ViChip Corporation v. Tsu-Chang Lee
438 F.Supp.2d 1087
In the United States District Court for the Northern District of California
Case Number C 04-2914 PJH
Before District Judge Hamilton
Decided on June 09, 2006

Relevancy of the Case: Deleting data on the company’s laptop and server after receiving the employment termination notice

Statutes and Provisions Involved

• The Computer Fraud and Abuse Act, 18 U.S.C. § 1030

Relevant Facts of the Case

• The defendant established a joint venture with ViVoDa and two other Taiwanese companies. This resulted in the formation of ViChip, an electrical engineering company involved in manufacturing and selling integrated circuits (ICs).
• He was the joint venture company’s sole director, CEO, and president. He initiated a project and made his engineering team sign agreements to assign all intellectual property rights to the company and ensure confidentiality. Meanwhile, he was the board chairman at ViVoDa.
• In Sprint 2004, the chairman of the ViChip group became aware of the defendant’s involvement with ViVoDa. As a result, the nature of his employment with the present company was questionable. He alleged five causes of action against the defendant, filing a suit for stealing confidential information from the company.
• The defendant had admitted that he took several files and deleted certain electronic files.
• Subsequently, the defendant filed two patent applications and claimed priority before the plaintiff’s patent applications.
• The plaintiff seeks a summary judgment on all its causes of action and the defendant’s four counterclaims.

Prominent Arguments by the Counsels

• The plaintiff’s counsel submitted that the evidence of patent ownership is undisputed through three separate agreements. These agreements include a Consulting Agreement, Employee Agreement, and US Patent Assignment Form. Through the Employee Agreement, the defendant assigned the ownership of chip technology exclusively to the plaintiff.
• While arguing for the CFAA claim, the plaintiff’s counsel pointed out the defendant’s admission that he deleted ViChip‘s computer files after receiving the termination notice.
• The defendant’s counsel contended that he is the sole inventor of the underlying patent invention. His invention pre-existed ViChip‘s formation. The counsel argued that the assignment provisions in the Employee Agreement are ineffective. First, they do not apply to inventions created before the agreement. Second, they do not apply to his pre-existing technology, which formed the basis for the Viper chip technology.

Opinion of the Bench

• The defendant has failed to submit evidence proving his sole inventorship claim. His exhibits actually support the plaintiff’s submission that the defendant’s contribution was for the Viper project. As a result, the defendant would be a co-inventor.
• The Consulting Agreement only transfers ownership in inventions created for ViChip after the agreement’s execution. This excludes any background technology owned by ViVoDa.
• This is not the proper forum for the defendant to dispute inventorship of the Viper chip technology. Further, the evidence shows that the defendant’s contributions led to the resulting product. As a result, the defendant appears to have expressly assigned the inventorship of ViChip’s provisional patent application to the plaintiff.
• The defendant had a duty of loyalty towards ViChip and, therefore, an agency relationship. When he deleted the information from the company’s server and his computer, he breached his duty of loyalty and terminated his agency relationship.

Final Decision

• The court granted summary judgment in the plaintiff’s favour for all its affirmative causes of action against the defendant, except its claim for trade secrets misappropriation.