As we've noted, a riveting trial is underway in Los Angeles, pitting famed fixed-income guru Jeffrey Gundlach against his old employer, the Trust Company of the West (TCW).

Gundlach took the stand in his own defense Monday, prepared to rebut the allegation that he stole trade secrets in the form of critical software in an effort to set up a company to compete with TCW. The plaintiff is seeking $375 million in damages. Gundlach has counter sued and is seeking $500 million.

According to the New York Times, Gundlach was asked directly about the system in place at his company and their similarities to TCW's systems. He answered that the software was like Ernest Hemingway's novel "The Sun Also Rises" in that once it was written, it could be easily recreated by the author. Much of the testimony was about whether Gundlach had laid elaborate plans to leave the company to set up DoubleLine Capital. Gundlach's response is that he was preparing for a move only because he thought TCW's parent company, Societe Generale, was planning to sell the firm.

One question here is the extent to which the legal war has tainted Gundlach and distracted him from his business as a bond manager. Both sides played hardball, which unfortunately featured some lurid information about Gundlach released to the media in the wake of his December 2009 firing. All in all, this provides a stark management lesson in how not to leave a firm to start up a competitor company. You do get the feeling that this one is as much about the personalities as the software in question.

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