Apple has filed a suit against Nuvia’s Gerard Williams III and it looks very interesting to SemiAccurate. Those interesting bits are not about what is being alleged but why Apple is doing this in the way they are doing it.
Details, details, details:
Rather than focus in on the details, many of which are not public yet, plus Williams or Nuvia has not filed a counter-argument yet, only a demurrer, lets look at the bigger picture. If you step out a little it quickly becomes clear that this legal action is not what it appears to be on the surface. That leads to the question of why Apple is filing this, and the answers seems to fit a very consistent pattern for the company.
If you read the filings from both sides, first the Apple Complaint and then the Williams demurrer, one pattern is immediately obvious. The Apple complaint is full of inflammatory quotes that mostly land at the level of sound bites. Many of their allegations are based on text messages and phone records between the defendant, Gerard Williams III, and third parties. What is striking is how out of context they are, nothing before and after in most cases.
The next piece of the puzzle is that one side of this disagreement offers concrete specifics. The other side has a lot of generalizations and future looking allegations about what someone may or may not do at some time in the future on something they may be planning. If you haven’t guessed by now, Apple is the one making nebulous arguments and Nuvia/Williams is making the specific counters where possible.
That brings us to the next point, Williams filed a demurrer, not a full response because their side says Apple didn’t put enough specifics in their claim for them to be able to respond. SemiAccurate is not a legal site, nor does the author have legal training, but Williams’ claim that Apple isn’t alleging anything specific as they are required to do is pretty compelling from our viewpoint. That said there are some details in the Apple complaint and some specific rebuttals in the Williams demurrer.
So from the thousand foot point of view it looks like Apple doesn’t have too much solid evidence to go on. To the extent of SemiAccurate’s knowledge of California law, it is legal to have a company’s trade secrets as long as you don’t use them in ways you shouldn’t. Unlike some other states, California does not subscribe to the same legal theories that someone with trade secrets who may use them later is problematic. After all, how can you un-know a trade secret once you leave a company?
Apple is saying that Williams and some of the Nuvia hires may use unspecified Apple trade secrets and the like in a future product that may or may not compete with something Apple may or may not build. Due to the utter lack of specifics in their filing, it doesn’t look like Apple has much in the way of a solid case. Instead it looks like they are trying to get their foot in the door to do enough discovery to hopefully find something solid. In short if Apple had a smoking gun they would have at least hinted strongly at it. What they did allege is almost entirely based on, in our opinion, likely invalid contract, but more on that later.
In case of law:
That brings us to later, basically the case law. If you read Apple’s complaint there is a lot in the filing about the allegedly awful things Williams did while working at Apple. Apple includes Gerard Williams III’s IPA (Intellectual Property Agreement) at the end of their filing and uses it along with texts, phone records, and other specific data to claim Williams violated that agreement in various ways.
Looking at the broader picture rather than any point details, there is one big thing that stands out, timing. The IPA is dated, “April 2009” and signed by Williams with a date of January 7, 2010. The second half of the first paragraph of it states, “Apple has agreed to employ you (or if this Agreement is being executed after you have already been employed Apple, to continue to emptoy[sic] you) on the condition that you agree to and will abide by the following terms and conditions for the duration of your employment by Apple (including, but not limited to, any leave of absence or other time off) and thereafter.”
This is important for two reasons, the first is that this agreement is a necessity for employment at Apple. There is nothing wrong with that in and of itself, it is a very common practice at almost every large company. What this means is that that, in legal terms, this is a contract of adhesion meaning one side has all the power when it comes to terms of the contract. Just remember that this contract appears to be one for now.
The other point is that there are a lot of things in this contract that Williams had to sign that Apple alleges, some with specificity, some not, that the company claims he is in violation of. The problem for Apple is that when this contract was written and when it was signed, the case law was not as fully expanded in California as it has been in the 10 years since the signing. The current state of case law seems to invalidate much if not all of what Apple is using as the basis for their claims. This looks like a big problem for Apple, a very big and potentially fatal to their case type of problem.
In broad strokes Apple is alleging Williams planned the startup, Nuvia, while still at Apple. If you read the contract at the end of the complaint it is pretty clear that Williams very likely did plan his future away from Apple while still at Apple. The problem for Apple is that between the time that contract was signed almost a decade ago and the time Williams allegedly did these things, case law in California changed considerably to, again to the extent of SemiAccurate’s legal knowledge, support what Williams allegedly did. What was potentially objectionable at the time of the signing seems unlikely to be so when Williams allegedly did the things Apple is complaining about.
