June 12, 2017

Augmented Reality Company Sues Former Employee Over Trade Secrets

5-VR NEWSFEED June12 2017 - Augmented Reality Company Sues Former Employee

Augmented reality startup Meta is suing a former employee, claiming that he stole trade secrets. Zhangyi Zhong, the former head of optics at the California company is being sued along with rival augmented reality company DreamWorld USA and 20 unnamed defendants.

Zhong was employed by Meta between March 2015 and July 2016 before leaving to create his own company, DreamWorld and develop a competitive product for them. The lawsuit alleges that:

Evidence in the public domain provides compelling proof that Zhangyi Zhong and his start-up company, Dreamworld USA, Inc., have shamelessly leveraged Zhong’s sixteen months of employment at Meta Company to misappropriate confidential and trade secret information relating to Meta’s technologies, supply chain, manufacturing methods and relationships, as well as business, investment and market strategies. Through the use of that confidential and trade secret information, Zhong and Dreamworld have jump-started their development of a prototype augmented reality device, and are on the verge of launching a campaign to steal what they can from Meta’s market share and investor base for personal gain.

DreamWorld has responded by describing the charges as “completely baseless.”

The background to the case is that DreamWorld has just announced the release of its first product - an augmented reality headset called DreamGlass, priced at $350. In contrast, the Meta 2 headset, which was launched last year, is priced at $950.

The Meta lawsuit further claims that:

On July 21, 2016, Zhong emailed his direct manager and Meta’s Human Resources staff and informed them that he was resigning from his employment at Meta, effective the following day (i.e., July 22, 2016). In that message, Zhong attributed his decision to resign to “some old medical conditions which need serious attention now. My doctor suggests avoid [sic] any work activities.” Zhong further represented that he had decided, in light of this medical advice, “. . . to take a break and stop working for a while.”

The suit goes on to accuse Zhong of secretly setting up DreamWorld under a variation of his name and running the company through an intermediary whom Meta allege is Zhong’s wife or girlfriend.

Meta claim that they initially accepted Zhong’s explanation of his resignation in good faith but then became when an article in Upload reviewed the DreamWorld glasses, pointing out that they were lighter and cheaper than both the Meta 2 and the Microsoft Hololens. The article also stated that the DreamGlass has: “a Meta-esque optics system that places the screens at an angle above the lenses.”

The meta lawsuit alleges misappropriation of trade secrets, breach of contract and fraudulent business practices. DreamWorld has disputed the allegations, describing them as “completely baseless and without merit.” They further state that they they will respond in due course.

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