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Case 3:17-cv-03259-MEJ Document 1 Filed 06/06/17 Page 1 of 34

1 SHEPPARD, MULLIN, RICHTER & HAMPTON LLP


A Limited Liability Partnership
2 Including Professional Corporations
JENNIFER G. REDMOND, Cal. Bar No. 144790
3 jredmond@sheppardmullin.com
4 PAUL S. COWIE, Cal. Bar No. 250131
pcowie@sheppardmullin.com
5 JOHN-PAUL S. DEOL, Cal. Bar No. 284893
jdeol@sheppardmullin.com
6 Four Embarcadero Center, 17th Floor
San Francisco, CA 94111-4109
7
Telephone: 415.434.9100
8 Facsimile: 415.434.3947

9 Attorneys for Defendant


META COMPANY
10
11 UNITED STATES DISTRICT COURT
12 NORTHERN DISTRICT OF CALIFORNIA
13 META COMPANY, a Delaware corporation, Case No.
14 COMPLAINT FOR INJUNCTIVE
Plaintiff,
RELIEF AND DAMAGES
15
v. 1. VIOLATION OF DEFEND TRADE
16 SECRETS ACT
ZHANGYI ZHONG (a.k.a. Zhangyi Johnny
17 Zhong, a.k.a. Zhangyi Kevin Zhong), an 2. VIOLATION OF CALIFORNIA
UNIFORM TRADE SECRETS ACT
18 individual, DREAMWORLD USA INC., a
Delaware corporation, and DOES 1 through
3. BREACH OF WRITTEN CONTRACT
19 20.
4. BREACH OF THE DUTY OF
20 Defendants. LOYALTY
21 5. INTENTIONAL INTERFERENCE
WITH CONTRACTUAL RELATIONS
22
6. VIOLATION OF CAL. BUS. & PROF.
23 CODE SECTION 17200, ET SEQ.
24
DEMAND FOR JURY TRIAL
25
26
27
28
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1 Plaintiff META COMPANY (Meta or Plaintiff) alleges as follows against Defendants

2 ZHANGYI ZHONG, a.k.a. Zhangyi Johnny Zhong, a.k.a. Zhangyi Kevin Zhong (Zhong),
3 and DREAMWORLD USA, INC., d.b.a. Dreamworld Vision (Dreamworld).
4 PARTIES

5 1. Meta is a Delaware corporation with its principal place of business located in the

6 County of San Mateo in the State of California.


7 2. Upon information and belief, Zhong currently resides in San Mateo County,

8 California, and has variously represented himself under the names Johnny Zhong, and Kevin
9 Zhong.
10 3. Upon further information and belief, Dreamworld is a Delaware corporation with its

11 principal place of business located in Millbrae, California. Dreamworld conducts business in


12 California, throughout the United States, and overseas.
13 4. Meta also sues fictitious defendants Does 1 through 20 because the true names and

14 capacities of such Doe defendants are not presently known to it. Meta will amend this Complaint
15 to allege the true names and capacities of Doe defendants when the true names of such Doe
16 defendants are determined.
17 5. Meta is informed and believes that each of the Doe defendants was responsible in

18 some way for the occurrences and injuries alleged in this Complaint. Meta is informed and believes
19 that in doing the things alleged in this Complaint, each defendant was acting as an agent, master,
20 servant, employer, employee, or partner of every other defendant, was acting within the course and
21 scope of this agency or employment relationship, and was acting with the consent, permission, and
22 authorization of each of the remaining defendants. Meta is also informed and believes that all
23 actions of each defendant alleged in this Complaint were ratified and approved by the officers or
24 managing agents of every other defendant.
25 JURISDICTION, VENUE, AND INTRADISTRICT ASSIGNMENT

26 6. This Court has subject matter jurisdiction over Metas federal trade secret claim

27 pursuant to 18 U.S.C. 1836-39 et seq. and 28 U.S.C. 1331. The Court has supplemental
28 jurisdiction over the state law claims alleged in this Complaint pursuant to 28 U.S.C. 1367.
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1 7. Venue is proper in this district under 28 U.S.C. 1391(b) and (c) based on the

2 following:
3 a. Meta is informed and believes that Zhong resides in San Mateo County, California;

4 b. Meta is also informed and believes that Defendant Dreamworld conducts, engages

5 in, and carries on business within San Mateo County, California; and

6 c. The unlawful acts giving rise to Plaintiffs claims have occurred in San Mateo

7 County, California and elsewhere.

8 8. For purposes of intradistrict assignment under Local Rule 3-2, this action should be

9 assigned on a district-wide basis.


10 FACTUAL BACKGROUND

11 I. Overview

12 9. Evidence in the public domain provides compelling proof that Zhangyi Zhong and

13 his start-up company, Dreamworld USA, Inc., have shamelessly leveraged Zhongs sixeen months
14 of employment at Meta Company to misappropriate confidential and trade secret information
15 relating to Metas technologies, supply chain, manufacturing methods and relationships, as well as
16 business, investment and market strategies. Through the use of that confidential and trade secret
17 information, Zhong and Dreamworld have jump-started their development of a prototype augmented
18 reality device, and are on the verge of launching a campaign to steal what they can from Metas
19 market share and investor base for personal gain.
20 10. Meta hereby seeks to stop Zhong, its former Senior Optical Engineer, and

21 Dreamworld from further misappropriating Metas confidential and trade secret information in
22 violation of federal and California state law and from continuing to engage in unfair competition.
23 Meta further seeks the return of Metas trade secrets and confidential information, to stop Zhong
24 from continuing to violate his ongoing contractual obligations to Meta, to stop Dreamworld from
25 interfering in those contractual obligations, and for compensation for the transgressions that Zhong,
26 Dreamworld and their agents have already perpetrated.
27
28
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1 II. Meta is a Leader in the Emerging Augmented Reality Market

2 11. Meta is a rapidly-growing Silicon Valley technology company that has pioneered

3 innovative ways to bring augmented reality (AR) to a wide range of industries and audiences.
4 Augmented reality is a technology that utilizes specialized hardware and software components to
5 superimpose computer-generated digital images onto a users view of the real world, thus allowing
6 the user, in real time, to interpret and manipulate the digital imagery while maintaining his or her
7 view of the real world. By contrast, virtual reality (VR) hardware blocks the users view of the
8 real world and replaces it with a simulated virtual world.
9 12. Since its founding in 2013, Meta has designed, developed, and brought to market

10 wearable AR technology products with unique designs based on neuroscience principles. Thanks
11 to its innovative vision and products, Meta launched a successful Kickstarter campaign in May 2013,
12 gained acceptance to the prestigious Y-Combinator start-up accelerator in August 2013, raised a
13 twenty-three million dollar ($23,000,000) Series A funding round in 2015 (led by Horizons
14 Ventures, Tim Draper, BOE Optoelectronics, and Garry Tan and Alex Ohanian (the founder of
15 Reddit), with participation from Danhua Capital and others), and raised a fifty-million-dollar
16 ($50,000,000) Series B funding round in 2016 (with participation from Lenovo Corporation,
17 Horizon Ventures, Tencent, Banyan Capital, Comcast Ventures, and GQY).
18 13. Meta owes much of its fundraising and marketplace success to its development of an

19 industry-leading wide field-of-view1 optical engine (the optical engine) with highly proprietary
20 specifications that is both high-quality and inexpensive. This custom off-axis optical engine enables
21 the user of a Meta device to easily perceive and be immersed in digital content, with which he or
22 she can interact through Metas natural gesture-based user interface (UI).
23 14. The development of Metas wide field-of-view optical engine has been driven by

