued. "He's like a drunken father who can be extremely brutal one day, but really apologetic the next. His employees had better get used to it."
Some employees, however, refuse to get used to it. "When he was acquiring my company, I thought he was the sweetest, nicest guy in the world," said one Valley entrepreneur who worked for Eubanks for several months. "But my first staff meeting there was like cold water in my face. The man is brutal, and it was obvious that people there were afraid of him. It was no place for anyone with a backbone, or for anyone with creative juices. I got out of there fast."
But most industry analysts say they have a hard time imagining Symantec without him - crediting Eubanks, who came to Symantec in 1984, with building the company into the software powerhouse it is today.
"He's probably the best CEO in the industry," said Jeff Tarter, an analyst based in Cambridge, Massachusetts, who has been following Symantec for years. "He's technical. He's got vision. He's got business sense. I don't think it is an exaggeration at all to say that Gordon is crucial to Symantec. People keep saying the board might take him out of office for this, but I can't see how they could do that. There is absolutely no one around who could replace him."
Eubanks's reputation as a hard-driving manager was well known at Borland. "When (Wang) told Philippe he was leaving, Philippe told him he'd be back. . .he told him Gordon Eubanks is an impossible man to work for," said a friend of Wang's who asked to remain anonymous. "Philippe told him he was welcome to come back any time."
A Fawn Hall?
Wang hasn't come back and probably never will, due to the circumstances. But Lynn Georganis, Wang's assistant who followed him to Symantec, did come back, allegedly for the wrong reasons. According to court documents, a week after Borland filed its civil suit against Symantec, Georganis contacted Borland Human Resources Manager Kim Begley and asked if she could retrieve some personal files left on her computer.
Begley allowed her to return, but contacted the plainclothes police officers stationed outside when she noticed Georganis not just copying files to floppies, but also deleting several files in hard disk subdirectories labeled "Sales" and "Marketing."
The officers confiscated the disks from Georganis as she left the building, according to Begley's statement to the court. They then drove her to Symantec headquarters, where they made her surrender five other disks she had removed from Borland earlier that week.
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