Magic Leap Violates Laws Prohibiting Restraints on Employee Mobility Says Defendants

magic leapAs reported back in June, augmented reality startup, Magic Leap, filed a trade secret misappropriation lawsuit in the Northern District of California against two former high-level employees, Dr. Gary Bradski and Dr. Adrian Kaehler.  Magic Leap’s complaint alleges, among other things, that Bradski and Kaehler worked together for at least a year, while employed by Magic Leap, to create and develop plans for a new company using “Magic Leap’s intellectual property and Proprietary Technologies.”

Earlier this month, Bradski and Kaehler struck back against Magic Leap with a flurry of responsive filings.

First, in their Motion to Dismiss, the defendants allege that Magic Leap’s lawsuit “violates Dr. Bradski and Dr. Kaehler’s freedom to pursue independent consulting; in addition, California law prohibits restraints on employee mobility and ‘protects Californians and ensures that every citizen shall retain the right to pursue any lawful employment an enterprise of their choice.'”  The motion alleges that both Bradski and Kaehler were considered experts in computer vision and machine learning, and discussed starting a robotics company long before joining Magic Leap.  Moreover, according to the motion, both Bradski’s and Kaehler’s employment agreements with Magic Leap each provided that “he will be free to pursue independent consulting work.”  After their hiring, Magic Leap allegedly failed to allocate budget to Kaehler’s project, and “for Dr. Bradski’s part, he had been increasingly ostracized.”  In March and April 2016, Kaehler disclosed his plans to leave Magic Leap to work on a “noncompetitive project,” and both Kaehler and Bradski subsequently returned their computers and research to Magic Leap.

In terms of legal argument, the motion asserts that “Dr. Bradski’s and Dr. Kaehler’s skills and expertise, pre-dating employment, and their prior work combining machine vision, deep nets, and robotics cannot be any Magic Leap trade secret.”  In an interesting legal argument, Defendants also assert that the Defense of Trade Secrets Act claims should be barred because “all acts complained of occurred, were disclosed, and ceased prior to the [DTSA] going into effect on May 22, 2016.”

In addition to its Motion to Dismiss, Defendants each filed a Motion for Sanctions of Dismissal (“Rule 11 Motions”) against Magic Leap.  The Rule 11 Motions forcefully assert that Magic Leap filed a “baseless suit without reasonable inquiry; and for the improper purpose of harassing the defendants, staging a fishing expedition and smear campaign designed to paralyze and prevent defendants from any gainful employment.”  In addition to dismissal, defendants seek an award of attorneys’ fees which they claim are “justified and necessary for effective deterrence of future violations by Magic Leap and similarly-minded employers.”

Magic Leap has until September 12 to respond to Kaehler’s and Bradski’s Motions to Dismiss and Rule 11 Motions.  A hearing on the motions is scheduled for Wednesday, October 12, 2016.

Another Update on ZeniMax v. Oculus

As reported here earlier, the two year-old legal battle over the Oculus Rift between ZeniMax  Media and Oculus VR continues to rage on in a federal court in Texas, with trial set for January 9, 2017.  Less than two weeks ago, the court granted ZeniMax’s motion to unseal its Second Amended Complaint, which raises new allegations against Oculus and Palmer Luckey, and now adds Brendan Iribe and John Carmack as defendants.

ZeniMax’s pleading remains substantially the same as its previous complaint, but adds some interesting new allegations.  For example, the new complaintZvO - SAC images alleges that Luckey “lacked the expertise, knowledge, training or resources” to develop VR technology and did not have the “expertise or knowledge to create a viable SDK for the Rift.”  ZeniMax also alleges that Carmack admitted that “without ZeniMax, Oculus ‘wouldn’t exist as a funded company.'”  (an admission most likely obtained during deposition.)

The most relevant new allegations, however, may have to do with the Non-Disclosure Agreement signed between Luckey and ZeniMax in May 2012.  As reported earlier, the NDA allegedly prohibited Luckey from using or disclosing ZeniMax’s Proprietary Information (including its trade secrets), as shown below:

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According to the new complaint, Luckey “informed Iribe and others about the NDA he had signed which … confirmed that ZeniMax alone owned the critical VR technology being used by Oculus.”  Despite this, “Iribe privately directed Luckey and other Oculus employees to continue to obtain ZeniMax’s hardware and software technology from Carmack, and Iribe directed Oculus’s employees to use that technology to create the Oculus SDK and to develop, modify, and tune the Oculus Rift hardware.”  Further, the complaint alleges that throughout several rounds of financing and continuing through Facebook’s acquisition of Oculus, Luckey and Iribe “concealed from potential investors and business partners the existence of the NDA that Luckey had executed.”

