Iconix, Inc. v. Tokuda
| Decision Date | 26 September 2006 |
| Docket Number | Docket No. 82.,Docket No. 21.,Docket No. 116.,No. C 06-2201 SBA.,Docket No. 130.,C 06-2201 SBA. |
| Citation | 457 F.Supp.2d 969 |
| Parties | ICONIX, INC. Plaintiff, v. Lance TOKUDA, et al. Defendants. |
| Court | U.S. District Court — Northern District of California |
Kenneth A. Kuwayti, Susan Vastano Vaughan, Timur S. Engin, Morrison & Foerster LLP, Palo Alto, CA, for Plaintiff.
Daniel Justin Weinberg, I. Neel Chatterjee, Michael A. Aparicio, Orrick Herrington & Sutcliffe LLP, Meno Park, CA, for Defendants.
This matter comes before the Court on Plaintiffs Motion for Preliminary Injunction [Docket No. 21], Defendants' Evidentiary Objections to the Declaration of Ronald Alepin and Jeff Wilbur [Docket No. 82], Plaintiffs Objections to Certain Evidence filed in Opposition to Motion for Preliminary Injunction and Motion to Strike [Docket No. 116], and Defendants' Objections to New Evidence and Argument in Iconix's Reply Memorandum [Docket No. 130].
BACKGROUND1.
Plaintiff Iconix, Inc. ("Plaintiff or "Iconix") is a corporation organized and existing under the laws of the state of Delaware with its principal place of business in Mountain View, California. Defendants in this matter are Lance Tokuda, Jia Shen, and netPickle, Inc. (collectively, "Defendants").
Defendant Lance Tokuda ("Tokuda") is a former employee and officer of Iconix; Tokuda resides in Foster City, California.
Defendant Jia Shen ("Shen") is a former employee of Iconix; Shen resides in East Palo Alto, California.
Defendant netPickle, Inc. ("Netpickle") is a corporation organized and existing under the laws of the State of Delaware and has its principal place of business in Foster City, California.
Plaintiff provides email identity services that proactively combat email fraud spawned by phishing. Phishing is a form of email fraud where senders impersonate legitimate businesses and organizations to try to get recipients to divulge personal information such as passwords and account numbers so the senders can steal the recipient's identity and/or funds from the recipient's account.
Tokuda and Shen began their employment at Iconix in December of 2004. Tokuda was the Vice President of Engineering and Chief Technology Officer at Iconix and was in charge of setting the engineering and development direction for Iconix and for managing the engineering team. Among other things, Tokuda supervised the development of Iconix's new intellectual property and ideas. Shen was the Manager of Client Development at Iconix, and his responsibilities included overseeing the work of software development.
As employees of Iconix, Tokuda and Shen both signed contracts entitled, "Proprietary Information and Inventions Assignment Agreement." These contracts are quoted in pertinent part below.
In the fall of 2005, Plaintiff was activelygenerating, developing, and evaluating ideas for increasing traffic to Plaintiffs website. This activity included developing new features that would entice consumers to download Iconix's email identity product ("email ID product"). Of particular interest to Iconix was the ability to penetrate community website such as www.myspace. com, where web users create profiles and socially network with one another. To implement this marketing strategy, Plaintiff created a separate website, called Uberfuze.com ("Uberfuze"), that was targeted directly at social networking users. Wilbur Decl. at ¶ 22.
In the fall of 2005, Iconix engineers, including Tokuda, discussed the idea of creating a feature that would rotate through a user's pictures. The user would download Iconix's email ID product and then be able to use the feature. Iconix continued to evaluate the feature and began to test it as a marketing strategy by the beginning of 2006.
In late December of 2005, Tokuda gave notice to Iconix. Tokuda's last day of employment was January 23, 2006.
On or about January 20, 2006, Iconix discovered that in or around October 2005, while he was still an officer of Iconix, Tokuda secretly registered the domain name rockmyspace.com. Prior to that time, Tokuda had covertly been developing a customizable slideshow feature for his own personal benefit. While an Iconix officer, Tokuda also secretly formed his own company, Netpickle, for the purpose of exploiting the customizable slideshow feature for his own benefit. Tokuda also began soliciting other Iconix personnel, including Shen, to join him in creating his own customizable slideshow business. Tokuda's solicitation of Iconix employees and the Defendants' development of a competing customizable slideshow feature occurred on Iconix's company time and through the use of Iconix's computers. Shen and Tokuda launched rockmyspace.com on the night of November 13-14, 2005. Shen Decl. I 56; Tokuda Decl. 1159.