24 Metas confidential analysis of the needs and demands of the nascent AR marketplace. In general
25
26
1
The field of view of an AR device refers to the percentage of the observable real world over
27 which the device enables a user to perceive overlaid digital content. In other words, the field of
28 view refers to the size of the window through which the user of an AR device can see digital
content projected by a given optical engine.
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1 terms, this confidential marketplace analysis is based in part on lessons Meta learned from the
2 launch and sales of the Meta 1 Development Kit (the Meta 1). Launched in 2014, the Meta 1 was
3 built largely from off-the-shelf hardware components and was hindered by a small field of view,
4 which limited the usefulness of that device in the eyes of Metas customers. Through customer
5 feedback, it became clear that developing an inexpensive, wide field-of-view optical engine in-
6 house that would allow users to seamlessly interact with 3D models and other content would provide
7 Meta with a significant competitive advantage. With this goal in mind, in late 2014, Meta launched
8 an extensive, lengthy and complex research and development effort to create such an optical engine.
9 15. For over three years, Meta has been developing its custom off-axis optical engine,

10 which is comprised of many specialized components. In general terms, at the heart of the optical
11 engine is a highly-proprietary, transparent curved optical lens (the optical element). The convex
12 and concave surfaces of the optical element are coated with a series of custom films (the coatings)
13 that give the optic both reflective and transmissive properties. The optical element is coupled to a
14 high-performance display (the display), which projects high-resolution digital content that is
15 reflected into the eye of user by the optical element. The position and orientation of the optical
16 element and the display are precisely determined to ensure that the digital imagery projected by the
17 display is efficiently directed into an eye box engineered to represent the anatomy of the majority
18 of potential users. The display is configured to render imagery according to software that pre-warps
19 the digital content according to a complex mathematical algorithm (the rendering software) to
20 correct distortions introduced by the curvature of the optical element, and to allow the user to
21 perceive the digital content clearly and with proper proportionality. Researching, developing, and
22 prototyping these novel components individually and collectively as a system has been an
23 extraordinary effort, requiring the combined efforts of dozens of Meta hardware, software, and
24 optical engineers over the three years it has taken to develop the optical engine.
25 16. Additionally, due to the immaturity of the technologies required to create AR

26 experiences, Meta has dedicated a great deal of resources to developing a proprietary global
27 manufacturing and supply chain needed to affordably produce its optical engine and other custom
28 components in its AR device. The sourcing and production of the components or services acquired
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1 from a worldwide and diverse set of suppliers and vendors has required significant research,
2 development, customization, and oversight by Meta personnel. For example, Meta was required to
3 design and build a custom optical lens to use with an off-the-shelf depth sensor, enabling Metas
4 hands and environmental tracking software to properly function. The depth sensor itself also needed
5 significant customization to perform according to Metas functionality requirements. Additionally,
6 Meta has been required to keep engineering personnel on-staff at its contract manufacturer to
7 overcome the many challenges encountered during prototype builds of its AR hardware due to
8 unfamiliarity with AR technologies. For every success in the face of the foregoing challenges, Meta
9 has encountered multiple intractable design, functionality and/or cost impediments and as such,
10 Meta regards its specialized knowledge and experience regarding the capabilities, sources and costs
11 associated with its manufacturing and supply chain as highly valuable and proprietary information.
12 17. These custom technologies (sourced and developed from Metas trade secret supply

13 chain) are incorporated into Metas current flagship product: the Meta 2 Development Kit (the
14 Meta 2). The Meta 2 is comprised of a wearable AR head-mounted display and accompanying
15 software development kit (SDK), which supplies a user with the core technology and tools
16 necessary to create AR experiences for the Meta 2. In addition to Metas proprietary wide field-of-
17 view optical engine, the Meta 2 features specialized sensors and complex computer vision software
18 that allow a user to touch, grab, move, and manipulate the digital content intuitively and naturally,
19 as if that content were physically present in the users field of view.
20 18. Metas success in developing an affordable wide field-of-view optical engine have

21 made it one of the three leaders in the emerging AR space (along with Microsoft Corporation and
22 Magic Leap, another venture-backed start-up). Metas success in this regard is made apparent by
23 comparing field of view and price metrics with other AR devices presently in the market. For
24 example, the field of view of the Meta 2s optical engine is over twice as large as the competitive
25 Microsoft Hololens device (ninety (90) degrees for the Meta 2, versus less than forty (40) degrees
26 for the Hololens), while being offered for pre-order at one-third of the price of the Hololens. Magic
27
28
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1 Leap has yet to release a product into the market, primarily due to difficulties miniaturizing and
2 productizing its AR technologies.2
3 19. For these reasons among others the Meta 2 debuted to great fanfare at the

4 TED2016 Conference, was named Best New Wearable Technology Device at the Wearable USA
5 2016 conference, was named Best in Show at the SIGGRAPH 2016 conference and exposition,
6 and was recognized as Best in Show at the 2017 Augmented World Expo.
7 20. Beyond the industry awards and recognitions enumerated above, the appeal and

8 utility of Metas proprietary wide field-of-view off-axis optical engine has been broadly recognized
9 in the press and media as providing a strong competitive advantage to Meta in the AR marketplace.
10 For example, in a January 6, 2017 article, noted technology publication The Verge stated that the
11 Meta 2s 90-degree field of view blows the Hololens (and any other augmented reality Ive seen)
12 away.3 Toms Guide made similar assertions in a March 14, 2017 article, in which the author
13 compared the Meta 2 with the Hololens as follows: [T]he biggest difference between the two
14 systems is the quality of the images rendered in augmented reality. Boasting a wide 90-degree field
15 of view (compared to Hololens' 40 degrees), during my brain dem[o], it looked like I was staring up
16 at a galaxy of twinkling stars, which were in actuality electricity-firing neurons. Thanks to [the
17 Meta 2s] 2560 x 1440 resolution, I could clearly see the glowing veins and folds that make up the
18 organ. In another demo, I could see strands of the presenters hair.4 Engadget made the same
19 claims (The Meta 2 also feels like a more complete AR experience, compared to the HoloLens.
20 The big reason for that: It features a wide 90-degree field of view, whereas the HoloLens only offers
21
22
2
Nick Statt, Magic Leap is actually way behind, like we always suspected it was, THE VERGE
23 (Dec. 8, 2016, 7:16 PM), https://www.theverge.com/2016/12/8/13894000/magic-leap-ar-
24 microsoft-hololens-way-behind.
3
Adi Robertson, Metas augmented reality glasses look ridiculous, but theyre ridiculously
25
comfortable, THE VERGE (Jan. 6, 2017, 11:38 AM),
26 https://www.theverge.com/ces/2017/1/6/14187780/meta-2-augmented-mixed-reality-headset-
hands-on-ces-2017.
27 4
Sherri Smith, Meta 2 is the Augmented Reality of Tomorrow, Today, TOMS GUIDE (Mar. 14,
28 2017, 9:06 PM), http://www.tomsguide.com/us/meta-2,news-24662.html.
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1 a thin 30-degree field-of-view.),5 as has Forbes (Unlike my experience with the Meta 2 glasses . .
2 the HoloLens experience feels more like seeing through a letterbox video monitor . . . The lack of a
3 wide field of view damaged the HoloLens' ability to create the illusion that holograms are real
4 objects. The field of view makes the edges of the illusion noticeable, even distracting. . . . [U]p until
5 now, my experience with Meta 2 is far and away the winner - an experience I found truly immersive
6 and awesome.).6
7 21. Further refinements of Metas wide field-of-view optical engine are slated to be

