On January 11, 2018, the Federal Circuit issued a game-changing decision that addressed the pitfalls of an entity’s attempt to secure the ownership of intellectual property rights through an employment agreement. The Court held that three different provisions that the employer argued effected an assignment of intellectual property rights were not sufficient to convey those…

On October 10, 2017, the U.S. Supreme Court denied a petition for writ of certiorari challenging the Ninth Circuit’s holding that Power Ventures, Inc. had violated the Computer Fraud and Abuse Act (“CFAA”) by accessing Facebook user accounts.

Power provided a platform whereby its members could access their various social media accounts in one place.  Power received authorization from Facebook users for this service after sending them messages through the social media platform.  Facebook responded by sending Power a cease-and-desist letter demanding that Power immediately stop its access of Facebook computers.  Power nevertheless continued, evading Facebook’s attempts to block it.

Facebook filed a lawsuit in federal court in 2008 alleging that Power had used Facebook trademarks to send upwards of 60,000 spam messages to Facebook users to deceive them into thinking the messages were from Facebook, then stored and saved user account information outside the reach and protection of Facebook.
Continue Reading U.S. Supreme Court Rejects CFAA Appeal by Power Ventures against Facebook

In the hotly contested case of Calendar Research LLC v. StubHub, Inc. et al., which is venued in the Central District of California, the plaintiff alleges misappropriation of trade secrets. Recently, the federal judge overseeing the litigation ruled that a source code expert, who had served very early in the litigation as a neutral evaluator for the parties to determine whether the defendant’s source code was based on Plaintiff’s misappropriated code, was disqualified from being used as an expert witness by defendant, StubHub, at trial.

On September 22, 2017, Hon. Stephen V. Wilson of the U.S. District Court for the Central District of California ruled on plaintiff Calendar Research LLC’s motion to disqualify tech expert Dr. Cynthia Lee from serving as an expert witness for defendant StubHub, Inc. at trial.

The District Court noted in its opinion that early in the case, the parties had agreed to retain Dr. Lee as a neutral evaluator to analyze source code from all parties related to Calendar Research’s arguments that its former employee, Michael Gray, had stolen its trade secrets, including the source code of its primary product—a smartphone application called “Klutch.” That product purports to simplify scheduling of business meetings and meetups.  As part of her evaluation, Dr. Lee had entered into confidentiality agreements with the parties, received proprietary source code from the parties, and ultimately provided the parties with a written report of findings.  Months later, StubHub designated Dr. Lee as its expert for the case, a designation which Calendar Research immediately challenged.
Continue Reading Trial Experts Must Pick a Lane – Source Code Expert Disqualified for Switching from Neutral Evaluator to Witness in StubHub Trade Secrets Matter

In addition to federal and state‑specific hurdles facing employers who wish to utilize non‑compete agreements, the Appellate Division of the New Jersey Superior Court has provided a warning to employers across the country that those agreements can be stricken for seemingly unrelated employment issues.

On September 22, 2017, in the case of SpaceAge Consulting Corp. v. Maria Vizconde et al. (case no. A-3444-15T1), the Superior Court of New Jersey, Appellate Division, held that an employer had no ability to prevent its former employee from working for its direct client despite the existence of a non‑compete agreement expressly covering that client.  The Court noted that the employee was not paid properly by the employer during her training period and thus found that because the employment and non‑compete “agreements violated federal law, they were void and unenforceable.” Id. at *12.
Continue Reading Can Your Non Compete Agreement Be Invalidated Based on Wage-and-Hour Violations? One Appellate Court Says Yes.

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