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Protecting San Diego Intellectual Property: What is “Trespass to Chattels?”

Every San Diego business has intellectual property. “Intellectual property” includes assets like trademarks, patents, and copyrights but also includes trade secrets. Indeed, trade secrets are the most common form of intellectual property owned by California businesses. Intellectual property is protected under both California and federal law. At one end of the legal spectrum, theft or unauthorized use of another person’s intellectual property can result in very large civil judgments and even criminal penalties. At the other end, even small invasions against use of intellectual property can be punished and prevented. A common example here is where an employee leaves a business and takes with him or her the passcodes and security codes to the company’s website. If the employee does not use the website or change it, the former employee has not technically committed a theft. But, certainly, the former employee has interfered with the intellectual property of the business and caused economic injury, even if the injury is minor.

Here in the Golden State, there is a litigation cause of action that can be used in just this sort of circumstance. The cause of action is called “trespass to chattels.” Most people are familiar with the idea of trespass to land. Someone comes onto your property or into your home without permission or legal authorization: That is trespass to or against real property. The same idea applies to trespass to chattels, except that “chattels” denotes something that is intangible. A recent decision was handed down by the California Court of Appeals that illustrates the legal principles. See Pneuma International, Inc. v. Cho, Case No. A151536 (Cal. App. 1st Dist. June 24, 2019).

In that case, employee Yong Cho had set up a website for his employer, Pneuma International, Inc. In doing so, Cho used his own personal Yahoo! email address and became the registered owner of the domain. The website was used as a repository of the company’s business records, including its financial books, contact information for vendors and customers, purchase orders, and was used for email for company employees.

About a year later, Cho left to go work for a competitor. He partially trained his successor in how to run the website and he cooperated with Pneuma in keeping the website operating. However, because the website was linked to his own person email account, he refused to turn over all emails and communications related to the website and, because shifting the ownership of the domain name would interfere with his new employment, he would not allow Pneuma to become the owner of the domain. Eventually, Pneuma sued Cho for numerous alleged legal violations including trespass to chattel.

To prove trespass to chattel, a plaintiff must prove five elements:

  • The plaintiff owned, possessed, or had a right to possess some intangible property — chattel — like a website domain
  • Intentional interference with that use or possession by the defendant
  • The plaintiff did not consent
  • Harm; and
  • The interference was a substantial factor in causing the harm

At trial, the court held that Pneuma successfully proved trespass to chattel. The interference with Pneuma’s right to use the website was minor, but it was real. As such, the trial court ordered Cho to transfer the ownership and contents of the domain to Pneuma. The Court of Appeals affirmed.

This case is a “win” for San Diego businesses. The case demonstrates that California courts will protect a business from even minor interference with the use, enjoyment, and monetization of a business’ intellectual property. In this Age of the Internet, strong and vigorous protection of intellectual property is essential.

Contact San Diego Corporate Law Today

For more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard can be reached at (858) 483-9200 or via email. Mr. Leonard’s law practice is focused on corporate, securities, contract, and intellectual property law for small and medium businesses. Mr. Leonard can assist with the formation of your business entity — corporations, LLCs, and other forms — financing through the sale of debt and equity securities, mergers and acquisitions, contract drafting and review including commercial leases, and establishment and licensing of trademarks, copyrights, and trade secrets. Like us on Facebook.

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