Startup wins IP battle against major brand

Glenn W. Peterson

California is the home to many major global brands but is also the hotbed of innovation. Across a variety of industries, there is no shortage of businesses and ventures being started by eager entrepreneurs and scientists. Many of these smaller companies face challenges when trying to compete with their respective industries’ leaders and some end up being bought out by larger competitors.

A potential buyout of a startup based in California by a global brand did not pan out as the small business went forward on its own. Since their initial discussions, however, the two companies ended up embroiled in a legal battle related to alleged violations of intellectual property and breach of contract.

As reported by Bloomberg, the startup company asserted that the major brand violated the terms of its confidentiality agreement signed when the two companies were in discussions regarding a potential buyout. The startup also accused the other company of two patent infringements and the theft of some of its trade secrets. Recently, a jury agreed with the startup and returned a verdict indicating a settlement to the newer business in excess of $91 million.

Because the violations were determined to have been intentional, the judge will have the ability to increase the amount of damages payable to the startup entity. There is also the possibility that the judge could rule to reduce the award amount. The major brand has indicated that it plans to appeal the decision but no further details about that appeal are known at this time.