Data-mining pioneer Henry Asher is being sued by a Boca Raton, Fla.-based arm of database operator LexisNexis for allegedly reneging on a noncompete agreement as part of his 2004 sale of Seisint Technologies for $775 million.
LexisNexis Risk and Information Analytics Group is seeking an injunction against Asher and his companies and demanding about $300 million in damages in the Palm Beach Circuit Court suit filed Thursday. Judge Thomas Barkdull set a hearing for next Thursday.
"Our simple allegation here is that Asher in a number of different ways violated the noncompete agreement" in place when Lexis' U.K.-based parent, Reed Elsevier, bought Seisint, said Faith Gay, a partner with Quinn Emanuel in New York.
Reed and Asher agreed to an exception to the noncompete agreement that allowed them to work together to provide database services to the National Center for Missing and Exploited Children.
"It is this carve-out that Asher is now cynically abusing to camouflage his development and marketing of a competing commercial product," the complaint reads, noting Seisint customers included two state agencies -- Corrections, and Children and Families. "In fact, these very same law enforcement agencies ... are customers and prospective customers of Reed Elsevier's Seisint subsidiary."
Asher responded by e-mail, saying, "This lawsuit is completely without merit, and is a very sad and disingenuous attempt to slow down the enormous progress we are making in our efforts to rescue children from child sexual predators." He noted Reed Elsevier also sued Asher-controlled JARI Research, which performs cancer research. "What's with people? They've even sued my cancer research company."
Reed contends Asher is flouting a five-year noncompete stipulation by displaying a ticking clock on TLO's Web site indicating when his new company, TLO Holding, can begin doing business. Above the countdown clock, the one-page site proclaims, "The way commerce is done is going to change forever!"
"The ticking clock is pretextual as Asher has already developed his new products," the complaint reads.
Asher hired away Reed employees and used Seisint's database technology for business to be performed by around 15 companies he allegedly controls, the complaint reads.
"Defendant's own description of their new database products and services reveal that they employ and reference the very same proprietary technologies that Asher sold exclusively to Reed Elsevier," the complaint said. It also includes counts of misappropriating trade secrets and breach of good faith.
"We want him to stop his illegal behavior and stop approaching our customers. He breached a fundamental obligation in a bunch of different ways," Gay said.
Asher started Boca Raton-based Seisint in 1998 and expanded it into a data-mining bastion that marketed personal information to private interests and law enforcement agencies.
Before the sale, Seisint launched the Multi-State Anti-Terrorism Information Exchange, or Matrix for short. The federally funded data-mining system was created to identify terror suspects for the Florida Department of Law Enforcement. Privacy groups attacked Matrix as overly intrusive, and other states that had committed to it dropped out. Federal funds were withdrawn in 2004, and Matrix shut down in 2005.
As technology platforms and formats change at the drop of a dime, industry leaders have been seeking enforcement of noncompete agreements to retain a competitive edge.
In 2007, LexisNexis claimed in a federal lawsuit that a former senior sales and marketing executive breached his agreement by taking a job as president and chief executive at a competitor. The suit claimed Paul Colangelo harmed his former company by violating confidentiality and noncompete agreements.
The two parties settled the same year after U.S. District Judge Donald Middlebrooks ordered Colangelo to hold off on working for Lexis competitor LocatePlus Holdings for six months and return confidential information.