8 incorporated into future Meta products. For example, Meta has developed advanced versions of the
9 Meta 2 optical engine that have an even wider field of view, reduce the eye strain that a user may
10 experience when using the device for extended periods of time, and have a smaller form factor than
11 the Meta 2. It has taken Meta over two years to develop its advanced optical engines and to identify
12 and secure a reliable supply chain to procure all necessary components. Meta has also conducted
13 confidential evaluations into powering its next generation AR devices by a mobile device rather
14 than a powerful desktop or laptop computer, another key differentiator in the AR marketplace.
15 22. In addition to its refinement of the optical engine featured in the Meta 2, Metas

16 optical engineering team is constantly experimenting with cutting-edge technologies to develop


17 next-generation optical engines.
18 III. Zhong Undertook Contractual Obligations to Protect Meta Trade Secrets and

19 Confidential Information when he Accepted Metas Offer of Employment

20 23. Meta offered Zhong a position as Senior Optical Engineer on or about March 22,

21 2015 (the Employment Agreement). See Exhibit A; Employment Agreement. At the time Zhong
22 received the Employment Agreement, he was employed by General Electric as an optical engineer
23 in Schenectady, New York, and had no previous experience with AR.
24
25
5
26 Devindra Hardawar, A closer look at the Meta 2 AR headset, ENGADGET (Mar. 12, 2017),
https://www.engadget.com/2017/03/12/meta-2-ar-headset/.
27 6
Steven Rosenbaum, Microsoft's Big HoloLens Bet Falls Flat, FORBES (Mar. 10, 2016, 3:00 PM),
28 https://www.forbes.com/sites/stevenrosenbaum/2016/03/10/microsofts-big-hololens-bet-falls-
flat/#4e76a3eb6e77.
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1 24. Zhongs Employment Agreement included a standard Confidential Information and

2 Invention Assignment Agreement that Meta requires all its incoming employees to review and
3 execute as a condition of Metas offer of employment. See Exhibit B; Confidential Information
4 and Invention Assignment Agreement (CIIAA).
5 25. Among other things, the Employment Agreement (Exhibit A) offered to Zhong

6 contained the following terms and conditions to Metas offer of employment:


7 In connection with your employment by the Company and in consideration of
your entry into the Companys Confidential Information and Inventions
8 Agreement . . . you will be granted an equity-based incentive; and
9 Because of the nature of your responsibilities with the Company, it is very
important that there be an orderly transition at the time your employment
10 terminates. Accordingly, you agree to provide the Company with at least 10
working days notice (i.e. days you perform work for the Company) prior to
11
terminating your employment.
12 26. Among other things, the CIIAA offered to Zhong contained the following terms and
13 conditions to Metas offer of employment:
14 During the [Employment] Relationship, I will devote my entire best business
efforts to the interests of the Company and will not engage in other employment
15
or in any activities detrimental to the best interests of the Company without the
16 prior written consent of the Company; (CIIAA, Section 2);
I agree, at all times during the term of the Relationship and thereafter, to hold
17
in strictest confidence, and not to use, except for the benefit of the Company to
18 the extent necessary to perform my obligations to the Company under the
Relationship, and not to disclose to any person, firm, corporation or other entity,
19 without written authorization from the Company in each instance, any
Confidential Information that I obtain, access or create during the term of the
20 Relationship, whether or not during working hours, until such Confidential
21 Information becomes publicly and widely known and made generally available
through no wrongful act of mine or of others who were under confidentiality
22 obligations as to the item or items involved: (CIIAA, Section 3(a));

23 I further agree not to make copies of such Confidential Information except as


authorized by the Company; (Id.);
24 I agree that I will promptly make full written disclosure to the Company, will
25 hold in trust for the sole right and benefit of the Company, and hereby assign to
the Company, or its designee, all my right, title and interest throughout the world
26 in and to any and all Company Inventions and all patent, copyright, trademark,
trade secret and other intellectual property rights therein; (CIIAA, Section 4(d));
27
28
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1 I agree to keep and maintain adequate and current written records of all
Company Inventions made or conceived by me (solely or jointly with others)
2 during the term of the Relationship; (CIIAA, Section 4(e));
3 [A]t the time of termination of the Relationship, I will deliver to the Company
(and will not keep in my possession, recreate or deliver to anyone else) any and
4 all devices, records, data, notes, reports, proposals, lists, correspondence,
specifications, drawings, blueprints, sketches, laboratory notebooks, materials,
5
flow charts, equipment, other documents or property, or reproductions of any of
6 the aforementioned items developed by me pursuant to the Relationship or
otherwise belonging to the Company, its successors or assigns; (CIIAA, Section
7 5);
8 In the event of the termination of the Relationship, I agree to sign and deliver
the Termination Certification . . . however, my failure to sign and deliver the
9 Termination Certification shall in no way diminish my continuing obligations
under this Agreement; (CIIAA, Section 6);
10
I acknowledge and agree that the Companys Confidential Information includes
11 information relating to the Companys employees, consultants, customers and
others, and that I will not use or disclose such Confidential Information except
12 as authorized by the Company; (CIIAA, Section 8);
13 I acknowledge that the Company has valuable Trade Secrets . . . to which I will
have access during the term of the Relationship; (CIIAA, Section 8(b)); and
14
I agree that during the term of the Relationship . . . I will not, other than on
15 behalf of the Company and except as a passive investor in less than 5% of the
securities of a publicly-held company, directly or indirectly own, manage,
16 operate, control, conduct, or engage in, or participate in the ownership,
17 management, operation, or control of, serve as an officer, director, shareholder,
partner, employee, agent, consultant, joint venturer, independent contractor,
18 advisor, developer, or in any similar capacity with, or have any financial interest
in or aid or assist anyone else in the conduct of, any Competitive Enterprise.
19 (CIIAA, Section 8(c)).
20 27. Zhong duly executed both his Employment Agreement and the CIIAA on March 22,

21 2015. See Exhibits A and B. Zhong represented that he had no inventions, improvements, or
22 original works to disclose as of the date of execution. See Exhibit 1 to the CIIAA (Exhibit B).
23 28. Zhongs employment with Meta commenced on April 9, 2015.

24 IV. Meta Diligently Protects the Secrecy of its Confidential and Trade Secret Information

25 29. Meta takes the secrecy of its confidential and trade secret information very seriously,

26 and has implemented a variety of legal, logistical, physical and electronic protections for such
27 information.
28
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1 30. During Zhongs employment, Metas offices moved to a new location. On April 9,

2 2015, the day that Zhongs employment with Meta commenced, Metas offices were located in a
3 large private home located in Portola Valley, California. In December 2015, Meta moved its offices
4 to a commercial building in Redwood City, California, where the Company was located at the time
5 of Zhongs abrupt resignation in July 2016.
6 31. After Zhong resigned, Meta moved its offices to its current location: a commercial

7 building located in San Mateo, California.


8 32. During the period of Zhongs employment and all times thereafter, access to Metas

9 offices has been limited to employees and secured by key and lock and/or electronic keycard access.
10 33. Additionally, during the period of Zhongs employment and all times thereafter,

11 visitors to Metas offices have been required to electronically sign a non-disclosure agreement
12 (NDA) in the waiting/entrance area before entering any non-public areas. Thereafter, visitors are
13 accompanied through Metas offices by a host employee, and are escorted out of the office upon
14 completion of business activities.
15 34. During the period of Zhongs employment and all times thereafter, visitors have not

16 been permitted to freely access areas in which hardware design and prototype activities including
17 optical engine design and prototyping are taking place without being covered by a non-disclosure
18 agreement (entered into personally at the door, or by the visitors employer prior to arrival).
19 Exceptions to this NDA requirement must be approved by the Meta Legal Department.
20 35. In addition to these precautions, during the period of Zhongs employment and all

21 times thereafter, especially-sensitive areas of Metas offices have been and are protected by
22 additional security measures. This includes the office areas in which engineers engage in optical
23 design and prototyping. For example, in the Redwood City and San Mateo offices, the optical
24 research and development lab was (and is) protected by an additional keycard access panel, and any
25 individual employee desiring entry privileges was (and is) required to receive advance approval
26 from the Meta Legal Department.
27 36. During the period of Zhongs employment and all times thereafter, Meta has strictly

28 limited access to Company computer systems, mobile devices, email accounts, data storage
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1 repositories and networks. All such resources are required to be password protected, and are subject
2 to other protective measures. Permissions to access data repositories (both local and cloud-based)
3 can be moderated and limited based on the sensitivity of the information, and require IT approval
4 before being shared with any external party. Repositories containing highly confidential

5 information (e.g., optical engine design files and research data) are inaccessible to the general
6 employee population by default.
7 37. During the period of Zhongs employment and all times thereafter, an employees

8 failure to abide by these strictures could result in disciplinary action.


