Google Faces Accusations of Trade Secret Misappropriation and Racketeering

August 25, 2018

Trade secrets can be key to giving businesses an edge in their fields. Confidential techniques, formulas, recipes, and business practices, among other forms of commercially valuable information, can be kept as trade secrets. Keeping such information secret from competitors makes it valuable, and legislation such as the federal Uniform Trade Secrets Act (UTSA) and Defend Trade Secrets Act (DTSA) helps business owners protect against the misappropriation of proprietary information.

A case brought against Google, Inc. in October of last year, Attia et al. v. Google LLC et al., Case No. 5:17-cv-06037 (California Northern District Court), alleges that its misappropriation of small businesses’ trade secrets constitutes racketeering under the Racketeer Influenced and Corrupt Organizations (RICO) Act. The RICO Act was instituted to fight organized crime. Activities that constitute racketeering include embezzlement, kidnapping, slavery, money laundering, extortion, dealing in controlled substances, and theft, among many other crimes. Defendants can be prosecuted under RICO for engaging in such activities two or more times and for being involved with criminal enterprises affecting interstate or foreign commerce. In this case, Google is being charged with racketeering because of its allegedly repeated misappropriation of proprietary information from small companies.

Eli Attia is the inventor of Engineered Architecture, a technology which uses low-cost, efficient, and sustainable methods to construct buildings. It includes designs for hundreds of modular blocks that can be used to assemble buildings in “any and every conceivable form,” notes Attia in the February 17, 2015, edition of The Verge (“The Moonshot that Missed” by Russell Brandom). Google offered to partner with Attia, and after both parties executed a Non-Disclosure Agreement (NDA), Attia shared many of his trade secrets with Google. Google X—Google’s research-and-development facility, which has worked on projects from self-driving cars to internet access balloons—then used this information to develop a software system that would implement EA technology and called the project Project Genie. However, Attia claims that the Genie team at Google soon pushed him out by claiming to shut down the project while continuing to develop and promote it through a new company called Flux Factory.

Attia later filed an amended complaint on July 24, 2017, to add racketeering charges upon finding six other instances in which Google was accused of similarly misappropriating others’ trade secrets. This complaint argues that Google’s actions follow a pattern: “1) seek out inventors; 2) promise such inventors that Google will invest in, partner with and/or seek to acquire a license for any proprietary inventions of the investor; 3) sign a nondisclosure agreement (NDA) with inventors; 4) upon inducing inventors to reveal trade secrets and other confidential information, Google disregards the NDA and misappropriates the trade secrets; and 5) Google then subsequently attempts to box-out the victim inventors from the market by filing numerous patent applications, which result in the unauthorized disclosure of the inventors’ trade secrets and the subsequent granting of a monopoly on the technology by the issuance of the patent. Where no NDA is required, Google has simply copied and criminally stole other inventors’ copyrights.”

The other incidents the complaint cites include the cases VSL Communications, LTD v. Google, Inc., et al., Space Data Corp. v. X, Alphabet, Inc., et al., and PayPal, Inc., et al. v. Google, Inc., et al. Some of these suits do not yet have rulings, but in the Space Data case, for example, the court ruled that Space Data has the rights to intellectual property that Google used in its Project Loon, which was Google X’s internet access balloon project. The complaint alleges that Google has continued to use Space Data’s trade secrets for Project Loon, despite the court ruling.

Given Google’s history of involvement in trade secret misappropriation lawsuits filed by smaller companies, its business practices appear questionable. But whether these practices constitute not only misappropriation but the more serious crime of racketeering, as well, will be determined when Attia’s case goes to trial this September.