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Dem data firm sues rival over alleged theft of trade secrets

Dem data firm sues rival over alleged theft of trade secrets
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One of the most prominent Democratic data firms in Washington is suing its chief rival for allegedly stealing trade secrets, the first step in a legal battle between ordinarily low-profile progressive strategists that power campaigns across the country.

In a lawsuit filed in federal court late Thursday in Boston, TargetSmart alleges that its rival Catalist engaged a Boston-based company specializing in corporate mergers to engineer a buy-out. As part of the ensuing due diligence process, TargetSmart says, the Boston firm Good Harbor Partners (GHP) learned trade secrets it then shared with Catalist and its top advisers.

“GHP and Catalist devised and executed a scheme to induce TargetSmart to disclose confidential and proprietary information and misuse that information to damage and/or unlawfully compete with TargetSmart,” the lawsuit says.

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TargetSmart and Catalist are among the leaders in the Democratic technological field, and a vast majority of campaigns, consulting firms and party organizations use one of the two firms — or both — to hone their messages and reach out to voters.

The suit accuses Catalist and GHP of several counts of misappropriating trade secrets, in violation of both federal and Massachusetts law, as well as breach of contract, fraud and deceptive practices. TargetSmart is seeking $75,000 in damages, on top of attorney fees.

"At a time when progressives should be working together, it is sad that TargetSmart is engaged in a baseless and divisive lawsuit," said Will Loman, Catalist’s general counsel.

The case pits two leading Democratic firms that provide voter-targeting information to campaigns and party organizations. Voter-targeting firms are not as well known in the political world as pollsters or media consultants, but their work has become the backbone of increasingly data-driven campaigns that strive to identify and contact voters on an individual level, a far more sophisticated process that involves proprietary models, consumer data and detailed information about every registered voter in the country.

“TargetSmart entered into discussions about a business partnership because we were led to believe it would advance our goals of supporting Democratic candidates and progressive values,” said Tom Bonier, TargetSmart’s CEO, in a statement Friday. “Instead we became the victim of trade secret theft by a competitor.”

“There’s no place in our party or industry for this type of dishonest and deceptive behavior,” Bonier added.

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A source close to the case said TargetSmart had turned over information relating to its data file, its most valuable product, including details about where it obtained consumer data and how the company built the list.

A TargetSmart representative declined to comment beyond the lawsuit and a press release it sent out Friday morning.

A phone number for Good Harbor Partners went to a voice mailbox that was full. Another company tied to Mark Miller, GHP’s chief executive, did not return a call requesting comment. Its website redirects to a Canadian pharmacy that sells erectile dysfunction pills.

TargetSmart alleges in the complaint that it was contacted in December by a representative of Good Harbor Partners, who told TargetSmart executives it had been hired by wealthy donors who wanted to improve data infrastructure within the progressive movement to elect more Democrats. They said the unnamed donors were only concerned with winning elections, and that price would not be an obstacle. 

“Money is secondary, and [the donors] are self-funding,” the lawsuit quotes Good Harbor Partners executives telling TargetSmart.

TargetSmart and Good Harbor Partners signed a nondisclosure agreement the next day. As the due diligence process got underway, TargetSmart handed over proprietary data relating to its voter file product, VoterBase, and its client roster, including details about contracts the company had signed with progressive groups and campaigns.

Good Harbor Partners told TargetSmart that its goal was to merge the company with Catalist, its chief rival. TargetSmart said it would only be interested in the merger if its executives ran the new company, to the exclusion of Catalist executives.

About a month after handing over the proprietary information, TargetSmart employees and clients were contacted by a reporter who asked specific questions that hinted he knew information disclosed as part of the due diligence process. The reporter, the complaint says, had ties to Laura Quinn, Catalist’s chief executive. 

Bonier then called a mutual acquaintance, Michael Podhorzer, the AFL-CIO’s political director and a Catalist board member. Podhorzer spoke with Quinn, and the inquiries stopped. The writer stopped following several TargetSmart employees on Twitter.

Reached by The Hill on Friday morning, Podhorzer declined to comment on the pending legal matter. 

A few weeks later, a TargetSmart client told Bonier he had heard Catalist was trying to purchase the company. The existence of the merger discussion itself should have been covered by the nondisclosure agreement, TargetSmart says in the complaint.

By March, Good Harbor Partners and TargetSmart executives met in Podhorzer’s office at the AFL-CIO building, across the street from the White House. Good Harbor Partners said it had not been able to raise the money to acquire TargetSmart, and revealed for the first time that Catalist had been their client all along. Podhorzer and another Catalist board member, Mark Steitz, were both present at the meeting. 

Steitz acknowledged that he and Quinn had received at least some of the information, from Catalist’s most significant competitor, disclosed during the due diligence process. He also said one of Catalist’s funders had broken the nondisclosure agreement.

“But what are you going to do?” the complaint quotes Steitz as saying.

Steitz did not return a message seeking comment Friday morning.

In the following weeks, TargetSmart demanded both Good Harbor Partners and Catalist return any information they had obtained during the merger discussions, and prove that they no longer retained any information. Both Good Harbor Partners and Catalist said they had destroyed the information.

After years of dominating the data game, Democrats felt stung in 2016 after Republicans caught up and surpassed the party’s analytics and data collection methods. The party is now racing to build out its infrastructure, fostering new companies and technologies in hopes of rebuilding their advantage.