Case Name:   Yahoo! Inc. v. Media Relevance, Inc., et al.

 

Case No.:       1-14-CV-264874

 

Special Motion to Strike Complaint of Plaintiff Yahoo! Inc. as a Meritless SLAPP Under Code Civ. Proc. §425.16 by Defendants Media Relevance, Inc. and Steven Clarke-Martin

 

On or about October 10, 2003, Yahoo and Defendant Steven Clarke-Martin (“Martin”) entered into an Employee Confidentiality and Assignment of Inventions Agreement (“Assignment Agreement”).  (Complaint, ¶7.)  Pursuant to the Assignment Agreement, Martin assigned his entire right, title, and interest in all inventions that he developed or reduced to practice while employed at Yahoo.  (Complaint, ¶¶7 – 8.)  In addition, Martin also agreed not to copy Yahoo confidential information without authorization and to return and destroy any such information in his possession at the end of his employment with Yahoo.  (Complaint, ¶18.)

 

On April 6, 2007, Yahoo filed a patent application entitled, “Method System for Displaying Contextual Advertisements with Media,” identifying Martin as one of the inventors and Yahoo as assignee.  (Complaint, ¶9.)  On June 15, 2010, the United States Patent and Trademark Office (“PTO”) issued U.S. Patent No. 7,739,596 (“ ‘596 Patent”) pursuant to the aforementioned application.  (Complaint, ¶10.)

 

Over the next several years, Yahoo filed three patent applications that claimed priority to the ‘596 Patent each identifying Martin as inventor and Yahoo as assignee.  (Complaint, ¶11.) Two of the applications resulted in patents (“ ‘911 Patent” and “ ‘917 Patent”) while one application (“ ‘153 Application”) remains pending. (Complaint, ¶11.)  The ‘596 Patent, ‘911 Patent, ‘917 Patent, and ‘153 Application and any related patent or application are collectively referred to as the ‘596 Patent Family.  (Complaint, ¶11.)

 

The inventions disclosed in the ‘596 Patent Family were developed while Martin was employed by Yahoo, relate to Yahoo business activity, were aided by Martin’s use of Yahoo time, material, proprietary information, or facilities, and relate to Martin’s work for Yahoo. (Complaint, ¶13.)

 

On or about October 4, 2011, Martin executed an agreement purporting to assign the ‘596 Patent from himself to Defendant Media Relevance, Inc. (“MRI”) in breach of the Assignment Agreement.  (Complaint, ¶14.)  Martin and/or MRI recorded, with the PTO, the agreement between Martin and MRI purporting to assign the ‘596 Patent.  (Complaint, ¶15.)

 

On January 15, 2013, MRI contacted Yahoo and asserted co-ownership of the ‘596 Patent Family and continues to asserts co-ownership in the ‘596 Patent Family despite Yahoo’s sole ownership and legal title to the ‘596 Patent Family.  (Complaint, ¶¶16 – 17.)

 

On or about April 6, 2007, Martin’s employment with Yahoo ended.  (Complaint, ¶19.) Yahoo recently conducted a forensic examination which revealed that on January 4, 2007, Martin copied contents of his Yahoo computer, including confidential information, to eight recordable compact discs.  (Complaint, ¶20.)  Martin never returned the discs and did not have permission from Yahoo to create the discs.  (Complaint, ¶21.)

Based on these allegations, Yahoo filed a complaint against MRI and Martin on May 6, 2014, asserting causes of action for:

 

• Quiet Title
• Breach of Contract
• Conversion
• Declaratory Relief
• Breach of Contract – Unauthorized Copying
• Conversion – Unauthorized Copying
• Breach of Duty of Loyalty
• Violation of Penal Code §502

 

On July 11, 2014, MRI and Martin each filed answers to the complaint.  On July 25, 2014, Yahoo filed a motion to strike MRI’s answer.  On August 28, 2014, pursuant to a stipulation, the court issued an order continuing the hearing on Yahoo’s motion to strike to October 14, 2014.

 

On September 19, 2014, Defendants filed the motion presently before the court: a special motion to strike the complaint pursuant to Code of Civil Procedure section 425.16.  On October 7, 2014, Yahoo filed its opposition to the special motion to strike, and on October 14, 2014, Defendants replied.

 

5. Defendants’ special motion to strike pursuant to Code of Civil Procedure section 425.16 is DENIED.

 

1. The two-step procedure for anti-SLAPP motions

 

Code of Civil Procedure section 425.16 requires a court to engage in a two-step process when determining whether a defendant’s anti-SLAPP motion should be granted.  First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one “arising from” protected activity.  The moving defendant’s burden is to demonstrate that the act or acts of which the plaintiff complains were taken in furtherance of the defendant’s right of petition or free speech under the United States or California Constitution in connection with a public issue.  If the court finds such a showing has been made, it then must consider whether the plaintiff has demonstrated a probability of prevailing on the claim.  In making these determinations, the trial court considers the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.  (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.)

