## Facts

- Iconix, Inc., an email identity services company focused on anti-phishing technology, employed Lance Tokuda (VP Engineering/CTO) and Jia Shen (Manager of Client Development) beginning in December 2004.
- Tokuda and Shen signed a Proprietary Information and Inventions Assignment Agreement (PIIAA) requiring confidentiality and assignment to Iconix of inventions and ideas developed during employment, subject to California’s statutory employee-invention exception.
- In fall 2005, Iconix was evaluating concepts to increase traffic to its website, including social-network-related features; Tokuda participated in these internal discussions as part of his duties.
- During the same period, Tokuda secretly developed a slideshow concept aimed at social-network users, formed netPickle, Inc., registered rockmyspace.com, and later recruited Shen to assist.
- Iconix alleged Tokuda and Shen used Iconix computers and discussed aspects of the slideshow project during Iconix meetings and working time.
- After Tokuda resigned in January 2006, Iconix discovered the rockmyspace/netPickle project, terminated Shen, demanded return of the slideshow program and source code, and defendants refused.
- Iconix sued for, among other claims, breach of contract and misappropriation, and moved for a preliminary injunction to restrict defendants’ use of the technology and to protect Iconix’s asserted ownership interests.

## Issues

1. Whether Iconix showed a likelihood of success that the slideshow concept and related code fell within the PIIAA’s disclosure and assignment obligations rather than California’s employee-invention exception.
2. Whether Iconix showed irreparable harm and that the balance of hardships and public interest favored interim injunctive relief restricting defendants’ exploitation of the disputed technology.

## Decision

- The court granted Iconix’s motion for a preliminary injunction in substantial part.
- The court found Iconix showed a sufficient likelihood of success that the slideshow concept and associated work were covered by the PIIAA and should have been assigned to Iconix.
- The court found a sufficient showing of irreparable harm from defendants’ continued use of the disputed technology during litigation and entered injunctive relief to preserve the status quo.
- The order did not finally determine ownership or liability; it provided interim relief pending adjudication on the merits.

## Legal Principles

- Under federal preliminary-injunction standards, a plaintiff must show likelihood of success (or serious questions on the merits) and irreparable harm, with consideration of equities and public interest.
- Employee invention-assignment agreements may require assignment of not only completed inventions but also ideas conceived or developed in the course of employment, depending on contract language.
- California Labor Code § 2870’s exception applies only if an invention is developed entirely on the employee’s own time, without use of employer equipment, supplies, facilities, or trade secret information, and does not relate to the employer’s business or actual or demonstrably anticipated research or development.
- Evidence of use of employer resources and conceptual overlap with the employer’s ongoing or anticipated work can support a finding that § 2870 does not apply and that assignment obligations likely control.
- In disputes over control of alleged proprietary technology, loss of control over intellectual property and associated business opportunities can constitute irreparable harm supporting interim injunctive relief.

## Conclusion

The court issued preliminary injunctive relief after concluding Iconix was likely to prove that the employees’ slideshow side project was related to Iconix’s work and developed using company resources, placing it within the scope of the employees’ assignment agreement and outside California’s statutory exception, and that continued exploitation by defendants risked irreparable harm.


Iconix, Inc. v. Tokuda, 457 F. Supp. 2d 969 (N.D. Cal. 2006)