Magic Leap Opposition

Case 5:16-cv-02852-NC Document 99 Filed 09/09/16 Page 1 of 29
PAUL J. ANDRE (State Bar No. 196585)

1 pandre@kramerlevin.com
LISA KOBIALKA (State Bar No. 191404)
2 lkobialka@kramerlevin.com
KRAMER LEVIN NAFTALIS & FRANKEL LLP
3 990 Marsh Road
Menlo Park, CA 94025
4 Telephone: (650) 752-1700
Facsimile: (650) 752-1800
5
AARON FRANKEL (appearance pro hac vice)
6 afrankel@kramerlevin.com
KRAMER LEVIN NAFTALIS & FRANKEL LLP
7 1177 Avenue of the Americas
New York, NY 10036
8 Telephone: (212) 715-7793
9 Attorneys for Plaintiff
MAGIC LEAP, INC.
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IN THE UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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SAN JOSE DIVISION
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MAGIC LEAP, INC., a Delaware Corporation,

Plaintiff,
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v.
18 GARY BRADSKI, an individual, ADRIAN

KAEHLER, an individual, Robotics Actual,
19
Inc., a Delaware Corporation, and OpenCV.ai,
20 Inc., a Delaware Corporation,
21
Case No.: 5:16-cv-02852-NC

MAGIC LEAP, INC.S OPPOSITION TO
DEFENDANTS MOTIONS FOR
SANCTIONS OF DISMISSAL AND AN
AWARD OF ATTORNEYS FEES FOR
COSTS
Defendants.
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REDACTED VERSION OF DOCUMENT SOUGHT TO BE SEALED
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CASE NO.: 5:16-cv-02852-NC
DEFENDANTS MOTIONS FOR SANCTIONS
TABLE OF CONTENTS
Page
2
3 I.
INTRODUCTION ....................................................................................................................... 1
4 II.
STATEMENT OF ISSUES PRESENTED .................................................................................. 3
5 III.
MAGIC LEAPS STATEMENT OF FACTS ............................................................................. 4
A.
Magic Leap is Developing Cutting Edge Technology ..................................................... 4
B.
Magic Leap is Developing Deep Learning Technology .................................................. 5
C.
Magic Leap Entrusted and Invested in Bradski and Kaehler ........................................... 8
D.
Magic Leap Terminated Bradski and Kaehler Due to Their Misconduct ........................ 9
E.
Magic Leap Filed Suit After Attempting to Negotiate a Resolution in Good

Faith ............................................................................................................................... 14
9
10
11
12 IV.
ARGUMENT ............................................................................................................................. 16
13
A.
Defendants Breached Their Employment Agreements ................................................ 18
14
B.
Magic Leap is Developing Robotics and Deep Learning Technology .......................... 20
C.
Defendants Concealed Their Robotics Actual Venture From Magic Leap ................... 22
D.
Defendants Converted Magic Leaps Resources ........................................................... 22
E.
Defendants Documents Confirm Their Connection to OpenCV.ai .............................. 22
F.
Defendants Repeatedly Disparaged Magic Leap ........................................................... 23
G.
Magic Leap Did Not Pursue a Breach of Fiduciary Duty Claim Against Kaehler ........ 23
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V.
DEFENDANTS REQUEST FOR SANCTIONS SHOULD BE DENIED.............................. 24
VI.
CONCLUSION .......................................................................................................................... 24
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CASE NO.: 5:16-cv-02852-NC
TABLE OF AUTHORITIES
Page(s)
2
3 Cases
4 Applied Materials, Inc. v. Advanced Micro-Fabrication Equip. (Shanghai) Co.,

630 F. Supp. 2d 1084 (N.D. Cal. 2009) ............................................................................................19
5
Arthur J. Gallagher & Co. v. Lang,
6
No. C 14-0909 CW, 2014 WL 2195062 (N.D. Cal. May 23, 2014) .....................................18, 19, 20
7 Asset Mktg. Sys. v. Gagnon,
542 F.3d 748 (9th Cir. 2008) ............................................................................................................20
8
9 Bank of Am. v. Lee,
08-CV-05546 CAS(WJX), 2008 WL 4351348 (C.D. Cal. Sept. 22, 2008) .....................................19
10
Bighorn Capital, Inc. v. Sec. Nat'l Guar., Inc.,
11
No. C 15-03083 SBA, 2015 WL 9489897 (N.D. Cal. Dec. 30, 2015) .............................................17
12 Edwards v. Arthur Andersen LLP,
44 Cal. 4th 937, 81 Cal. Rptr. 3d 282 (2008)....................................................................................19
13
14 Farmers Ins. Exchange v. Steele Ins. Agency, Inc.,
No. 2:13-cv-00784-MCE-DAD, 2013 WL 3872950 (E.D. Cal. July 25, 2013)...............................19
15
Gatan v. Nion Co.,
16
Case No. 15-cv-1862-PJH, 2016 WL 1243477 (N.D. Cal. Mar. 30, 2016)......................................19
17 Henry Schein, Inc. v. Cook,
Case No. 16-cv-03166-JST, 2016 WL 3418537 (N.D. Cal. June 22, 2016) .............................. 19-20
18
19 In re Keegan Mgmt. Co., Sec. Litig.,
78 F.3d 431 (9th Cir. 1995) ........................................................................................................16, 17
20
Loral Corp. v. Moyes,
21
174 Cal. App. 3d 268 (1985) ...........................................................................................................19
22 Network Caching Tech., LLC v. Novell, Inc.,
No. C-01-2079 VRW, 2003 WL 21699799 (N.D. Cal. Mar. 21, 2003) ...........................................17
23
Operating Eng'rs Pension Trust v. AC Co.,
24
859 F.2d 1336 (9th Cir. 1988) ..................................................................................................1, 3, 16
25
Thomas Weisel Partners LLC v. BNP Paribas,
No. C 07-6198 MHP, 2010 WL 546497 (N.D. Cal. Feb. 10, 2010) ...........................................18, 19
26
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CASE NO.: 5:16-cv-02852-NC
Tom Growney Equip., Inc. v. Shelley Irrigation Dev., Inc.,

