OTX, a major provider of movie market research to studios, is seeking to restrict the operations of former division president’s rival company, launched almost immediately after he left the company last month.
OTX filed a 116-page lawsuit against Kevin Goetz and two business partners earlier this week, charging that their newly formed business, Search Engine, is relying on confidential and proprietary information and that it is attempting to unfairly poach employees from its business.
The suit underscores the hyper-competitive nature of the movie research business — which includes test screenings, tracking services and consumer data — and the suspicion and bitterness that arises because of its reliance on prized information about consumers’ attitudes toward movie releases.
Goetz, who had been president of OTX’s motion picture group and is regarded as a preeminent focus group moderator, left the company on Feb. 25, launching his rival firm called Screen Engine LLC. OTX alleges that Goetz orchestrated his unexpected departure to “maximize the disruption and chaos to OTX’s business and internal operations.” It also alleges that Rachel Parness, head of OTX’S screenings and qualitative division, resigned abruptly on Feb. 28, and entered the OTX offices that night to “take confidential and proprietary information” and “to destroy information and files,” among other efforts to gather company information. Also named in the suit is Christine Perakis, Goetz’s lawyer and business partner.
Among other things, OTX accuses Goetz of breach of contract, pointing to a 2007 agreement that barred him from “unlawfully competing with OTZ, using or disclosing OTX’s confidential and proprietary information and trade secrets, and unlawfully soliciting OTX’s employees and customers.” OTX says that it was forced to offer increased salaries and retention bonuses to employees that Goetz and Parness pressured to join their company.
The most immediate legal wrangling centers on Search Engine’s use of information gleaned from Goetz and Parness’ years of expertise. On Tuesday, at an ex parte hearing, Los Angs Superior Court Judge James Chalfant did not grant a temporary restraining order to halt Search Engine’s business, as OTX had sought. But he did instruct the parties to draft an injunctive order regarding Search Engine’s use of OTX research, or “norms,” during the length of the litigation.
Whether both sides can agree on what that order says is a big question, given that they each declared satisfaction with the results of the Tuesday hearing.
“The judge noted that while companies can compete fairly, a competitor cannot use confidential and proprietary information from another company,” Dawn Coulson, one of OTX’s lawyers, said in a statement. “Its norms are confidential and proprietary information belonging to OTX. As such, the judge ordered that Screen Engine cannot use OTX’s norms. Further, the judge specifically commented that Kevin Goetz cannot use OTX’s norms that he claims to know off the top of his head.”
Vincent Bruzzese, who was tapped to lead OTX’s studio operations after Goetz’s departure, called Chalfant’s ruling a “tremendous win for us.” “We believe that this is a very serious case, and we are going to protect ourselves, our employees, our clients and our information.”
But in a statement, Goetz said that he felt “vindicated” by Chalfant’s decision. Gary W. Nevers, Screen Engine’s counsel, said that Chalfant’s decision “confirms that Screen Engine LLC is free to continue its business without any interruption or change in its operations.”
Other major players in the research business include NRG and Marketcast, the latter of which is owned by Daily Variety parent company Reed Business Information.