MTV bought Imagine Radio in February for US$14.5 million from founders Rotem Perelmuter and P. Michael Briseno, who are named in the suit filed Tuesday in New York State Supreme Court. The purchase was part of MTV's initiative to create an online music site, dubbed the Buggles Project.
According to the lawsuit, Perelmuter and Briseno were planning a competing Internet radio venture called "3mr," or "Third Millenium Radio," with MTV's proprietary information and wanted to recruit other contracted MTV employees. But Perelmuter and Briseno signed "no compete" agreements with MTV until February 4, 2000, and February 3, 2001, respectively.
"Absent judicial intervention, defendants will continue to misappropriate and exploit proprietary and trade secret information owned by MTV in order to develop new business ventures," the suit says.
The suit seeks a court order barring Perelmuter and Briseno from competing with MTV until the dates set out in their employment contracts. It also seeks to prevent them from hiring MTV employees or using any MTV trade secrets.
Under Perelmuter's agreement with MTV, he received US$6.7 million from the sale of Imagine Radio and committed to working for MTV for nine months ending November 2, for US$150,000 per year, the suit says. He also received an US$18,000 bonus August 4, it says.
Briseno agreed to work for MTV for two years for nearly US$500,000, it adds. The men, college roommates, were 28 when MTV bought Imagine Radio from them.
MTV on August 2 found a proposed written presentation on Perelmuter's computer asking Sequoia Capital, a venture capital firm involved in the Internet industry, for US$8 million in funding, the suit says.
After the computer files were discovered, both Perelmuter and Briseno stopped working for MTV.
Perelmuter and Briseno couldn't immediately be reached for comment.
MTV's Buggles Project, now called SonicNet, was named after the music group whose song "Video Killed the Radio Star" was the first clip aired on MTV in 1981.
MTV's new site is expected to let users program their own audio and video channels spanning all genres of music. It also will be used to sell items such as concert tickets and will offer music for sale.
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