834 F.2d 833 (9th Cir. 1987) ............................................................................................................16
In re Yagman,
796 F.2d 1165 (9th Cir.), opinion amended on denial of reh'g, 803 F.2d 1085 (9th
3
Cir. 1986) ....................................................................................................................................24 n.4
4
Statutes
5
18 U.S.C. 1836(e) ................................................................................................................................21
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Cal. Bus. & Prof. Code 16600 .......................................................................................................18, 19
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8 Defend Trade Secrets Act (2016) ...........................................................................................................21
9 Other Authorities
10 Fed. R. Civ. P. 11 ............................................................................................................................ passim
11 Notes of Advisory Comm. on Rules1993 Amendment, Fed. R. Civ. P.11(b) .....................................17
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CASE NO.: 5:16-cv-02852-NC
I.
INTRODUCTION
Defendants motions for sanctions should be denied as totally baseless, and an improper
3 attempt to litigate the merits of the case through Rule 11. Magic Leap brought its claims against
4 Defendants in good faith to protect its intellectual property and contractual rights, and its claims are
5 grounded in compelling evidence. Despite being informed that Magic Leaps claims were well6 founded and filed after a reasonable investigation, Defendants, nonetheless, opted to recklessly file
7 their Motions, seeking the extraordinary remedy of sanctions that should be exercised with extreme
8 caution and is reserved for rare and exceptional cases. Operating Eng'rs Pension Trust v. AC Co.,
9 859 F.2d 1336 (9th Cir. 1988). Defendants Motions are frivolous in simply ignoring explicit
10 representations Magic Leap made to Defendants counsel that the assumptions underlying many of the
11 outrageous statements made in the Motions were wrong. For example, Defendants continue to baldly
12 assert, without any evidence, that Magic Leap only investigated its claims for two days before filing
13 suit, notwithstanding the representation of Magic Leaps counsel that its investigation began far earlier.
14 Even after being provided with some of the undisputed evidence that supports Magic Leaps claims,
15 Defendants continued to refuse to withdraw their Motions. Ex. 44. The contemporaneous
16 documentary evidence presented herein more than substantiates Magic Leaps allegations, refutes
17 Defendants denials of misconduct and establishes that there are genuine conflicting factual issues that
18 should be the subject of discovery, not grossly premature sanctions motions.1
19
Magic Leap is a startup company that is developing a variety of cutting-edge technologies.
20 Magic Leap is best known for being able to project life-like animations and images into real-life scenes
21 using its proprietary techniques of projecting digital light fields into users eyes. These technologies
22 create a new type of mixed or augmented reality, combining actual vision with computer23 generated imagery. For example, a user could look at a real desk and see a computer-generated river
24
1
As the separate motions filed by Drs. Gary Bradski (Bradski) and Adrian Kaehler (Kaehler)
(together, Defendants) present substantially the same arguments, Magic Leap offers this
26 consolidated Brief in Opposition to both Motions. Where appropriate, Defendants also refers to
Defendant Robotics Actual (Robotics), who is also a moving party to Defendants Motion. Magic
27 Leap separately opposes Robotics Motion to Join in Defendants Motions for Sanctions.
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CASE NO.: 5:16-cv-02852-NC
1 flowing over it. Magic Leap invests substantial resources in developing and protecting its technology,
2 which has generated significant investment and interest. Magic Leap is well-known for its secrecy and
3 the care it takes to avoid disclosing its technology to others.
4
Magic Leap hired Defendants to help advance its technology. Magic Leap entrusted both of
5 them with access to the companys most valuable proprietary technology and gave them considerable
6 autonomy. Bradski, a Magic Leap executive, was in charge of running many aspects of its Mountain
7 View facility, including recruiting technical talent and leading the development of the future of Magic
8 Leaps technology. Magic Leap appointed him to head its N+1 Invent the Future initiative, which
9 broadly extended to numerous technologies across different industries. Declaration of Rony Abovitz
10 in support of Magic Leaps Opposition (Abovitz Decl.), 4.
11
In May 2016, Magic Leap learned, to its great surprise, that Defendants betrayed its trust and
12 were engaging in conduct detrimental to Magic Leap while employees. After carefully investigating
13 the facts and retaining outside counsel to further investigate, the company filed this action to protect its
14 technology and prevent further harm. Magic Leaps well-founded complaint and further evidence
15 offered in support of this Opposition demonstrate that Defendants misconduct included, for example:
16
founding Defendant Robotics, a company directed to applications of deep learning,

including using reinforcement learning to robotics, despite the fact that Magic Leap was
heavily involved in developing deep learning, was using reinforcement learning, had robots,
and had plans to implement those techniques in robotics;
attempting to take technology developed using Magic Leaps resources to Robotics;
attempting to poach Magic Leap deep learning engineers for Robotics, plainly violating
Defendants non-solicitation obligations, and forcing Magic Leap to
;
diverting Magic Leaps corporate resources to fund personal projects, such as hiring
programmers to write software for OpenCV, a company for which Bradski was President
and CEO;
negotiating unfavorable provisions in Magic Leaps contract with

in
breach of Bradskis fiduciary duty, while Bradski owned
, which caused Magic Leaps loss of substantial time and expense; and
disparaging Magic Leap, causing morale and retention issues and violating their contractual
non-disparagement provisions.
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Defendants know what they did and had more than sufficient notice of Magic Leaps claims
2 against them from Magic Leaps complaint and amended complaint. Nonetheless, Defendants each
3 served draft Rule 11 motions on Magic Leap grounded on the incorrect and demonstrably false
4 assumptions that Magic Leap only conducted two days of investigation before filing suit simply
5 because Magic Leap filed two days after Defendants filed a declaratory judgment action (the DJ
6 Action) and thus, could not have evidence to support its claims. In response, Magic Leaps counsel
7 (1) represented in writing that it conducted an appropriate investigation before filing this action, which
8 began which it learned of Defendants misconduct well before they filed the DJ Action, (2) responded
9 to various issues raised in Defendants draft papers and (3) represented that Magic Leap would provide
10 the evidence substantiating its claims in the due course of discovery. Ex. 45 (8/12/16 Letter).
11 Defendants, completely unfazed, proceeded to file their baseless Motions without waiting to review
12 Magic Leaps evidence and without any basis whatsoever to support their bald claim that Magic Leap
13 failed to conduct an appropriate pre-filing investigation.
14
Rather than proceed with extreme caution in seeking the extraordinary remedy of Rule 11
15 sanctions, Defendants pursued these premature and reckless Motions at this pre-discovery stage.
16 Operating Eng'rs Pension Trust v. AC Co., 859 F.2d 1336, 1345 (9th Cir. 1988). Defendants
17 stubbornly refused to withdraw their Motions, even after Magic Leap provided them with the
18 compelling evidence of their misconduct cited herein. Ex. 44. Accordingly, Magic Leap respectfully
19 requests that the Court reprimand Defendants for filing these inappropriate and premature Motions for
20 sanctions without first pausing to consider Magic Leaps considerable evidence of Defendants
21 significant misconduct.
22
23
II.
STATEMENT OF ISSUES PRESENTED

