Starwood Hotels and Resorts has announced that it has launched legal action against Hilton Hotels Corporation (HHC), as well as two of its senior executives, over claims of corporate espionage and unfair competition.
It is alleged that Ross Klein and Amar Lalvani, both of whom are former Starwood employees, stole confidential documents relating to the development of Starwood's W hotel brand that were then used by HHC to develop its own lifestyle brand, Denizen.
Kenneth Siegel, chief administrative officer and general counsel at Starwood, said that the theft of trade secrets, consisting of more than 100,000 electronic documents, played a significant role in enabling HHC to establish the Denizen brand in an unfair manner.
Siegel said: "Starwood seeks to avoid litigation, but the egregiousness of the conduct and the volume of highly confidential documents taken left us no choice but to take strong action to protect our bands and intellectual property for the benefit of our investors, associates, owners and customers.
"The wholesale looting of proprietary Starwood information, including a step-by-step playbook for creating a lifestyle luxury hotel brand, unfairly enabled Hilton to launch a new brand in only nine months instead of the usual three to five years."
Starwood is now seeking damages and an injunction against the three defendants.
HHC has issued a statement saying that it had temporarily suspended development of the Denizen brand in light of the federal grand jury subpoena, which was issued by the US Attorney's Office for the Southern District of New York.
Both Klein and Lalvani, together with their luxury and lifestyle team, have also been put on paid administrative leave while HHC reviews the situation.
