A global software company has filed a lawsuit accusing a former sales executive of downloading thousands of confidential files before his dismissal and subsequently joining a competitor involved in a dispute over a contract valued at approximately $3.5 million.
Cyara Solutions, an AI-powered customer experience platform with origins in Melbourne and now based in Texas, alleges in its statement of claim that former ANZ sales manager Stephen Mitchell breached his employment contract, a separate confidentiality agreement, and his duty not to misuse confidential information. The company further alleges Mitchell used information obtained during his employment for the benefit of rival Hypertech Solutions, violating the Corporations Act. Hypertech denies these allegations.
According to a Supreme Court judgment, Mitchell joined Cyara in 2017, eventually becoming ANZ Sales Manager, primarily managing the company's relationship with Optus, which subcontracted Cyara for services to the Australian Taxation Office (ATO).
In February 2023, Optus's account manager informed Mitchell that the ATO was seeking price reductions and improved functionality. Cyara's filings characterize this as notification of an open tender process. Following negotiations, Cyara renewed its contract with Optus for three years from July 2023. Mitchell signed an additional confidentiality and intellectual property agreement with Cyara on July 3, 2023.
Cyara alleges that in November or December 2023, Mitchell learned he was not selected for a newly created Vice President of International Sales role and would not attend the company's annual sales kickoff event in the U.S. Mitchell disputes this, stating he had no interest in the role and only learned of his non-attendance when his accommodation was canceled in January.
Around December 8, 2023, while discussions between Optus and Hypertech were ongoing, Mitchell was reportedly focused on securing the ATO tender. Cyara's filings claim it was also around this date that Mitchell downloaded approximately 11,000 work files to his personal drive without authorization or a work-related purpose. Cyara states more than 3,500 of these files contained confidential information, including pricing strategies and contract terms. Mitchell's defense asserts he saved copies for remote work purposes, unrelated to employment concerns.
On Christmas Eve, Mitchell reportedly received a call from Cyara CEO Alok Kulkarni, leading him to fear for his job. Leaked text messages filed in court show Mitchell urging Kulkarni to give him one more quarter, stating his Christmas was "ruined" by the call. Cyara alleges Mitchell downloaded eight additional files on Christmas Day, transferring them to a flash drive the next day.
Mitchell was terminated on January 9, 2024. A Deed of Settlement was executed, requiring his compliance with confidentiality and intellectual property obligations. Later that month, Kulkarni responded to Mitchell's texts, leading to a heated exchange where Mitchell expressed anger and disappointment over his termination and the company's management.
In February 2024, Mitchell began consulting for Hypertech after a month of unsuccessful job hunting. By that time, Hypertech had already entered discussions with Optus regarding its PumpCX software and opportunities with the ATO. Hypertech had signed a Master Supply Agreement with Optus in December 2023, while Mitchell was still employed by Cyara, with Optus formally executing the deal in February.
A day after Mitchell started consulting for Hypertech, Optus advised the company it wanted to proceed with a trial of PumpCX, a platform being considered as a potential replacement for Cyara's technology at the ATO. In March 2024, Optus notified Cyara that the ATO intended to end its supply contract, and in May, informed Cyara that the ATO would cease using its products and transition to Hypertech's offerings from July 1, 2024.
Cyara subsequently launched its legal proceedings against both Mitchell and Hypertech in June 2024. Earlier in August, Hypertech succeeded in having some claims against it struck out for vagueness in Victoria's Supreme Court, though a bid to have the entire case dismissed was unsuccessful, with Cyara granted leave to refile its claim.