(1) Should Defendants Motion be denied when Magic Leap filed its claims against Defendants
24 to protect its intellectual property and contractual rights, after conducting a reasonable investigation
25 and based on substantial evidence that Defendants engaged in significant misconduct?
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CASE NO.: 5:16-cv-02852-NC
1 III.
MAGIC LEAPS STATEMENT OF FACTS
A.
Magic Leap is Developing Cutting Edge Technology
1.
Magic Leap is a startup company founded in 2011 that is developing a variety of
4 cutting-edge technologies. Ex. 1; Abovitz Decl., 2. Magic Leap is known for being able to
5 superimpose life-like animations and images into real-life scenes using its proprietary technology to
6 project digital light fields directly into users retina. Ex. 2 at 2. This technology creates a mixture of
7 real-world vision and computer-generated images, often called mixed or augmented reality, in
8 contrast to virtual reality, which is usually limited to computer-generated imagery. Dkt. No. 41-3,
9 Ex. 1 at 3.
10
2.
Magic Leaps proprietary technology has generated substantial interest from investors
11 and the media. Dkt. No. 41-3, Ex. 1 at 3-4. Magic Leap has raised over $1.4 billion to date from a
12 list of investors including Google and Chinas Alibaba Group. Id.
13
3.
Magic Leap operates in a very competitive ecology, and is in a race against many
14 other companies to develop and bring to market its products. Id. The potential market for Magic
15 Leaps technology is staggering. Id. at 9, see also Abovitz Decl., 5. Accordingly, any theft of
16 Magic Leaps technology or delay in its ability to bring that technology to market could have
17 substantial financial consequences for Magic Leap and its investors. Abovitz Decl., 2. Magic Leap
18 employs talented engineers and scientists in its ongoing research and development efforts into
19 cutting-edge technology. Id. At Bradskis recommendation, Magic Leap also hired
who previously worked with Bradski, to assist in developing Magic Leaps
20
. Id., 9. The departure of engineers
21
or difficulty in recruiting and
22 retaining top talent due to reputational injury is expensive and detrimental to Magic Leaps race to the
23 market, especially given the strong demand for such employees in the Silicon Valley area and around
24 the country. Id., 2; Declaration of Hendrick Vlietstra (Vlietstra Decl.), 7; Declaration of Scott
25 Henry (Henry Decl.), 3.
26
4.
Magic Leap takes extensive measures to secure and protect its intellectual property
27 and state-of-the-art, confidential proprietary technologies. Vlietstra Decl., 3. For example, Magic
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CASE NO.: 5:16-cv-02852-NC
1 Leap has sought, and obtained, patent protection for those proprietary technologies that Magic Leap
2 is willing to disclose to the public, filing over 17 published patent applications, with the Patent Office
3 awarding Magic Leap at least six patents to date. Ex. 3. Magic Leaps technology spans a broad
4 range of fields and technology, and goes far beyond gaming and entertainment applications. See e.g.,
5 Dkt. No. 40-15 (Kaehler Decl.), 24 (describing work on
); Abovitz Decl., 4.
6 Magic Leap maintains technologies, such as its source code and technology not yet disclosed in
7 published patent applications, as highly confidential company information and trade secrets. Vlietstra
8 Decl., 3. Additionally, Magic Leap requires its employees to assign to Magic Leap all ownership
9 rights to technologies on which they work or develop during the course of their employment and to
10 enter into stringent confidentiality agreements. Id.; see also, e.g., Dkt. Nos. 61-6; 61-10
11 (Employment Agreements). Recognizing the importance of protecting the secrecy of Magic Leaps
12 numerous and diverse innovations, Kaehler kept his notebook used for Magic Leaps most
13 confidential information in a cipher for Magic Leaps protection. Dkt. No. 40-15 at 21.
14
5.
Magic Leap will serve a detailed preliminary disclosure of the trade secrets at issue in
15 this action once the parties enter into a Stipulated Protective Order. Declaration of Lisa Kobialka
16 (Kobialka Decl.), 47. Magic Leap provided Defendants with a draft protective order on August
17 29, 2016. Id. Despite Magic Leaps following up five times, Defendants did not provide their
18 comments on the draft until September 8, 2016, the day before this opposition was due.
19
B.
Magic Leap is Developing Deep Learning Technology
20
6.
Magic Leap is heavily involved in developing deep learning and computer vision
21 technology, which are core to its current and anticipated future ventures, and are part of the
22 companys trade secrets. Declaration of Yannick Pellet (Pellet Decl.), 2 (The work being done
23 and being discussed while Dr. Bradski and Kaehler were employees at Magic Leap included deep
24 learning technologies); Abovitz Decl., 3; Ex. 4 (Unpublished Magic Leap Patent Application), e.g.,
25 at 43, 57. For example, Magic Leaps system must be able to process the real-world view the user is
26 seeing in order to augment it with appropriate imagery. Abovitz Decl., 3. Indeed, Defendants
27 acknowledge that Magic Leap is using deep learning, neural networks and robots to develop the
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1 software for its augmented reality eyewear. See Dkt. No. 61, 8.
2
7.
Magic Leaps use of deep learning includes deep reinforcement learning, and
3 Defendants claim to the contrary is simply false. For example, in a patent application filed with the
4 Patent Office but not yet publicly available directed to Magic Leaps proprietary technology for
5 localizing the position and orientation of objects in augmented reality systems, Magic Leap describes
6 such technology with deep learning, including using deep reinforcement networks, or deep
7 reinforcement learning. Ex. 4 at 57.
8
8.
Bradski exchanged an email with CEO Rony Abovitz on New Years Day on the
9 importance of deep learning to ten of the eleven priority development areas for Magic Leap and also
10 noted the broad importance of deep learning to a variety of applications, including robotics. Ex. 5.
11
9.
The applications for Magic Leaps technology and the scope of its development efforts
12 go far beyond video games and entertainment. For example, Magic Leap has a Deep Learning and
13 Perception initiative within its invent the future division, also internally referred to as N+1.
14 Abovitz Decl., 4; Ex. 6. This group works to develop the future applications of Magic Leaps
15 technology, including developing ways to broadly apply Magic Leaps technology across any and all
16 areas where its technology could grow the companys business, including robotics. Id. Many
17 companies, including Apple, Google and IBM are investing heavily in developing deep learning
18 technology. See, e.g., Ex. 7 (Apples use of deep learning); Ex. 8 (IBM deep learning patent). As
19 another example, Magic Leap assigned Dr. Kaehler to develop a financial transaction system
20
21
Dkt. No. 46 at 6.
10.
Computer vision, machine/deep learning and artificial intelligence (AI) are critical
22 technology in the robotics field. Abovitz Decl., 3. Just as Magic Leaps system must be able to
23 process the real-world view the user is seeing in order to augment it, robots must be able to process
24 and understand the images their sensors provide of the world around them. Id.
25
11.
Robotics technology, AI/machine/learning/deep learning and automation are an
26 important part of Magic Leaps current and future technology pathway and partnerships. Abovitz
27 Decl., 5. Magic Leaps CEO and founder Abovitz has a background in robotics as his former
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1 company, MAKO Surgical, Corp., developed robots for use in surgery for which computer vision and
2 AI technology was also crucially important. Id. Naturally, therefore, Magic Leap had planned for
3 several years to combine robotics with the technologies that it was developing. Id. Indeed, CEO
4 Abovitz specifically discussed with Bradski the applicability of Magic Leaps research and
5 development technology to robotics and
6
7
applications. Id.
12.
Magic Leap is completing its manufacturing plant for its anticipated products.
8 Abovitz Decl., 6. The manufacturing plants production line will be automated in design, and
9 Magic Leap is
in the manufacturing process. Id. Magic Leap perceives
10 the combination of mixed reality and contextual, machine-vision based computing as being highly
11 relevant to many portions of human life, including the home, entertainment, healthcare, industry,
12 education and more. Id., 5.
13
13.
In recruiting Bradski to Magic Leap, CEO Abovitz, Paul Greco, Senior Vice President
14 Hardware Engineering and Programs, and David Lundmark, Chief Patent Counsel, told Bradski that
15 (1) future applications of Magic Leaps technology would include
16
in its manufacturing plant, (2) Bradski could work on applying machine vision/perception/AI
17 /deep learning technology to robotics and

18 Magic Leaps own factory
and (3)
for all kinds of future Magic Leap industrial
19 applications. Abovitz Decl., 5, 6; Declaration of David Lundmark (Lundmark Decl.), 3;

20 Declaration of Paul Greco (Greco Decl.), 2. Part of Bradskis pitch to hire Kaehler was that he
21 could eventually lead the
Ex. 9. Earlier this year,
22 Bradski toured Magic Leaps manufacturing facility. Abovitz Decl., 6.

23
14.
Members of Bradskis team programmed robots. See Ex. 10. Kaehler reviewed a
24 patent application regarding Magic Leaps use of a robot as a part of a system for camera calibration.
25 Dkt. No. 48 (Kaehler Decl.), 16, n.5. Defendants acknowledge that there was a lack of publicly
26 available software for commercial applications for deep learning as applied to robotics, The
27 technology has been available for a while (at considerable expense), but without advanced programming
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CASE NO.: 5:16-cv-02852-NC
1 for many commercial applications. Dkt. 41, 11 (emphasis in original). Bradski further attempted to
2 have Magic Leaps contractor,
3
15.
. Ex. 11.
Magic Leap is not just a consumer of robotics. As part of its business development
4 activities, Magic Leap has had various meetings with

5
with Magic Leaps technology,
6 for example in industrial and healthcare applications. Abovitz Decl., 7. As one example, a medical
7 device company reached out to Magic Leap in early 2016 to discuss such a project to
8
9
Id.
16.
Magic Leap also regularly discussed with investors the broad potential use of its
10 technology and products in consumer, home, healthcare, industrial, military and aerospace
11 applications, including in combination with automation and robotics. Id. 8.
12
17.
As another example of Magic Leaps investment in robotics and computer vision
13 technology and the resources available to Bradski, Bradski authorized Magic Leaps purchase of
14 Occipitals mobile depth cameras on August 27, 2014. Ex. 12. Bradski was on the Board of
15 Occipital
in the company. Ex. 13 at 5.
16
C.
Magic Leap Entrusted and Invested in Bradski and Kaehler
17
18.
Magic Leap hired Bradski in late 2013 as VP of Advanced Perception and
18 Intelligence. Vlietstra Decl., 2. Based in large part on Bradskis recommendation, Magic Leap
19 hired Kaehler shortly thereafter as VP of Technology Solutions. Id.; see also Ex. 9. During their
20 employment, Bradski and Kaehler had access to Magic Leaps proprietary technology and projects.
21 Vlietstra Decl., 2; Greco Decl., 3; Abovitz Decl., 4.
22
19.
In late 2015, Bradski was chosen to head Magic Leaps N+1 team, including the
23 future Deep Learning and Perception initiatives. Abovitz Decl., 4. Furthermore, Bradski was
24 entrusted with leading the companys Mountain View facility. Vlietstra Decl., 2.
25
20.
As a condition of their employment, Bradski and Kaehler each entered into an
26 Employment Agreement and a Proprietary Information and Inventions Agreement (collectively,

