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Genuinely curious for your legal counsel's take on you posting such an article publicly. I've always thought the prevailing wisdom shared by all lawyers was "d

Genuinely curious for your legal counsel's take on you posting such an article publicly. I've always thought the prevailing wisdom shared by all lawyers was "don't talk." Also, in this day and age of using services like Github for personal projects but having access to other repos, etc., using things like 1Password for work and personal things, how has the discovery process worked with everything? I'm really interested in knowing to what degree someone should be paranoid. Are you potentially risking your entire business because you once checked your work webmail from a personal computer or checked a personal email account from a work phone?

mikeshreds 11y ago
One of the best ways to discourage bad behavior is to shine a light on it, which is why we're publishing our story. The risk here isn't that your former employer actually has a right to your company under the scenarios you listed. It's that if they have the resources, they can bleed you in litigation before your case is ever adjudicated. It's like a form of patent trolling, they're using the process to achieve an end they'd never get in adjudication.
- toomuchtodo 11y ago
  If they have the resources to bleed you in litigation, would they not have the resources to care little about bad PR?
  - jegutman 11y ago
    Depends on the company. PR is a proportional thing. If the CEO of a company is caught on video killing kittens that can kill 50% of a $100,000,000 company or 50% of $1,000,000 company. Public relations / branding is proportional in that way. Money on the other hand is slightly more constant, so in the two cases above it might be a 2 million dollar hit to each. A possible gamble to the 100 million dollar company but not to the 1 million dollar company.
    - rancur 11y ago
      > is caught on video killing kittens ?
      - TallGuyShort 11y ago
        Just an extreme example of bad PR.
      - brongondwana 11y ago
        http://www.abc.net.au/news/2015-09-09/dentist-walter-palmer-who-killed-zimbabwe-lion-cecil-return-work/6760184 http://www.abc.net.au/news/2015-09-09/dentist-walter-palmer-...
  - pbh101 11y ago
    Maybe if it were Oracle, but in this case it is another startup which runs in the same circles and benefits from credibility from a similar audience, even if only for developer recruiting.
    - toomuchtodo 11y ago
      Oracle is exactly who came to mind when I was typing out my reply :)
  - deleted 11y ago
    [deleted]
- giancarlostoro 11y ago
  I'm surprised you can't just sue them on the basis that they keep bringing up fraudulent charges against you and wasting the legal departments rather valuable time? If something like this isn't possible, then our legal system is currently flawed. I'm not a law expert but that's just awful.
  - anseljh 11y ago
    That can be done -- there is a claim for malicious prosecution. But you have to win the first case before you can bring it. The other alternative, in the current case, is to ask the court for sanctions.
cenal 11y ago
I'm not affiliated with them so my thoughts are my own. I'd wager this is a last nuclear option before they lose their company to the lawsuit. If they can manage to publicly shame the company suing them they stand a shot at keeping the company alive. Typically lawyers hate posts like this because it's public record now what happened and if any of this isn't true and provable 100% it can hurt them, a lot. There are some eDiscovery consulting companies like http://www.dcdatacorp.com http://www.dcdatacorp.com that go out and do forensic capture for law firms before it ever gets to a courtroom. They try and determine access to digital systems best as they can on behalf of the firms that hire them. Don't build a business on quicksand. Get a lawyer involved in formation to ensure your IP is clean and usable for your new venture. If in doubt. Scrap it all.
- mikeshreds 11y ago
  This is not a last nuclear option, and we're not in danger of losing our company to the lawsuit. Everything in the post is 100% true. We did get a lawyer involved when we started Shred Video, and are 100% sure our IP is clean and usable. It will take probably two years for the case to get fully adjudicated, and the legal recourse for preventing frivolous lawsuits like this is insufficient. Starting a startup is plenty hard enough without this kind of distraction, it's in all of our interest to dissuade larger companies from harassing startups in this way.
  - 7Figures2Commas 11y ago
    > It will take probably two years for the case to get fully adjudicated... During which time many prospective investors, partners and customers won't want to touch you with a 10 foot pole. > ...and the legal recourse for preventing frivolous lawsuits like this is insufficient. To be honest, this doesn't look like a frivolous lawsuit, even if this goes to trial and is adjudicated in your favor. Your post indicates that you and your co-founder quit your jobs at Smule to start Shred. In your post, you detail the differences between some of the technology behind Smule's products and your own, but it is clear that Smule and Shred are in the same general space as far as technology is concerned. The intellectual property assignment agreements most employees sign cover inventions, processes, discoveries, etc. that are made or conceived of during their terms of employment. They often contain language referring to "the present or reasonably anticipated business" of the employer. While none of this means you can't leave an employer to start a business in the same space, matters like this can be incredibly messy. If you believe that your defense will be successful because you can prove you didn't steal code outright, you are being incredibly naive. It's not that simple.
mbesto 11y ago
I'd be inclined to agree but it seems like they've talked to YC and it's endorsed by them as well: https://twitter.com/paulg/status/646448913566687232 https://twitter.com/paulg/status/646448913566687232
- compumike 11y ago
  as well as https://blog.ycombinator.com/on-the-shred-video-lawsuit https://blog.ycombinator.com/on-the-shred-video-lawsuit
compumike 11y ago
IMHO, your legal counsel provides advice, but that's it. You're already sitting on the receiving end of bullying with an existential threat, so there's a strategic choice (talk/don't talk) with risk on either side. As a founder who has taken on a legal threat from a big-corp before, know that bigger companies are in the habit of being bullies like this, because they get away with it far more than they should, and they might not even realize how stupid it is. Big-corp's lawyers are simply incentivized to rack up billable hours, legit or not. But when you can make it clear to big-corp's strategic decision makers that there's far less upside than they expect (including that they have practically zero chance of winning anything), and far more downside (including that they will really look like idiots in front of their customers, their employees, future strategic partners, etc), big-corp usually calls off its lawyers and moves on to the next person on their hit-list. They're usually rational enough not to pursue negative-ROI activities for very long simply for vengeance. If the threat of going public isn't enough to make them back down, it's ugly, but you've got to follow through.
sandworm101 11y ago
I don;t think they passed this by legal. If they did, they aren't listening. Publicly airing dirty laundry while in the middle of a suit is a dangerous tactic. It doesn't take much to tack on new claims.
dmourati 11y ago
"I'm not mad, I'm proud of you. You took your first pinch like a man and you learn two great things in your life. Look at me, never rat on your friends and always keep your mouth shut." -- Jimmy Conway, Goodfellas
rhino369 11y ago
>I'm really interested in knowing to what degree someone should be paranoid. Are you potentially risking your entire business because you once checked your work webmail from a personal computer or checked a personal email account from a work phone? You should be paranoid, but just checking your email isn't a big deal unless you start co-mingling secret information. But under CA trade secret law, you can commit trade secret misappropriation without ever taking a document or file. Mind trade secrets are still trade secrets. If your employer creates a new algorithm that nobody outside the company knows about. You can't recreate it from memory in your own company. As you can imagine, this gets into grays areas real quick. It's impossible to neatly distinguish between skills you learned at work and trade secrets you learned. I'll leave the business advice to the businessmen, but I've seen several investment/buyouts killed because during an IP review it was discovered that the startup was in the same space as a previous employer.
ww520 11y ago
Most IP cases are settled before going to trial. Public opinion is an important factor in persuading the parties to settle or drop the case. Going public could be a valid strategy in forcing the other side's hand.