 

1. Step one: showing that the challenged causes of action arise from protected activity

 

Defendants bear the initial burden of demonstrating that the causes of action in the complaint “arise from” some protected activity.  “Defendant need only make a prima facie showing that plaintiff’s complaint ‘arises from’ defendant’s constitutionally-protected free speech or petition activity.  The burden shifts to plaintiff to establish as a matter of law that no such protection exists.”  (Weil & Brown, et al., CAL. PRAC. GUIDE: CIV. PRO. BEFORE TRIAL (The Rutter Group 2014) ¶7:991, p. 7(II)-56 citing Governor Gray Davis Committee v. American Taxpayers Alliance (2002) 102 Cal.App.4th 449, 458 – 459.)

 

“A defendant meets the burden of showing that a plaintiff’s action arises from a protected activity by showing that the acts underlying the plaintiff’s cause of action fall within one of the four categories of conduct described in section 425.16, subdivision (e). [Citation.]  Those four categories are: ‘(1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law; (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law; (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest; (4) or any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest.’” (Siam v. Kizilbash (2005) 130 Cal.App.4th 1563, 1569.)

 

Here, Defendants focus on the first two categories, and with respect to the first four causes of action, rely principally upon the decision in Mindys Cosmetics, Inc. v. Dakar (9th Cir. 2010) 611 F.3d 590 (Mindys).  In Mindys, a family dispute over trademark ownership pitted the father and son against the mother, daughter, and the mother’s attorney. The plaintiffs allege they founded a cosmetics company and registered two trademarks in 2000 and 2001, respectively, in the name of defendant daughter. In 2007, the attorney retained for family business noticed one of the trademarks had expired. The mother instructed the attorney to register both trademarks in her name which the attorney did. In 2008, the plaintiffs filed an action against defendants asserting claims for trademark infringement by defendant mother, legal malpractice and breach of fiduciary duty by defendant attorney, and fraudulent concealment and conversion against all defendants. The defendant attorney filed a special motion to strike, but the trial court denied the motion.

 

On appeal, the Ninth Circuit addressed whether the claims against the defendant attorney arose under subdivisions (e)(1) or (e)(2) of the anti-SLAPP statute. “California appellate courts interpreting the anti-SLAPP statute have distinguished between communications made in the course of ‘official’ proceedings, which are protected, and mere ‘ministerial’ business communications, which are not.” (Mindys, supra, 611 F.3d at p. 596.) The Mindys court held, “Filing a trademark application is more than merely a ministerial act connected with a business transaction. It is an attempt to establish a property right under a comprehensive federal statutory scheme,’ and “such a filing is a protected act under the anti-SLAPP statute.” (Id. at p. 597.)

 

In opposition, Yahoo argues that Mindys is distinguishable because the claims here are not based on the recording of Martin’s assignment with the PTO, but rather Martin’s fraudulent execution of the assignment. In this case, the recording of the assignment is merely evidence of the wrongful act which is the execution of the assignment.

 

Not only must the claims relate to statements made before a judicial proceeding or in connection with an issue under consideration or review by a judicial body, “ ‘the critical consideration is whether the cause of action is based on defendant’s protected free speech or petitioning activity.’  [Citation.] [¶]  Whether plaintiff’s lawsuit was intended to chill or actually chilled defendant’s protected conduct is immaterial: ‘(T)he statutory phrase ‘cause of action … arising from’ means simply that the defendant’s act underlying the plaintiff’s cause of action must itself have been in an act in furtherance of the right of petition or free speech.’” (Weil & Brown, et al., CAL. PRAC. GUIDE: CIV. PRO. BEFORE TRIAL (The Rutter Group 2014) ¶7:875, pp. 7(II)-45 to 7(II)-46 citing City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78.) “In determining this matter, the court may look to the pleadings and supporting and opposing affidavits stating the acts upon which the liability or defense is based.”  (Id. at p. 7(II)-46 citing Code Civ. Proc., §425.16, subd. (b); Navellier v. Sletten (2002) 29 Cal.4th 82, 88.)  “Whether the anti-SLAPP statute applies is determined by the ‘principal thrust or gravamen’ of plaintiff’s claim.  It cannot be invoked where allegations of protected activity are only incidental to a cause of action based on nonprotected activity.” (Id. at ¶7:876, p. 7(II)-29 citing Martinez v. Metabolife International, Inc. (2003) 113 Cal.App.4th 181, 187; Dyer v Childress (2007) 147 Cal.App.4th 1273, 1279.)  Here, the second four causes of action are premised upon Yahoo’s allegation that Martin copied the contents of his Yahoo issued computer onto compact discs and kept the information: not a protected activity.

 

Defendants have not met their burden of demonstrating that the causes of action in the complaint arise from protected activity. Consequently, Defendants’ special motion to strike the complaint pursuant to Code of Civil Procedure section 425.16 is DENIED.