According to the Williams demurrer, many of the things like starting a company while still employed at another, the idea that trade secrets may be used in a potential product in the future, and most of the other allegations are now not only legal for an employee to do but also have extensive case law to back that up. This is likely why Apple’s filing was full of inflammatory snippets, out of context text messages, and nice sounding claims but short on case law.
On the other hand the demurrer was full of very specific citations, case law, legal changes, and more. The one thing that SemiAccurate is unclear on is some but not all of the hiring allegations. California case law has once again changed significantly in this area and some of the allegations surrounding hiring after Williams left Apple seem to be clearly void. Others about potential conversations prior to leaving fall in to a large grey area that SemiAccurate does not have the background nor the facts to evaluate properly.
Stuck to adhesion:
Remember the bit about contract of adhesion? In this case it means Apple had all the power to set the terms for Gerard Williams III’s employment, he could agree the them or not come to work for Apple. This isn’t unfair, we are just pointing out that Apple wrote the contract and controlled when it was updated. The fact that the part quoted above contains language that says it can be executed after employment has begun as well strongly suggests that there is a process in place to update things like the IPA when needed.
If you look at how much of the case law has changed and how much it conflicts with the adhesion contract signed by Gerard Williams III it brings a question to mind. Why did Apple not update its contract to reflect current statutory and case law? The overwhelming majority of it seems to be no longer enforceable, at least on the parts Apple is basing their complaint around. SemiAccurate has no idea about the prior inventions language but Apple is not alleging anything there. In any case when the majority of a protective provision like this is nullified, as appears to be the case here, you should obviously update the language and terms for the covered employees to agree to.
But Apple didn’t. One thing we can say is that Apple is not short of lawyers, IP or otherwise. They also appear from the outside to have a very competent HR team as well. In this case both legal and HR seem to have missed the most important changes to California employment law in decades. OK, we are pretty confident in saying that they didn’t miss the changes, they aren’t that bad, but at least in the case of Gerard Williams III, nothing was done about those changes to the case law.
This brings up the question of what Apple is having new employees sign, is it the same contract that contains mostly legally invalid terms or did they update it with one that contains legally enforceable clauses? If so what was in the first contract and what is in the new one? If there were any substantive changes, why didn’t they offer Williams and presumably other employees to update their employment status with the new document? These are not rhetorical questions mind you.
What’s the point:
So Apple didn’t update the contract. It is likely they knew that it was invalid and now appear to be making a lot of claims that on the face of things can’t be enforced. They are also doing it in a very public way and making a point of going after a relative pipsqueak of a company, and are doing it with a very big legal gun. That brings up the question of why.
There are two obvious answers to that question, the first being that Apple is afraid of what Nuvia is doing. Although they allege in very vague terms that Williams and Nuvia are, or more to to point may at some time be a competitor, this doesn’t seem likely. Apple was in the server business and voluntarily got out of it. Clickbait rumors aside, SemiAccurate has not heard any serious rumblings of Apple server plans for almost a decade. We completely discount the competition angle because Nuvia has clearly said they plan to make server products that Apple does not want to.
The other option is more interesting, basically that Apple does indeed know that their IPA is basically void for anything but a few prior invention clauses. Based on SemiAccurate’s non-lawyerly reading of the relevant case law, it sure looks that way to us. If Apple can’t enforce that agreement or has changed it for new hires to a significantly watered down variant, why wouldn’t they update it and ask employees covered by the old one to sign the update?
If they do, they are telling the older employees that what they signed earlier is not the case and they have a lot more rights than they thought. This could lead to employees exercising those rights which may be problematic for Apple in some situations. Even worse they could do about 90% of what Apple alleges Williams did, and do it legally. The other 10% or so is that grey area that we are not qualified to be a legal judge of. It sure looks to us like Apple doesn’t want their employees to know their rights, if the people assume they are bound by more restrictions than they really are, that is fine by Apple. Also do remember that this looks like a contract of adhesion, Williams has no power to force an update so any changes or lack thereof are entirely Apple’s doing.
