Apple lawsuit tests if an employee can plan rival startup while on payroll
reuters.com
reuters.com
I'm even further removed from company time: not only am I salaried non-exempt, but I mostly work remotely.
My own rule (without taking into account any legal advice I don't need, since I'm not working on my own startup) is to be very strict about the resources that belong to the company, and not mix them with anything I do for fun or personal/professional growth.
Did you mean you are exempt?
If the guy's last couple month's productivity goes through the floor and he has dozens of hour+ long phone calls to his lawyer's office, he might be in trouble.
...if you work from home?
If you absolutely had to use your personal computer for a full time gig I can’t imagine how having a clean slate and user namespace wouldn’t be beneficial.
Discreet SSH keys, directories, downloads, etc.
This setup allows me full separation for each client plus my own stuff. Personally I think this is the best solution. Only downside is that requires a good internet connection, which in my country is a non-issue
No, that would be illegal in pretty much every state, except possibly the worker-hostile US Deep South.
The moonlighting laws in CA seem to give them leway to so if they are in a related area to my project, which for AmaGoopleSoft is potentially everything that can be done with software these days.
This is backwards. CA's laws are one of the few in the country that actually let you do this type of thing. Most states let companies have extremely permissive claims to products/IP created by their workers, even off the clock. CA is one of the few states that strongly protects workers' individual creations produced off the clock. In a nutshell, unless you're an executive, material employee, or significant owner of the company, the stuff you make in your free time is yours unless it's directly within the scope of the Company's business activities. And generally, even in those situations CA law provides procedures to protect the workers' independently created IP.
Note: off the clock for these purposes roughly means that you're (a) not in the office/facility and (b) not working on a specific task or project for the company. I'm not going into all of the nuances in this comment.
> No, that would be illegal in pretty much every state, except possibly the worker-hostile US Deep South.
A friend of mine had to put his PhD on-hold when the company he worked for was acquired by Oracle, while his lawyer and their lawyers argued over whether the "standard employment contract" he was being asked to sign prevented him from publishing his thesis as required by the university to complete his PhD... A face value reading pretty much claimed "everything you think while employed by Oracle becomes IP exclusively owned by Oracle", and his new manager, their manager, and several levels up the corporate hierarchy all stuck to that interpretation for months before granting what was desc ribed to them as an "extremely unusual one-time-only expemtion which you musty not disclose to any colleagues".
That being said, this story doesn't make sense unless it takes place outside of CA. Work for a PhD thesis is generally done on university grounds, giving the university the putative right to the underlying IP. A third-party employer like Oracle would have to duke it out with the university to claim ownership, no matter what their employment contracts said.
OTOH, if work for the PhD was done using Oracle facilities and equipment, then it makes perfect sense for Oracle to investigate IP ownership since many PhD thesis projects go on to become valuable commercial products.
It was without doubt a time wasting and frustrating shitfight ensuring he was "allowed" to think about his PhD topic after being acquired by Oracle (although he had enough equity to have done quite nicely out of the deal anyway, I suspect...)
If you're working from home and don't have normal "work hours" then it's not so well-defined.
It gets trickier if you are, say, eating lunch or are there after common working hours.
When I've had employers try to claim weekend/evening work was "theirs", I've sent them a link to that legislation and a pro forma invoice for all my time during employment with them for the difference between 168 hours per week at equivalent hourly rate and what they've actually paid me so far. That nicely sets the tone for further discussion.
(I only got threatened with being fired on the spot once for doing that, on which they did not follow through, and I was already interviewing elsewhere anyway...)
IIRC the wording in Australian legislation is that employers can require full-time employees to work "reasonable overtime". So that doesn't sound right - at least, not as a rule across the board. Perhaps under certain awards.
Even then, it's fairly useless wording. It does nothing to resolve disagreements between employer/employee as to what's reasonable. An extra hour once a year? 10 hours every week? Big difference between the two.
How often it’s ‘enforced’ is, like you said, probably isn’t great
"Reasonable overtime" is only one example - there's a whole host of other really basic questions that you can't get simple, definitive answers to.
For example, can I employ someone on a 12 month contract? What about 24 months? 36 months? At some point, they become a full-time/ongoing employee and get the benefits of unfair dismissal/redundancy, which means the whole "fixed-term" thing becomes meaningless. The problem is, it's never clear at what point that actually occurs.
Gut feeling is that this is because all politicians know it's an absolute minefield, so none of them is willing to touch it. Better to leave it vague enough that no-one can accuse them of favouring business or employees, because no-one really has any clue what's going on. Kick the can down the road and let FWA deal with it.
I'm talking about "full-time employee for a fixed-term" versus "full-time employee on an ongoing permanent basis".
In both cases, they're employees, not 'contractors' (so you withhold PAYG, pay their superannuation, etc).
