Peraton asks for immediate injunction in $25M suit against Raytheon

Peraton is asking a federal judge to issue a preliminary injunction to immediately force Raytheon to put a firewall in place that Peraton says is needed to protect its intellectual property.

As I reported yesterday, Peraton and Raytheon are embroiled in a fight over a failed partnership that Peraton says leaves its trade secrets at risk of being exposed to competitors. Peraton is suing Raytheon for $25 million as well as for the federal court to force Raytheon to put a firewall in place.

The companies teamed together on a pair of classified contracts known as Grimlock and Broadside. But Raytheon eventually decided to go in a different direction. Peraton, the former Harris IT Services business, says that any Raytheon employee who worked with Peraton should not be allowed to work on the pursuit of the contracts going forward.

Peraton says this risks exposure of confidential information it shared with the Raytheon employees.

Peraton claims in its lawsuit that non-disclosure agreements both companies signed required such firewalling as it is called. It has gone to federal court to enforce those agreements.

Both companies declined to comment.

Raytheon has claimed in its filings that the firewalling wasn’t required and that what Peraton is asking for is a “Draconian” restriction on its ability to compete.

In its latest filing, Peraton is asking for an immediate injunction because the competition for the contracts is ongoing. If Raytheon isn’t forced to put the firewall in place, Peraton claims it will suffer “irreparable harm.”

In a memo supporting its motion for the injunction, Peraton lays out its version of the facts including that Raytheon initially agreed to a firewall and that the non-disclosure agreements required the firewalls, even if the term “firewall” isn’t used.

The agreements require “Raytheon to protect Peraton’s information by using the same degree of care Raytheon uses to protect its own information—but no less than reasonable care. Raytheon’s care and reasonable care require firewalling,” Peraton writes.

To back up this claim, Peraton says that Raytheon agreed to the firewalls on May 2 when it told Peraton in a letter that it had put a firwall in place. Peraton also claims that Raytheon’s outside counsel wrote a letter on Aug. 9 “confirming Raytheon’s legal obligation to impose firewalls,” according to the memo. More on that later.

Peraton also claims that the teaming agreement for the Grimlock contract included provisions for firewalling. The federal Defend Trade Secrets Act of 2016, a new law to expand protection of trade secret, also requires the firewalling.

The company also argues that given the size of Raytheon it has enough employees to pursue the two contracts. Raytheon’s competitive position would not be harmed by firewalling the employees who had worked with Peraton, the memo states.

The memo has several portions that are redacted, mostly around details of classified contracts Grimlock and Broadside.

But the memo also sheds some light into how the two companies worked together.

Peraton knew about the opportunities first, according to the memo and pulled Raytheon into the Grimlock and Broadside competitions and would be the prime with Raytheon acting as its partner.

A teaming agreement was signed for Broadside in October 2014 and for Grimlock September 2015. After that the companies worked together and shared win strategies and developed proposal and technical solutions.

Peraton says it shared sensitive strategic, financial and technical information that was proprietary with about 19 Raytheon employees on Broadside and 13 on Grimlock. Seven employees overlapped, so there are 25 Raytheon employees that Peraton wants firewalled.

Why the partnerships fell apart is redacted in the memo but it occurred sometime before April 20 of this year. On that date, Peraton said it disputed Raytheon’s reasons for terminating the partnership and wanted Raytheon to abide by the teaming agreements.

On May 2, Raytheon said it had firewalled the employees in question, according to the memo. But 10 days later, Raytheon removed the firewalls, the memo says.

Just before Peraton filed its lawsuit, Raytheon’s attorney wrote that it wouldn’t allow its own personnel to serve on multiple capture teams if they had access to sensitive and confidential information. This is the letter that Peraton claims Raytheon admitted it had an obligation to put up the firewall.

But Raytheon asserted that the teaming relationship with Peraton “never reached a point where proprietary and trade secret information that would threaten fairness and integrity of these procurements was disclosed.”

In other words, Raytheon views whatever Peraton shared didn’t rise to the level of a trade secret.

Peraton also argues that the judge should issue the preliminary injunction because the company is likely to win the lawsuit. Though I’m sure Raytheon’s attorneys will have a counterargument to that claim.

But for Peraton, speed is of the essence because the Grimlock and Broadside procurements are moving forward. As long as the firewalls aren’t in place, the company is at a disadvantage, it claims.