Tech-industry trade groups vie for business as companies step up their Washington presence

December 8, 2013

When Carol Henton abruptly quit her lobbying job last month, her employer shut off her e-mail and halted her access to its computer network, moves organizations usually make to prevent workers from taking sensitive information that could benefit a competitor. The precautions apparently were not enough.

TechAmerica, a trade association that represents hundreds of technology companies, agreed that Henton, who lives and works in California, could take a few days to return the laptop it had provided her. In a lawsuit filed in D.C. Superior Court, Tech­America claims that Henton used the laptop to make off with a spreadsheet with key details about its members, including contacts and dues. The lawsuit alleges she contacted Tech­America members about joining her new employer, the Information Technology Industry Council, and added a column to the spreadsheet listing “where each member stood with regard to becoming ITI members.”

The alleged digital deviousness is at the heart of a legal feud between the trade groups that erupted after Henton and three other TechAmerica lobbyists were hired away by ITI to set up a new initiative to help tech companies win government contracts.

The dispute highlights the fierce competition to represent the high-growth tech industry in Washington. The groups’ battle for business and influence comes as tech companies are continuing to strengthen their Washington presence, using expanded corporate offices and trade groups to weigh in on taxes, patents, cybersecurity and other issues. The push to shape the Washington debate has led to a profusion of associations representing tech companies, some that speak for the whole sector and others for elements such as makers of software or semiconductors, often with overlapping membership.

TechAmerica lawsuit

In its lawsuit against ITI and three former TechAmerica employees, TechAmerica charged that the defectors used confidential information about its members to try to woo clients to their new venture. Those named in the suit are Henton, Pamela Walker and A.R. “Trey” Hodgkins, who led a similar procurement program at TechAmerica that had been a pillar of the association’s business. The suit says the defendants ultimately hope “to drive TechAmerica out of business.”

Henton declined to comment for this article. An ITI spokeswoman said that none of the three employees named in the suit would comment.

In court papers filed Nov. 27, ITI and the employees urged a judge to dismiss the case, arguing, among other things, that it is based on “a variety of nebulous claims” and fails to show that TechAmerica has suffered any damages.

In their filing, the employees argue that the lawsuit is “based upon the faulty presumption” that there was some agreement between them and TechAmerica prohibiting them from doing similar work for a competitor. Tech­America “has filed this lawsuit in an attempt to prevent lawful competition” by its former employees and a competitor, ITI’s filing says.

In an e-mailed statement on Thursday, Dean Garfield, ITI’s president and chief executive, told the group’s board, “We continue to believe this legal action is imprudent and a waste of resources that are best devoted to advancing policy on behalf of the sector.” ITI has 54 members, including many of Silicon Valley’s biggest stars.

In its suit, TechAmerica, a broad-based group with about 350 members, asked for a temporary restraining order prohibiting ITI and its new employees from using any confidential Tech­America information, as well as at least $5 million in compensatory damages.

The lawsuit alleges that Henton e-mailed TechAmerica members, told them that several of the group’s lobbyists had moved to ITI and asked the companies to join their new project. One member was “very supportive,” according to notes that she allegedly made on the spreadsheet; another was just “lukewarm.”

She gave Walker and Hodgkins regular updates on her efforts, the suit says.

“To put it simply, there is a right way and a wrong way to leave a job,” Dennis Stolkey, chairman of TechAmerica, said in a statement after the suit was filed Nov. 8. “We don’t begrudge anyone for wanting a change but perpetrating illegal acts on your way out is not the way to do it.”

In an interview, ITI’s Garfield disputed another central charge in the suit, that the TechAmerica lobbying team resigned only after they had won commitments from at least a dozen tech companies to pay $50,000 each toward backing the new venture at ITI.

But he acknowledged the “competitive marketplace” in which his trade group is operating and said the decision to hire the former TechAmerica lobbyists was part of his effort to strengthen ITI.

“We identify issues that are really important to the tech sector, and I will try to identify the most talented people in that area, and we go out and hire them,” Garfield said, adding, “We didn’t target them because they worked at that association.”

The lawsuit, according to a tech lobbyist unaffiliated with either group, has prompted a flurry of “breathless conversations” in Washington’s circles of influence.

The recent falling-out is a dramatic shift from just 18 months ago, when ITI, TechAmerica and a third group, TechNet, were talking about a merger. Some tech companies had promoted the idea as a way to boost the sector’s impact.

But the talks failed, and the groups continued to go it alone. About the same time, there was a new entrant in the field — the Internet Association, launched with 14 members including Facebook, Google, Amazon.com and Yahoo, to work on piracy, privacy and cybersecurity issues.

The tech lobby grows

Overall spending on lobbying by the computer and Internet industries, through their individual companies and outside trade groups, has grown with the industries, totaling $133 million in 2012 and on track to surpass that level this year, according to federal records tallied by the Center for Responsive Politics. That number is nearly double the $69 million in reported lobbying spending by the industry a decade ago.

Some advocates worry that the proliferation of tech lobbyists could be undercutting the industry’s effectiveness.

“There is a certain level of confusion that develops among policymakers — and to some extent the public — in trying to figure out who does what,” ITI’s Garfield said.

Garfield and other tech lobbyists say they try to collaborate when they can and argue that the broad range of pressing policy issues makes it impossible for any one association to handle everything. “You can only have relationships with so many people and you can only be so expert in issues before you are out of your depth,” said an industry representative.

The result: Even as tech players acknowledge that the field is crowded and some companies feel business pressure to streamline in Washington, most firms are going to maintain their presence there.

“What they’re really saying is, ‘We don’t like to spend money on dues, and all these groups are logistically difficult for us to manage,’ ” said the industry representative, who spoke on the condition of anonymity to comment freely about his peers and competitors. “But they would be more upset if they got burned on a policy fight than they would if they had to write more checks.”

TechAmerica, founded in 2009, has seen its membership decline in part as the group has reorganized to concentrate on its core offerings, such as procurement and export controls. Two other lobbyists left this summer for positions with SAP America and Hewlett-Packard.

Despite the struggles, Stolkey, the association’s chairman, said he remains confident about its future. “Make no mistake, we have full confidence in the Tech­America team and that fresh new faces will join the organization to create even greater return for members’ investment,” his statement said, “and we will defend our members’ interests simultaneously.”

Stephanie Craig, senior vice president for communications at TechAmerica, said by e-mail that the group is moving to replace the lobbyists who left for ITI.

ITI has suffered its own defections among its members, most notably to Cisco, whose chief executive, John Chambers, helped found TechNet, a network of senior business executives.

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