mikeshreds 11y ago

One of the best ways to discourage bad behavior is to shine a light on it, which is why we're publishing our story. The risk here isn't that your former employer actually has a right to your company under the scenarios you listed. It's that if they have the resources, they can bleed you in litigation before your case is ever adjudicated. It's like a form of patent trolling, they're using the process to achieve an end they'd never get in adjudication.

toomuchtodo 11y ago
If they have the resources to bleed you in litigation, would they not have the resources to care little about bad PR?
- jegutman 11y ago
  Depends on the company. PR is a proportional thing. If the CEO of a company is caught on video killing kittens that can kill 50% of a $100,000,000 company or 50% of $1,000,000 company. Public relations / branding is proportional in that way. Money on the other hand is slightly more constant, so in the two cases above it might be a 2 million dollar hit to each. A possible gamble to the 100 million dollar company but not to the 1 million dollar company.
  - rancur 11y ago
    > is caught on video killing kittens ?
    - TallGuyShort 11y ago
      Just an extreme example of bad PR.
    - brongondwana 11y ago
      http://www.abc.net.au/news/2015-09-09/dentist-walter-palmer-who-killed-zimbabwe-lion-cecil-return-work/6760184 http://www.abc.net.au/news/2015-09-09/dentist-walter-palmer-...
- pbh101 11y ago
  Maybe if it were Oracle, but in this case it is another startup which runs in the same circles and benefits from credibility from a similar audience, even if only for developer recruiting.
  - toomuchtodo 11y ago
    Oracle is exactly who came to mind when I was typing out my reply :)
- deleted 11y ago
  [deleted]
giancarlostoro 11y ago
I'm surprised you can't just sue them on the basis that they keep bringing up fraudulent charges against you and wasting the legal departments rather valuable time? If something like this isn't possible, then our legal system is currently flawed. I'm not a law expert but that's just awful.
- anseljh 11y ago
  That can be done -- there is a claim for malicious prosecution. But you have to win the first case before you can bring it. The other alternative, in the current case, is to ask the court for sanctions.

