Snapkeys, LTD v. Google LLC

Background

Snapkeys, a software development company, sued Google for breach of contract and conversion. The dispute concerned a July 29, 2015 nondisclosure agreement and two smartwatches that Snapkeys provided to Google with Snapkeys’ keyboard application installed. The agreement allowed confidential information to be used only to facilitate technical discussions about product development, required reasonable care to prevent unauthorized use or disclosure, and did not require the confidential information or the device carrying it to be returned.

Google employee Clement Wright used each watch briefly and kept them in a secure bin. After Snapkeys sent an updated version of its application, Wright discarded the two older watches in a secure electronic-waste bin. They were securely shredded. Snapkeys first demanded their return on November 1, 2016, after they had already been discarded.

Summary-judgment standard

Summary judgment is appropriate when the evidence shows no genuine dispute about a fact that could affect the result and the moving party is entitled to judgment as a matter of law. The court must view disputed evidence in the light most favorable to the party opposing the motion, but that party must present specific evidence supporting a trial-worthy dispute.

Breach-of-contract claim

Snapkeys advanced two theories: Google misused the code, software, or other technical data underlying Snapkeys’ application, or Google breached the agreement by discarding the watches.

The court granted summary judgment on the code-misuse theory for five reasons. First, Snapkeys did not address that theory in its opposition brief and therefore waived or abandoned the argument. Second, Snapkeys’ evidence showed that its code was encrypted and required a password, and Snapkeys offered no evidence that Google had the password or could bypass the encryption. Third, Google presented undisputed evidence that it independently created its smartwatch keyboard: Google employees began developing it in 2014 and released a prototype for internal testing on August 28, 2015, before receiving Snapkeys’ watches. Google’s smartwatch keyboard was based on Google’s existing phone-keyboard code. Fourth, only Wright saw or used the watches, and the evidence showed that he was not a software engineer and did not know how to access the underlying code. Fifth, Snapkeys presented no evidence that Google accessed, used, or shared its code.

The court also granted summary judgment on the theory that discarding the watches breached the nondisclosure agreement. The court interpreted the agreement’s requirement that Google protect confidential information and prevent unauthorized use or disclosure. It concluded that securely discarding the watches protected the information by preventing anyone from accessing or disclosing it. The agreement did not require Google to preserve or return the watches, and the five-year protection period did not bar secure disposal. Requiring return of the devices would add a contract term that the parties had not included.

Conversion claim

Under California law, conversion requires proof that the plaintiff owned or had the right to possess the property, the defendant wrongfully exercised control over it, and the plaintiff suffered damages.

The court found no genuine dispute concerning any required element. Snapkeys gave the watches to Google without stating that Snapkeys retained ownership or expected their return. Snapkeys also did not request their return when it sent the updated application and did not demand their return until approximately one year after delivery. The court therefore found that Snapkeys had not shown that it retained ownership or a right to possess the watches.

The court further found that secure disposal was not wrongful under the nondisclosure agreement, for the reasons discussed above, and Snapkeys did not establish that the disposal was wrongful on another basis. Finally, Snapkeys presented no evidence that the watches had remaining market value or other value to Snapkeys. Its suggestion that the watches might have allowed it to investigate how Wright used them was speculative and was not shown to have monetary or other compensable value.

Disposition

Judge Lucy H. Koh granted Google’s motion for summary judgment on Snapkeys’ breach-of-contract and conversion claims.