9 38. During the period of Zhongs employment and all times thereafter, Meta has imposed

10 strict, contractual confidentiality requirements on any external entity that has received a prototype
11 Meta 2 device (e.g., under an NDA, Alpha or Beta Testing Agreement, or both).
12 V. Zhongs Role with Meta Provided Him with Wide Access to Confidential and Trade

13 Secret Information relating to Metas Technologies and Business Strategies

14 39. Before Zhong abruptly resigned from his employment at Meta Company in July

15 2016, his role as Senior Optical Engineer placed him at the center of Metas critical optical research
16 and development efforts, provided him with access to Metas confidential product and business
17 strategies, involved him in architecting and prototyping various proprietary AR hardware
18 configurations, required him to engage regularly with potential suppliers and manufacturers under
19 NDA to build Metas supply chain, and engaged him in the development and refinement of Metas
20 investment and marketing strategies.
21 40. Through the performance of these responsibilities, Zhong became the de facto Head

22 of Optics at Meta. He developed, worked with and had full access to a large body of highly-
23 valuable trade secrets and confidential information that stretched across the entirety of Meta
24 Companys business and operations.
25 41. One of Zhongs primary responsibilities was to design, prototype and realize the

26 affordable, wide field-of-view off-axis optical engine that Meta had set out to build after completing
27 its confidential analysis of the AR markets needs. Zhong was given unfettered access Metas
28 keycard-restricted optical research and development lab, which contains Metas optical engine
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1 prototypes and demos and had authority to request that other Meta employees be given access to
2 that lab.
3 42. Zhong regularly participated in briefings and received information from the Meta

4 executive team on customer profiles and business strategies that were intended to guide the creation
5 of Metas off-axis optical engine. Zhong worked closely and regularly with Metas executive team
6 to generate and refine the confidential product specifications for that optical engine given changing
7 assessments of market demands.
8 43. Under that direction, Zhong guided the Meta optical engineering teams efforts to

9 develop and optimize:


10 The curvature and industrial design of Metas proprietary off-axis optical

11 elements to achieve the desired wide field of view and flat focal plane;

12 The configuration of coatings for those off-axis optical elements necessary to

13 achieve the required transparency and reflectivity of the optical elements, as well

14 as to mitigate negative cross-talk in the optical engine7;

15 The performance requirements and specifications of the display used in the

16 optical engine, including the size and number of displays to incorporate into the

17 optical engine;

18 The orientation of the optical element vis--vis the display within the optical

19 engine to maximize field of view and flatten the focal plane of the optical engine;

20 and,

21 The rendering software required to pre-warp the digital content and correct

22 distortions introduced by the curvature of the optical element.

23 44. Zhong also played a key role in researching, developing and prototyping potential

24 iterations of Metas highly-confidential next generation optical engine projects.


25
26 7
Negative cross talk occurs in an off-axis AR optical engine when: (1) the left eye can see light
rays that are intended for the right eye (and vice versa); and (2) light reflects off of surfaces of the
27 optical element that are not properly curved and coated to reflect that light directly into the users
28 eyes. These effects can inhibit the users ability to form a fused stereo image when using the
device.
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1 45. Zhongs involvement in these projects led to the creation of a large body of

2 proprietary intellectual property. While Meta has applied for (and in some cases, obtained) patent
3 protection for certain broad aspects of its technology, the precise implementations of the custom
4 off-axis optical engine, hardware and software technologies, along with its supply chain,
5 manufacturers and manufacturing methods, market analyses, and investment strategies, are not
6 disclosed in patent applications or issued patents, and instead constitute Metas confidential,
7 proprietary and trade secret information. Furthermore, not only did Zhongs guidance of Metas
8 optical engineering program provide him with knowledge of novel designs and prototypes that
9 achieved Metas goals with respect to affordability and wide field-of-view, but his work at Meta
10 also provided him with exposure to designs, approaches and materials that did not achieve those
11 goals (also known as negative know how).
12 46. By way of example, at the outset of Zhongs employment at Meta, members of the

13 Companys optical engineering team provided him with a set of design specifications for multiple
14 potential iterations of Metas off-axis optical engine. These specifications proposed several
15 potential curvatures for the optical element, along with the use of different display sizes and stereo
16 overlaps that were under evaluation at that time. Zhong spent the first several months of his
17 employment at Meta evaluating the viability of these potential configurations, winnowing out
18 designs and combinations of elements that failed to meet performance requirements.
19 47. Zhong was deeply involved in the design and prototyping of potential optical engine

20 configurations for Metas planned products beyond the Meta 2. Specifically, from approximately
21 May 2015 through his departure from Meta in July 2016, Zhong led efforts to develop advanced
22 off-axis optical engines. Zhong created written reports evaluating potential configurations for
23 advanced off-axis optical engines, and oversaw the creation of several hardware prototypes of the
24 most promising configurations. For example, in November 2015, Zhong authored and circulated
25 internally a confidential report outlining his development of an off-axis optical engine that utilized
26 two displays and a novel display/optical element configuration to achieve a one-hundred and two
27 (102) degree field-of-view and a flatter focal plane than the Meta 2 optical engine.
28
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1 48. Zhong was also regularly engaged in the evaluation and selection of the materials

2 and components needed to manufacture Metas proprietary off-axis optical engine, and assisted with
3 the development of the supply chain to acquire those specialized materials and components from
4 vendors and suppliers around the world. Zhong and others engaged in lengthy back-and-forth
5 discussions with potential manufacturers and suppliers to determine which of them was capable of
6 supplying or manufacturing the components in Metas optical engine to the required technical
7 specifications a complex, iterative process that took many months and required the efforts of
8 numerous engineers. Through those activities, Zhong generated and had access to Metas

9 confidential analyses of the technical and production capabilities of specific vendors and suppliers.
10 He also obtained valuable and time saving information about which vendors and suppliers were
11 incapable of meeting the technical needs associated with the manufacture of an wide field-of-view
12 optical engine (e.g., more negative know how).
13 49. Zhongs senior role within Meta further required him to collaborate closely with

14 hardware and software engineers developing other components of the technology stack integrated
15 into Metas augmented reality devices. For example, Zhong participated in the design of Metas
16 custom depth sensor lens. In so doing, Zhong had access to confidential and trade secret information
17 related to Metas hands tracking and gesture recognition software and product requirements, as well
18 as confidential and trade secret information related to Metas simultaneous localization and mapping
19 (SLAM) technology (sometimes referred to as tracking software) and product requirements.8
20 SLAM software is generally considered to be among the most complex and closely-guarded
21 elements of the AR technology stack.
22 50. Zhong also had access to confidential information related to the engineering and