27 Employment Agreements) with Magic Leap. Vlietstra Decl., 3; Dkt. Nos. 61-6; 61-10
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CASE NO.: 5:16-cv-02852-NC
1 (Employment Agreements). By signing the Employment Agreements, they agreed, inter alia, to the
2 following provisions, each of which they proceeded to breach:
3
not engage in any other employment, occupation, consulting or other business

activity directly related to the business in which [Magic Leap] is now involved or
becomes involved during the term of your employment;
while employed and for 12 months thereafter, to not solicit the employment of any
person who shall then be employed by the Company (as an employee or consultant).
hold in strictest confidence, and not to use except for the benefit of the Company or
to disclose to any third party . . . any Confidential Information of the Company; and
not engage in any other activities that conflict with your obligations to the Company;
provided, however, that you will be free to pursue ongoing consulting work consistent
with your past practice.
4
5
6
7
8
9
10 Id. In connection with their hiring, neither Defendant disclosed to Magic Leap any projects or
11 ongoing consulting work they were working on relating to a robotics venture they purportedly were
12 incubating since 2008. Vlietstra Decl., 4; Dkt. Nos. 61-6, Ex. A, 3(d); 61-10, Ex. A, 3(d).
13
D.
Magic Leap Terminated Bradski and Kaehler Due to Their Misconduct
14
21.
In the spring of 2016, Magic Leaps CEO had an in-person meeting with Bradski,
15 discussing his future with Magic Leap. Abovitz Decl., 10. He emphasized the value of Magic
16 Leaps advanced technology program and discussed various avenues to allow Bradski to fulfill his
17 technical and creative ambitions. Id. During this and related conversations, Bradski did not disclose
18 his future plans to CEO Abovitz, and led him to believe that he was excited about being at Magic
19 Leap, especially if Magic Leap could create a wider-scale research program (which Magic Leap
20 continued to support and fund). Id.
21
22.
During a follow up discussion, Bradski told CEO Abovitz for the first time that he
22 intended to hire Magic Leap engineers to work at a new company he was founding. Id. CEO
23 Abovitz never told Bradski that it would be acceptable for him to do so. Id. Rather, after listening to
24 Bradskis plans, he conducted further research regarding Bradskis ambitions and directed members
25 of the Magic Leap team to investigate. Id. To Magic Leaps surprise and disappointment, it
26 discovered that Defendants had been (a) working on a competing company for over a year while they
27 were Magic Leap employees; (b) actively soliciting Magic Leap employees and investors to be part of
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CASE NO.: 5:16-cv-02852-NC
1 their new company; and (c) improperly using Magic Leap resources. Id.
2
23.
Misuse of Trade Secrets For a New Venture: Defendants were obligated to make
3 full written disclosure, hold in trust for the sole right and benefit and assign to Magic Leap all
4 right, title and interest in and to any original works of authorship . . . inventions, concepts,
5 improvements, processes, methods or trade secrets that they conceived of, developed or reduced to
6 practice while employed by Magic Leap that (i) are developed using the equipment, supplies,
7 facilities or Confidential Information of the Company, (ii) result from or are suggested by work
8 performed . . . for the Company or (iii) relate to the Company business or to the actual or
9 demonstrably anticipated research or development of the Company. Dkt. Nos. 61-6, Ex. A, 3(d);
10 61-10, Ex. A, 3(d). Defendants Employment Agreements prohibited during the term of their
11 employment engaging in any other employment, occupation, consulting or other business activity
12 directly related to the business which the Company is now involved or becomes involved . . . nor will
13 you engage in any other activities that conflict with your obligations to the Company; provide
14 however, that you will be free to pursue ongoing consulting work consistent with your past practice.
15 Dkt. No. 61-6, at 2 (emphasis added).
16
24.
Defendants began planning new competitive ventures long before Magic Leap
17 terminated them for their misconduct. At least as early as July, 2015, Defendants began to form a
18 ventureNewCo, which was later named Robotics Actualthat was intended to develop robots
19 using deep learning and computer vision technology Magic Leap developed, and which related to
20 Magic Leaps ongoing and anticipated future research. Exs. 14 (meeting during business hours with
21 Lux Capital regarding investment in NewCo), 15 (referring to a new lab developing human-like
22 robots as Potential buyers of their new robotics venture), 16 (scheduling a visit to a manufacturing
23 factory with self-made robotic equipment in Shenzhen, China for new company); 17 (Bradski
24 acknowledging that his new venture Robotics [A]ctual needs deep reinforcement learning.).
25
25.
For example, Bradski explained that one of Robotics areas of focus would be using
26 computer vision technology for its robots to Visual pick and place. Find object, grab it, move it,
27 release. Ex. 18. Defendants prepared a presentation to pitch their new venture that talked about
28
10
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CASE NO.: 5:16-cv-02852-NC
1 how they would use [t]he same algorithms that learned to see to better control their robots and deep
2 learning technology. Dkt. No. 41-2, Ex. F at 12. The presentation also refers to calibration of robot
3 vision. Id. at 16. This same technology was being developed at Magic Leap, including under
4 Bradskis direction. See Abovitz Decl., 3, 4; see also Pellet Decl., 3; Greco Decl., 3.
5
26.
Defendants exchanged emails discussing their plans. For example, in November 2015,
6 Bradski ruminated about When should I leave Magic Leap, and Kaehlers response was effectively
7 that they should complete preparing their competing company in secret and only then leave Magic
8 Leap. Ex. 19 (first, your side, strong position make. Then, his side, weakness. Then you can kill.).
9 In December 2015, during business hours, Defendants exchanged emails regarding potential buyers
10 for their company. Ex. 15.
11
27.
Defendants also took meetings with investors and potential business partners during
12 business hours, when they should have been working on Magic Leap projects, while acknowledging
13 that Magic Leap would not approve of these meeting. See, e.g., Ex. 14 (meeting during business
14 hours with Lux Capital regarding investment in NewCo); Ex. 20 (arranging demonstration with
15 surgical robotics company during working hours: This is my interest and perhaps for thoughts
16 relating to my future company. Magic Leap has boatload of lawyer[s] and Id never get this past
17 the business reason question.) (emphasis added). Defendants even attempted to pitch their concept
18 for robotics computer vision technology to one of Magic Leaps investors, Kleiner Perkins, without
19 explaining that this technology belonged to Magic Leap. Ex. 18.
20
28.
On February 24, 2016, months before they were terminated, Defendants incorporated
21 Robotics. Ex. 21.

22
29.
Violation of Non-Solicitation Clause: To build a team to support Robotics,
23 Defendants attempted to poach (their word) various Magic Leap engineers, including
24
Ex. 22; Ex. 23 (Bradski: I tried to be totally honest
25 with [CEO Abovitz] 2 weeks ago and tell him whom I was thinking about poaching.).
26
Vlietstra Decl., 7; Ex. 24 (chart
27 describing roles). For example, Bradski specifically recruited

28
to Magic Leap from
11
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CASE NO.: 5:16-cv-02852-NC
Ex. 5. Defendants also apparently attempted to steal away
2 from Magic Leap
Notwithstanding her
3 employment with Magic Leap, Defendants describe

4
Ex. 25 at 9. Defendants were discussing which employees they
5 would poach as early as November 2015. Ex. 19 (Lets start pulling together more concrete funding
6 commitments, and decide between us, who we need on day 0.).
7
30.
Defendants attempts to poach Magic Leap employees directly violated their
8 Employment Agreements, obligating them, during the Restricted Period and for a period of twelve
9 (12) months thereafter [to] not solicit the employment of any person who shall then be employed by
10 the Company (as an employee or consultant). Dkt. Nos. 61-6, 61-10 at Ex. A, 6.
11
31.
Bradski sent an email documenting his full awareness that their activities were
12 inappropriate and disloyal to Magic Leap (confirmed by his decision to conduct these activities using
13 his personal email account). Ex. 22. After beginning his email with a decoy filler line, Bradski
14 contacted Magic Leap engineer
about leaving Magic Leap to join him at Robotics.
15 Id. Bradski set up a clandestine meeting at a Starbucks, warning him, Do not tell anyone this, nor
16 acknowledge that you know until I have a real agreement and admitted that he was poaching
17 multiple employees, while noting that, It may come to bite me. Id. (emphasis in original).
18
32.
Ultimately, to counteract all of Defendants misconduct, Magic Leap had to agree
19
20
Vlietstra Decl., 7.
33.
Disparagement of Magic Leaps Management: Bradski thought he should have been
21 leading Magic Leap, not CEO Abovitz. Lundmark Decl., 4. He repeatedly disparaged the
22 companys management to its employees, for example by stating that he did not have confidence in
23 Magic Leaps leadership or processes and that he thought he should be running the company. See,
24 e.g., id., 4-5; Ex. 26 (disparaging Magic Leap management to Magic Leap engineer); Ex. 27
25 (disparaging CEO Abovitz to Kaehler). This disparagement hurt the morale of Magic Leaps
26 employees in Mountain View, further
27
28
of this constant disparagement. Vlietstra Decl., 7.

