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When Your Former Boss Sues You for Starting a Startup

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Re: When Your Former Boss Sues You for Starting a Startup

#91

Post by rhino369 »

shostack wrote: post #4

Genuinely curious for your legal counsel's take on you posting such an article publicly. I've always thought the prevailing wisdom shared by all lawyers was "don't talk." Also, in this day and age of using services like Github for personal projects but having access to other repos, etc., using things like 1Password for work and personal things, how has the discovery process worked with everything? I'm really interest…

>I'm really interested in knowing to what degree someone should be paranoid. Are you potentially risking your entire business because you once checked your work webmail from a personal computer or checked a personal email account from a work phone?

You should be paranoid, but just checking your email isn't a big deal unless you start co-mingling secret information.

But under CA trade secret law, you can commit trade secret misappropriation without ever taking a document or file. Mind trade secrets are still trade secrets.

If your employer creates a new algorithm that nobody outside the company knows about. You can't recreate it from memory in your own company. As you can imagine, this gets into grays areas real quick. It's impossible to neatly distinguish between skills you learned at work and trade secrets you learned.

I'll leave the business advice to the businessmen, but I've seen several investment/buyouts killed because during an IP review it was discovered that the startup was in the same space as a previous employer.

Re: When Your Former Boss Sues You for Starting a Startup

#92

Post by mikeshreds »

sandworm101 wrote: post #80
grizzles wrote: post #66

Earlier quoted context omitted.

lol @ preposterous. That's the law yo. Copyright - Source code that has been copied. Patent - Monopoly on an idea. Trade Secret Law - N/A. They are former employees. Non Compete Agreement - Agreements in restraint of competititon are void in California. Shred's story sounds credible to me. The fact that Smule offered to make this lawsuit go away in exchange for equity sounds a lot like extortion to me. Why would they…

>Trade Secret Law - N/A. They are former employees. Non Compete Agreement - Agreements in restraint of competititon are void in California. I would respectfully disagree with these assertions. Trade Secret is not void just because someone is a former employee. You don't get to walk out the door with the secret recipes. And there are many exceptions to california's ban on non-compete agreements. Non-compete agreements…

Just want to point out that Smule has not cited trade secret theft as a claim against us.

And on non-compete, Mark and I were just employees, not officers of any sort. Neither of us was a manager with direct reports.

Re: When Your Former Boss Sues You for Starting a Startup

#93

Post by sandworm101 »

ClintEhrlich wrote: post #89
sandworm101 wrote: post #53

Earlier quoted context omitted.

"Ideas" isn't a form of IP that can be stolen. Did you patent anything? Have you appropriately protected these ideas to qualify for any sort of tradesecret protections? (ps. Don't answer. This is the sort of thing to be discussed with an attorney behind a closed door.)

That's not quite accurate: "Ideas" cannot be patented or copyrighted, but they can be protected by contract. The distinction is who the right to the idea is enforceable against. A patent represents a government enforced monopoly that bars anyone from using the specific intellectual property, whereas a contractual right to an idea can only be enforced against the other party to the agreement. In California, the semina…

I said that ideas were not IP, not one of the recognized forms of intellectual property rights. Everyone is of course free to invent new concepts via contract, but that only creates obligations between the parties. Any dispute will be governed by contract law, not IP. Nobody outside the agreement will be bound.

The classic case in this area is Warner-Lambert v. Reynolds 178 F. Supp. 655 (1959). (It's about a contract covering the formula for Listerine)

http://law.justia.com/cases/federal/district-courts/FSupp/17...

Re: When Your Former Boss Sues You for Starting a Startup

#94

Post by mikeshreds »

lacker wrote: post #72
mikeshreds wrote: post #49

Earlier quoted context omitted.

Don't you think this will be absolved with a review of Shred Video's code/methods vs Smule's code/methods? And isn't it telling that Shred Video is more than willing to submit to such a review, but Smule has not yet acquiesced?

That doesn't seem telling to me, because Smule is probably just listening to their lawyers. And their lawyers are probably advising them to just wait for court. That seems like the right strategy for Smule regardless of the facts of the case.

What do you mean by "right strategy" in this sense? Doing a 3rd party review of Shred vs Smule code/methods will give them a trove of relevant information if they intend to win on the merits.

In my understanding, refusing it is only the "right strategy" if your intent is to not have the case go to trial.

Re: When Your Former Boss Sues You for Starting a Startup

#95

Post by rfrank »

kumarm wrote: post #54

The only time I heard Jeff Smith was in Stanford Podcast[1]. I listened to every podcast on Stanford (DFJ Entrepreneurial Thought Leaders lecture series) and particularly remember Jeff Smith because I thought he came out wrong from the talk. His statement "Palantir is evil" because they hired a guy who smule was trying to recruit. Seriously you are giving a talk to inspire future entrepreneurs and use that to bad mou…

Calling Palantir evil strikes me as pretty fair.