23 product requirements associated with Metas proprietary rendering software, as Zhong worked with
24 software engineers to define display requirements and reduce latency in Metas rendering pipeline.
25
26
27 8
SLAM software analyzes data collected by an AR devices sensor array to map the users
28 environment and fix digital objects to a location within that environment, as well as to reorient
those digital objects based on the users movement within that environment.
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1 51. Zhong was privy to the confidential internal evaluations that Meta performed into

2 powering next generation AR devices by a mobile device rather than a powerful desktop or laptop
3 computer.
4 52. Zhong participated in several critical meetings with investors and/or potential

5 acquiring entities prior to his abrupt resignation in July 2016. In so doing, Zhong had access to
6 Metas highly confidential investment and market strategies with respect to both Metas current and
7 next generation products, as well as to confidential feedback and proprietary insight into the
8 technologies and market strategies in which investors and acquirers found attractive (or not, more
9 negative know how).
10 53. By his own public admission, Zhong had access to Metas confidential and trade

11 secret information in all of the aforementioned areas.9


12 VI. Zhong Abruptly Resigns from Meta under False Pretenses and Goes Undercover

13 54. On July 21, 2016, Zhong emailed his direct manager and Metas Human Resources

14 staff and informed them that he was resigning from his employment at Meta, effective the following
15 day (i.e., July 22, 2016). In that message, Zhong attributed his decision to resign to some old
16 medical conditions which need serious attention now. My doctor suggests avoid [sic] any work
17 activities. Zhong further represented that he had decided, in light of this medical advice, . . . to
18 take a break and stop working for a while.
19 55. In abruptly resigning from his final position as Manager, Optical Engineering at

20 Meta, Zhong breached his contractual obligation to provide at least ten (10) working days notice
21 prior to terminating his employment.
22
23
24 9
Zhangyi Zhong, LINKEDIN, https://www.linkedin.com/in/zhangyizhong/ (last visited Jun. 6, 2017)
25 (listing Zhongs job responsibilities at Meta to be the following: Design the Meta 2 Augmented
Reality optical engine with 90 degree Field of View; Led optical and psychophysics research for
26 current and future products (multiple patents filed); Built and managing [sic] a productive
engineering and research team; Invent customized optical testing method for Quality Assurance;
27 Manage vendors to ensure high rate[s] of yield and cost control during high volume manufacturing;
28 Deliver technical reviews during investment pitch and due diligence; [and] closed 50 million USD
funding round from top tier investors (Tencent, Lenovo, Horizons Ventures, etc.)).
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1 56. Nonetheless, Metas employees responded in good faith to Zhongs representation

2 of the basis for his resignation, expressing concern for his wellbeing. For example, upon learning
3 of Zhongs supposed health problems, Metas Human Resources Manager reached out to Zhong by
4 e-mail, telling him, I'm really worried about you. Please give me a call (or come see me if you are
5 in) and let's talk. Let me know if there's anything we can do to help.
6 57. When the Human Resources Manager succeeded in meeting with Zhong on July 22,

7 2016 Zhongs last day at Meta he presented Zhong with Metas standard Termination
8 Certification, the execution of which upon termination was a condition of Zhongs acceptance of
9 employment at Meta. See Exhibit A.
10 58. The Termination Certification, among other things, acknowledges that the signatory:

11 (1) has returned any devices, records, data, notes, reports, proposals, lists, correspondence,
12 specifications, drawings, blueprints, sketches, laboratory notebooks, flow charts, materials,
13 equipment, other documents or property, or copies or reproductions of any aforementioned items
14 belonging to Meta; (2) has complied with all the terms of the CIIAA; (3) acknowledges his or her
15 continuing obligations under the CIIAA; (4) agrees to preserve as confidential all trade secrets,
16 confidential knowledge, data or other proprietary information to which he or she is exposed while
17 at Meta; and (5) acknowledges that Meta has valuable trade secrets to which he had access during
18 his employment. Zhong failed to execute and return the required Termination Certification.
19 59. At that time, Meta accepted Zhongs proffered reasoning for his resignation i.e.,

20 serious health concerns in good faith and did not follow up or take other action in response to
21 Zhongs failure to sign the Termination Certificate.
22 60. Until May 2017, Meta had no knowledge of Zhongs whereabouts or activities

23 subsequent to his departure, nor did Meta have any reason to suspect that Zhong was
24 misappropriating its trade secret or confidential information or breaching his agreements with Meta.
25 61. However, Meta is now informed and believes that Zhongs explanation for his abrupt

26 departure from Meta his health concerns - was a pretext to provide cover for his intention to
27 misappropriate Meta confidential and trade secret information to develop a competitive AR device,
28 and to personally profit from doing so.
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1 62. Metas suspicions with respect to Zhongs post-employment activities were first

2 raised on May 9, 2017. That day, UploadVR a web-based forum that publishes information and
3 news on AR and VR technologies and content published an article reviewing a wide field-of-view
4 AR device (the DreamGlass) under development by new Chinese startup Dreamworld Vision
5 (the UploadVR Article). See Exhibit C (PDF Printout of UploadVR Article, Dreamworld Is
6 Making AR Glasses That Connect To Your Phone For Under $350, available at
7 https://uploadvr.com/thes-ar-glasses-connect-smartphones-keep-prices-350/).
8 63. In its article, UploadVR described two DreamGlass prototypes that it was shown by

9 a Dreamworld representative. While the article did not publish images of the Dreamworld
10 prototypes, UploadVR stated that [t]he DreamGlass seems to use a Meta-esque optics system that
11 places the screens at an angle above the lenses. The light from the screens then reflects down onto
12 the lenses to create AR overlays in a wide FOV effect. Id. (also noting that the Dreamworld
13 DreamGlass has a similar reflection system to the Meta 2 device).
14 64. The noted similarity between the prototype Dreamworld device and the Meta 2 led

15 Meta to conduct an initial investigation into the background of Dreamworld and its employees. That
16 investigation revealed that Dreamworld was incorporated in Delaware on June 22, 2016, and that it
17 applied to do business in California under the name Dreamworld Vision on July 19, 2016. The
18 signatory on the California filing is Qiuyan Jiang (Jiang), who was represented as Dreamworlds
19 Chief Executive Officer at that time.
20 65. Metas investigation also revealed that, on September 2, 2016, Dreamworld filed a

21 Statement of Information with the California Secretary of State, on which Dreamworld disclosed it
22 would engage in the business of Research and Development of Electronics and listed one
23 Zhangyi Zhong as its Chief Executive Officer, with Jiang newly designated as Dreamworlds
24 Secretary and Chief Financial Officer. The signature of Zhangyi Zhong appears on

25 Dreamworlds September 2, 2016 California filing.


26 66. Meta is informed and believes that the Zhangyi Zhong listed in Dreamworlds

27 September 2, 2016 filing is the same Zhangyi Zhong who was formally employed by Meta as its
28 Senior Optical Engineer. For example, the Zhangyi Zhong signature on the September 2, 2016
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1 filing is identical to Zhongs signature on patent assignment documentation executed on Metas


2 behalf during Zhongs employment. Furthermore, a picture available online of the Zhangyi Zhong
3 who is CEO of Dreamworld, published by CES Asia in anticipation of Zhongs appearance on a
4 June 9, 2017 panel held at that conference, confirms the similarities in appearance between that
5 individual and the Zhong who worked for Meta.
6 67. Meta is further informed and believes that Jiang acted as Zhongs agent when he or

7 she filed to incorporate Dreamworld in Delaware on June 22, 2016 one month before Zhong
8 resigned from his position at Meta. On information and belief, Jiang has no experience working in
9 AR technology, nor is Jiang a full-time Dreamworld employee but is instead a full-time Tax
10 Manager employed in the San Francisco office of Price Waterhouse Cooper. Additionally, on

