Amazon sues former logistics exec recently hired by Target, says trade secrets are at stake

Amazon said Arthur Valdez was not only privy to the company's top secret supply chain and operational techniques, he also helped to develop them.
Written by Natalie Gagliordi, Contributor

Amazon filed suit Monday against its former senior supply chain and logistics leader Arthur Valdez.

Valdez, a 16-year veteran of Amazon, was recently hired by Minneapolis-based Target Corp. as the retailer's chief supply chain and logistics officer.

Amazon claims that Valdez's new job, which he is due to start next week, violates the terms of a non-competition agreement that he signed in 1999 -- and again in 2012 -- as part of his employment with Amazon.

Amazon said Valdez was not only privy to the company's top secret supply chain and operational techniques, he also helped to develop them.

"Mr. Valdez's new position with a key Amazon competitor will involve the disclosure and use of Amazon's confidential and proprietary information to Amazon's detriment and Target's advantage in a core area of competition between the companies: the cost-effective and rapid movement of goods in the most efficient way possible for retail customers," the company says in its suit.

What's more, Amazon alleges that Valdez was not forthcoming about his intended role for Target when announced his resignation from Amazon. The e-commerce giant said Valdez told Amazon he would be "focused on delivering product to stores," not to customers.

But it doesn't stop there. Amazon, citing Valdez's resume and Target's own press release, accuses the former executive of shopping his insider knowledge to Target.

Amazon also accuses Valdez of touting his participation in various high-level logistics and strategy meetings with others on the Amazon leadership team across retail, IT, web services, supply chain, finance and transportation.

"While interviewing with Target's most senior executives, Mr. Valdez referenced not only core aspects of Amazon's confidential information, training and expertise, but also the title and topics of a key analysis and strategy meeting Mr. Valdez was contributing to and participating in at Amazon," the company says in its suit. "Mr. Valdez's behavior at Target with respect to Amazon's confidential information before being hired there highlights the injury to Amazon from Mr. Valdez's work for Target if he works there."

So in a nutshell, Amazon is worried about losing its competitive edge in logistics and fulfillment -- two areas that have been critical to the e-tailer's success. Factor in the race for same-day delivery or even same-hour delivery, and it becomes clear why Amazon is up in arms over potentially handing over its highly guarded secrets to one of its top competitors.

Amazon attempted to settle the Valdez dispute out of court, according to the company, but is now seeking to stop Valdez from even starting the new gig -- a familiar tactic used with previous Amazon defectors.

As for Target, the discounter has indeed made strategic moves to bolster its e-commerce business and better compete with Amazon.

But in regards the actions against Valdez, Target spokesperson Molly Snyder said the suit is without merit.

"We have taken significant precautions to ensure that any proprietary information remains confidential and we believe this suit is without merit," Snyder wrote in an email to ZDNet. "However, as this is pending litigation we are not going to comment further at this time."

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