WHITE PLAINS-The lawsuit filed by Starwood Hotels & Resorts Worldwide Inc. against Hilton Hotels Corp. took another twist late last month when US District Judge for the Southern District of New York Stephen C. Robinson entered a Preliminary Injunction against Hilton and two of its executives, Ross Klein and Amar Lalvani. But as the case winds it way through the courts, the industry is left to ponder its ultimate impact.

On April 16, Starwood filed a lawsuit against Hilton, Klein, global head of Hilton luxury and lifestyle brands, and Lalvani, global head of Hilton luxury and lifestyle brand development, alleging that the parties participated in corporate espionage, theft of trade secrets and unfair competition. Both Klein and Lalvani are former Starwood employees instrumental in the development of Starwood’s W brand, its upscale boutique chain. The suit charges that both executives, aided by Hilton, “stole massive amounts of proprietary and highly confidential Starwood information which was used to expedite Hilton’s entry into the lifestyle hotel market, reposition its luxury brands and substantially reduce its costs and risks of doing so.”

Hilton subsequently halted development of its Denizen brand and placed Klein and Lalvani on paid administrative leave. The company also acknowledged receipt of a federal grand jury subpoena and stated it had returned materials to Starwood in February.All parties agreed to the injunction on April 24, which is in effect for 90 days. The action prohibits Hilton, Klein and Lalvani from further developing the Denizen brand; entering into discussions with prospective owners, developers and/or franchisees regarding Denizen; and using, directly or indirectly, any documents or information obtained from Starwood. Hilton was also ordered to return any Starwood information in its control and Klein and Lalvani were mandated to preserve or provide to their counsel all Starwood data in their possession. Further action in the suit was stayed pending further court order.A spokesperson for Hilton declined to further comment on pending litigation. Request for comment from Starwood were not returned by press time.

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