If this second reason is indeed the case, it explains why Apple is being so public about the case. An ex-employee decided to exercise their legal rights and did so in a way that got a lot of attention, Nuvia is pretty well known inside the circles SemiAccurate covers for example. That could lead to a completely legal brain drain at Apple and/or a bidding war for new talent. Word getting out that Williams did it correctly, as he appears to have done, might make life a tiny bit harder for some at Apple. Or he may have just pissed off a vindictive executive, who knows?
By filing a public suit and trying to crush an ex-employee and a startup, Apple seems to be trying to intimidate their current employees who may think they are still bound by more restrictive terms than they really are. If they let it go, they will set a precedent. If they lose the case, they will also set a precedent. If they go into the case knowing they have no or very sparse grounds to take legal action, they could always make a big stink about it and settle with sealed terms, again in a public fashion. This would not set a precedent and if written right would allow Apple to claim anything they wanted to about what was done, or at least intone it while keeping the other side from contradicting the whispers.
To SemiAccurate it looks like a classic case of intimidation. Apple is trying to stop talent from leaving, or worse yet understanding their legal rights surrounding leaving. Given how much of the Apple allegations are based on what we read as clearly invalid legal terms, the scant few remaining potential causes of action do not seem to be worth bothering with. Is it worth this level of fight just to keep ten or so employees in the fold? Given the legal actions Apple started, those ex-employees aren’t likely to come back, ever, nor does Williams have enough money for Apple to take if they win to pay for the lawyers, assuming Apple does have a case and can win it. There is no up side for the company other than to scare others and keep them in the dark.
Privacy is for others:
That brings up the last point here, again in broad strokes. Gerard Williams III had an Apple phone issued to him and he knew it was a company phone. While some of the information on that phone was Apples, other bits were not. If Gerard texted his doctor about something or called his lawyer about a hypothetical family matter, who then emailed him a document, is that Apple’s information? Can they view it?
This is relevant since under California law it appears to us to be completely legal for a person to start up a company, even if it competes with their current employer, while still employed with some caveats according to SemiAccurate’s non-lawyerly reading. The employer should have no right to that information unless Williams allows them to see it. Apple does not appear to have gathered the information for their actions with a warrant or subpoena, at least according to what is in the filings.
Similarly the texts included in the Apple complaint are in that same grey area. SemiAccurate’s understanding of California privacy laws says that both parties need to consent for such things to be disclosed. While Williams was working at Apple, you could make the argument that some of those text messages could fall under that category, but what about the other side? And again, even if he was an employee did he consent for Apple to know medical or personal family matters he communicated through his Apple phone? The other two co-founders of Nuvia were not employed by Apple at the time and as far as we can tell did not consent to those communications being disclosed to Apple.
SemiAccurate is unsure about this but you can be pretty sure that if Apple pulled text messages from Williams as far back as 2015, they did a pretty comprehensive search of his files and history. Want to bet that they saw some calls, texts, and other bits that were not related to his work? Even if Williams gave permission, did Apple get permission from the other parties?
“Privacy is a fundamental human right. At Apple, it’s also one of our core values. Your devices are important to so many parts of your life. What you share from those experiences, and who you share it with, should be up to you. We design Apple products to protect your privacy and give you control over your information. It’s not always easy. But that’s the kind of innovation we believe in.”
Do you believe it either?
All in all:
SemiAccurate is not alleging that Apple did anything wrong here but to us it sure looks like Apple takes privacy seriously. On paper. When someone exercises what SemiAccurate thinks is their legal rights, that privacy stance appears to waver a bit. I guess they are saying human rights are for non-Apple employees but that might be reading a bit much into the situation, either way it is hard to align the two positions.
The legal situation appears to be similar, it is hard to justify Apple’s claims and statements with the law and any realistic chance of winning the action they brought. Worse yet there appears to be nothing for Apple to win, or at least nothing material other than potentially spending an ex-employee into the ground. The only up side for Apple seems to be sending a message. That message is clear enough, if you try and exercise your rights, we will come after you.
Everything else bar a few potential claims about hiring that SemiAccurate does not have the legal background to evaluate look to have been nullified by case law since the signing of the IPA. Apple appears to have made the clear choice not to inform their employees of this change, and there has to be a reason for that. If you think it is anything other than what we described above, please email the author and let us know your views.S|A
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