12
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CASE NO.: 5:16-cv-02852-NC
34.
Misuse of Contractor: Bradski held stock in
Ex. 28. At Bradskis insistence, Magic Leap hired multiple teams
to perform critical software programming projects
Abovitz Decl., 9; Ex. 11. Magic Leap entrusted Bradski with responsibility for managing
5 the
6
teams and relationships. See, e.g., Ex. 29.

35.
Bradski then convinced Magic Leap to expand the budget and size of the
7 and, relying on Bradski, Magic Leap ultimately spent
. See, Henry Decl.,
8 2; Ex. 30. During this time, Bradski directed

9
, a company for which he is the President and CEO. Ex.
10 31 (directing
11
36.
to work on OpenCV code); Bradski Decl., 11.

Notwithstanding
critical importance to Magic Leap and contrary to his
12 fiduciary duties, as early as March of 2015, Bradski devised a plan to help

13
. Ex. 32 (I need to get
14 Whos a good contact.).

15
37.
16
, which Bradski insisted the company renew quickly. See, e.g., Ex. 33. Bradski proceeded to
Magic Leap further entrusted Bradski to handle Magic Leaps renegotiation of
17 add
to Magic Leap, including a
18
to leave projects
19
with Magic Leap. Ex. 34
20
is refreshing their contract with us. Dont
for that.); Ex. 35 1(b). At the same time that Bradski was
21 handling these negotiations to the detriment of Magic Leap and attempting to help
22 Bradski had already secretly decided to leave Magic Leap (although he had not given notice to Magic
23 Leap when it entrusted him with this responsibility). Indeed, the very day after Bradski pushed for
24
25
, Defendants incorporated Robotics. See Ex. 21.

38.
Three months after Bradski succeeding in
26
then terminated its relationship with Magic Leap. Ex. 36. Bradskis new
27 provisions permitted
28
unfinished, and prevented Magic Leap from
13
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CASE NO.: 5:16-cv-02852-NC
1 mitigating the harm by
Ex.
2 35 1(b). Magic Leap incurred significant additional expenses

3
, and the
4 associated delays in bringing Magic Leaps technology to market could also have substantial financial
5 consequences. Henry Decl., 3; Abovitz Decl., 2.
6
39.
Current Status: Before leaving to start a new venture, Defendants both waited to
7 collect their substantial bonuses and participated in Magic Leaps secondary offering.
8
40.
Defendants claims of unemployment are incorrect. See Dkt. No. 62 at 21. According
9 to his LinkedIn profile, Bradski is currently busy advising and participating in twelve different
10 ventures in various capacities, including as a board member (Occipital), President and CEO
11 (OpenCV), advisor and investor (PerceptIn) and Consulting Professor (Stanford). Ex. 37; see also
12 Dkt. No. 67-1 at Ex. 18. Bradski started nine of these roles since 2015, mostly while still employed
13 by Magic Leap. Id.
14
41.
Similarly, Kaehler founded in early 2015 and has been working for a non-profit
15 organization called Silicon Valley Deep Learning Group that has over 2000 members and [holds]
16 regular meetings in the Bay Area. Ex. 38. Kaehler also remains a Board Member of OpenCV. Id.
17
E.
Magic Leap Filed Suit After Attempting to Negotiate a Resolution in Good Faith
18
42.
Defendants claim that Magic Leap did not accuse them of misconduct until May 26,
19 2016after they filed the DJ Actionis plainly false, as demonstrated by the contemporaneous
20 documentary evidence. See Dkt. No. 46 at 7. As previously noted, Magic Leaps CEO Abovitz
21 ordered an investigation into Defendants activities after learning they intended to leave to start a new
22 venture. Abovitz Decl., 10. Based on this investigation and six days before Defendants filed the DJ
23 Action, on May 20, 2016, Magic Leaps General Counsel discussed in an email a potential amicable
24 resolution of the parties dispute, while stating that Magic Leap intended
25
. Ex. 39 at 3-4. Magic Leap sought reasonable assurances
26 from Defendants that its trade secrets would be protected, and memorialized its proposed settlement
27 terms in an email stating that, time is of the essence. Id.
28
14
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CASE NO.: 5:16-cv-02852-NC
1
2
3
. Id.
43.
Over the following three days, counsel for the parties continued to engage in
4 settlement discussions. Defendants repeatedly acknowledged their understanding that litigation was
5 inevitable in the event that negotiations were to break down. See, e.g., Ex. 39 at 3; Ex. 41 at 1.
6
44.
On May 23, 2016, after Magic Leap gave Defendants an additional 72 hour extension
7 of time to consider Magic Leaps settlement terms, Defendants filed the DJ Action in the Superior
8 Court of California in the County of Santa Clara, seeking a declaration regarding their contractual
9 rights and obligations to Magic Leap. Ex. 40 at 6; Ex. 42. Magic Leap removed the DJ Action from
10 the Superior Court of California to this Court. Ex. 43.
11
45.
Three days later, Magic Leap terminated Bradski and Kaehler, and filed this action
12 against both former employees. Dkt. No. 1. Magic Leap filed a first amended complaint (FAC),
13 which included charges against Robotics Actual and OpenCV.ai, Delaware corporations that Magic
14 Leap learned were founded by Bradski while he was still employed by Magic Leap. Dkt. No. 11.
15
46.
Magic Leap reached out to Kramer Levin Naftalis & Frankel LLP on May 16, 2016 to
16 assist with its investigation regarding this dispute. Kobialka Decl., 48. Before filing this action,
17 Magic Leaps counsel conducted a substantive pre-filing investigation, including reviewing the
18 correspondence and documentary evidence of Defendants misconduct as well as Magic Leaps
19 investigation into the same. Id. 48. Magic Leap apprised Defendants of this fact in writing after
20 receiving their draft Rule 11 papers. Id. 48; Ex. 45 (8/12/16 Letter).
21
47.
After serving Defendants with the evidence cited herein, Magic Leaps counsel asked
22 Defendants to withdraw their Motions. Kobialka Decl., 49; Ex. 44. To date, Defendants have
23 refused to do so.
24
25
26
27
28
15
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CASE NO.: 5:16-cv-02852-NC
1
2
IV.
ARGUMENT
Defendants lack a good faith basis for their Motions seeking Rule 11 sanctions grounded on
3 two baseless theories, namely that Magic Leap (1) filed suit for an improper purpose and (2) filed
4 without any basis and without conducting an appropriate pre-filing investigation. Defendants do not
5 even attempt to meet their heavy burden that their Motions are justified in any way. See Tom Growney
6 Equip., Inc. v. Shelley Irrigation Dev., Inc., 834 F.2d 833, 837 (9th Cir. 1987). Indeed, Rule 11
7 sanctions are an extraordinary remedy, one to be exercised with extreme caution. Operating Eng'rs
8 Pension Trust, 859 F.2d at 1345. They are reserved for rare and exceptional case[s] where the action
9 is clearly frivolous, legally unreasonable or without legal foundation, or brought for an improper
10 purpose. Id. at 1344. Rule 11 must not be construed so as to conflict with the primary duty of an
11 attorney to represent his or her client zealously. Id.
12
Here, Magic Leap filed suit for the appropriate purpose of protecting its valuable trade secrets
13 and other rights. As set forth above, Magic Leap has alleged and come forward with substantial
14 evidence, even without the benefit of any discovery, that Defendants engaged in serious misconduct,
15 including attempting to form a competing venture using Magic Leaps proprietary technology and
16 trade secrets, attempting to poach Magic Leap employees to support their new venture in violation of
17 the non-solicitation clauses in their Employment Agreements, violating the anti-disparagement
18 provisions in their Employment Agreements and misusing Magic Leaps resources and contractors for
19 their private ventures. See Magic Leap Statement of Facts (MLSOF) at 23-38. Thus, Magic Leap
20 was justified in filing this action, and there is no basis to find that it filed for improper purpose. For
21 this reason alone, Defendants Motions should be denied.
22
There also is no basis to conclude that Magic Leap filed frivolous claims. Sanctions may only
23 be awarded under the frivolousness prong of Rule 11 if a filing is both baseless and made without a
24 reasonable and competent inquiry, which are governed by an objective standard of reasonableness
25 under the circumstances. See In re Keegan Mgmt. Co., Sec. Litig., 78 F.3d 431, 434 (9th Cir. 1995).
26 Here, Magic Claims are based on significant evidence of misconduct, and were filed after a reasonable
27 investigation into the merits both by Magic Leap and its outside counsel. MLSOF at 21-46.
28
16
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CASE NO.: 5:16-cv-02852-NC
Defendants Motions are particularly inappropriate in that they rushed to file for sanctions
2 without waiting to first evaluate Magic Leaps evidence. Defendants arguments are based on pure
3 conjecture and false assumptions as to the nature of the evidence that Magic Leap would present. Rule
4 11 should not be employed . . . to test the legal sufficiency or efficacy of allegations in the pleadings,
5 as Defendants have attempted here. Notes of Advisory Comm. on Rules1993 Amendment, Fed. R.
6 Civ. P.11(b).
7
That Magic Leap conducted a reasonable pre-filing investigation is an independent ground to
8 deny Defendants Motion. See Keegan Mgmt., 78 F.3d at 434. Defendants assert the bald and
9 incorrect claim that Magic Leap could not have properly investigated its claims because it filed suit
10 only two days after Defendants filed the DJ Action. To the contrary, Magic Leaps investigation
11 began at the direction of its CEO well before the DJ Action when Magic Leap learned that Defendants
12 were starting a competing venture. MLSOF 21, 22, 42-46. Indeed, by May 16, 2016, Magic Leap
13 already had involved outside litigation counsel to investigate and prepare its claims. MLSOF 46. In
14 filing their Motions, Defendants simply ignore Magic Leaps representations that their investigation
15 began well in advance of the DJ Action, and do not identify any evidence to the contrary. See Ex. 44
16 (8/12/16 Letter) Thus, there is no basis for the Court to find that Magic Leaps pre-filing investigation
17 was inadequate, warranting denial of Defendants Motions.
18
Finally, Defendants Motions are totally premature, given that they were filed before they
19 reviewed Magic Leaps evidence and any discovery. Courts have found the Rule 11 motions are
20 premature at the pleadings stage. See, e.g., Network Caching Tech., LLC v. Novell, Inc., No. C-0121 2079 VRW, 2003 WL 21699799, at *7 (N.D. Cal. Mar. 21, 2003) (denying without prejudice motion
22 for Rule 11 sanctions because the court is unable to ascertain definitively whether [plaintiffs] claims
23 are without any merit); Bighorn Capital, Inc. v. Sec. Nat'l Guar., Inc., No. C 15-03083 SBA, 2015
24 WL 9489897, at *4 (N.D. Cal. Dec. 30, 2015) (The Court finds that [defendants] Rule 11 motion is
25 premature. Courts should, and often do, defer consideration of certain kinds of sanctions motions
26 until the end of trial to gain a full sense of the case and to avoid unnecessary delay of disposition of the
27
28
17
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CASE NO.: 5:16-cv-02852-NC
1 case on the merits. This is a sensible practice where the thrust of the sanctions motion is that
2 institution of the case itself was improper.).
3
For each of these reasons the Court should deny Defendants Motions. Magic Leap responds
4 below to Defendants particular arguments regarding the merits of its claims.

