The well-known online betting superpower, DraftKings, has escalated its legal combat against its former VIP program director, Michael Hermalyn. The company now asserts that Hermalyn was involved in corporate espionage. These fresh accusations follow Hermalyn’s recent promotion to the head the VIP division at direct competitor, Fanatics. DraftKings asserts that Hermalyn misappropriated trade secrets during his tenure, intending to replicate the operator’s VIP program for Fanatics.
Hermalyn Accused of Misusing Trade Secrets
The legal brawl between Hermalyn and DraftKings began in February when the ex-executive brought a lawsuit against DraftKings, questioning the legitimacy of the non-compete clauses in his termination contract. The legal dispute between the two quickly took a heated turn, leading to a temporary court order preventing Hermalyn from utilizing the knowledge he gained at DraftKings in his new role at Fanatics.
Untangling the counterclaim DraftKings lodged against Hermalyn, the firm insists that some compelling evidence they discovered supports their allegations of Hermalyn acting in bad faith – a factor necessitating the enforcement of the non-compete clauses through a court injunction. According to DraftKings’ legal team, further evidence points to a deep-seated pattern of theft, intentional deceit, and untruthfulness by Hermalyn, which includes the deliberate downloading of numerous documents containing confidential information and secret trade details.
The scale of the defendant’s lies, deception, and theft is far more extensive and alarming than initially assumed.
DraftKings statement
DraftKings alleges that Hermalyn ways trying to poach key employees from the company for Fanatics, then attempted to erase the traces of his actions by removing the evidence. To add to this, Hermalyn is accused of giving false testimonies during court questioning, sworn declarations, and depositions, besides failing to return all necessary confidential information as required. DraftKings has also supposedly applied legal strategies aimed at limiting Hermalyn’s defence.
Gaming Titan Alleges Ownership of Compelling Evidence
DraftKings recently released a statement asserting that Hermalyn’s actions were not only shocking but also part of a wider plot hatched by Fanatics to mirror DraftKings’ VIP program. Instead of creating its unique reward structure, Fanatics seemingly lured Hermalyn with an attractive compensation deal to take over a likeminded role at their company. For this, it is claimed he downloaded sensitive business documents to ease the copying process.
On January 16, the Defendant… exported a range of highly sensitive business-related documents onto a non-DraftKings device; everything that would be needed to replicate our business.
DraftKings statement
It’s reported that Hermalyn erased numerous documents that stood as proof of his malpractice, even after consulting Fanatics’ chief legal expert. As a result, the firm is imploring the court to impose a preliminary injunction to enforce his contract’s non-compete clause. Hermalyn, in his defence, has motioned to discard the suit, arguing Californian law does not uphold the non-compete agreements present in his contract.
As the lawsuit develops, gambling industry professionals will keenly observe how legal authorities adjudicate these intricate and divisive charges and the potential impact on the involved parties. This ongoing legal tussle underscores the intense competitiveness of the virtual sports betting industry, with the outcome of this suit potentially having widespread implications for the sector, encouraging operators to enhance their intellectual property protection strategies.
