Sunday, December 28, 2008

Nondisclosure Agreements and Software Development: Where To Sue?

You are in Illinois. You file an action in state court. The adversary removes the action to federal court. In federal court, the adversary moves to transfer to California. You move to remand to state court in Illinois. The federal judge doesn't decide your remand motion, but decides to transfer the action to California. What are your options?

In re Limitnone LLC, -- F.3d---, 2008 WL 5254359 (7th Cir. December 19, 2008) gives us the answer. You may properly file a writ of mandamus. The decision on Findlaw is here. The original petition for a writ of mandamus is filed directly with the Court of Appeals, in this case the Seventh Circuit.

The factual underpinnings of the case are of great interest to software developers. Google and Limitnone signed a nondisclosure agreement ("NDA"). The NDA related to a program Limitnone had developed to move information from Microsoft Office apps to Google's competing apps. The program was called gMove. The NDA had a dispute resolution clause that venued all disputes in California.

Limitnone provided a Beta version of its program to Google. The Google employee had to click "I accept" on a "Beta License Agreement" to use the Beta version of the gMove. Months passed, and Google announced that it was launching an app that did what gMove did and would give it away for free. The Beta License Agreement specified Illinois courts and Illinois law.

The district court and Seventh Circuit found that the Beta License Agreement was not valid because it was not signed and was not in writing, and thus transferred the case to California. The odd thing is that the basis for the removal to federal court was that was that the Copright Act preempted the Illinois trade secrets statute relied on by Limitnone.

The Seventh Circuit held out the possibility that Limitnone might still make a motion for a remand.

If the action was improperly removed to federal court, then Limitnone might end up in a state court after all.

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