5
A.
Defendants Breached Their Employment Agreements
Magic Leaps fifth cause of action (the Breach of Contract Claim) is well-founded. As set
7 forth above, Defendants attempted to poach Magic Leap employees, regularly disparaged Magic
8 Leaps management, misappropriated Magic Leaps proprietary technology and diverted company
9 funds and resources to personal projects, including for
MLSOF 23-38. These actions
10 breached multiple enforceable contractual provisions, including non-solicitation, non-disparagement,

11 non-diversion and non-misappropriation provisions. FAC, 76-83; Dkt. Nos. 61-6; 61-10, Ex. A,
12 2, 5, 6. At a minimum, Magic Leaps evidence identified to date confirms that its Breach of Contract
13 Claim is not objectively baseless.
14
Any preexisting expertise Defendants claim does not excuse any of this misconduct or prevent
15 Magic Leap from pursuing its claims. The freedom to consult clause in Defendants contracts
16 permitted them to pursue ongoing consulting work consistent with [their] past practice. Dkt. Nos.
17 61-6; 61-10 (Employment Agreement) at 2 (emphasis added). None of the activity that is the basis for
18 the FAC was related to ongoing consulting activity at the time they were hired by Magic Leap.
19 MLSOF 20. Moreover, the ongoing consulting provision does not give Defendants free license to
20 poach employees, divert funds or steal trade secrets, all of which are precluded by the Employment
21 Agreements. Id.
22
Similarly, 16600 does not permit any of Defendants misconduct or prevent Magic Leap from
23 pursuing its claims. For example, California law specifically recognizes the enforceability of
24 provisions precluding current employees solicitation of other employees. Arthur J. Gallagher & Co.
25 v. Lang, No. C 14-0909 CW, 2014 WL 2195062 (N.D. Cal. May 23, 2014) (recognizing that section
26 16600 permits restraints on solicitation of employees); Thomas Weisel Partners LLC v. BNP Paribas,
27 No. C 07-6198 MHP, 2010 WL 546497, at *6 (N.D. Cal. Feb. 10, 2010) (same). In Gallagher, the
28
18
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CASE NO.: 5:16-cv-02852-NC
1 court held: the provision of the agreement prohibiting Lang from recruiting Gallagher's employees is
2 not void. Although California courts recognize that an employer may not prohibit its former
3 employees from hiring the employer's current employees, an employer may lawfully prohibit its
4 former employees from actively recruiting or soliciting its current employees. Gallagher, at *4 (citing
5 Weisel and Loral Corp. v. Moyes, 174 Cal. App. 3d 268, 280 (1985)) (Equity will not enjoin a former
6 employee from receiving and considering applications from employees of his former employer, even
7 though the circumstances be such that he should be enjoined from soliciting their applications.)).
8
Further, Magic Leaps non-compete clauses are enforceable as necessary to protect Magic
9 Leaps trade secrets, and Defendants citation to Edwards v. Arthur Andersen LLP is not to the
10 contrary. 44 Cal. 4th 937, 81 Cal. Rptr. 3d 282 (2008). See Asset Mktg. Sys. v. Gagnon, 542 F.3d 748,
11 758 (9th Cir. 2008) (noting that Cal. Bus. & Prof. Code 16600 invalidates noncompete contracts
12 unless they are necessary to protect an employers trade secrets.) (emphasis added) (citing
13 Edwards); Applied Materials, Inc. v. Advanced Micro-Fabrication Equip. (Shanghai) Co., 630 F.
14 Supp. 2d 1084, 1089 n.7 (N.D. Cal. 2009) (finding that case law amply supports the existence of the
15 trade secret exception to 16600) (citing Edwards); Bank of Am. v. Lee, 08-CV-05546 CAS(WJX),
16 2008 WL 4351348, at *6 (C.D. Cal. Sept. 22, 2008) (holding that the trade secret exception to
17 section 16600 still applies, and [n]othing in Edwards is to the contrary.); Farmers Ins. Exchange v.
18 Steele Ins. Agency, Inc., No. 2:13-cv-00784-MCE-DAD, 2013 WL 3872950, at *13 (E.D. Cal. July 25,
19 2013) (When the trade secret exception applies, a plaintiff may succeed on a breach of contract claim
20 that alleges that defendants breached the non-solicitation provisions of the agreement) (citation
21 omitted).
22
The cases Defendants cite are inapposite. In Gatan v. Nion Company, the Court found a non-
23 compete provision invalid because a separate contractual Use of Confidential Information provision
24 adequately protected the companys trade secrets. Case No. 15-cv-1862-PJH, 2016 WL 1243477 (N.D.
25 Cal. Mar. 30, 2016). Here, Defendants theft of trade secrets violates the Employment Agreements
26 confidentiality provisions, which Gatan found enforceable. Id.; MLSOF 20. Henry Schein, Inc. v.
27 Cook is also inapposite, as it found invalid a non-solicitation provision restricting solicitation of past
28
19
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CASE NO.: 5:16-cv-02852-NC
1 and current customers of the company. Case No. 16-cv-03166-JST, 2016 WL 3418537, at *6 (N.D.
2 Cal. June 22, 2016). Here, Defendants violated a non-solicitation clause prohibiting attempting to hire
3 away Magic Leaps current employees, which is plainly enforceable under California law.
4 Gallagher, 2014 WL 2195062, at *4.
5
Finally, that Defendants were involved in working on the technology they attempted to
6 misappropriate does not give them a free pass. Defendants acknowledged that any inventive work they
7 created while employees belongs to Magic Leap if (1) Defendants used Magic Leaps resources, or (2)
8 the developments took place on company time or (3) the inventions related to the employers business
9 or actual or demonstrably anticipated research or development. Dkt. No. 41 at 13. All three factors
10 are present here (although any alone is sufficient). Dkt. No. 61-6, Ex. A 3(a). Defendants used
11 Magic Leaps resources in their work on deep learning and computer vision technology, Defendants
12 worked on their new venture during working hours when they should have been focusing on Magic
13 Leap projects and their venture relates to Magic Leaps current and anticipated development in deep
14 learning, computer vision and robotics. MLSOF 6-17, 23-27.
15
Accordingly, Magic Leaps Breach of Contract Claims are well-founded, and not baseless.
16
B.
17
Magic Leaps trade secret claims are well-founded. Even without the benefit of discovery,
Magic Leap is Developing Robotics and Deep Learning Technology
18 Magic Leap substantiated these allegations with admissible evidence that it has trade secrets in the
19 fields of robotics and deep learning, is actively developing technology in those fields, is planning
20 further development in those fields, and that Defendants knew of those plans. MLSOF 1-19. Magic
21 Leap relies on declarations and contemporaneous documents regarding Magic Leaps activities and the
