Posted: January 16th, 2018
By: Jamie Burchette *| Staff WriterIt is an age-old story – companies work together, but the relationship sours. Sometimes this is the end of the story, and sometimes this is only the beginning. The relationship between Keyssa Inc and Essential Products Inc seems to be heading in the latter direction.
Keyssa is a company that wants to change the way devices connect with each other. There are already several existing ways: cables, Wi-Fi, etc., however, Keyssa’s product, Kiss Connectivity, promises many benefits over existing connections. Wireless connections take up a significant amount of space inside devices since the connection requires antennas. While these antennas are small, they are relatively large when they are placed inside a smartphone. On the other hand, Kiss Connectivity is “coffee bean-sized” and takes up less space. And, unlike cables, Kiss Connectivity does not require an opening in the device. Kiss Connectivity is more secure than Wi-Fi since it is a direct connection between the two devices without going through any routers. Even more impressively, Kiss Connectivity allows data transfer speeds of up to 6GB per second.
Keyssa has been developing this technology since 2009, and it is just starting to roll it out. In October 2016, Keyssa announced it was placing Kiss Connectivity in Intel 2 in 1 devices. In August 2017, Keyssa partnered with Samsung and Foxconn to place Kiss Connectivity chips in smartphones. Keyssa’s thunder, however, was stolen by the Essential Phone. The Essential Phone was released shortly after the partnership was announced, and it came equipped with a “magnetic connector with wireless data transfer.” For Keyssa, this move raised some eyebrows, and, subsequently, Keyssa filed a lawsuit against Essential Products.
Keyssa’s lawsuit does not allege that Essential Products stole their chip technology. Instead, this lawsuit has taken a different path. According to Keyssa, the two companies spent ten months discussing Keyssa’s technology. These discussions involved Keyssa’s trade secrets, which Essential Phone was obligated not to disclose under a non-disclosure agreement. Eventually, Essential Products ended the relationship and, instead, used a competing chip from SiBEAM. Still, the Essential Phone incorporated elements, such as testing methods and antenna designs, which Keyssa claims are trade secrets which they had shared with Essential Products.
Trade secrets work differently than patents and trademarks. Trade secrets have the potential to last forever, but the responsibility of protecting the trade secret falls more heavily on the owner. The owner cannot just file with the government and sue anyone who does not comply. Instead, the owner must actively keep the trade secret hidden from others through restricted access, non-disclosure agreements, etc. There is nothing stopping another company, however, from creating the same idea. The owner can sue if someone steals the trade secret or violates a non-disclosure agreement, but there is no remedy if another company came up with the idea independently.
In the current situation, the facts are not clear enough to reveal the truth. Keyssa almost certainly used the techniques which are the subject of the lawsuit and considered them to be trade secrets. However, whether these trade secrets were disclosed to Essential Products during the two companies’ relationship remains to be decided. The situation seems suspicious, but it could have just been two great minds thinking alike. In the end, the case will be decided based on where Essential Products came up with its techniques, whether Keyssa shared these trade secrets with Essential Products, and how well Keyssa protected its trade secrets. Of course, this is assuming that the case makes it to trial. The lawsuit is still in its earliest phases and the two parties once had a business relationship. There is a strong chance that this case will reach a settlement that both parties find acceptable.
Jamie Burchette is a second-year law student at Wake Forest University School of Law. He holds a Bachelor of Science in Business Administration and Law with a minor in Computer Science from Western Carolina University. Upon graduation, he intends to practice business law.