Last week, Waymo LLC (a subsidiary of Google’s parent company Alphabet, Inc.) filed suit in the Northern District of California against Uber Technologies, Inc. and Otto Trucking LLC for misappropriation of trade secrets, patent infringement, and unfair business practices. The case is sure to become one of the first high-profile cases alleging claims under the federal Defend Trade Secrets Act (DTSA) (another being the claims brought against Google and Alphabet by Space Data in June 2016, which this blog covered here). Waymo describes itself as a “self-driving technology company,” which for the last seven years has been developing technology related to self-driving cars, including a laser system used to help the car navigate known as LiDAR (“Light Detection And Ranging”). In January 2016, one of Waymo’s managers, Anthony Levandowski, left Waymo and launched Otto, a new company focused on self-driving car technology. Then, in August 2016, Uber acquired Otto for $680 million.
Continue Reading Waymo v. Otto: Self-Driving and Self-Dealing

On February 1, 2017, a Texas jury awarded Zenimax $500 million following trial in Zenimax’s longstanding dispute with Oculus, the creators of the Oculus Rift virtual reality system. Zenimax and Oculus had initially worked together on the Oculus Rift, with Zenimax programmer John Carmack (a well-known figure in the video game industry) working with Oculus founder Palmer Luckey (at the time a college student) to improve the Oculus Rift. As part of this collaboration, Zenimax shared certain confidential information and technology with Luckey pursuant to a Non-Disclosure Agreement (NDA). Eventually, however, Oculus stopped its collaboration with Zenimax and was in 2014 purchased by Facebook.  Shortly after that purchase, Carmack and several other Zenimax employees left Zenimax and joined Oculus, with Carmack being named Oculus’s Chief Technology Officer. In its Complaint, Zenimax alleged that Oculus improperly took and used Zenimax proprietary and confidential information, including the improvements and code that Zenimax had contributed to Oculus Rift during their prior collaboration. Zenimax sought over $4 billion in damages for misappropriation of trade secrets, copyright and trademark infringement, and breach of the non-disclosure agreement.
Continue Reading Oculus: Looks Like Trade Secret Theft

One of the most complicated parts of litigating a trade secret case is the discovery process.  Plaintiffs often seek discovery immediately to determine the full extent of information that was taken and how it was used, and often seek expedited discovery to prevent the defendants from destroying or hiding evidence of wrongdoing.  Defendants, on the other hand, resist discovery in order to prevent the plaintiff from using the defendant’s information to help structure its claims, and to prevent the plaintiff from acquiring the defendant’s trade secrets.  Recognizing this danger, courts typically require the plaintiff to identify its trade secrets before the plaintiff may obtain any discovery from the defendant. Many states, including California, have made this preemptive disclosure requirement statutory.
Continue Reading Designation of Trade Secrets a One-Way Ratchet in Discovery

Plaintiffs in trade secret cases are often torn between two conflicting interests: the need to state their trade secrets with enough specificity to survive a motion to dismiss, and the necessity of keeping their trade secrets confidential. In order to resolve this dilemma, plaintiffs often seek to file their complaints under seal, so that the contents are withheld from the public but still available to the parties and the court.

In deciding whether to seal a court filing, the court must balance the need for privacy against the public’s “general right to inspect and copy public records and documents, including judicial records and documents.” Nixon v. Warner Comm., 435 U.S. 589, 597 (1978). In federal court, in order to succeed on a motion to seal, a plaintiff must state compelling reasons, supported by specific factual findings, that outweigh the public’s right of access to court filings and the public policies favoring disclosure of court documents. In re Hewlett-Packard Co., 2015 WL 8570883, *2 (N.D. Cal. 2015); see also Sherwin Williams Co. v. Courtesy Oldsmobile Cadillac, Inc., 2015 WL 8665601, *1 (E.D. Cal. 2015). State courts employ similar standards.  For example, in California, in order to seal a document the moving party must demonstrate: (1) There is an overriding interest that overcomes the right to public access to the record; (2) the overriding interest supports sealing the record; (3) there is a substantial probability that the overriding interest will be prejudiced if the record is not sealed; (4) the proposed sealing is narrowly tailored; and (5) there is no less restrictive means to achieve the overriding interest. California Rule of Court 2.550(d).Continue Reading Recent Decision Reinforces the Significance of Motions to Seal in Trade Secret Cases

Last week, the California Court of Appeal issued a decision highlighting the need for employers, especially large employers with operations and employees in several states or countries, to take great care in drafting mandatory forum selection clauses and to always be aware of the relevant law in the chosen jurisdiction. In Richtek USA, Inc. v. UPI Semiconductor Corp., 2015 WL 7479125, a state Court of Appeal affirmed that a mandatory forum selection clause in an employment agreement is binding on both the employee and the employer.
Continue Reading Be Careful What You Wish For: The Importance of Forum Selection Clauses

Earlier this month, in Ajaxo Inc. v. E*Trade Financial Corp., Case No. 1-00-CV-793529, the long-running dispute between Ajaxo Inc. and E-Trade over Ajaxo’s proprietary stock trading software took yet another turn following a two-part trial in Santa Clara County Superior Court.   In the latest round of this fight over trade secrets related to proprietary stock trading software, the California Court of Appeal delved into when a reasonably royalty may be recovered and the proof it takes to recover them.
Continue Reading Hammering a Hard Drive Instead of a Royalty Check

Earlier this month, the District Court for the Northern District of California addressed the scope of the Computer Fraud and Abuse Act (“CFAA”), drawing a firm line between causes of action based on improper access of an employer’s computer, and causes of action based on improper use of the employer’s data.  Because of the narrow view taken within the Ninth Circuit as to the scope of claims properly falling under the CFAA, the district court held that there was no viable claim under the CFAA.
Continue Reading Access v. Use: An Important Distinction in the Computer Fraud and Abuse Act

Last week, the Ninth Circuit  issued an important decision for employers in United States v. Christensen, No. 08-50531, 2015 WL 5010591, at *14 (9th Cir. Aug. 25, 2015). In that case, the Court of Appeals held that employees who misuse their access to their employers’ computer systems can be held criminally liable under California Penal Code § 502(c)(2). While many lower-court decisions within the Ninth Circuit had questioned the scope of Section 502(c) and certain of its sub-parts, and some considered it to be primarily an “anti-hacking statute,” the Ninth Circuit’s decision makes clear that § 502(c) applies even to an employee who accesses a database or system with a valid password, but proceeds to take, copy, or use data without permission to do so.
Continue Reading Access Denied — Christensen Sets the Standard for Violations of Penal Code § 502(c)