But in the first case, you don't have an obligation to continue employing them after (say) 12 months.
The second, you are obliged to do so, so you can't turn around and say "we just don't want to employ you any more" after 12 months. You need to follow the redundancy provisions or terminate them for cause.
The problem is that it's not explicit whether businesses can actually offer the first type of contract (or more specifically, that if I employ someone on an 18-month, it's not explicit that they can't claim a redundancy payout when those 18 months end).
Even so, as a matter of law, it's not required.
"After several months of being sidelined, Jobs resigned from Apple on September 13, 1985. He told the board he was leaving to set up a new computer company, and that he would be taking several Apple employees from the SuperMicro division with him."
Seems to me to be pretty similar to this case, although, as noted down thread, it will likely hinge on the very specific details of this instance.
He resigned on the same day he told them about NeXT, which had already had a good amount of work put into its planning (including poaching several apple engineers). I think it's reasonable to assume that before he resigned, he was being paid.
https://www.bizjournals.com/atlanta/blog/atlantech/2013/01/w...
I think in today's world, he would definitely be sued.
This is in fact one of the ways that an employee can retain rights to an IP or product that is otherwise within the scope of the company's active businesses.
If someone repeatedly says “you can have this” and you say “no” and then say “no wait I want it now that it is valuable” you probably don’t have an open and shut case regardless of what a contract says.
I’m not super familiar with Woz’s story so if that’s not what happened, my point was more about the ambiguities of the law and flexibility of its application.
I don't see how anyone can fault Apple here when the person doing this was leading their entire chip division.
Scenario: I own car washes and hire someone to run and manage one of my locations. I pay them well and put them at the helm of the entire location. This person is able to completely learn the ins and outs of my business and in the meantime is slowly working on poaching other members of my staff and getting things lined up to open a competitive car wash.
Who's side are you on?
"a duty of loyalty to the company" - wholly made up. The company has no loyalty to you.
"breached an intellectual property agreement" - this is the meat of the case. The rest is theater, including the subject.
You have skill and talent and you are paid to do a series of tasks. You can capitalize those talents in many ways to make money, working for a company is an option.
If you don't treat your employees well enough, they might leave and might even compete with you. We have laws to enforce this relationship at almost every possible turn. It's REALLY hard to get away with sabotage or inside information without quitting. Having your own LLC is great for a number of personal finance reasons.
This is easily resolved. He was simply on break every second he spent planning and recruiting for his startup.
I'm on the side of allowing all employees, including executives and rank and file employees, to quit and work for a competitor without being sued. This is how a competitive labor market is supposed to work.
"Quit" is the operative work here. The employee in question was building the competitor using Apple resources. He didn't quit and work for a competitor. He worked for a competitor and then quit.
I wish it was that easy, it will work for small companies Until you run into economy of scale where your previous company has advantage over your own.
Why does position even matter? Ultimately in this industry it's talent and skill that prevail. Woz was at least as capable, if not more, than anyone else working in a technical capacity at HP at the time. He arguably had better business sense than anyone at the company too because they had the opportunity to start the personal computer revolution but passed on it.
Not a lawyer, but I do not think that would raise constitutional or fairness issues.
Any person who is a police officer has X different rules for example.
Two things stand out. First is the quote:
>The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.
Second, the law including power imbalances as a reason to treat people different is already considered equality under the law. Consider we already have laws that treat certain groups of people different because of power imbalances. For example consider minors entering into contracts and how the law enforces such contracts.
The law also taxes people differently. Not just for income, but also family status. There are differences in how the law handles certain matters between two people when they are a spouse compared to when they are not (such as property transfers and social security).
The law also discriminates plenty based on age. For example, some people are allowed to withdraw funds from their tax deferred accounts while others are not, all because of differences in age (or in rarer cases other special circumstances).
If all of these are considered equal because the way the rules apply mean that you qualify when you are of the appropriate age/married/meet the specified life circumstances, then the purposed notion would also be equal as the law would equally apply to all when they are on the specific side of the power imbalance.
To set the standard the law must be equal to everyone would require re-evaluating much of the existing law and would fundamentally change quite a few facets of society.
Since we're talking about the idea of different treatment under the law for rich vs. poor (well, "comfortable", in this case), tax law in the US is a fine example: the more income you make, the higher your marginal earnings are taxed.
That's technically true, but misleading.
The long term capital gains tax, which is what most high income earners end up paying, maxes out at 20%, which is lower than most of the regular income tax brackets. It's the reason some CEOs opt for a $1 salary.
No, it does not apply to previously taxed assets at all, only to an additional income you made from those assets. Equity grant is taxed when you excercise your stock options based on their current value. If the stock price goes up later, capital gains tax is only applied to the amount you gained, not the whole sum.
