Late last year, a California appellate court reaffirmed longstanding principles that have important lessons for employers hoping to prevent their employees from taking trade secrets with them if they leave to work for a competitor.

In Hooked Media Group, Inc. v. Apple Inc., Hooked Media Group, Inc. (“HMGI”), a San Francisco-based startup with a mobile app that provides personalized suggestions for other apps, sued tech powerhouse Apple Inc. for, among other things, misappropriation of trade secrets under the Uniform Trade Secrets Act (UTSA).  55 Cal. App. 5th 323, 328, 269 Cal. Rptr. 3d 406, 410, reh’g denied (June 19, 2020), publication ordered (Sept. 30, 2020), review denied (Dec. 30, 2020).  After talks related to Apple’s acquisition of HMGI for the sole purpose of making HMGI’s employees Apple employees broke down —“an ‘acqui-hire’ in Silicon Valley jargon”—Apple decided to directly hire away three of HMGI’s engineers, including its Chief Technology Officer, without providing any compensation to HMGI.  Id. at 328–29.  In its lawsuit, HMGI alleged that Apple misappropriated trade secrets when those engineers later developed an app recommendation system for Apple using source code similar to the code on which HMGI’s system was based. See id. at 331–33. The lower court entered summary judgment in Apple’s favor, dismissed the claim, and HMGI appealed.

Read the full post on Proskauer’s Minding Your Business blog.