The US District Court for the Northern District of California this month compelled arbitration of two former workers' counterclaims seeking to invalidate their employment contracts. Cisco Sys., Inc., et al. v. Chung, et al., No. 19-CV-07562-PJH, 2021 WL 427293 (N.D. Cal. Feb. 8, 2021). Cisco had sued the two ex-employees for misappropriating trade secrets in violation of their Proprietary Information and Inventions Agreements (PIIAs). The employees countersued, alleging the PIIAs were invalid under California law. Both PIIAs provided for arbitration of claims under the agreements, except for certain claims relating to intellectual property.
The court ruled that the counterclaims did not fit within the carveout for intellectual property claims, and thus were subject to arbitration. With regard to the first defendant, the court held that the claims "pertain[ing] to" or relat[ing] to" misappropriation of property did not qualify as claims "for misappropriation of such property" under the carveout. With regard to the second defendant, the court held that a challenge to the PIIA's definition of "Proprietary Information" and vague references to intellectual property did not convert the claim into one concerning intellectual property. The court thus granted Cisco's motion to compel arbitration of the ex-workers' counterclaims.
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