ZvO - SAC images-3ZeniMax’s complaint also levels some new allegations at Carmack, who was previously employed by iD Software (a ZeniMax sub) before becoming the Chief Technology Officer at Oculus in August 2013.  Allegedly, “before leaving ZeniMax, Carmack secretly and illegally copied thousands of documents containing ZeniMax’s intellectual property from his computer at ZeniMax to a USB storage device which he wrongfully took with him to Oculus.  After he had joined Oculus, Carmack returned to ZeniMax’s premises and took without permission a customized tool that Carmack and other ZeniMax personnel had developed for work on virtual reality.”  According to ZeniMax, “Carmack has refused to return the tool to ZeniMax, and he has used this tool for developing virtual reality technology for Oculus.”

Oculus recently issued a response stating that the “complaint filed by ZeniMax is one-sided and conveys only ZeniMax’s interpretation of the story. We continue to believe this case has no merit, and we will address all of ZeniMax’s allegations in court.”

With the trial less than six months away, the parties continue to engage in a pitched legal battle, with recent filings including motions to exclude expert reports, motions for sanctions and motions to compel the production of documents (all of which are sealed).  According to the court’s scheduling order, motions for summary judgment are due in one week on September 2, 2016, and pre-trial filings due on December 2, 2016.

Finally, the court has ordered the parties to hold a face-to-face meeting to discuss settlement in mid-December.  Will the parties eventually settle?  If the recent failed mediation is any indication, the answer may be ‘no.’  However, the cost of trial (and subsequent appeals) could play a large factor.  Perhaps the only sure take-away from this story is that there will be some unhappy associates working over Thanksgiving this year.

SUPER SMASH BROS VR EDITION: An Update on ZeniMax v. Oculus

zenimax v. oculus title

The legal battle between two heavyweights over the Oculus Rift continues between ZeniMax Media and id Software, in one corner, and Oculus and Facebook, in the other.  In a court filing this week, the two sides reportedly failed to reach a resolution in a recent court-ordered mediation.

The lawsuit also made headlines in December 2015 when Facebook’s CEO, Mark Zuckerberg, was ordered to sit for a deposition in the case.

If you’ve been living under a rock for the past two years, I’ve provided a summary below.  (I also recommend reading the complaint, a lengthy, but fascinating read for those interested in the VR industry.)

In May 2014, ZeniMax Media, parent company of id Software and Bethesda Softworks, filed suit in a federal court in Texas, asserting claims of trade secret misappropriation, copyright infringement, breach of contract, unfair competition, unjust enrichment, trademark infringement and false designation against Oculus and Palmer Luckey.  (Zenimax has since amended its complaint to add Facebook and John Carmack as defendants.)

In its complaint, ZeniMax alleged that, in 2012, Luckey approached John Carmack (then, an iD software employee) about a Rift prototype, which Carmack offered to help improve.  Subsequently, Carmack and other ZeniMax employees allegedly “transformed” the Rift prototype by adding positional tracking, reducing latency and making other significant improvements.  (According to Facebook, the improvements to the Rift amounted to “hot-gluing” a motion sensor previously purchased from Hillcrest, “placing tape on the outside edges of the lenses, attaching a strap, and plugging the headset into an external power source.”)

Before revealing the improved Rift prototype — and at ZeniMax’s request — Luckey executed an NDA, which stated that ZeniMax would retain exclusive ownership of the IP disclosed under the agreement.  (Facebook has since denied that the NDA is valid or enforceable.)  Carmack later demonstrated the enhanced Rift prototype at E3 in 2012, which resulted in significant attention and acclaim regarding the HMD.

carmack

After a successful E3, Luckey and Oculus allegedly continued to seek out Carmack’s expertise, but ignored ZeniMax’s overtures regarding compensation for its IP. Moreover, Oculus and Luckey allegedly demonstrated the Rift prototype using ZeniMax’s properties (Doom 3: BFG Edition and RAGE) against ZeniMax’s wishes.  In addition, Oculus later solicited and hired away several ZeniMax employees, including Carmack, who became CTO of Oculus.  According to ZeniMax, Oculus has never paid a dime to Zenimax.

In March 2014, Facebook announced that it would acquire Oculus for $2 billion in cash and stock.  Two months later, Zenimax filed its lawsuit.

