The CEO of SANgate Systems Inc. resigned on Tuesday after a Massachusetts state court ruled in favor of his former employer, EMC Corp., in a non-compete lawsuit.
EMC sued Doron Kempel in October after he quit as president of EMCs media solutions group to join SANgate, a start-up maker of data mirroring hardware and software, with about 75 employees. EMC officials said that Kempels non-compete agreement barred him from working for a competitor for nine months after leaving.
Kempel and SANgate attorneys argued that although SANgates not-yet released product does have some overlap with EMC products, the companies are not competitors because of their vast differences in size and scope.
A Suffolk Superior Court judge in Massachusetts disagreed. Judge Allan van Gestel ruled that what was important was what SANgate does, not its size nor Kempels position with EMC before leaving.
“As is apparent … EMC and SANgate are competitors for the purpose of Kempels Agreement,” the judge said in his 14-page ruling, dated Nov. 20. “They each are developing, and EMC is marketing, software for point-in-time copying, data migration, and remote mirroring applications for use in data storage systems.”
Kempel was unavailable for comment on Wednesday, but SANgate has not yet hired a new CEO and is considering its options, said Paul Feresten, vice president of marketing and business development for the Southborough, Mass., company. SANgate is still on track to release its product in the second quarter of next year, he said.
“This was, of course, a surprise. We were feeling pretty confident that this would not happen,” Feresten said. “We believed the court would view our case favorably. In the storage industry, you can claim that any company at some level can be a competitor of any other company. Were fundamentally not one of their competitors. We thought it would be obvious to the court and apparently it wasnt.”
But, he added, “We were able to take advantage of a couple of months of Dorons help to hone our strategy. Its disappointing, but were going to live through it.”
EMC, the leading specialist of the high-end storage industry, competes against behemoths like IBM, Compaq Computer Corp., and Hitachi Ltd.
Ann Pace, a spokeswoman with EMC, of Hopkinton, Mass., said the suit was fair even though SANgate is not on EMCs success level.
“We need to protect our intellectual capital,” she said. “We dont just target companies like SANgate that have 75 employees.”