22 nature of Defendants Robotics venture. See, e.g., MLSOF 6-17, 24-27.
23
At best, Defendants factual allegations and extrinsic evidence (which have no bearing on the
24 reasonableness of Magic Leaps claims when filed) boil down to a naked claim that they had
25 experience in the fields of robotics and computer vision when they joined Magic Leap and the
26
27
28
20
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CASE NO.: 5:16-cv-02852-NC
1 allegation that others may have published research in the field of machine learning.2 Such contentions
2 are of no moment, as the fact that some information is known in a field (or to Defendants) does not
3 preclude other information in that field from being a trade secret.3 1-1 Milgrim on Trade Secrets
4 1.08, 1.08[5] (Case law clearly recognizes trade secret status for a combination of features, all or most
5 of which are, individually, generally known, provided that the combination itself meets trade secret
6 definitional standards . . . novel combinations of known principles can constitute a trade secret)
7 (collecting cases). What is dispositive here is that (1) Magic Leap developed confidential and
8 proprietary technology, beyond what is publicly available, that has substantial value, (2) Defendants
9 obtained access to that technology through their employment at Magic Leap and (3) in breach of their
10 duty to Magic Leap began to use that technology to start their own venture. FAC at 11-48, 52-54,
11 59-64, 69-71; MLSOF 1-19, 23-28.
12
Finally, Magic Leaps federal Defend Trade Secrets Act causes of action (Nos. 1-2) apply to
13 misconduct occurring on or after the May 11, 2016 effective date of the statute. For example, Magic
14 Leap has come forward with evidence that Defendants were working on their Robotics ventureas
15 discussed above a core component of Magic Leaps allegations of trade secrets misappropriationat
16 least as late as May 12, 2016, when they attempted to poach various key Magic Leap employees
17 specializing in deep learning technologies. MLSOF 29, 31. DTSA applies so long as part of the
18 misappropriation occurred on or after the effective date, even if Defendants original access to the
19 trade secrets was before the effective date. 18 U.S.C. 1836(e) states that The amendments made by
20
21
28
21
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CASE NO.: 5:16-cv-02852-NC
The Declaration of Dr. Pieter Abbeel should be disregarded as unreliable as he failed to disclose that
he is far from unbiased as he is an interested party who agreed to be an advisor to Robotics . See Ex.
22
23 (confirming that Abbeel was on board with Robotics Actual; Ex. 2). Aside from the unreliability
23 of Abbeels statements due to his undisclosed personal interest in Robotics, Magic Leap disputes
Abbeels claim that there is a clear link between published work in deep reinforcement learning and
24 Robotics ideas, as his analysis is limited to a comparison of a Robotics marketing document, which
does not define the full scope of its present and planned activities. See MLSOF 24-27.
25 3
Under Defendants logic, it would be virtually impossible to protect any technology as a trade secret,
26 because someone has published in almost every scientific field, and employees who are hired with a
technical background would have carte blanche to misappropriate their employers technology. Of
27 course both outlandish propositions are incorrect and unsupported by any authorities.
1 this section shall apply with respect to any misappropriation of a trade secret . . . for which any act
2 occurs on or after the date of the enactment of this Act.) (emphasis added).
3
Accordingly, Defendants Motion should be denied as to Magic Leaps trade secret claims
4 because, at a minimum, Magic Leap has come forward with evidence sufficient to demonstrate that it
5 brought those claims in good faith.
6
C.
Defendants Concealed Their Robotics Actual Venture From Magic Leap
Defendants concealed their competing venture from Magic Leap for close to a full year (and
8 possibly longer) before Bradski first discussed the issue with CEO Abovitz. MLSOF 24-28.
9 During that time, Defendants diverted company resources to their new venture, attempted to poach
10 Magic Leaps technology and employees for their effort, and worked on their competing venture
11 during work hours when they should have been furthering Magic Leaps projects. MLSOF 21-38.
12 Defendants intention to conceal their venture from Magic Leap and understanding that their actions
13 were disloyal and inappropriate is confirmed by their use of personal email accounts and decoy email
14 filler headers, clandestine meetings away from Magic Leaps facilities, email discussing the need to
15 prepare their venture in secret before the kill and email acknowledging that Magic Leaps lawyers
16 would never approve of their venture. MLSOF 24, 26, 27, 31. Thus, Defendants own documents
17 refute their claims that they did not conceal Robotics from Magic Leap. Dkt. No. 47 at 15-16.
18
D.
Defendants Converted Magic Leaps Resources
19
Defendants converted Magic Leaps resources at least by (1) using Magic Leap funds and
20 resources to develop their private competing venture and (2) working on their private venture during
21 company time when they should be been working on Magic Leap projects. MLSOF 24, 27, 34-38.
22 Accordingly, Magic Leaps conversion claims against Defendants are, at a minimum, not baseless.
E.
Defendants Documents Confirm Their Connection to OpenCV.ai
23
Defendants presentation confirms the link between OpenCV.org, OpenCV.ai and Magic
24
Leaps technology. See Ex. 25. Specifically, in an OpenCV.ai presentation, Bradski characterizes
25
OpenCV as being funded by Magic Leap, and explains that the focus of OpenCV.ai will be
26
developing products in the field of computer imaging technology. Id. at 23-29. Directly contrary to
27
28
22
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CASE NO.: 5:16-cv-02852-NC
1 Bradskis declaration that OpenCV.org has no relationship to OpenCV.org, the presentation explains
2 that OpenCV.ai is a for profit corporation . . . that will support OpenCV.org. Id. at 24; compare with
3 Dkt. No. 49 (Bradski Decl.), 11(b). Defendants presentation describes Kaehler as OpenCVs
4 Development Lead for Documentation. Id. at 9. This presentation, which describes Bradski as the
5 Founder, Funder and Board Member of OpenCV.ai and identifies him as the author of the
6 presentation and main point of contact, directly contradicts Defendants claim that his sole role is to
7 assist OpenCV in raising funds. Compare id. at 30 with Dkt. No. 47 at 10. Defendants also
8 apparently attempted to poach
for
. MLSOF 29. Accordingly, Magic Leaps
9 claims regarding OpenCV.ai are not baseless.

