Lawsuit exposes the risks of partnerships

Raytheon and Peraton -- the former Harris Corp. IT business -- are embroiled in a legal battle over alleged broken promises.

This case has the potential to expose some of the risks and shortcomings of the many partnerships and alliances government contractors form. Unlike just about any other marketing effort, government contractors rely on partnerships to serve customers and win business.

Peraton is suing Raytheon to protect trade secrets shared when the two companies were working together to pursue some classified contract opportunities.

According to Peraton’s lawsuit, the companies signed a non-disclosure agreement. Later, Raytheon decided to pursue the contracts on its own and not on team with Peraton.

Peraton requested a firewall be put up between the Raytheon personnel who had seen Peraton’s proprietary data and the part of Raytheon that was pursuing the contract.

In other words, if you were a Raytheon employee and you were in meetings with Peraton employees discussing how the two companies would pursue these opportunities together, then those Raytheon employees could no longer work on the pursuit of the contracts.

Raytheon agreed but then a week later it said it wouldn’t, according to Peraton’s lawsuit. In its motion to dismiss, Raytheon denies this and calls what Peraton expects “draconian restraint on competition.”

Both companies declined to comment for this story.

The companies were interested in a pair of contracts called Broadside and Grimlock in the lawsuit. I was unable to find more information on the kind of work performed by these contracts but sources have indicated they are classified and are consolidations of other contracts that both Peraton and Raytheon have worked on.

The non-disclosure agreements both companies signed were updated several times before Raytheon went out on its own, according to Peraton’s filing with the court.

Peraton wants the court to enforce its interpretation of the non-disclosure agreements.

Prior to filing the lawsuit, Peraton and Raytheon went back and forth as Peraton tried to convince Raytheon to reinstate the firewall. Raytheon steadfastly refused to and in fact challenged whether the trade secrets were worth protecting at all, according to Peraton’s lawsuit.

Peraton says that the information Raytheon has includes specific technical solutions that meet the customer’s needs, staffing solutions, customer contacts and marketing efforts, competitive analysis and trade-off analysis.

The company fears that this information will be exposed to Peraton competitors.

Firewalling employees with proprietary knowledge of a former partner is a common practice, Peraton states.

Raytheon says that a firewall was never part of the nondisclosure agreements and in emails exchanged with Peraton sought to reassure the company that none of the proprietary information it had of Pertaon’s would be shared.

I won’t pretend to be a legal expert but Peraton also might be trying to break some new ground with its lawsuit. Peraton claims that Raytheon is in violation of the Defend Trade Secrets Act, which became law in 2016. That law strengthens the position that trade secrets are intellectual property and deserve more protection such as the ability to file a civil action. Which is what Peraton has done.

The law defines what trade secrets are including financial, business technical and engineering information.

Because the law is so new, Peraton’s lawsuit might be creating some new case law. Of course, Raytheon in its filings disputes that the law applies in this case. And there lies the at least one of the bones of contention between the two.

Depending on your perspective, the outcome of the this case will either strengthen or weaken teaming agreements. At the very least, it will likely force more companies to specifically state how they want their secrets protected.

No hearings are scheduled yet but the case is moving forward in the U.S. District Court for the Eastern District of Virginia.