Legal Roundup: Apple Sues Former Employee, Military Vets Go After Faulty Earplugs and More

A look at recent court decisions and how their rulings have an impact on risk management and the insurance industry.
By: | January 28, 2020

Apple Sues Ex-Employee Who Launched Competitive Startup 

The Case: Startup companies are particularly protective of their intellectual property and talent. The rule of thumb is simple: Anything you invent during your tenure belongs to the company. Whether Gerard Williams III crossed that line while working at Apple is now being argued in Santa Clara County Superior Court.

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Williams was the chief architect for the custom processors that power the iPhone and iPad. After Williams left the company to launch Nuvia Inc. — which designs chips for servers — Apple sued him claiming that Williams planned his startup while still on the Apple payroll.

Apple claims Williams “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,” according to Reuters.

Williams signed an agreement not to plan or engage in any other employment that competes with Apple, but Reuters explains that the agreement may be “unenforceable because California law allows employees to make some preparations to compete while still in their current job.”

 Scorecard: Judge Mark H. Pierce issued a tentative ruling last week allowing the case to proceed. 

Takeaway: What counts as business hours vs. personal time — especially in the up-all-night tech space? What counts as meetings with colleagues vs. recruitment meetings for Williams’ new startup? Which is more enforceable — Apple’s contract or California’s long-held public policy favoring employees in non-compete scenarios?

Those questions make this case a must-watch.

Porn Deception Case Awards 22 Women $13 Million and Ownership of Content 

The Case: Twenty-two women sued the leaders of a porn website saying they were deceived into signing contracts under the influence of marijuana and alcohol and were told the sexual acts they were doing on camera would be disseminated only via DVD, not over the internet.

Scorecard: A San Diego Superior Court Judge awarded the women $12.7 million and ownership of their images. The judge also “ordered the defendants to take down the women’s sex videos and take steps to get them off other porn sites they don’t control but allowed to post clips, ads or entire films,” according to the Los Angeles Times.

Takeaway: Perhaps the most historic part of the decision is awarding the defendants ownership rights of the material, which Buzzfeed News reports is “big deal because it’s nearly impossible to force sites like Pornhub to remove content once it is uploaded … even if it had been created and published without a person’s consent.”

Veterans with Hearing Loss Sue 3M Over Allegedly Faulty Earplugs

The Case: A group of military veterans — 2,000 strong and growing — are suing 3M for “knowingly making defective earplugs that caused vets to lose hearing during combat in Iraq or Afghanistan or while training on U.S. military bases,” according to the Star Tribune in Minnesota.

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The earplugs (created by 3M acquisition company Aearo Technologies) were designed with two sides — one to block out all noise, another to block out all but critical voice commands. The Star Tribune reports: “Many of the lawsuits point to internal Aearo documents, alleging the company knew the earplugs could slip and might not have been long enough to fully protect wearers from loud noises.”

Scorecard: 3M has denied the allegations. The Star Tribune reports that 3M said in court documents that it and Aearo designed the earplugs “with the help of the U.S. military and according to its specifications.Therefore, 3M cannot be liable.”

New lawsuits are appearing in court “almost daily,” the newspaper said, and it will likely lead to “one ‘bellwether’ case that then could determine how most others would proceed.”

Takeaway: Once you acquire a company, you acquire their risk portfolio as well.

That appears to be a lesson 3M has already learned with regard to its acquisition of Aearo. In December 2018, it agreed to pay military branches $9.1 million, but did not admit guilt. &

Jared Shelly is a journalist based in Philadelphia. He can be reached at [email protected]

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The R&I Editorial Team can be reached at [email protected]