Northern California Record

Thursday, September 19, 2019

RICO allegations against Google over alleged misappropriate of trade secrets dismissed

Lawsuits

By Scott Holland | Apr 3, 2019


SAN JOSE – A federal judge sided with Google in a trade secrets lawsuit.

The dispute pits Google LLC against plaintiffs Eli Attia and Eli Attia Architect PC. Flux Data Inc. joined Google as a defendant. Judge Beth Labson Freeman had already dismissed the plaintiffs' five-count fourth amended complaint, which they brought under the Racketeer Influenced and Corrupt Organizations Act. In the opinion issued March 19, Freeman said the fifth complaint doesn’t correct the RICO deficiencies of the fourth and the Defend Trade Secrets Act claim fails for the same reasons.

Freeman granted Google’s motion to dismiss Attia’s federal claims with prejudice but declined to exercise supplemental jurisdiction over the state law claims, remanding the case to state court for that portion of the complaint.

According to Freeman, Eli Attia “has spent much of his life developing a new architecture technology called ‘Engineered Architecture,’” and Google X sought to partner with him in July 2010. They started developing Project Genie software that September. Attia alleged Google disclosed his trade secrets in its 2012 patent applications, then squeezed him out of the project to create Vannevary Technology, which eventually became Flux Factory, and reneged on an agreement to compensate him.

In her opinion, Freeman detailed the reasons she dismissed the fourth complaint’s RICO allegations. Chiefly, she said criminal misappropriation of trade secrets wasn’t a predicate act under RICO until Congress passed the Defend Trade Secrets Act in 2016, and is not retroactively applicable.

Attia “still had remedies at state law for the alleged misappropriation in 2011 and 2012, even without valid RICO claims,” Freeman wrote. 

Further, she said using Attia’s ideas in a 2012 patent application doesn’t amount to continued misappropriation into 2016 when the DTSA took effect. She also said the fourth complaint didn’t sufficiently tie Flux to Google or the individual Google defendants to the Google corporate entity.

Although Attia pointed to six lawsuits accusing Google of similar conduct, Freeman noted five were resolved in Google’s favor, undercutting the allegations of a pattern of racketeering.

Freeman said the fifth complaint more clearly delineates the alleged trade secrets at issue, which “are completely parallel to what was disclosed in Google’s published patent applications.” She also said there now were only two RICO allegations, and Attia cut back on the number of other cases used to establish a pattern of illegal behavior. Still, the timeline negated Attia’s legal strategy.

“Neither a theory of estoppel nor continued use can convert these 2012 actions into a DTSA violation or a RICO predicate act,” Freeman wrote. “Allowing estoppel here would give RICO and the DTSA retroactive effect, a result that is contrary to existing law.”

Freeman also said Attia’s reference to Google’s experience with trade secret disputes involving Oracle and VSL Communications don’t establish a “threat of continuing activity.”

Google’s “point is well taken that it would set a dangerous precedent to allow two seemingly disparate lawsuits against one of the world’s largest companies to establish a ‘pattern of racketeering,’” Freeman wrote. “Google is sued so frequently that it is hard to imagine a scenario in which a plaintiff could not cobble together two seemingly similar lawsuits to support allegations of racketeering against the company.”

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U.S. District Court for the Northern District of California U.S. District Court for the Northern District of California, San Jose Division

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