Hooked Media Group, Inc. v. Apple Inc., 55 Cal. App. 5th 323 (2020)

Hooked Media, a startup company that Apple expressed interest in acquiring, sued Apple after Apple passed on the deal but three of Hooked’s most important employees (including two engineers and the Chief Technical Officer) left to work for Apple. Hooked sued for fraud, misappropriation of trade secrets, interference with contract and related claims. The trial court granted summary judgment to Apple, and the Court of Appeal affirmed, holding that the fraud claim failed because the alleged misrepresentations by Apple all involved future events, not past or existing facts. As for the trade secrets claim, the Court held that evidence that the former employees may have had protected information in their possession is not sufficient to establish that Apple improperly acquired or used it. Further, just because there was evidence suggesting that the former engineers “drew on knowledge and skills they gained from Hooked to develop a product for [Apple]” does not mean there was a misappropriation of trade secrets, citing California’s rejection of the “inevitable disclosure” doctrine. Nor did Apple’s production of Hooked’s trade secret information in response to discovery requests show that Apple acquired trade secrets by improper means. Finally, the Court held that “California’s emphasis on employee mobility and freedom to compete counsels against a finding that the CTO’s self-serving efforts to land a position with Apple were a breach of fiduciary duty.” See also Brown v. TGS Mgmt. Co., 2020 WL 6634990 (Cal. Ct. App. 2020) (arbitrator exceeded his power in issuing an award enforcing provisions of an employment agreement that illegally restricted a former employee’s right to work in violation of Cal. Bus. & Prof. Code § 16600).