[mikeshreds]

This is not a last nuclear option, and we're not in danger of losing our company to the lawsuit. Everything in the post is 100% true.

We did get a lawyer involved when we started Shred Video, and are 100% sure our IP is clean and usable.

It will take probably two years for the case to get fully adjudicated, and the legal recourse for preventing frivolous lawsuits like this is insufficient. Starting a startup is plenty hard enough without this kind of distraction, it's in all of our interest to dissuade larger companies from harassing startups in this way.

[7Figures2Commas]

> It will take probably two years for the case to get fully adjudicated...

During which time many prospective investors, partners and customers won't want to touch you with a 10 foot pole.

> ...and the legal recourse for preventing frivolous lawsuits like this is insufficient.

To be honest, this doesn't look like a frivolous lawsuit, even if this goes to trial and is adjudicated in your favor.

Your post indicates that you and your co-founder quit your jobs at Smule to start Shred. In your post, you detail the differences between some of the technology behind Smule's products and your own, but it is clear that Smule and Shred are in the same general space as far as technology is concerned.

The intellectual property assignment agreements most employees sign cover inventions, processes, discoveries, etc. that are made or conceived of during their terms of employment. They often contain language referring to "the present or reasonably anticipated business" of the employer.

While none of this means you can't leave an employer to start a business in the same space, matters like this can be incredibly messy. If you believe that your defense will be successful because you can prove you didn't steal code outright, you are being incredibly naive. It's not that simple.

[jnbiche]

> Your post indicates that you and your co-founder quit your jobs at Smule to start Shred.

Are you insinuating that 2 employees quitting a company together and starting a company in the same "general space" is reasonable grounds for a lawsuit?

> If you believe that your defense will be successful because you can prove you didn't steal code outright, you are being incredibly naive. It's not that simple.

And that's to the shame of our legal system, and to the detriment of our country's economy.

[7Figures2Commas]

> Are you insinuating that 2 employees quitting a company together and starting a company in the same "general space" is reasonable grounds for a lawsuit?

If a former employer has reason to believe that the employees misappropriated intellectual property or otherwise violated the terms of their employment agreements in doing so, it has every right to seek to enforce its agreements and protect its interests.

Like it or not, when employees leave to start a company in the same general space, claims of misappropriation are more likely.

> And that's to the shame of our legal system, and to the detriment of our country's economy.

How? If a source code comparison will not be dispositive of Smule's claims against Shred's co-founders, why would a court rely on a source code comparison?

From what I can see, nobody has produced the actual filings in this case, so we don't know the exact claims, but other comments indicate that Smule isn't just claiming Shred's co-founders stole source code.

[mikeshreds]

In our case, we did not develop anything Shred-related (ideas or otherwise) while we were employed at Smule. So invention assignment is not at issue, because we did not moonlight on Shred Video while employed by Smule. I knew I wanted to build products for the GoPro audience, which is why I left Smule. Mark left for his own different reasons, and we only began prototyping on things that turned into Shred Video after he left Smule.

[7Figures2Commas]

> In our case, we did not develop anything Shred-related (ideas or otherwise) while we were employed at Smule. So invention assignment is not at issue, because we did not moonlight on Shred Video while employed by Smule.

Please recognize that assignment is likely an issue because Smule will almost certainly try to claim the opposite of what you're claiming. It doesn't mean that they will be able to prove their claims, but you should at least be aware of the fact that there are two sides to every legal dispute and both parties have the opportunity to make their case.

If this isn't matter isn't settled, the legal process provides the means to sort it all out and you'll have the opportunity to evaluate the evidence supporting Smule's claims as part of the discovery process.

[jnbiche]

> If this isn't matter isn't settled, the legal process provides the means to sort it all out and you'll have the opportunity to evaluate the evidence supporting Smule's claims as part of the discovery process.

If they even make it through the discovery process without going bankrupt, which is the explicit, admitted goal of their opponent.

[7Figures2Commas]

> If they even make it through the discovery process without going bankrupt, which is the explicit, admitted goal of their opponent.

No, it isn't. According to Business Insider, this is what was stated:

I'm fairly confident we will figure something out eventually, and this won't be a long-term problem. But I think they've got to face the music here. And we're going to have to figure that out unfortunately with a bunch of lawyers.

And here's the sad truth. You compare a 100-person company with 10, 30, 40 million dollars in the bank to a two-person startup. If it goes to litigation, if we're wrong, we'll win.

Right? We'll win. We'll put a giant law firm on it and we'll do all of the discovery and we'll do all the depositions and we'll win. And if we're right, we'll still win.

So it's not a great scenario. If you fork off a startup and there's IP overlap, it's just a big mess.

The Smule CEO doesn't at all suggest he's trying to put Shred out of business. Instead, he:

1. Seems to imply that a settlement is possible.

2. Laments the fact that this matter required legal action and that said legal action will put Shred's co-founders in a disadvantaged situation.

3. Acknowledges that this matter is the result of the fact that there seems to be some overlap between the kind of technology Smule creates and the kind of technology Shred creates.

Until Smule's claims are known in detail, it's premature to assume that Smule's action has no merit. Smule could be the good guy, or the bad guy. But lots of people here can't help but pick David over Goliath when very few meaningful facts are known.

[mikeshreds]

The filing is public, and referred to in the lawsuit. I'll summarize here:

Smule has claimed we violated non-solicitation provision in our contract by recruiting each other to start a startup; that we appropriated Smule's code or methods to build Shred Video (though they don't make any specific trade secret claims); That Mark is guilty of fraud in his consulting relationship w/ Smule's engineers (this is detailed our post); and We converted Smule's proprietary information into Shred Video (far as I understand, conversion is a fancy word for "stealing").

The "non-solicitation" claim is laughable, especially in California. The fraud claim is fraudulent itself, as the email record clearly shows Smule itself asked for Mark's help, and he was wholly transparent in the way he provided that help. Everything else comes down to whether we used Smule's proprietary code or methods.

When Smith says "I'm fairly confident we will figure something out eventually...unfortunately...with a bunch of lawyers," seems a reasonable interpretation that "a bunch of lawyers" is code for legal threats, and "figure something out" is code for us paying him (in equity or otherwise) to withdraw the legal threat.