Know Your Code
By: C.J. Cantwell


Hooli was expected to win its lawsuit against Pied Piper when the company sued for IP ownership of the startup’s compression algorithm. One can imagine Hooli engineers on the edge of their seats, waiting for the decision that would allow them to put the world’s most advanced, middle-out compression algorithm into the struggling Nucleus project. But those dreams were dashed when a judge, in a binding arbitration decision, awarded Pied Piper full ownership of their IP and ensured both a future of continued innovation from the hot compression play and a world where tech giants like Hooli better think twice about picking on the little guy.

The lawsuit claimed Pied Piper founder Richard Hendricks created his algorithm while working at Hooli, meaning the IP belonged to Hooli alone. Pied Piper, with Hendricks at its helm, has maintained the algorithm belongs to the startup and not the tech giant. This binding arbitration confirmed that fact.

Unfortunately for Hooli, it looks like CEO Gavin Belson has lost more than a piece of tech. Sources tell us the decision implicated Belson’s insistence to include Jared “It’s Donald” Dunn in the suit—asserting that Hendricks violated the non-solicit terms of his employment contract when he hired Dunn directly from Hooli. Hendricks did, in fact, violate this non-solicit clause; however, the judge decided to void Hendricks’s entire contract after a review of the Hooli employment agreement. Hooli’s standard contract includes a non-compete clause which would have prevented Dunn from taking the job—that is, if non-compete clauses were legal.

In California, non-compete agreements are unenforceable, per Section 16600 of the California Business and Professions Code, which states any contract “by which anyone is restrained from engaging in a lawful profession, trade or business of any kind is to that extent void.” Unlike other states, which allow for “reasonable” non-compete clauses, California law says you cannot stop your employees from taking another job. Perhaps Belson should consider taking advantage.

Pied Piper’s victory has brought new life to the struggling startup, immediately marking it as the innovator it has always claimed to be. Hendricks has sealed his fate as the next Mark Zuckerberg, ready to lead a world-changing technology company and forever alter how we see the internet. For those who actually want to see someone make the world a better place, Pied Piper is one to watch.

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