Groupon Sues Two Former Execs For Revealing Secrets to Rival Google

Groupon filed a lawsuit against two former sales managers it says took secrets from the company to rival Google Deals.

Groupon sued Brian Hanna and Michael Nolan, citing the disclosure of trade secrets is inevitable while they work at Google, according to reports. The duo, according to the complaint, broke their employment agreements, which prohibits them from working for a competitor of Groupon for two years.

Google, whose $6 billion buyout offer was rejected by Groupon last year, was not named in the suit.

The lawsuit comes just over a month after the pair joined Google, a move motivated by money, according to a report by Courthouse News Service.

The complaint alleges the pair was given access to Groupon’s sales databases, merchant list, pricing structure and other internal information.

"This information is not publicly available, but rather has been developed by Groupon over time through the use of analytical research and substantial experience-tested research and development. It has taken Groupon substantial time and the application of significant resources, and money to develop this best practices information and to continue to optimize it,” Groupon said in the case filing.

The lawsuit seeks damages for breach of contract and violations of the Illinois Trade Secrets Act, according to reports. Groupon also wants the pair prohibited from sharing what it says is confidential information.

News of the lawsuit comes just one day after Groupon made headlines as investors are skeptical of the company’s earnings potential. Groupon is slated to go public Nov. 4.

Groupon, which boasts 143 million email subscribers, may be a risky investment because the business model is new and untested, Morningstar analyst Rick Summer has said.

That sentiment may have led Groupon to lower its recent initial public offering. The company is looking to raise $10 billion when it becomes publicly traded, which is half of what it sought when it filed to go public in June.

It is unclear what effect the competition from Google or recent lawsuit will have on Groupon’s viability in the marketplace.

Groupon increased subscribers, but earnings-per-subscriber has dropped by nearly half in the third quarter, according to reports.

“The company has not been able to achieve profitability, as expense growth continues to outpace revenue gains,” Summer said in a report.

He estimates the company may not be able to turn a profit until 2013.

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