Re: When Your Former Boss Sues You for Starting a Startup

#96

Post by giancarlostoro »

mikeshreds wrote: post #5
shostack wrote: post #4

Genuinely curious for your legal counsel's take on you posting such an article publicly. I've always thought the prevailing wisdom shared by all lawyers was "don't talk." Also, in this day and age of using services like Github for personal projects but having access to other repos, etc., using things like 1Password for work and personal things, how has the discovery process worked with everything? I'm really interest…

One of the best ways to discourage bad behavior is to shine a light on it, which is why we're publishing our story. The risk here isn't that your former employer actually has a right to your company under the scenarios you listed. It's that if they have the resources, they can bleed you in litigation before your case is ever adjudicated. It's like a form of patent trolling, they're using the process to achieve an end…

I'm surprised you can't just sue them on the basis that they keep bringing up fraudulent charges against you and wasting the legal departments rather valuable time? If something like this isn't possible, then our legal system is currently flawed. I'm not a law expert but that's just awful.

Re: When Your Former Boss Sues You for Starting a Startup

#97

Post by thoman23 »

iamleppert wrote: post #15

I am sad to say I was a Smule customer, having downloaded and played Magic Piano. I also purchased quite a few songs inside the app. It is/was a great app. Not anymore. I've deleted Magic Piano and I'll never again be downloading, purchasing or contributing to in any way Smule or Jeff Smith's companies or products.

Wow! Magic Piano? My daughters buy songs on there all the time. Deleting it right away! Thanks for the information.

Re: When Your Former Boss Sues You for Starting a Startup

#98

Post by thoman23 »

hsod wrote: post #27
iamleppert wrote: post #15

I am sad to say I was a Smule customer, having downloaded and played Magic Piano. I also purchased quite a few songs inside the app. It is/was a great app. Not anymore. I've deleted Magic Piano and I'll never again be downloading, purchasing or contributing to in any way Smule or Jeff Smith's companies or products.

Isn't it possible that there's another side to this?

First, I believe them when they say they didn't steal anything. But second, and more importantly, I find it highly unlikely that even if they technically violated some agreement somewhere that it would play any significant role in the success or failure of Shred Video. I think it's just anti-competitive, greedy, ill-will to not allow former employees to succeed or fail based on how well they execute their new venture. It's a dangerous bullying approach that stifles innovation.

Re: When Your Former Boss Sues You for Starting a Startup

#99

Post by grizzles »

sandworm101 wrote: post #80
grizzles wrote: post #66

Earlier quoted context omitted.

lol @ preposterous. That's the law yo. Copyright - Source code that has been copied. Patent - Monopoly on an idea. Trade Secret Law - N/A. They are former employees. Non Compete Agreement - Agreements in restraint of competititon are void in California. Shred's story sounds credible to me. The fact that Smule offered to make this lawsuit go away in exchange for equity sounds a lot like extortion to me. Why would they…

>Trade Secret Law - N/A. They are former employees. Non Compete Agreement - Agreements in restraint of competititon are void in California. I would respectfully disagree with these assertions. Trade Secret is not void just because someone is a former employee. You don't get to walk out the door with the secret recipes. And there are many exceptions to california's ban on non-compete agreements. Non-compete agreements…

There was no "misappropriation" here. Employment does not qualify as "improper means". [1]

Just imagine for a moment the slippery slope this would create if companies were able to criminalize knowledge on the basis of prior employment. Literally any work process you performed could be considered protected IP. You could work one job and never be employable again.

[1] https://en.wikipedia.org/wiki/Uniform_Trade_Secrets_Act

Re: When Your Former Boss Sues You for Starting a Startup

#100

Post by sandworm101 »

hga wrote: post #88
sandworm101 wrote: post #80

Earlier quoted context omitted.

>Trade Secret Law - N/A. They are former employees. Non Compete Agreement - Agreements in restraint of competititon are void in California. I would respectfully disagree with these assertions. Trade Secret is not void just because someone is a former employee. You don't get to walk out the door with the secret recipes. And there are many exceptions to california's ban on non-compete agreements. Non-compete agreements…

You don't get to walk out the door with the secret recipes. Indeed, but in general in the US you have to go to real efforts to create and keep secret such recipes. And I find it utterly amazing that California law, last time I checked, doesn't consider customer lists to be protectable trade secrets for salesmen (!!!).

I'm completely onboard with california on that one. Customer lists are not secret. Each and every customer knows they are a customer. Certainly the tax man knows who is an isn't a customer, along with any number of credit cards companies and banks that might process orders. So the alleged secret isn't really kept in-house.
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