Perhaps on a related note, earlier this year at E3, Bethesda, ZeniMax’s subsidiary, announced that it was developing virtual reality versions of its blockbuster AAA titles, Fallout 4 and Doom, which, unsurprisingly, would be released on the HTC Vive.

The jury trial in the ZeniMax v. Oculus case is scheduled to begin on Monday, January 9, 2017.

In the News: Magic Leap

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The secretive startup company, Magic Leap, made headlines recently with two stories of note.  First, as reported last week by UploadVR, Magic Leap is suing two former employees in federal court for trade secret misappropriation.  Magic Leap’s complaint alleges that Gary Bradski (Senior Vice President of Advanced Perception and Intelligence) and Adrian Kaehler (Vice President of Special Projects)  worked together for at least a year, while employed by Magic Leap, to create and develop plans for a new company using “Magic Leap’s intellectual property and Proprietary Technologies” in violation of their various employment agreements.  According to the complaint, while at Magic Leap, Bradski was involved in projects that involved “deep learning techniques for robots,” and that Kaehler was “responsible for the definition and development of technologies of certain projects, as well as the technical vision, staffing, budget, and ultimate implementation of such projects.”  The complaint further alleges that Bradski “disclosed Magic Leap’s confidential information and trade secrets to third parties and specifically misrepresented to third parties that such confidential and trade secret information did not belong to Magic Leap.”

Magic Leap’s complaint is noteworthy in that it asserts trade secret misappropriation claims under the new federal Defense of Trade Secrets Act (“DTSA“), which was signed into law by President Obama only a few weeks prior to the filing of this suit.

Although the details of the allegations are somewhat vague at this point, more information will likely come to light soon.  Because the complaint also asserts trade secret misappropriation claims under California state law, Magic Leap must identify the trade secrets which were allegedly misappropriated with reasonable particularity pursuant to Section 2019.210 of the California Code of Civil Procedure.

magic leap-2In less contentious news, it was also reported in the past few days that the USPTO had issued a design patent, US D758,367, to Magic Leap for a Virtual Reality Headset.  The design patent contains eight drawings (one of which is shown to the left) and was filed on May 14, 2015.

However, Magic Leap’s VP of public relations, Andy Fouché, provided the following somewhat definitive statement to Tech Insider regarding the patent’s images:

“This is part of our R&D and experience validation, and is not at all representative of what our product will look like. Items that any company patents can be helpful to the entire process, regardless if they end up pursuing that path or not.”

So it appears that Magic Leap’s product will continue to remain a secret for now.

 

 

GeoVector v. Samsung

On May 5, 2016, GeoVector Corporation (“GeoVector”) sued Samsung Electronics Co., Ltd., Samsung Electronics America, Inc., Samsung Telecommunications America, LLC (“Samsung”) in federal district court in the Northern District of California.  GeoVector’s complaint asserts against Samsung numerous patent infringement claims, trade secret misappropriation claims (under California law), Lanham Act violations and RICO violations.

According to the complaint, GeoVector was founded in 1987 by John Ellenby, a former employee at Xerox-PARC.  In 1990, John Ellenby and his son, Thomas, conceptualized and invented “the first augmented reality device which utilized data as to the device’s position and orientation to display relevant information to the user.”

GeoVector is the owner and assignee of U.S. Patent Nos. 6,037,936 (“Computer vision system with a graphic user interface and remote camera control”), 7,301,536 (“Electro-optic vision systems”), 7,916,138 (“Electro-optic vision systems”).

FIG 17

GeoVector alleges that, in December 2002, Samsung and GeoVector had a meeting in which GeoVector produced a “confidential slide deck demonstrating the possibility of integrating GeoVector technology into Samsung handsets.”  GeoVector also alleges that it disclosed to Samsung, in confidence, “its entire unpublished patent portfolio, including its early applications for augmented reality patents.”  Despite negotiations that continued into 2008, the parties never consummated a licensing agreement.  Subsequently, GeoVector alleges that Samsung began incorporating GeoVector’s technology into its Galaxy devices.

GeoVector begain sending numerous notice letters to Samsung in April 2013, notifying them of infringement, including claim charts.  GeoVector also alleges that Samsung wrongfully patented GeoVector’s same augmented reality technology.

GeoVector’s complaint is fairly detailed and also takes a few shots at Samsung’s past IP litigations (“Because Samsung regularly refuses to license technology without being sued, victims are forced to sue Samsung”), and includes a list of former “victims.”