10
F.
Defendants Repeatedly Disparaged Magic Leap
11
Defendants state in their declarations and Motions that they never disparaged Magic Leap (Dkt.
12 No. 46 at 21; Dkt. No. 47 at 19), but Magic Leap has come forward with proof that they did. MLSOF
13 33. Accordingly, Magic Leaps claims based on Defendants violation of the anti-disparagement
14 provisions in their Employment Agreements are not baseless.
15
G.
Magic Leap Did Not Pursue a Breach of Fiduciary Duty Claim Against Kaehler
16
Defendant Kaehler devotes an entire section of his brief to denying that he owes a fiduciary
17 duty to Magic Leap (Dkt. No. 46 at 18-19), yet Magic Leap only asserted breach of fiduciary claims
18 against Bradski. See FAC at 84-88.
19
20
21
22
23
24
25
26
27
28
23
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CASE NO.: 5:16-cv-02852-NC
V.
Defendants request for sanctions should be denied because Magic Leap brought its claims
2
3
4
DEFENDANTS REQUEST FOR SANCTIONS SHOULD BE DENIED
against Defendants for the valid purpose of protecting its intellectual property and contractual rights,
based on substantial evidence and after conducting a reasonable pre-filing investigation.4
VI.
CONCLUSION
5
For these reasons, Magic Leap respectfully requests that the Court deny Defendants Motions
6
and reprimand Defendants for filing them without first reviewing Magic Leaps substantial evidence
7
of their significant misconduct and because Defendants had absolutely no basis to allege that Magic
8
Leap failed to conduct an appropriate pre-filing investigation.
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Respectfully submitted,
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Dated: September 9, 2016
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Aaron Frankel (appearance pro hac vice)

KRAMER LEVIN NAFTALIS
& FRANKEL LLP
1177 Avenue of the Americas
New York, NY 10036
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By: /s/ Lisa Kobialka

Paul J. Andre
Lisa Kobialka
KRAMER LEVIN NAFTALIS
& FRANKEL LLP
990 Marsh Road
Menlo Park, CA 94025
Telephone: (650) 752-1700
Facsimile: (650) 752-1800
pandre@kramerlevin.com
lkobialka@kramerlevin.com
The questionable nature of Defendants Motions extends to their entirely unreasonable requests for
over $50,000 in fees as to Bradski and $45,000 in fees as to Kaehler. Defendants Motions are almost
identical, making their request to double-dip on fees inappropriate, and given that their papers
recycle the same arguments used in their motion to dismiss. See Dkt. No. 41. To support their request,
Defendants offer only their counsels statement that his team spent over 211 hours on the Motions,
totaling $65,310 in fees. See Dkt. No. 51 26. This declaration fails to account for about $30,000 in
requested fees. A request for fees must be reasonable in light of the circumstances of the case and
properly documented. In re Yagman, 796 F.2d 1165, 1184 (9th Cir.), opinion amended on denial of
reh'g, 803 F.2d 1085 (9th Cir. 1986). Defendants requests for fees fall far short of that standard
without more specific documentation in support of their requests and without a proper opportunity for
Magic Leap to analyze and object to such documentation.
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__________________________________________________________________________________
CASE NO.: 5:16-cv-02852-NC
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Telephone: (212) 715-7793

afrankel@kramerlevin.com
Attorneys for Plaintiff
MAGIC LEAP, INC.
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__________________________________________________________________________________
CASE NO.: 5:16-cv-02852-NC

Magic Leap Opposition

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Case 5:16-cv-02852-NC Document 99 Filed 09/09/16 Page 1 of 29

PAUL J. ANDRE (State Bar No. 196585)

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

MAGIC LEAP, INC., a Delaware Corporation,

18 GARY BRADSKI, an individual, ADRIAN

Case No.: 5:16-cv-02852-NC

REDACTED VERSION OF DOCUMENT SOUGHT TO BE SEALED

Case 5:16-cv-02852-NC Document 99 Filed 09/09/16 Page 2 of 29

STATEMENT OF ISSUES PRESENTED .................................................................................. 3

MAGIC LEAPS STATEMENT OF FACTS ............................................................................. 4

Magic Leap is Developing Cutting Edge Technology ..................................................... 4

Magic Leap is Developing Deep Learning Technology .................................................. 5

Magic Leap Entrusted and Invested in Bradski and Kaehler ........................................... 8

Magic Leap Filed Suit After Attempting to Negotiate a Resolution in Good

Defendants Breached Their Employment Agreements ................................................ 18

Magic Leap is Developing Robotics and Deep Learning Technology .......................... 20

Defendants Converted Magic Leaps Resources ........................................................... 22

Defendants Documents Confirm Their Connection to OpenCV.ai .............................. 22

Defendants Repeatedly Disparaged Magic Leap ........................................................... 23

DEFENDANTS REQUEST FOR SANCTIONS SHOULD BE DENIED.............................. 24

Case 5:16-cv-02852-NC Document 99 Filed 09/09/16 Page 3 of 29

4 Applied Materials, Inc. v. Advanced Micro-Fabrication Equip. (Shanghai) Co.,

Case 5:16-cv-02852-NC Document 99 Filed 09/09/16 Page 4 of 29

Tom Growney Equip., Inc. v. Shelley Irrigation Dev., Inc.,

Case 5:16-cv-02852-NC Document 99 Filed 09/09/16 Page 5 of 29

Magic Leap is a startup company that is developing a variety of cutting-edge technologies.

Case 5:16-cv-02852-NC Document 99 Filed 09/09/16 Page 6 of 29

founding Defendant Robotics, a company directed to applications of deep learning,

attempting to take technology developed using Magic Leaps resources to Robotics;

negotiating unfavorable provisions in Magic Leaps contract with

Case 5:16-cv-02852-NC Document 99 Filed 09/09/16 Page 7 of 29

STATEMENT OF ISSUES PRESENTED

Case 5:16-cv-02852-NC Document 99 Filed 09/09/16 Page 8 of 29

MAGIC LEAPS STATEMENT OF FACTS

Magic Leap is Developing Cutting Edge Technology

Magic Leap is a startup company founded in 2011 that is developing a variety of

. Id., 9. The departure of engineers

or difficulty in recruiting and

Case 5:16-cv-02852-NC Document 99 Filed 09/09/16 Page 9 of 29

Magic Leap is Developing Deep Learning Technology

Case 5:16-cv-02852-NC Document 99 Filed 09/09/16 Page 10 of 29

Robotics technology, AI/machine/learning/deep learning and automation are an

Case 5:16-cv-02852-NC Document 99 Filed 09/09/16 Page 11 of 29

in the manufacturing process. Id. Magic Leap perceives

17 /deep learning technology to robotics and

19 applications. Abovitz Decl., 5, 6; Declaration of David Lundmark (Lundmark Decl.), 3;

Ex. 9. Earlier this year,

22 Bradski toured Magic Leaps manufacturing facility. Abovitz Decl., 6.

Case 5:16-cv-02852-NC Document 99 Filed 09/09/16 Page 12 of 29

4 activities, Magic Leap has had various meetings with

with Magic Leaps technology,

As another example of Magic Leaps investment in robotics and computer vision

in the company. Ex. 13 at 5.

Magic Leap Entrusted and Invested in Bradski and Kaehler

Magic Leap hired Bradski in late 2013 as VP of Advanced Perception and

As a condition of their employment, Bradski and Kaehler each entered into an

26 Employment Agreement and a Proprietary Information and Inventions Agreement (collectively,

Case 5:16-cv-02852-NC Document 99 Filed 09/09/16 Page 13 of 29

not engage in any other employment, occupation, consulting or other business

Magic Leap Terminated Bradski and Kaehler Due to Their Misconduct

Case 5:16-cv-02852-NC Document 99 Filed 09/09/16 Page 14 of 29

Case 5:16-cv-02852-NC Document 99 Filed 09/09/16 Page 15 of 29

21 Robotics. Ex. 21.