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Can a non-disclsoure agreement protect your corporate secrets?

With non-disclosure agreements and other devices, companies go to great lengths to disclose their intellectual property.  Yet if a former employee does disclose trade secrets to a competitor, quick action may help to mitigate the damage. In other cases, a company’s best recourse may be to seek damages in a civil lawsuit. However, the process of litigating an intellectual property dispute can be complicated and lengthy.

Consider the lawsuit between Zenimax Media Inc. and Facebook Inc. over virtual reality software. Facebook became a player in the virtual reality game when it paid around $2 billion in 2014 to acquire a startup called Oculus VR, founded by a young entrepreneur named Palmer Luckey. Since the acquisition, Facebook has come out with a virtual reality headset.

Facebook believes its acquisition of the startup protects its claim to the software that runs its headset. Yet Oculus’ founder is accused of using technology developed by Zenimax when he shopped his headset prototype around to investors prior to the 2014 acquisition. ZeniMax and Luckey also had a prior business relationship, with ZeniMax demonstrating the same prototype at a video game expo around the same time period.

In the lawsuit, the Oculus founder admits to utilizing the code in his demonstrations of the headset. Notably, he had also signed a non-disclsoure agreement with ZeniMax. Nevertheless, Luckey denies disclosing any proprietary source code. Rather, he claims he only ran the code. Is this a distinction without a difference?

As this example illustrates, it may take an experienced lawyer to analyze an alleged intellectual property crime. Our Los Angeles intellectual law firm can provide such comprehensive advisory services.

Source: The New York Times, “Mark Zuckerberg, in Suit, Testifies in Oculus Intellectual Property Trial,” Nick Wingfield and Mike Isaac, Jan. 17, 2017

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