Since January, 2006, Tokuda and Net-Pickle registered the domain name rockyou.com. Defendants currently market their customizable slideshow feature using the www.rockyou.com website. Tokuda Decl. at If 75. . By February 19, 2006, rockmyspace had already exceeded 1.1 million registered users. Wan Decl., Ex. 0, at NP002545.
When Iconix found out that Shen helped Tokuda take Iconix's ideas and property to form his own customizable slideshow business, Iconix was forced to terminate Shen's employment.
On March 13, 2006, Iconix sent Defendants a letter requesting that they return the customizable slideshow program and source code to its rightful owner, Iconix, and that they cease and desist all other activity in which they are engaged that uses software or derivative works owned by Iconix. Defendants refused to do so. On March 27, 2006, Plaintiff filed the original Complaint in this matter. On May 4, 2006, Plaintiff filed the instant Motion for Preliminary Injunction.
Federal Rule of Civil Procedure 65 permits the issuance of a preliminary injunction to preserve the positions of the parties until a full trial can be conducted. LGS Architects, Inc. v. Concordia Homes, 434 F.3d 1150, 1158 (9th Cir.2006) (citing University of Texas v. Camenisch, 451 U.S. 390, 395, 101 S.Ct. 1830, 68 L.Ed.2d 175 (1981)). When a party is seeking a preliminary injunction, he or she must show either: Stuhlbarg Int'l Sales Co. v. John D. Brush & Co., Inc., 240 F.3d 832, 839-40 (9th Cir.2001) (citation omitted). "These two formulations represent two points on a sliding scale in which the required degree of irreparable harm increases as the probability of success decreases." Roe v. Anderson, 134 F.3d 1400, 1402 (9th Cir.1998) (citation omitted). "An irreparable harm is one that cannot be redressed by a legal or equitable remedy following trial." Optinrealbig.com, LLC v. Ironport Sys., 323 F.Supp.2d 1037, 1050 (N.D.Cal. 2004) (Armstrong, J.).
Under the sliding scale theory, a party seeking an injunction "need not demonstrate that he will succeed on the merits, but must at least show that his cause presents serious questions of lawworthy of litigation." Topanga Press, Inc. v. City of Los Angeles, 989 F.2d 1524, 1528 (9th Cir.1993). "Serious questions" are those which are "substantial, difficult, and doubtful, as to make them fair ground for litigation and thus for more deliberative investigation." Senate of State of Cat. v. Mosbacher, 968 F.2d 974, 977-78 (9th Cir. 1992) (citing Gilder v. PGA Tour, Inc., 936 F.2d 417, 422 (9th Cir.1991)); Republic of the Philippines v. Marcos, 862 F.2d 1355, 1362 (9th Cir.1988) (). Although the serious questions posed by the movant "need not promise a certainty of success, nor even a probability of success," he or she must nevertheless demonstrate a "fair chance of success" on the merits. Gilder, 936 F.2d at 422. Finally, in cases where the public interest may be affected, the court must consider the public interest as a factor in balancing the hardships. Harris v. Bd. of Supervisors, 366 F.3d 754, 760, 766 (9th Cir.2004) (citing Fund for Animals, Inc. v. Lujan, 962 F.2d 1391, 1400 (9th Cir.1992)).
"`The grant of a preliminary injunction is the exercise of a very far reaching power never to be indulged except in a case clearly warranting it.'" Sierra Club v. Hickel, 433 F.2d 24, 33 (9th Cir.1970).
Defendants object to the new evidence and argument in Plaintiffs Reply Brief. Defendants request that the Court either strike the new evidence and argument or, alternatively, accept the supplemental declarations that Defendants have submitted to the Court.
Defendants cite to Provenz, in which the Ninth Circuit held that "where new evidence is presented in a reply to a motion for summary judgment, the district court should not consider the new evidence without giving the non-movant an opportunity to respond." Provenz v. Miller, 102 F.3d 1478 (9th Cir.1996) (citation omitted).
Plaintiff argues that the holding of Provenz applies only in the context of summary judgment motions. The Court finds that Plaintiffs argument is erroneous. The Ninth Circuit has applied the holding of Provenz to preliminary injunction motions, holding that "a district court may consider new evidence presented in a reply brief if...
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