Livepersona, Inc. v. [24]7.ai, Inc.

Patent Infringement, Trade Secrets Misappropriation

Northern District

U.S. District Judge John S. Tigar

Plaintiffs Attorney: Kirkland & Ellis Llp, Adam R. Alper, Michael W. De Vries, Sierra Elizabeth, Sharre S. Lotfollahi, Joshua L. Simmons, Benjamin A. Herbert, Kristen Reichenbach, Kevin D. Bendix

Defense Attorneys: O'melveny & Myers Llp, Darin W. Snyder, Luann L. Simmons, Geoffrey H. Yost, Melody D. Hansen, Carolyn S. Wall, David R. Eberhart

Adam R. Alper

There's a reason Mike De Vries and Adam Alper like trying trade-secret misappropriation cases. They're interesting trials for plaintiffs' attorneys, De Vries said, because "you regularly have the defendants admit that they did the wrong thing."

And that, as the lead counsel pair sees it, is just what happened when the top purveyor of online chat applications for businesses sued a top supplier of personnel to work as chat agents. LivePerson Inc. v. [24]7.ai Inc., 4:17-cv-01268 (N.D. Cal., filed March 10, 2017).

The case is about "the relationship of trust" that a company has with its suppliers and partners "and how that relationship of trust was fundamentally violated here," Alper said.

LivePerson developed a pioneering messaging platform that allows customers to "click to chat" with a business or live agents through the company website.

The defendant, [24]7.ai, supplies the real people who sometimes chat with the customers, and the two companies shared many clients, including major retailers, banks and other businesses. In order to do its work, [24]7 needed to know some of LivePerson's trade secrets.

But about 10 years ago, [24]7 announced its own online chat software, allegedly using some LivePerson secrets.

LivePerson initially sued in 2014, and [24]7 countered with a lawsuit claiming patent infringement. Once the litigation made its way to the Northern District, Judge Jon S. Tigar decided to try the trade secrets side of the case.

During the trial last spring, the Kirkland team showed the jury that "while [24]7 was putting on a face to LivePerson that it needed access to the trade secret technologies for purposes of playing its part in all of this,... behind the scenes it was planning something very different," Anders said. "It was a very devious plan."

Specifically, documents showed, [24]7 had a two-stage plan, first to acquire further LivePerson secrets and second, lure LivePerson's customers away with a less expensive product.

"And then they lied about it, and they attempted to lie about it on the stand at trial," he said. "We were able to reveal that during our cross-examination."

For example, [24]7's CEO during a deposition denied there was any plan to take LivePerson's secrets, according to De Vries. Then, the Kirkland lawyers showed him a PowerPoint pack titled "Our Playbook," in which the first item was "get the LivePerson rules," or key software secrets. When the CEO took the stand for cross-examination, the jury watched a video of that deposition, De Vries said.

Armed with that and similar evidence, the jury returned a verdict awarding LivePerson $6.75 million in lost profits and $23.59 million in punitive damages.

Posttrial motions are pending, and the trial of [24]7's patent infringement suit against LivePerson is still to come, although no date has been set, De Vries said.

Darin W. Snyder and Luann L. Simmons of O'Melveny & Myers LLP, who led the defense for [24]7, did not respond to a request to comment on the verdict.

- Don DeBenedictis

Michael W. De Vries