11 information and belief, Zhong attended graduate school at Indiana University at the same time as
12 Jiang, and Meta is informed and believes that Zhong and Jiang are either husband and wife or
13 boyfriend and girlfriend, and have lived together in New York, Indiana, Los Angeles, Palo Alto,
14 and South San Francisco. In Dreamworlds September 2, 2016 California filing, Zhong and Jiang
15 are reported to share the address 512 Keoncrest Dr., Unit 2 in South San Francisco, California.
16 That same filing lists Dreamworlds address as 501 Broadway #744 in Millbrae, California.
17 VII. Publicly-Available Evidence Demonstrates that Zhong, Dreamworld and Does 1-20

18 Have Misappropriated Confidential and Trade Secret Information from Meta to Jump

19 Start Their Development of a Competitive AR Device

20 68. Analysis of publicly-available information provides compelling evidence that

21 Zhong, Dreamworld and Does 1-20 intentionally misappropriated Metas confidential and trade
22 secret information and used it to jump start the development, production and sale of the DreamGlass
23 AR device, potentially in violation of state and federal criminal law, that Zhong breached his duty
24 of loyalty to Meta and his ongoing contractual obligations as a former Meta employee, that
25 Dreamworld interfered with those contractual obligations, and that Zhong and Dreamworld engaged
26 in unfair competition.
27 69. As noted in Paragraphs 62-63 above, the author of the UploadVR article repeatedly

28 compared the wide field-of-view DreamGlass prototypes that he was shown by Dreamworld to the
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1 proprietary optical engine utilized by the Meta 2 device. See Exhibit C. Since the publication of
2 the UploadVR article, Dreamworld has claimed on its website (available at

3 http://www.dreamworldvision.com/ - a URL that is itself a derivation of Metas website address,


4 www.metavision.com), that the field of view of the DreamGlass is approximately 100 degrees.
5 Meta is informed and believes, based on Metas years of research and development into creating a
6 wide field-of-view optical engine in which Zhong played an integral part that there is no means
7 by which Zhong and Dreamworld could have designed and created a prototype of a wide field-of-
8 view off-axis optical engine with a $350 price point within a less than one-year development period
9 unless they used both Metas affirmative trade secrets and its negative know how.
10 70. This conclusion is evidenced by an analysis of the preliminary renderings of the

11 DreamGlass device that were first made available on Dreamworlds website on May 26, 2017. The
12 optical engine in these renderings strongly resembles the prototype optical engines developed by
13 Meta optical engineers during Zhongs tenure at Meta, including the 102-degree field of view optical
14 engine designed by Zhong in November 2015. Metas creation and refinement of its off-axis wide
15 field-of-view optical engines has taken over 3 years of intensive research and development by
16 multiple Meta optical engineers including Zhong, who led those efforts during his employment at
17 Meta. It is highly implausible that Dreamworld and Zhong could have developed an off-axis optical
18 engine with a similar field of view in one-third of the time without Zhongs knowing misuse of the
19 confidential and proprietary experimentation that he and others performed at Meta (such as
20 combinations of potential optical curvatures, display technologies, coatings on the optical element
21 and rendering algorithms).
22 71. The conclusion that the DreamGlass was developed through the misappropriation of

23 Meta trade secret information is further evidenced by Dreamworlds admission that the DreamGlass
24 optical engine is driven by the use of a [d]edicated high-resolution display for each eye. Zhong
25 designed an off-axis optical engine in November 2015 that utilized two displays (one for each eye)
26 to achieve a 102-degree field of view a design that was subsequently refined and embodied in
27 several prototypes created while Zhong was employed at Meta. As stated above, it took Meta over
28 two years to develop these advanced optical engines and to identify and secure a reliable supply
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1 chain to procure the components necessary to produce them; by all appearances, Zhong and
2 Dreamworld have leveraged that confidential and trade secret information to generate an optical
3 engine with similar capabilities in less than half of the time.
4 72. Dreamworld has publicly stated its intention to offer the DreamGlass device for sale

5 for $350 by the end of 2017. Any effort to achieve such an aggressive price point on such an
6 aggressive schedule compared to all other AR headsets on the market must be supported by an
7 extremely well-developed and well-executed supply chain, as well as a sophisticated manufacturing
8 and quality assurance process. Meta has spent years developing the relationships with vendors and
9 suppliers that are necessary to acquire the various technologies and components necessary to build
10 and offer the Meta 2 at an affordable price point not to mention the implementation of the custom
11 manufacturing processes required to create and test the various components of that device. Zhong
12 was intimately involved in the development of this confidential trade secret information and once
13 again, by all appearances, he and Dreamworld have stolen that proprietary information and taken
14 advantage of the negative know associated with the trial and error approach to developing Metas
15 supply chain and manufacturing methods, with the goal of creating a product that took Meta years
16 of trial and error to prototype in a fraction of the time, with a fraction of the effort.
17 73. In another example, the optical elements depicted in renderings of the DreamGlass

18 device consist of two separate optical elements held in a separate chassis from the transparent visor
19 that wraps around them, as opposed to the apparent optical architecture of the Meta 2 device, which
20 combines the optical elements into a single visor to form a unitary optical element/visor component.
21 Upon information and belief, this Dreamworld design is derived from and based on findings made
22 by members of the Meta optical engineering team including Zhong concerning trade-offs that
23 could be used to manufacture a cheaper optical engine. The width and size of the chassis that holds
24 the two optical elements also appears to be optimized to reduce the effects of any negative cross-
25 talk introduced by the optical engine another design feature in the Dreamworld device that was
26 prototyped by members of the Meta optical engineering team including Zhong and likely
27 incorporates the confidential learnings from those prototypes.
28
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1 74. The renderings of the DreamGlass device, along with various other statements made

2 on Dreamworlds website and to UploadVR, strongly suggest that Zhong and Dreamworld have
3 also misappropriated Meta confidential and trade secret information relating to other critical
4 components of the technology stack needed to generate a functional AR device or may do so
5 imminently. For example, renderings provided on the Dreamworld website depict a number of
6 sensors present on the front-facing brow of the DreamGlass device. Based on Dreamworlds
7 demonstration of rudimentary positional tracking functionality to UploadVR, (See Exhibit C), as
8 well as videos that Dreamworld has posted on YouTube purporting to exhibit its devices tracking
9 capabilities,10 Dreamworld has designed these sensors to among other things collect data that is
10 processed by SLAM software that is run by a processor connected to the device. Additionally,
11 UploadVR reported that Dreamworld demonstrated rudimentary hands tracking functionality,
12 represented by the devices apparent recognition of a quack quack selection gesture. (See Exhibit
13 C). Dreamworld has published videos on YouTube purporting to show its hands tracking and
14 gesture recognition capabilities.11 As an optical engineer, Zhong had no technical experience with
15 either of these highly complex computer vision technologies before commencing his employment
16 at Meta, leading to the obvious conclusion that he has once again misappropriated and leveraged his
17 knowledge and exposure to Metas confidential, proprietary and trade secret SLAM and hands
18 tracking/gesture recognition software and product requirements to jump start Dreamworlds product
19 on these fronts.
20 75. Meta is confident that it will identify evidence of Zhongs and Dreamworlds

