Software company Zoho accuses rival Freshworks of stealing customer data; files legal case in US court

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March 30, 2020 1:37 PM

Zoho, which has users including Amazon, Facebook, KPMG, Suzuki, Renault, Hyatt, alleged in the lawsuit that Freshworks raised its initial funding “through use of Zoho’s non-public financial information".

Zoho has sued Freshworks in a US court alleging data theft by Freshworks.

Two of India’s leading software-as-a-service (SaaS) companies – Zoho and Freshworks are at loggerheads. Zoho has sued Freshworks in a US court alleging data theft by Freshworks. The company, founded in 1996 by Sridhar Vembu, wherein Freshworks founders Girish Mathrubootham and Shan Krishnasamy worked for nine years, said Freshworks was built “upon the theft and misuse of Zoho’s confidential business information,” the lawsuit filed by Zoho at the United States District Court for the Northern District of California and accessed by Financial Express Online read. “We are investigating the extent of the data theft. In order to protect customer data, we were compelled to immediately sue Freshworks to stop their illegal and immoral behaviour. We cannot discuss this further, as it is now a legal matter,” Zoho said in an email response to Financial Express Online.

Chennai-based Zoho, which has offices globally and boast of over 50 million users including Amazon, Facebook, KPMG, Suzuki, Renault, Hyatt, alleged in the lawsuit that Freshworks, founded in 2010, raised its initial funding “through use of Zoho’s non-public financial information” and since then the company has been “poaching Zoho’s employees, using Zoho’s confidential customer and competitive marketing information, planning press releases to coincide with Zoho’s undisclosed product launch dates, and pressuring Zoho’s business partners to divulge Zoho confidential customer information.”

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“Freshworks is taking these allegations very seriously and plan on defending ourselves. We have no further comments at this time,” the company told Financial Express Online over email. Zoho filed the case in the California court which has “personal jurisdiction over Freshworks because Freshworks is headquartered in this judicial district and has systematic and continuous contacts with the District,” according to the lawsuit.

Zoho said that Mathrubootham was Vice President of Product Management for ManageEngine, Zoho’s IT Management software that gave him “specialized and non-public knowledge of what Zoho (and thus other similar mid-size companies) would need in a tool to provide efficient and effective support to its customers,” the lawsuit said.

The company also alleged that Freshworks knew “Zoho employees have unique knowledge of the market landscape, competitive pricing, and Zoho’s development paths for its business tools,” hence it recruited “over a hundred employees from Zoho” to access to Zoho’s private information. In some of the instances of reaching out to customers, Freshworks “contacted Zoho’s customers at email addresses the customers created solely for registration with Zoho’s cloud-based offerings,” the lawsuit read.

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