Suit: Best Buy Stole Buy-Back Program Model
About a month after Best Buy launched its buy-back program, a California start-up tech firm is claiming that the Richfield-based retailer stole the idea and backed out on a promised partnership.
Best Buy's program allows customers to sell back devices-including laptops, netbooks, tablets, mobile phones, and televisions-for Best Buy gift cards.
According to court documents, which were filed February 11 in U.S. District Court in Los Angeles, TechForward, Inc., developed a buy-back program called Guaranteed Buyback Plan, which it has implemented at several companies, including Dell, RadioShack, and CompUSA.
The suit states that TechForward and Best Buy entered into a confidentiality and non-disclosure agreement in 2008 under which the companies collaborated to develop a pilot program to sell TechForward's Guaranteed Buyback Plan in select Best Buy stores.
After the pilot program proved to be a success, the suit says, Best Buy approached TechForward saying it wanted to partner to launch a nationwide buyback program. As part of these discussions, Best Buy required TechForward to share highly confidential and propriety information about the Guaranteed Buyback Plan.
TechForward stated in the court documents that it provided the requested information because it knew that the confidentiality and non-disclosure agreement was in place and that it had received additional verbal assurances that Best Buy would only use the information in evaluating a partnership with TechForward.
However, just six weeks after TechForward supplied the requested information, Best Buy “abruptly ended discussions” with TechForward about a nationwide rollout of its buy-back plan at Best Buy stores, the suit says.
The suit alleges that Best Buy then launched its own buy-back program that was “virtually identical to TechForward's Guaranteed Buyback Plan in its program structure, marketing materials, and terms and conditions.”
TechForward is seeking unspecified damages for Best Buy's “misappropriation of trade secrets” and breach of the nondisclosure agreement.
A Best Buy spokesman reached by phone on Thursday said that the company does not comment on pending litigation.
Best Buy is the state's third-largest public company based on revenue, which totaled $49.7 billion for its fiscal year that ended in February 2010.