21 misappropriation of other elements of confidential and trade secret information related to its
22 hardware and software products that have been incorporated into the DreamGlass device once it is
23
24
25
10
Positional Tracking with DreamWorld DreamGlass, YOUTUBE (May 9, 2017),
26
https://www.youtube.com/watch?v=6IC8qxbAEI0&index=3&list=PL3Y8B3b23.EovpmU6Uz6jx
27 mMcWgWZFUnMQ.
11
28 Dreamworld Glass - AR Object Manipulation, YOUTUBE (May 9, 2017),
https://www.youtube.com/watch?v=-HpPcJSRo7s.
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1 able to closely inspect and analyze actual prototypes and designs for that device, in addition to the
2 renderings and videos that Dreamworld has currently made available online.
3 76. Furthermore, Meta is greatly concerned and strongly suspects that Zhong and

4 Dreamworld are implementing its market penetration strategy, a strategy developed by Metas
5 executive team and shared with Zhong during his employment at Meta the details of which Meta
6 continues to regard as a trade secret. By all appearances, Zhong and Dreamworld have decided that
7 they can execute that strategy better than Meta, and misappropriated Metas confidential and
8 proprietary engineering, manufacturing and supply chain information to jump start their attempt do
9 so.
10 77. Zhong and Dreamworld have held DreamGlass out as being built from their own

11 proprietary technology, that they alone have developed. They have represented DreamGlass as the
12 only AR headset with a 100 degree field of view and natural hand gestures. Zhong and Dreamworld
13 have therefore falsely and fraudulently held out to the public that DreamGlass is an entirely new
14 product that has no relationship to any of its competitors previous products or prototypes.
15 78. Furthermore, on information and belief, Zhong has taken steps to disguise his identity

16 and involvement in Dreamworld. From approximately April 9, 2015, until his abrupt departure from
17 Meta on July 22, 2016, Zhong told Meta employees that he also went by the nickname Johnny.
18 However, upon information and belief, since his departure from Meta and involvement with
19 Dreamworld, Zhong has changed his nickname to Kevin, presumably to hide the fact that he was
20 the same individual as the former Meta employee Johnny Zhong. Additionally, Zhong has not
21 updated his otherwise complete and detailed LinkedIn profile with information on his new position
22 as CEO at Dreamworld a move that can only be interpreted as an attempt to reinforce his stated
23 reasons for his departure from Meta in July 2016.
24 79. In so doing, Zhong and Dreamworld have engaged in activity that may rise to the

25 level of violation not only the civil statutes listed herein, but also criminal statutes such as Cal. Pen.
26 Code 499c and 18 U.S.C. 1832.
27
28
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1 VIII. Meta Has Suffered and Is Continuing to Suffer Irreparable Harm


2 80. Meta believes in free and fair competition in the augmented reality marketplace,

3 respects the innovative products created by its legitimate competitors, and hopes that all of its
4 employees past and present achieve great career and personal success.
5 81. However, Meta also takes the confidentiality of its trade secrets and proprietary

6 technical, strategic and business information very seriously. Evidence in the public domain clearly
7 shows that Zhong and Dreamworld have misused and are likely to continue to misuse Metas
8 confidential and trade secret information to target Metas current and future base of customers,
9 investors and potential employees. And while the DreamGlass product is still in its infancy, Meta
10 has suffered irreparable harm by Zhongs and Dreamworlds brazen theft of its trade secret and
11 confidential information and stands to suffer additional irreparable harm should this ongoing theft
12 not be remedied by this court.
13 82. For example, Zhong and Dreamworld have already taken efforts to undercut Metas

14 position in the AR marketplace. They have developed at least two prototypes of their nascent
15 DreamGlass device, and have invited press coverage from UploadVR. This activity was obviously
16 intended to raise awareness of Dreamworld and its product, and immediately generated comparisons
17 to the Meta 2 device. On information and belief, Zhong and Dreamworld fully intend to continue
18 and even ramp up their development of the DreamGlass and their campaign to publicize that device,
19 and presumably, will continue to avoid correcting comparisons between the Meta 2 and their
20 facsimile of Metas technologies.
21 83. Zhong and Dreamworld have chosen CES Asia as their next venue to publicize their

22 existence and device, and to attempt to attract customers, investors and potential employees. CES
23 Asia an offshoot of the enormous and popular CES exposition held each year in Las Vegas is
24 set to take place from June 7, 2017 to June 9, 2017. Per the CES Asia brochure on its website,
25 Zhong will be presenting at CES China on a panel discussing innovations in AR and VR on behalf
26 of Dreamworld, and Dreamworld will have a booth offering demos of DreamGlass. The potential
27 for Zhongs and Dreamworlds presence at conferences like CES Asia and in related press may
28
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1 result in an even temporary degradation of Metas status as an AR pioneer and market leader would
2 cause irreparable harm.
3 84. On information and belief, Zhong and Dreamworld intend to continue their use of

4 Meta confidential and trade secret information at CES Asia and in other venues to solicit pre-orders
5 for the DreamGlass device. Dreamworlds website has a Pre-Order tab, and features entry fields
6 where interested customers can input their names and contact information to receive email and
7 the latest news from Dreamworld. The possibility that Dreamworlds solicitations might damage
8 goodwill towards Meta in the market and lure away current and future customers who might
9 otherwise be attracted to the Meta 2 constitutes irreparable harm.
10 85. On information and belief, Zhong and Dreamworld are attempting to raise additional

11 capital from investors to continue to build DreamGlass and their company, writ large; their presence
12 at CES Asia is intended to garner the attention of potential Chinese investors. The passage of each
13 day that Zhong and Dreamworld are left free to raise capital from investors and further develop their
14 AR device on the back of confidential and trade secret information stolen from Meta causes
15 irreparable harm. Such activities may unfairly prejudice the investment community with respect to
16 Metas status as a leader in the AR marketplace, and may draw investment capital away from Meta
17 and into Dreamworld. While Meta has achieved great technological and market success, it is still a
18 start-up entity that is dependent on periodic injections of venture capital to continue its growth
19 and is therefore especially sensitive to disruptions in its reputation in the investment community.
20 Finally, on information and belief, Zhong and Dreamworld are actively recruiting talented and
21 specialized hardware and software engineers to join Dreamworld as full-time employees. For
22 example, Dreamworld appears to maintain a recruiting website that, as of the filing of this
23 Complaint, lists several open positions for which Dreamworld is actively accepting applications.12
24 Should Zhong and Dreamworld be permitted to continue these recruiting efforts along with their
25
26
27 12
See Work at Dream World, https://angel.co/dream-world/jobs (last visited Jun. 6, 2017) (listing
28 open positions for (1) computer vision engineer; (2) Android developer; and (3) Android software
architect).
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1 misappropriate of Meta confidential and trade secret information, it is possible that these valuable
2 hires (or even current employees) may be drawn away from Meta, causing irreparable harm.
3 FIRST CAUSE OF ACTION

4 Misappropriation of Trade Secrets Under the Defend Trade Secrets Act,

5 18 U.S.C. 1836, et seq.

6 (Against All Defendants)

7 86. Meta hereby incorporates by reference Paragraphs 11 through 53, 60 through 76, and

8 78 through 85 as though fully set forth herein.


