Value Partners, headquartered in Milan, Italy, and recognized as one of the major European management consulting firms with approximately 150 professionals working in seven offices in three continents and with clients in over 50 countries, was founded in 1993 by former partners of the Italian offices of McKinsey & Company. They opened their first overseas offices in São Paulo, Brazil, and Buenos Aires, Argentina, in 1994. By the end of 1997, its São Paulo office had 20 employees producing annual revenues of about $5 million, assisting both Italian clients and local companies. 

Rival Bain & Company, a major management consultancy with over 10,500 employees and 60 offices in 37 countries, was founded in 1973 by seven former partners from the Boston Consulting Group, and is headquartered in Boston. Bain established its São Paulo office in October 1997, and by early November, had hired away almost all of Value Partners’ staff. 

Value Partners filed criminal charges in Brazil and New York against Bain, alleging breach of trust and loyalty of its former employees (pirated away by Bain) and theft of confidential and proprietary information. The New York court ruled that the case would be more conveniently and efficiently dealt with in Brazil under the doctrine that New York was not the most convenient place to hear the case. Unfortunately for Value Partners, Brazilian law offered none of the US’s significant compensatory and punitive damages for employee disloyalty and theft of intellectual property. However, the New York federal court also made it clear that Value Partners was permitted to re-file the lawsuit against Bain in a more convenient forum.

So, Value Partners re-filed the case in Boston, the site of Bain headquarters. After a five-week trial, the jury found Bain & Company liable for unfair competition and tortuous interference and awarded Value Partners $10 million in compensatory damages (the full award sought). The trial court, after awarding another $2.5 million of interest, denied all Bain’s post-trial motions......

Case study questions

1. Identify and compare the law(s) related to protection of intellectual property and non-compete agreements in three to five different countries. 

2. Should employees be free to move at will from employer to employer? Should there be any constraints on this freedom of movement? Should employers be free to “pirate” employees from competitors? 

3. What can HR do to minimize the impact of this sort of employee mobility? 

4. Have the web and the Internet (and social media) changed the importance of intellectual property? Have they changed the way employers view IP? Have they changed the way employees view IP? How about the view of legal systems and cultures in various countries? How are they changing?