cenal 11y ago

I'm not affiliated with them so my thoughts are my own. I'd wager this is a last nuclear option before they lose their company to the lawsuit. If they can manage to publicly shame the company suing them they stand a shot at keeping the company alive. Typically lawyers hate posts like this because it's public record now what happened and if any of this isn't true and provable 100% it can hurt them, a lot. There are some eDiscovery consulting companies like http://www.dcdatacorp.com http://www.dcdatacorp.com that go out and do forensic capture for law firms before it ever gets to a courtroom. They try and determine access to digital systems best as they can on behalf of the firms that hire them. Don't build a business on quicksand. Get a lawyer involved in formation to ensure your IP is clean and usable for your new venture. If in doubt. Scrap it all.

mikeshreds 11y ago
This is not a last nuclear option, and we're not in danger of losing our company to the lawsuit. Everything in the post is 100% true. We did get a lawyer involved when we started Shred Video, and are 100% sure our IP is clean and usable. It will take probably two years for the case to get fully adjudicated, and the legal recourse for preventing frivolous lawsuits like this is insufficient. Starting a startup is plenty hard enough without this kind of distraction, it's in all of our interest to dissuade larger companies from harassing startups in this way.
- 7Figures2Commas 11y ago
  > It will take probably two years for the case to get fully adjudicated... During which time many prospective investors, partners and customers won't want to touch you with a 10 foot pole. > ...and the legal recourse for preventing frivolous lawsuits like this is insufficient. To be honest, this doesn't look like a frivolous lawsuit, even if this goes to trial and is adjudicated in your favor. Your post indicates that you and your co-founder quit your jobs at Smule to start Shred. In your post, you detail the differences between some of the technology behind Smule's products and your own, but it is clear that Smule and Shred are in the same general space as far as technology is concerned. The intellectual property assignment agreements most employees sign cover inventions, processes, discoveries, etc. that are made or conceived of during their terms of employment. They often contain language referring to "the present or reasonably anticipated business" of the employer. While none of this means you can't leave an employer to start a business in the same space, matters like this can be incredibly messy. If you believe that your defense will be successful because you can prove you didn't steal code outright, you are being incredibly naive. It's not that simple.

mbesto 11y ago

I'd be inclined to agree but it seems like they've talked to YC and it's endorsed by them as well: https://twitter.com/paulg/status/646448913566687232 https://twitter.com/paulg/status/646448913566687232

compumike 11y ago
as well as https://blog.ycombinator.com/on-the-shred-video-lawsuit https://blog.ycombinator.com/on-the-shred-video-lawsuit

compumike 11y ago

IMHO, your legal counsel provides advice, but that's it. You're already sitting on the receiving end of bullying with an existential threat, so there's a strategic choice (talk/don't talk) with risk on either side. As a founder who has taken on a legal threat from a big-corp before, know that bigger companies are in the habit of being bullies like this, because they get away with it far more than they should, and they might not even realize how stupid it is. Big-corp's lawyers are simply incentivized to rack up billable hours, legit or not. But when you can make it clear to big-corp's strategic decision makers that there's far less upside than they expect (including that they have practically zero chance of winning anything), and far more downside (including that they will really look like idiots in front of their customers, their employees, future strategic partners, etc), big-corp usually calls off its lawyers and moves on to the next person on their hit-list. They're usually rational enough not to pursue negative-ROI activities for very long simply for vengeance. If the threat of going public isn't enough to make them back down, it's ugly, but you've got to follow through.

sandworm101 11y ago

I don;t think they passed this by legal. If they did, they aren't listening. Publicly airing dirty laundry while in the middle of a suit is a dangerous tactic. It doesn't take much to tack on new claims.

dmourati 11y ago

"I'm not mad, I'm proud of you. You took your first pinch like a man and you learn two great things in your life. Look at me, never rat on your friends and always keep your mouth shut." -- Jimmy Conway, Goodfellas

rhino369 11y ago

>I'm really interested in knowing to what degree someone should be paranoid. Are you potentially risking your entire business because you once checked your work webmail from a personal computer or checked a personal email account from a work phone? You should be paranoid, but just checking your email isn't a big deal unless you start co-mingling secret information. But under CA trade secret law, you can commit trade secret misappropriation without ever taking a document or file. Mind trade secrets are still trade secrets. If your employer creates a new algorithm that nobody outside the company knows about. You can't recreate it from memory in your own company. As you can imagine, this gets into grays areas real quick. It's impossible to neatly distinguish between skills you learned at work and trade secrets you learned. I'll leave the business advice to the businessmen, but I've seen several investment/buyouts killed because during an IP review it was discovered that the startup was in the same space as a previous employer.

ww520 11y ago

Most IP cases are settled before going to trial. Public opinion is an important factor in persuading the parties to settle or drop the case. Going public could be a valid strategy in forcing the other side's hand.