No Trip to Paris to Fight App-Theft Claims

SAN FRANCISCO (CN) - A federal judge refused to throw out a suit accusing French telecom giant Orange S.A. of reverse-engineering Telesocial's "Call Friends" app, finding the parties didn't agree to fight all battles in Paris.

According to a federal complaint filed this past September by Telesocial, Orange and several of its employees hacked into Telesocial's secure servers and stole trade secrets and proprietary software code.

The companies had been negotiating a business deal for the Call Friends app, which integrates carrier-based phone call capability into social media platforms like Facebook, instead of using traditional phone numbers.

Telesocial and Orange had signed nondisclosure agreements before exchanging confidential information. The deal fell through after Orange balked at Telesocial's $1 million demand.

But instead of parting ways, Telesocial says Orange resorted to stealing what it couldn't buy by hacking the San Francisco-based startup's servers and swiping proprietary code.

When Telesocial discovered the alleged theft, it sued Orange under the federal Computer Fraud and Abuse Act and California law for unauthorized computer access, trade secret theft and other claims.

Orange moved to dismiss the suit, arguing that the companies' nondisclosure agreements required the Court of Paris as the sole venue for litigating potential dispute.

But despite a recent U.S. Supreme Court decision that clarified "often murky waters of venue, forum selection clauses and the forum non conveniens doctrine," U.S. District Judge James Donato on Tuesday denied Orange's request to move the case to Paris.

"Orange has failed to connect the complaint to the nondisclosure agreement," Donato wrote. "Orange contends that all claims in the complaint trace back to the confidential discussions held under the NDA and are therefore subject to the clause. In essence, Orange argues that once the parties started discussing Call Friends under the NDA, all other events and communications involving the application, including the events alleged in the complaint, necessarily relate to it. To get to that conclusion, Orange must stretch the NDA well past any reasonable application to the facts alleged in the complaint, and too far to be the basis for dismissing this case."

Telesocial's claims involve only the alleged hacking of its servers by Orange - actions not authorized or even contemplating in the nondisclosure agreement. Similarly, the company's actions for trade secrets and unfair competition don't involve anything referenced by the agreement such that the forum clause would be invoked, the judge said.

"All of Telesocial's claims here can and will be 'adjudicated without analyzing whether the parties were in compliance with the nondisclosure agreement,'" Donato wrote, citing the 9th Circuit case Manetti-Farrow Inc. v. Gucci Am. Inc. "Consequently, they fall outside the scope of the forum clause."

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