United States: Rogue Witnesses (Silicon Valley, Episode 17)

In Episode 17, Hooli's lawsuit appears to be nearing its end – with Hooli poised as the apparent victor. In Episodes 9 and 10 the show had positioned the case so we thought Pied Piper was sure to win. What happened? The impact of a rogue witness should not be underestimated.

As the episode opens, the Hooli brogrammers leave a Hooli Nucleus phone in a bar, and Big Head gives it to Richard. Richard realizes that Nucleus is truly awful. He calls Hooli and threatens speculates that the phone might end up in the hands of tech bloggers who might publish scathing reviews of it and tank Hooli's stock (but that this won't happen if Hooli drops its suit against Pied Piper). Gavin Belson (Hooli's CEO) ridicules Richard's threat speculation, claiming that tech journalists aren't "real journalists" and would never protect Richard as their source. After a short stalemate, the lawyers get involved and Pied Piper and Hooli agree to binding arbitration to resolve Hooli's lawsuit. As expected, at the arbitration Hooli relies on its manufactured story that Big Head is really an understated genius who was instrumental in developing Pied Piper as part of his brilliant career at Hooli. After the arbitrator appears to buy this story, Pied Piper puts Erlich on the stand to show that Big Head can't be genius because Erlich thought Big Head was awesome but Erlich is always wrong. The strategy works like a charm – until it doesn't. Erlich lets slip that Big Head's terrible app crashed Richard's laptop and put it in the shop for three days. When Richard takes the stand he cannot help but be honest and admit that one of the days his laptop was in the shop, he ran a few tests of Pied Piper and made a few tweaks to it using a Hooli computer. The episode ends with everyone convinced that Pied Pieper has lost the case.

But, does Hooli really own Pied Piper's technology just because Richard ran a test or two on a Hooli computer? As I explained in a previous post, California law provides that an employer can require employees to assign their inventions to the company. However, under California law, an employer is not allowed to claim ownership of inventions that the employee develops entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information, and provided it did not relate at the time of conception to the employer's business, or actual or demonstrably anticipated research or development of the employer. Now everyone is sure that Richard lost the case because he used Hooli's computer to test and tweak one component of Pied Piper.

First, a background point. California law limits how far an employer can go in claiming ownership of employee inventions. However, to obtain most such rights in the first place, the employer needs to have the employee sign an agreement that clearly assigns ownership of employee's inventions to the company. Employers can make their biggest mistakes, and can end up losing these types of cases, because they have poorly drafted invention assignment agreements (known as "PIIAs"). Therefore, the first thing Richard's team should do is read the agreement he signed with Hooli really carefully, because any holes in that agreement might save his case!

Assuming Hooli's employment agreement with Richard is air-tight, Richard still owns inventions he "developed" without using Hooli's equipment, so the question is whether running a few tests on one component counts as "developing" Pied Piper on Hooli's computer. Interestingly, there haven't been enough cases interpreting the statute to know exactly how a court might answer that question. On the one hand, the cases indicate that courts are pretty strict in enforcing the law. For example, an employee might lose the right to his or her invention by using a company laptop to do development work, even if the employer allows employees to use company laptops for 'personal purposes.' On the other hand, based on hints in some of the cases, Richard might prevail by arguing that Pied Piper had been "developed" before he ever "tested" it on Hooli's computer (after all, the tests worked!). He might also argue that the test (and tinkering) was to a non-essential component of Pied Piper, and therefore he didn't use Hooli's computer to "develop" the specific invention that Hooli wants to own.

Given the facts we have, Richard's case might not be as doomed as everyone thinks. Of course, it would have been sooo much better if he had never used Hooli's computer for anything related to Pied Piper!

What is more confusing to me is why we care about the Hooli lawsuit so much. As I recall the last episode of Season 1 (the TechCrunch disrupt final), Richard invented a much better and totally different technology—the middle-out technology—at TechCrunch, well after he stopped working at Hooli. As long as Pied Piper isn't using the old technology any more (or can design around it) then it might not matter at all if Hooli wins ownership of the old tech.

* * *

As a media lawyer, I also feel obliged to point out an important legal point that Gavin Belson got wrong: his claim that tech bloggers aren't "real journalists" and can't protect their sources. It is true that when a prototype iPhone was lost in a bar in 2010, the employee who lost the phone and the person who turned it over to the tech blog were both exposed. It is also true that the lost phone scenario can get complicated, because the phone might be considered "stolen" property. (In California, someone can be guilty of theft if they have knowledge of or means to inquire as to the true owner of lost property, and they take possession of the property without first "making reasonable and just efforts" to find the owner and to restore the property to him.)

However, the Valley's tech bloggers are "real journalists" and can protect their sources just like any other journalists if they choose to do so. California's press shield law—enshrined in California's Constitution—provides journalists with absolute protection from being forced to reveal their sources or any unpublished information in a civil lawsuit. (A criminal defendant might be able to force a journalist to disclose a source.) California and federal law also say that law enforcement normally shouldn't be able to use a search warrant to get unpublished information or sources. In a case in 2006, some tech bloggers went to the mat to protect the identities of their sources, and the court held that the tech bloggers were protected by California's press shield law and the First Amendment—just like "real journalists." The key question was whether the tech bloggers were engaged in gathering and disseminating news to the public. Because they were, they were protected by the shield law and could not be forced to reveal their sources.

Let's see how the arbitrator decides...

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
29 Nov 2017, Webinar, Los Angeles, United States

This webinar will cover issues that California employers must face when managing a remote workforce of employees who “telecommute” for work. Due to the growing number of employees that work from home, California employers must know how to manage this new remote workforce in order to offer competitive career opportunities for a new generation of employees, while also being careful not to violate the complex California employment laws that govern these work arrangements.

30 Nov 2017, Conference, Brussels, Belgium

The European Competition and Regulatory Law Review (CoRe), the Computer and Communications Industry Association (CCIA) and the Vrije Universiteit Brussel (VUB) are delighted to invite you to our joint conference discussing some of today’s most frequently asked questions: Does competition law enforcement require an update for online markets?

4 Dec 2017, Conference, Virginia, United States

The Government Contract Management Symposium (GCMS) is held annually by the National Contract Management Association (NCMA) in the Washington, DC metro area. Formerly intended for those in federal sector, it has grown to provide training for professionals in both government and industry contracting.

 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.