I would call that applying to previously taxed assets. Unvested RSUs (read: not taxed yet) that gain considerably over many years prior to vesting are still wholly taxed as regular income. Without additional income, there is nothing to be taxed therefore there shouldn't be any confusion as to what I mean by that.
Stock options are only one type of equity grants, the other being RSUs which have a cost basis of $0 and therefore the entire sum is subject to income taxes at vesting. Exercising stock options is not free, you must pay to do so at the exercise price which is done using post-tax cash, which again, had to have been taxed as regular income at some point.
It's true that if I buy some stocks for $100k I have (presumably) already paid taxes on that $100k. But if I sell the stock for $600k two years later, that extra $500k hasn't been taxed as income, and is only taxed as a capital gain.
> Capital gains taxes apply to both the rich and the poor, with the latter paying a whopping 0%.
Kind of silly to point that out. It's very easy for a "rich" person to have almost all of of their real income come from capital gains, but nearly impossible for many poor people to even have capital gains, much less arrange for it to be most of their income.
Rich people don’t become rich without first paying income taxes. Sure, once they have wealth, they mostly pay capital gains tax but if you and I have the same definition of rich, to sustain a luxurious life off investments alone, you had to have paid millions in income taxes which is more than most people will pay in their entire working years.
Additionally, turning $100K into $600K in two years is not as easy as you’re portraying it to be.
Capital gains, as others pointed out help in limited circumstances and typical equity compensation only marginally benefits.
The long term capital gains tax, which is what most high income earners end up paying, maxes out at 20%, which is lower than most of the regular income tax brackets. It's the reason some CEOs opt for a $1 salary.
This is simply wrong.
Equity paid as compensation is taxed as ordinary income at the value of the equity at the time awarded, and is subject to marginal rates.
The gains from holding that equity and selling it later is taxed as capital gains if and only if held for longer than one year prior to sale.
Genuine question. The article is about Apple. Why did you use Google as an example instead of Apple? Is there anything specific to Google that warrants using Google as an example instead of Apple, which is the company in question?
Or I think they dislike how google freemium model from ad revenue to push services has butchered many startups which would have been big today while apple is more secluded.
Think of gmail, chrome, gmaps, youtube, android, analytics, google cards, snippets etc. Only recently their revenue has more diversification than ads - at 89%.
California may have tons of shit wrong with it politically, but man did they get it right when it comes to making non-competes and non-solicits unenforceable. Coming from Texas, non-competes and non-solicits have a huge stifling effect on startup formation in the tech world. I've hit it myself, and it is a major pain in the ass. Most companies have a non-solicit of fellow employees for a full year after you leave. Of course if you start a startup you're going to want colleagues you really liked to come work with you.
I hear about other states and locales that say they want to "be the next Silicon Valley" and I just laugh if they have enforceable non-competes and non-solicits.
Talk about egregious.
If somebody works at Apple, they might have access to internal iOS code or knowledge of upcoming APIs which gives them an advantage over external app developers. The person working at Apple need not be part of iOS team. They could get hands on this internal information through grapevine, friends or being in a cross-team meeting.
In such cases, there are 2 options:
(i) Allow the apps from Apple developers, not label them as belonging to Apple and pretend that the app developer has no extra advantage over external developers. This seems misleading and wrong.
(ii) The apps from Apple developers should belong to Apple.
While it is entirely up to you what you do in your free time, but if your free time activities hinder your Full Time Job's performance, then it is a problem. And your employees do get to tell you what to do. You cant party all night and come back to work feeling sleepy just because it is "your" free time.
And that is especially true for someone in higher up position.
> Apple is not suing Nuvia itself or any of Williams’ co-founders and it did not allege any intellectual property or trade secret theft.
What exactly would Apple get here then if ruled in their favor? Petty revenge? A message they can send to current employees? Comp for hours he spent on the phone?
So this is really only about sending a message to other employees.
In reality they will get far enough into the case to determine whether or not they (likely) own any of the business and then settle for a tidy sum or some stock or something like that. They're probably also interested in locking up an IP the company owns (which is probably more important than the money).
Sending a message is a nice perk.
This probably is the main reason. Apple has been constantly losing its best talents on chip design. I believe they're very concerned about his leaving which may accelerate this trend.
I would not be surprised. AWS intend to have all of their SaaS and PaaS ( Not IaaS ) running on their own ARM CPU, which means all of those Software will be tested on ARM. The chicken and Egg problem is no longer there, it is only a matter of time before ARM takes a sizeable web server market.
Apple, given their scale, might well be exploring the idea as well.
But not _for servers_. It's like saying Qualcomm is a rival of Intel when it comes to CPUs. The two do not overlap at all.
