Third Time’s a Charm for Case Over Google’s Project Loon

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By Alexis Kramer

Alphabet Inc.'s Google failed to escape claims that its balloon-based wireless network, Project Loon, was developed with trade secrets allegedly stolen from a tech company.

Google previously won dismissal of two complaints by Space Data Corp. under federal and state trade secret law. But the U.S. District Court for the Northern District of California allowed Space Data’s third amended complaint to proceed.

The outcome of the case could affect the expansion of Project Loon, which X—the Alphabet tech research and development subsidiary originally founded under Google that works on the project—says is designed to provide internet coverage to people in rural and other remote areas around the globe. Google publicly launched Project Loon with a pilot test in New Zealand in 2013.

The claims were brought against Google because they predate the existence of X as a separate entity, or the creation of parent company Alphabet in Google’s 2015 corporate restructuring.

Space Data sufficiently alleged that Google used its confidential information in violation of a nondisclosure agreement between the two parties, the court said. The third amended complaint contains factual allegations that Google took photographs of information Space Data properly designated as confidential, and that many similarities exist between the two companies’ balloon technology.

The court rejected Google’s argument that Space Data couldn’t bring a claim under the federal Defend Trade Secrets Act on the grounds that the company failed to allege Google misappropriated trade secrets on or after May 11, 2016—the date of the law’s enactment.

The court said Space Data can assert such a claim because it alleged that Google continued to use its trade secrets after that date.

A Project Loon spokesperson who did not want to be named so she could discuss the matter told Bloomberg Law Dec. 19 the claims lack merit and the company is “vigorously” defending itself.

The case is Space Data Corp. v. Alphabet Inc. , N.D. Cal., No. 16-cv-03260-BLF, 12/18/17 .

To contact the reporter on this story: Alexis Kramer in Washington at akramer@bloomberglaw.com

To contact the editor responsible for this story: Keith Perine at kperine@bloomberglaw.com

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