Lawsuit Over Google Hangouts Gutted–Be In v. Google

Be In v. Google, 12-cv-03373-LHK (N.D. Cal. Oct. 9, 2013)

Be In developed “CamUP,” described as a “social entertainment consumption platform that allows a group of friends to simultaneously watch, listen, chat and collaborate around shared videos, music, and other media.” It was developed in 2007 but not unveiled until 2011’s SXSW. Be In says it made a later presentation in Cannes, where a senior Google/YouTube executive or two were present. Be In reached out to Google to discuss a possible partnership, but prior to the meeting Be In insisted on a non-disclosure agreement. Google prepared and signed the NDA and the meeting took place.  Thereafter, Google went cold and stopped responding to emails. Be In alleges that Google employees continued to access Be In’s site in order to develop a competitive product.

A few months later Google launched “Hangouts,” which Be In alleges is nearly identical to CamUp. Be In sued Google for (1) trade secret misappropriation; (2) copyright infringement; (3) breach of implied contract; (4) breach of the Be In’s website terms of service. Google moved to dismiss the first, third, and fourth claim.

Trade secrets claims: The court dismisses the trade secrets claim with leave to amend. This claim requires a plaintiff to allege that the defendant gained access to the trade secrets through improper means, and Be In inexplicably did not allege any improper means. As the court notes, the pleading requirements in this regard are “modest,” and a breach of an NDA would easily suffice.  Be In failed that minimum standard but gets another chance.

Implied contract: Be In brought an implied contract claim, alleging that Google agreed to not exploit any confidential information except in furtherance of some sort of licensing arrangement or partnership.  The court says that given that the parties entered into an NDA that covers the same subject matter, and because the NDA contains an “entire agreement” clause, the implied contract claim fails.

Terms of service claim: Resolution of Be In’s terms of service claim turns on whether Be In can satisfy the basics of contract formation with respect to the terms of service. Judge Koh does a thorough but somewhat depressing recap of the law in the area, starting with Specht and continuing to the modern cases, including many that we’ve noted on the blog (JDate; Barnes & Noble; cVent; Fteja; etc.). Ultimately, the court says that Be In fails to allege that Google was put on notice that use of Be In’s website signifies agreement to the terms of service:

[b]ecause browsewrap agreements, where enforceable, are a powerful means of binding users with very little affirmative assent, a complaint must state facts establishing the means by which the link in question would give notice to a reasonably prudent internet user.

This claim is also dismissed, but with leave to amend.

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As we get more incumbent players, this type of dispute–startup meets with established player then alleges misuse of confidential information–is occurring with increasing regularity in the Internet community. For another example against Google, see Booloon v. Google. It’s like the “idea submission” cases against movie studios from people who allege misappropriation of their movie ideas. It’s tough to say whether they all get shuttled to the dustbin, but I would guess succeeding in one of these lawsuits is no easy task. (Perhaps unexpected, Be In is represented by a big law firm.)

Conventional wisdom varies on the efficacy of an NDA, and even how you are perceived when you ask someone to sign one. Be In asked for an NDA. Google surprisingly signed it. More interestingly, Be In didn’t base its claims on a breach of the NDA. I took a quick look at the NDA and couldn’t identify a glaring reason why. Often an NDA has a limitation of liability or other unhelpful terms, but I didn’t see anything that falls into this category. (There is an exclusive venue clause that requires disputes to be resolved in “English courts.” It’s possible Be In did not bring express contract claims in order to avoid this venue clause.)

The court’s discussion of the terms of service is worth reading. It ultimately feels formalistic to require Be In to make the allegation that Google would have reasonably been on notice of a terms of use. Maybe in the ordinary case, this is an open question, but here the facts tend to indicate that to the extent anyone from Google accessed the site, they had to have known that there is a terms of service attached to it. This isn’t the ordinary situation where a consumer accesses a website, but it involves two corporate players who have engaged in a business discussion. There also were not any allegations that Be In tried to game the applicable default rules through including onerous provisions in its terms of service (a la Traton News).

Assuming there’s no significant similarity in the underlying code between Google’s and Be In’s software, Be In’s copyright claims will be a challenge. (See Eric’s post on EA v. Zynga.)

I’m not enthusiastic about the chances of this lawsuit’s success, but it will be interesting to see where it goes.

Eric’s Comment: Can we please retire the term “browsewrap”? It adds nothing to the legal analysis and has created unnecessary confusion.

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