Judge denies bid to bar Jain from work at InfoSpace rival
In the morning, Jain scored a significant victory against his old company after it tried to shut down his new venture.
A King County Superior Court judge denied InfoSpace's request for a preliminary injunction to prohibit Jain and his partner, Kevin Marcus, from working on their new company, Intelius, which they started across the street from InfoSpace in Bellevue. The judge also ordered InfoSpace to pay their legal bill.
In the afternoon, a shareholder suing Jain told a federal court how much Jain should be required to pay InfoSpace for illegal insider trading: $245 million.
The injunction denial stemmed from a lawsuit InfoSpace filed in March alleging Jain and Marcus violated noncompete agreements, interfered with InfoSpace's customer relationships and misappropriated trade secrets and confidential information to compete with their former employer when they started Intelius.
Although the case continues, Judge Douglas McBroom said yesterday he saw no "clear and convincing evidence" thus far that InfoSpace and Intelius are in the same business or that Jain and Marcus unfairly competed with InfoSpace. InfoSpace, a Bellevue Internet and wireless company, was one of the highest fliers during the Internet boom.
"Today's ruling doesn't impact the merits of the case," InfoSpace spokesman Adam Whinston said, adding the ruling was based on preliminary evidence reviewed in a short period. "We believe that once all the evidence is presented we will prevail."
InfoSpace had asked the judge to prohibit Jain and Marcus from working for Intelius or any InfoSpace competitor, and barring Intelius from hiring any former InfoSpace employee who had a noncompete agreement with InfoSpace. Because all of Intelius' employees had worked at InfoSpace, the injunction could have shut down Intelius.
"There is no evidence that we have done anything to compete unfairly with them," said Jain. "I hope InfoSpace will come to their senses and not waste any more shareholder money."
In the shareholder suit, U.S. District Judge Marsha Pechman was asked yesterday to order Jain to pay $245 million back to InfoSpace. The request came after Pechman ruled last week that Jain had committed illegal trades while CEO when he transferred shares from trust funds into his personal account.
The plaintiff, Thomas Dreiling, a Seattle lawyer, told the court yesterday Jain and his wife had a profit of $203 million plus interest of $42.4 million from the transactions. InfoSpace's Whinston said the company is reluctant to draw any conclusions.
"I have not talked to my lawyer so I have no idea what you're talking about," Jain said when asked about the plaintiff's request.
Jain originally founded InfoSpace in March 1996, then was fired as CEO in December. A month later, Jain gathered Marcus and other former InfoSpace employees to build a Web site to sell online public-records searches. Two months later, InfoSpace sued.
InfoSpace claims Jain knew the company was getting into the public-records search business. It also claims Jain had registered and built a search site that competes with InfoSpace. Jain says his son runs the site.
InfoSpace also alleged that Jain, in a meeting with an InfoSpace customer after leaving the company, disclosed confidential revenue numbers for InfoSpace's businesses and threatened to interfere with the company's relationship with America Online.
Jain subsequently accused InfoSpace of hacking into Intelius' servers and asked the judge for an injunction of his own against InfoSpace. The judge has yet to rule on that injunction.
After holding its annual shareholder meeting yesterday, InfoSpace shares rose 21 cents, or 1.5 percent, to $14.31 yesterday.
Sharon Pian Chan: 206-464-2958 or schan@seattletimes.com