Ticket Service to Appeal Jury’s $15-Million Verdict

Santa Ana-based ETM Entertainment Network said Thursday it will appeal a jury verdict awarding $15 million in damages to a former employee who accused the event ticketing company of stealing trade secrets.

Privately held ETM said that it has insurance against such verdicts and that the company will operate as usual while the award is appealed.

An Orange County Superior Court jury found last week that the company misappropriated technology that one of its employees had developed before joining the company.

In 1996, Berry Carter sold his company, ReTrac Systems Inc., to ETM for $140,000 in cash and 125,000 shares in ETM. As part of the deal, he also was hired as ETM’s vice president of special operations, drawing a salary of $120,000 a year.

At the time, ETM executives thought that the company would have an initial public stock offering later that year. Instead, ETM’s capital began to dry up and the company delayed paying its managers.

In September, Carter decided to exercise an option in his contract that allowed ReTrac to sell back to ETM the 125,000 shares for $350,000. ETM refused, and Carter left the company.

In January 1997, he sued ETM for about $37,000 in unpaid wages and moving expenses incurred when he relocated from Dallas to Newport Beach to take a job with the company.

That initial lawsuit set off a series of countersuits over exactly what ETM had received when it acquired ReTrac.

Carter contended that he never received full payment for his company or his work.

ETM countered that the technology developed by ReTrac was incomplete and did not live up to what Carter had promised. Finally, Carter sued ETM for using ReTrac’s technology in its system of selling event tickets over the phone, the Internet and through kiosks.

“ETM took the ReTrac software and converted it to its needs,” said attorney Bruce Cleeland, who represents Carter. “They took what they needed and changed other things, and they still use it today.”

ETM argued that ReTrac’s program was incomplete and that Carter came to them only with a concept for a product that they feel is in the public domain, and thus not proprietary.

“We thought we had bought a finished product, and his response to that was that, no, we had bought a concept,” said ETM President Peter Schniedermeier.

The jury reached its verdict after a five-week trial that began in June.

ETM also made headlines last year when two other former employees filed suit, accusing the company of misappropriating trade secrets by copying one of their Rolodexes with 7,000 names when they resigned from the company to join a rival firm.

That suit was settled for an undisclosed amount.