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Starwood Alleges Hilton's Hotel Brands are 'Infected' With Their Secrets

January 15, 2010 at 10:03 AM | by | Comment (1)

UPDATE: Starwood's Chief Administrative Officer has a statement on the new court filings below.

The drama continues in the Starwood-Hilton lawsuit with Starwood filing new allegations yesterday saying that higher-up execs at Hilton knew full well that its employees were stealing Starwood's trade secrets and that two other Hilton brands--Waldorf-Astoria Collecion and Conrad Hotels--are "infected." And they don't mean with swine flu.

USA Today reports on the new filings which may have been prompted by the discovery of a whistleblower:

According to Starwood's filing, the whistleblower told [Hilton CEO Christopher] Nassetta that "numerous manuals, detailed plans, budgets, marketing systems, building specifications and other proprietary documents from Starwood were brought to Hilton by Mr. [Ross] Klein. Mr. Klein put some of these highly proprietary documents on Hilton's internal computer server, and instructed Hilton personnel to use these proprietary Starwood documents as a detailed plan for them to follow to develop and modify Hilton's luxury and lifestyle brands."

Additionally, over at the WSJ we learned that the type of retribution Starwood is seeking goes way beyond some money:

It has asked the court to appoint a monitor to oversee Hilton's future conduct. Further, it says it wants to impose a "penalty box" on Hilton that would prohibit it from developing its own luxury brand for a period of time, according to the complaint.

More sordid details can be found in the WSJ article which also reports that Amar Lalvani may have worked as a spy for Hilton while still at Starwood before ultimately being hired by Hilton himself, along with Ross Klein. Also, the new filings say that Hilton "scrubbed" Starwood documents of the Starwood brand mentions and sent them out to Hilton managers as their own documents.

This new allegation of "Hiltonizing" Starwood documents is presumably how the other Hilton brands are "infected" with stolen knowledge. And the investigation by the U.S. Attorney's office for Manhattan continues.

Man, we knew that the hotel world was competitive but we didn't know that Hilton was that desperate. On the bright side, no one will ever be forced to spend a night in a Denizen Hotel. Thank God! We never understood what that was all about.

Update: Statement from Kenneth Siegel, Starwood’s Chief Administrative Officer and General Counsel:

“Since filing the initial complaint, Starwood has learned that Hilton’s misconduct was far more pervasive in terms of the staggering volume and commercial sensitivity of the information stolen, the widespread participation and personal involvement of Hilton’s senior management, and the dissemination and use of Starwood confidential information across all of Hilton’s luxury and lifestyle brands. This case is about restoring a level playing field for fair competition, not just substantial monetary damages. We will do whatever it takes to protect our brands and intellectual property for the benefit of our investors, associates, owners and customers.”

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wow...

I wonder if Ross was secretly trying to ruin the W brand before he left Starwood in order to make way for his new brand? Its no secret that W is NOT the same today as it was a few years ago.

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