Employees Bound By Clickthrough Agreements–ADP v. Lynch

12 07 2016

An employer sued two departing employees for joining a competitor. The employer sought to enforce, among other things, a non-compete clause (the court calls it a restrictive covenant). The employer included the non-compete provision in stock option grant documentation presented to employees electronically, which isn’t surprising because employees will agree to just about anything to get their stock option grants. The employees defended the employer’s lawsuit on lack of jurisdiction. The employer pointed to a venue selection clause that was included in the grant documentation along with the non-compete.



Case citation: ADP, LLC v. Lynch, 2016 WL 3574328 (D. N.J. June 30, 2016)

The content in this post was found at http://blog.ericgoldman.org/archives/2016/07/employees-bound-by-clickthrough-agreements-adp-v-lynch.htm and was not authored by the moderators of freeforafee.com. Clicking the title link will take you to the source of the post.

Oculus Faces Messy Ownership Claims Over Its Head Mounted Display–Total Recall v. Luckey

3 06 2016

Palmer Luckey, who ultimately developed the much-hyped Oculus Rift, entered into an agreement with a company called “Total Recall”. Although it was not crystal clear, the agreement was technically with Thomas Seidl, one of the partners of Total Recall. The agreement required Luckey to develop a prototype based on feedback from Seidl.

The parties corresponded via email, and Seidl asked for confirmation from Luckey regarding exclusivity:

[j]ust so we are on the same page. With the initial payment . . . I would like excusive rights to your design unless we decide not to use it. I need to cover myself if we pay for development and then end up paying for a competitor.

Luckey responds affirmatively:

[y]es we are on the same page here . . . I am sure we can put together a contract of some sort to finalize it all.

Seidl transferred $798 via PayPal. [Ouch. That Seidl made less than a thousand dollar payment for what turned into a much bigger problem for Luckey is a bummer. Perhaps it will be a minor blip on his radar screen in light of Oculus’s success, but still.]

A few months later, the parties entered into a “Nondisclosure, exclusivity and payments agreement”. It was between Seidl and Luckey and aimed at protecting confidential information, which it broadly defined as “all information or material that has or could have commercial value or other utility in the business in which Disclosing Party is engaged.” It had the standard carveouts from the definition of confidential information. It also included a non-disclosure and exclusivity provision:

The Receiving party shall keep all details including drawings and part suppliers of the Head Mounted Display [a term not defined anywhere in the agreement] confidential and shall not aid any other person or entity in the design of a Head Mounted Display other than the disclosing party. Unless within a twelve month period from 1st july 2011 the receiving party has not received a minimum payment in royalties of 10,000 US dollars by the disclosing party. The exclusivity shall remain in place for a period of 10 years providing a minimum of 10,000 US dollars is paid from the disclosing party to the receiving party per annum.

Luckey developed a prototype and modified the prototype based on feedback from Seidl. Luckey never returned the modified prototype (Seidl does not allege asking for its return). Luckey went on to form Oculus, LLC, and develop Rift, which became a blockbuster on Kickstarter and was ultimately sold to Facebook for 8 figures.

Total Recall asserted a range of contract and tort claims. (The Total Recall partners appear to be involved in some internal dispute regarding their pursuit of this lawsuit, including separate litigation in Hawaii, but the court’s order did not focus on that.)


Case Citation: Total Recall Techs v. Palmer Luckey and Oculus, 2016 WL 199796 (N.D. Cal. Jan. 16, 2016)


The content in this post was found at http://blog.ericgoldman.org/archives/2016/01/oculus-faces-messy-ownership-claims-over-its-head-mounted-display-total-recall-v-luckey.htm and was not authored by the moderators of freeforafee.com. Clicking the title link will take you to the source of the post.

A Legislative History of the Defend Trade Secrets Act of 2016

30 05 2016

Legislative history is, of course, the compilation of the legislative process’ source documents—committee reports, hearing transcripts, bills and floor debate—to understand the Congressional intent behind a law. Such a use is controversial, with no less than the late Justice Antonin Scalia being a leading critic of the practice while Justice Stephen Breyer is one of its most notable proponents. However, lawyers and judges continue to employ legislative history, in some fashion, and will likely turn to it to understand and interpret a law of this magnitude. This article surveys the more significant legislative history documents available for the DTSA.


The content in this post was found at http://www.ipwatchdog.com/2016/05/20/a-legislative-history-of-the-defend-trade-secrets-act-of-2016/id=69082/ and was not authored by the moderators of freeforafee.com. Clicking the title link will take you to the source of the post.

The Defend Trade Secrets Act of 2016 Creates Federal Jurisdiction for Trade Secret Litigation

30 05 2016

There is now federal jurisdiction for trade secret theft. The DTSA creates a federal cause of action for trade secret misappropriation that largely mirrors the current state of the law under the Uniform Trade Secrets Act, which has been adopted by 48 states. The DTSA uses a similar definition of trade secrets, and a three-year statute of limitations, and it authorizes remedies similar to those found in current state laws. The DTSA will not preempt existing state law, which will preserve and afford plaintiffs’ options in regards to whether to file federal or state claims and which court to select.


The content in this post was found at http://www.ipwatchdog.com/2016/05/23/defend-trade-secrets-act-2016-creates-federal-jurisdiction-trade-secret-litigation/id=69245/ and was not authored by the moderators of freeforafee.com. Clicking the title link will take you to the source of the post.

Definition of a ‘Trade Secret’ Under the DTSA

30 05 2016

In general, the form of the information qualifying as a trade secret under the DTSA is extremely broad, and includes information of any form, regardless of “how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing,” and of any type, “financial, business, scientific, technical, economic, or engineering information,” so long as: (1) the information is actually secret, because it is neither known to, nor readily ascertainable by, another person who can obtain economic value from the disclosure or use of the information; (2) the owner has taken “reasonable measures” to maintain the secrecy; and (3) independent economic value is derived from that secrecy.[i] By comparison the UTSA identifies, by way of example, eight specific types of trade secret information; “formula, pattern compilation, program device, method, technique or process.” The DTSA, unlike the UTSA, also provides that information “stored” only in an individual’s memory can be the subject of a civil claim for theft of trade secrets.


The content in this post was found at http://www.ipwatchdog.com/2016/05/24/defintion-trade-secret-dtsa/id=69262/ and was not authored by the moderators of freeforafee.com. Clicking the title link will take you to the source of the post.