Yesterday, I received a nice email from Uber announcing that it
had turned 5 years old. As I was looking at the origins and history
of the company this evening, I came across an odd lawsuit recently filed against Uber. A
couple weeks ago, it (and several investors) was sued by Kevin
Halpern and Celluride Wireless, Inc., for allegedly having stolen
the idea for a mobile ridesharing program back in 2006. According
to the complaint, Halpern had the idea of connecting drivers and
passengers using a mobile device beginning around 2003 and that he
had a working demonstration completed by 2005.
The next part gets a little weird, but Halpern claims to have
discussed his plans and company with Uber's founders and
several investors over the course of several years between 2006 and
2008. There was no written confidentiality agreement for any of the
discussions. According to Wikipedia, Uber's development began in
2009, and the service launched in June 2010. Halpern alleges trade
secret misappropriation, conversion, and breach of contract.
Halpern did not assert any patents.
Where do I start?
Trade secrets are protected under the Uniform Trade Secrets Act enacted in all but a
few states. Trade secrets are defined as:
Information, including a formula, pattern, compilation, program,
device, method, technique, or process, that: (i) derives
independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper
means by, other persons who can obtain economic value from its
disclosure or use, and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
Notably, "idea" is not specifically listed in the
examples. Not to say that ideas can't become trade secrets, but
they need more data behind them to get to a point where the ideas
can derive independent economic value. For example, a business plan
derives independent value because it would save a person time in
developing the plan and cost of analyzing elements of how to
execute an idea.
What about reasonable efforts to keep the secret? I'm not
sure it would be reasonable to proceed without having a written
confidentiality agreement in place these days. Granted, a written
confidentiality agreement can take many forms, such as a signed
agreement, and email exchange, an exchange of text messages,
How would you shut down this claim if you were in Uber's
The Uniform Trade Secrets Act
typically has a statute of limitations of three years. Halpern
waited over 5.
Conversion in this case is really the
same as trade secret misappropriation so that claim ought to die
with the first claim.
There is no physical evidence of a
contract between the parties. Some types of agreements simply
aren't even enforceable under public policy if there is no
writing. Here, this type of confidentiality agreement arguably
should require a writing.
How can you prevent this type of claim if you find yourself in
Never accept information from someone
without a written agreement stating what your obligations will be.
Confidentiality agreements are so easy to come by that there is no
reason to skip this step.
Document your development efforts so
you can prove important dates.
Separate information received from
other people from your development team. No need to taint
File provisional patent applications.
Even if they are not ever used, they can independently prove your
development milestones with a filing date. And they don't ever
need to be published or pursued if you don't want them to be
published or pursued.
How can you protect your claim if someone legitimately takes
your trade secrets?
Only share confidential information
after getting a signed confidentiality agreement.
Only share confidential information
using a means that shows when/what you shared (e.g., by email
– which is then archived).
Always mark information confidential
when you share it, whether in the cover email/letter or in the
confidential documents themselves.
Keep a log of who/when/what you share
with third parties and keep copies of all confidentiality
With any luck, you won't ever have a dispute like this
interrupt your birthday.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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