2) Seems like the whole "rival" piece is not material to the lawsuit itself and is just a bit of editorializing on Reuters' part. The lawsuit probably centers on duty of loyalty and breach of contract
There's vastly more to computer performance than the reductionist "It's a PC, in a nice, expensive machined case". In fact, that sounds condescending and dismissive rather than a comment in search of enlightenment.
Sorry.
Replacing a software-only codec with hw accelerator card would go a long way to explain performance difference.
And if I had to bet, the lack of ECC RAM.
But mostly the fact that they're not selling it as a server.
This argument feels...meh.
Since this is one of Apple's markets, it makes sense that they would cater to it. Dell also sells some desktops with rack mounting options for the same reason.
You get a new job before leaving, they’ll wait.
Similar to how banks view gaps in employment as additional risk when applying for a mortgage for example (at least in the UK).
Leave beneath your means - ALWAYS.
If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and sticking to the rules when posting here, we'd be grateful.
Had a lawyer look it over who said it was highly unlikely to be enforcable, then I got the company to basically remove the parts that didn't fly.
They said it was just kind of a stock contract they used, and I'm willing to believe that I guess because it wasn't a fight to get them to remove it. The lawyer specifically said that it would be on them to prove the clauses relevancy, but your mileage may vary. She pretty much laughed at it and charged me for like 15 min to 30 min of time.
But if you started the job already possessing those skills, then that's essentially your profession. Them asking you not to work in the industry for 12 months after leaving the job is akin to asking a lawyer or docter not to practice law or medecine after leaving a firm or clinic. It's a major overreach.
A subsequent company later asked its developer hires to sign a non-compete agreeing not to work in that industry for 1yr after leaving. But they were hiring us for skills we had already developed prior to joining, and contributed no training or skill development. All the developers refused to sign that and explained how you can’t expect people to agree not to work in their profession if they leave a company.
The CEO of that co realized they had overstepped and cancelled the non-compete request, which was cool. It was just an overprotective legal department pushing the limits of what they could get away with.
Regarding your contract, is your company’s blockchain product open source? Almost all of them are, since the whole point of blockchain is trust. If that’s the case, then their non-compete may be pointless, in that it doesn’t protect any actual trade secrets since they’re all open source. Also depending on what state you’re in, your non-compete may not be legal. Worth looking into.
If that's the case, then "no" that shouldn't be allowed.
> The case will likely hinge the specific facts of Williams’ planning for Nuvia, Palefsky said. Given that work at modern tech jobs rarely sticks to traditional business hours, it may be difficult to untangle whether calls were made during company time or personal time.
That's actually a pretty fair thing. Apple may define, for example, its "company time" as any time the office is open and accessible to employees -- which is a pretty wide window.
That doesn't preclude the jury deciding in Apple's favor but then awarding them something symbolic like $1.
They largely work traditional 9-5 hours and whilst people will work longer hours around key deliverable dates it's entirely optional.
It's interesting that this loyalty is only one-way. If someone is employed at Apple and Apple takes time to lay someone off while they are employed and not clearly deserving of being fired, there is no implicit claim of loyalty.
Does Apple just have carte blanche access to any data they have?
I mean, I guess so, there’s probably some EULA I haven’t read.
But I’d think their privacy stances would let you sue them if they snooped through your iCloud backups.
Unless it was a company phone in which case their employees probably have a separate EULA like most corporate devices.
Just like you hopefully wouldn’t stream a torrent over your corporate VPN.
In short, it doesn't matter if they don't have EULA or technical access to the data.
"You may not engage in work, necessary for your survival, with anyone but us." - how is this not one step removed from slavery? Unless he works for Apple, all he's allowed to do is untrained labor!
And just like forced arbitration, this will become a standard element of contracts if we allow it.
I'd say if he _did_ do those things, that seems like something that would merit serious legal action.
Getting his trusted friends and colleagues to work with him?
Of course, I don’t know what was in whose contracts. Maybe that’s something you negotiate for?
Poaching employees though... definitely hairy.
1. "Breach of Contract" in starting a competing business while employed there, which was apparently prohibited in his employment contract.
2. "Breach of Duty of Loyalty", again for starting a competing business while employed there.
There are no claims around theft of trade secrets or violation of copyrights or patents. This seems like an overreach by Apple, but Williams also seemed to be playing with fire by being fairly cavalier in breaching his contract with an employer known to be litigious. It will be very interesting to see where the courts land on this.
[0] https://regmedia.co.uk/2019/12/10/apple_v_gerard_williams.pd...
> Apple sued Williams in August, alleging that he breached an intellectual property agreement and a duty of loyalty to the company by planning his new startup while on company time at Apple, spending hours on the phone with colleagues who eventually joined the venture.
Oh please my sides, they hurt, I can only laugh so hard.
It's not like he was some kind of low-ranking IC engineer
It kind of boggles my mind that they would not anticipate this pattern eventually ending badly.