Last month, we wrote about the alleged removal of dozens of files and emails by former Zynga app-maker, Alan Patmore. Last Thursday, apparently based upon information learned in discovery, Zynga upped the stakes, naming Kixeye in the First Amended Complaint and seeking a temporary restraining order against Kixeye.
Yesterday, Kixeye fired back, bringing a cross complaint against Zynga for unfair competition, alleging that Zynga had filed the First Amended Complaint against Patmore and Kixeye only as a tool to stifle competition and gain access to Kixeye’s trade secrets. Notably, Kixeye alleges in its complaint that Zynga learned during expedited discovery that of the purported cache of files removed, Patmore only may have provided two files to a Kixeye employee, and that neither of which could have constituted a trade secret. Thus, despite knowing this, Kixeye alleges that Zynga amended its complaint, not only continuing the suit against Patmore but also improperly naming Kixeye to gain additional access to its information through discovery. Kixeye further alleges that the two businesses occupy different market segments using the analogy of a Ducati (Kixeye) and a minivan (Zynga).
The use by Kixeye of California’s unfair competition statute in the trade secret world is unusual. It is worth noting that under patent law, for a company to allege litigation constitutes unfair competition, courts have required that the party allege that the litigation was a “sham,” that is, “objectively baseless,” and that it has a general anti-competitive effect on the market. Whether these requirements will apply in this context, or whether Kixeye’s current pleading sufficiently meets these elements remains to be seen. We will keep you posted as this contentious litigation develops.