Iconix, Inc. v. Tokuda

Lance Tokuda and Jia Shen (defendants) were employees of Iconix, Inc. (plaintiff), a company that provided email security services. Tokuda and Shen were required to sign confidentiality agreements that included provisions requiring them to disclose, assign, and transfer to Iconix any inventions—including ideas—that they developed during their employment unless, pursuant to California law, the invention was developed on their own time without using Iconix’s equipment and did not relate to Iconix’s business. In fall of 2005, Tokuda was involved in Iconix’s development of a new slideshow feature for social networks. During this time, Tokuda was secretly developing a slideshow feature for his own website (rockmyspace.com) and formed a company—netPickle, Inc. (defendant)—to create a business based on the slideshow feature. Tokuda solicited Shen to join him in developing the business. Tokuda and Shen both used Iconix company computers for some tasks related to developing rockmyspace.com, and they communicated about the development during Iconix work meetings. Tokuda terminated his employment in January 2006. Iconix subsequently discovered Tokuda and Shen’s secret business, terminated Shen’s employment, and sent Tokuda and Shen a cease-and-desist letter requesting that they return the slideshow program and related source code to Iconix. Tokuda and Shen refused, and Iconix filed suit alleging, in part, that Tokuda and Shen had breached the confidentiality agreements by failing to disclose, assign, and transfer the slideshow feature they developed while employed. Tokuda and Shen argued, in part, that rockmyspace.com fell within the confidentiality agreement’s exception because (1) they developed rockmyspace.com on their own time, (2) their use of Iconix computers did not defeat the applicability of the exception because they were permitted to use Iconix’s computers for personal use, and (3) the slideshow feature was not related to Iconix’s business because Iconix decided not to pursue the idea. Iconix subsequently moved for a preliminary injunction.