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Tuesday, March 11, 2003 - Page updated at 12:00 AM

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InfoSpace sues fired chief exec

Seattle Times technology reporter

Three months after InfoSpace ousted Naveen Jain as chief executive officer, the company is suing both Jain and former engineer Kevin Marcus for violating contractual agreements.

Jain was fired at the end of December after a dispute with the Bellevue Internet and wireless services company's board of directors over the hiring of new CEO Jim Voelker. He then started a new technology company across the street called Intelius, which aims to pursue opportunities in homeland security and personal safety. He remains a director of InfoSpace until 2005, when his term ends.

The lawsuit, filed in King County Superior Court, claims that Jain and Marcus violated their noncompete agreements with InfoSpace, misappropriated trade secrets and confidential information, and interfered with the company's contractual relationships.

InfoSpace declined to be more specific.

Jain and Marcus have not seen the lawsuit yet, but both denied the allegations.

Marcus, who left InfoSpace last year and now serves as chief software architect at Intelius, said he was surprised by the suit. He said he thought he's always had "a pretty good working relationship" with InfoSpace, and he resented being singled out.

Marcus also said Intelius' software was not competitive since it is based on so-called open-source, rather than proprietary, standards.

Jain thinks InfoSpace filed the lawsuit in retaliation after he criticized the board of directors.

"We're not competing," he said.

Jain instead accused the board of mishandling the company, which Voelker denied. After weeks of corresponding with Intelius about this issue, InfoSpace's board met yesterday morning to discuss whether Intelius was competing with InfoSpace and, with the exception of Jain, unanimously voted to pursue legal action.

Jain signed the noncompete agreement in February 2000, which stipulates that he cannot compete with the company for two years after he leaves InfoSpace. That agreement would expire in December 2004.

In exchange for signing the noncompete, the board released Jain from a previous indemnification agreement. That 1998 agreement required Jain to put 1 million shares of his InfoSpace stock in a fund to pay for any potential litigation that InfoSpace could face as a result of its activities before it went public. When he signed the noncompete, the shares were worth close to $800 million.

InfoSpace shares dropped 25 cents yesterday to close at $11.09.

Sharon Pian Chan: 206-464-2958 or schan@seattletimes.com

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