9 87. Meta owns and possesses certain trade secret information, such as various iterations

10 and prototypes of off-axis optical engines; inside knowledge of novel designs and prototypes
11 addressing affordability and wide field-of-view of those optical engines; negative know how such
12 as designs, approaches, and materials that did not achieve Metas goals; information about Metas
13 supply chain, manufacturers and manufacturing methods, Metas investor, business and market
14 strategies; and other key Meta trade secrets as described in Paragraphs 45-52 above.
15 88. Metas confidential, proprietary, and trade secret information relates to products

16 used, sold, shipped and/or ordered in, or intended to be used, sold, shipped and/or ordered in,
17 interstate or foreign commerce.
18 89. Meta has at all times maintained stringent security measures to preserve the secrecy

19 of its trade secrets. For example, Meta restricts access to confidential and proprietary trade secret
20 information to only those who need to know. All networks and databases hosting Metas
21 confidential and proprietary information have at all times required passwords and for access.
22 Computers, tablets, and cell phones provided to Meta employees are password protected and subject
23 to other security measures. Meta secures its physical facilities by restricting access and then
24 monitoring actual access with security cameras. All employees promise to maintain the

25 confidentiality of Metas trade secrets and confidential information through the execution of CIIAA
26 documentation similar to Zhongs agreement. Similarly, all visitors to Metas headquarters are
27 required to sign a non-disclosure agreement before entering any areas outside of Metas
28 lobby/waiting area. Furthermore, in order to access certain sensitive data and rooms containing that
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1 data, Meta makes use of keys or keycard access panels, to which only a certain few, select
2 employees have access. Zhong was one of those employees.
3 90. Due to Metas security measures, Metas confidential and proprietary trade secret

4 information is not available for others in the AR technology space to use through any legitimate
5 means.
6 91. Metas confidential, proprietary, and trade secret information derives independent

7 economic value from not being generally known to, and not being readily ascertainable through
8 proper means by, any other individuals who could obtain economic value from the disclosure or use
9 of its information.
10 92. In violation of Metas rights, Defendants misappropriated and threaten to continue

11 to misappropriate Metas confidential, proprietary, and trade secret information in the improper and
12 unlawful manner as alleged herein. Defendants misappropriation and threatened misappropriation
13 of this information was intentional, knowing, willful, malicious, fraudulent, and oppressive.
14 93. On information and belief, if Defendants are not enjoined, Defendants will continue

15 to misappropriate and use Metas trade secret information for their own benefit and to Metas
16 detriment as alleged in Paragraph 72 through 76.
17 94. As the direct and proximate result of Defendants conduct, Meta has suffered and

18 will continue to suffer severe competitive harm, irreparable injury, and significant damages, in an
19 amount to be proven at trial. Because Metas remedy at law is inadequate, Meta seeks, in addition
20 to damages, temporary, preliminary, and permanent injunctive relief to recover and protect its
21 confidential, proprietary, and trade secret information and to protect other legitimate business
22 interests. Metas business operates in a very competitive market and will continue to suffer
23 irreparable harm absent injunctive relief as alleged in Paragraphs 80 through 86 above.
24 Meta has been damages by the conduct described herein and is therefore entitled to an award of
25 exemplary damages and attorneys fees.
26 ///
27 ///
28 ///
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COMPLAINT FOR INJUNCTIVE RELIEF AND DAMAGES
Case 3:17-cv-03259-MEJ Document 1 Filed 06/06/17 Page 28 of 34

1 SECOND CAUSE OF ACTION

2 Misappropriation of Trade Secrets Under the California Uniform Trade Secrets Act,

3 Cal. Civ. Code 3426.1, et seq.

4 (Against All Defendants)

5 95. Meta hereby incorporates by reference Paragraphs 11 through 53, 60 through 76, and

6 78 through 94 as though fully set forth herein.


7 96. Meta owns and possesses certain trade secret information, as alleged above in its

8 First Cause of Action. This information has actual or potential independent economic value from
9 not being generally known to the public or other persons who could obtain economic value from its
10 disclosure and/or use.
11 97. Meta has undertaken efforts that are reasonable under the circumstances to maintain

12 the secrecy of the trade secrets at issue. These efforts include, but are not limited to, the use of
13 passwords to protect data on its computers, and servers, the use of a CIIAA that emphasizes all
14 employees duties to maintain the secrecy of Metas confidential information, and the use of non-
15 disclosure agreements to require vendors, partners, contractors, and visitors to Metas headquarters
16 to maintain the secrecy of Metas confidential and trade secret information.
17 98. Defendants knew or should have known under the circumstances that the information

18 misappropriated by Defendants were trade secrets.


19 99. Defendants misappropriated and threaten to continue to misappropriate trade secrets

20 at least by acquiring trade secrets with knowledge of or reason to know that the trade secrets were
21 acquired by improper means, and Defendants are using and are threatening to use the trade secrets
22 acquired by improper means without Metas knowledge and/or consent.
23 100. As a direct and proximate result of Defendants conduct, Meta is threatened with

24 injury and has been injured in an amount that will be proven at trial. Meta has also incurred, and
25 will continue to incur, additional damages, costs, and expenses, including attorneys fees, as a result
26 of Defendants misappropriation. As a further proximate result of the misappropriation and use of
27 Metas trade secrets, Defendants were unjustly enriched.
28
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Case 3:17-cv-03259-MEJ Document 1 Filed 06/06/17 Page 29 of 34

1 101. The aforementioned acts of Defendants were willful, malicious, and fraudulent.

2 Meta is therefore entitled to exemplary damages under Cal. Civ. Code 3426.3(c).
3 102. Defendants conduct constitutes transgressions of a continuing nature for which Meta

4 has no adequate remedy at law. Unless and until enjoined and restrained by Court order, Defendants
5 will continue to retain and use Metas trade secrets to enrich themselves and divert business away
6 from Meta. Pursuant to Cal. Civ. Code 3426.2, Meta is entitled to an injunction against the
7 misappropriation and continued threatened misappropriation of trade secrets as alleged herein and
8 further asks the Court to restrain Defendants from using all trade secret information misappropriated
9 from Meta and to return all trade secret information to Meta.
10 103. Pursuant to Cal. Civ. Code 3426.4 and other provisions of law, Meta is entitled to

11 an award of attorneys fees for Defendants misappropriation of trade secrets.


12 THIRD CAUSE OF ACTION

13 Breach of the Duty of Loyalty

14 (Against Zhong)

15 104. Meta hereby incorporates by reference Paragraphs 11 through 23 and 54 through 59

16 as though fully set forth herein.


17 105. By virtue of his employment with Meta, Defendant Zhong owed Meta a duty of

18 loyalty.
19 106. The California Labor Code provides, An employee who has any business to transact

20 on his own account, similar to that entrusted to him by his employer, shall always give the preference
21 to the business of the employer. Cal. Lab. Code 2863. Furthermore, everything which an
22 employee acquires by virtue of his employment, except the compensation which is due to him from
23 his employer, belongs to the employer, whether acquired lawfully or unlawfully, or during or after
24 the expiration of the term of his employment. Cal. Lab. Code 2863.
25 107. Zhong breached his duty of loyalty by, among other things, setting up a competitive

26 company through an agent while employed by Meta, failing to disclose that he was engaged in a
27 competitive business while employed as Metas Senior Optical Engineer and then misrepresenting
28 to Meta the reasons for his abrupt resignation on one days notice.
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COMPLAINT FOR INJUNCTIVE RELIEF AND DAMAGES
Case 3:17-cv-03259-MEJ Document 1 Filed 06/06/17 Page 30 of 34

1 108. As a direct result of Zhongs breach of his duty of loyalty, Meta has been damaged,

2 and will continue to be damaged, in an amount to be proven at trial.


3 109. Zhongs breach of his duty of loyalty was accomplished in part through fraud, and

4 was done with malice and oppression, thereby entitling Meta to an award of punitive damages.
5 FOURTH CAUSE OF ACTION

6 Breach of Written Contract

7 (Against Zhong)

8 110. Meta hereby incorporates by reference Paragraphs 11 through 109 as though fully

9 set forth herein.


10 111. Defendant executed his Employment Agreement and CIIAA, attached hereto

11 respectively as Exhibits A and B.


12 112. Meta upheld all of its obligations under the terms of the Employment Agreement and

13 the CIIAA by, among other things, employing Zhong and providing him with access to its
14 confidential, proprietary and trade secret information.
15 113. Zhong breached his Employment Agreement by failing to provide 10 days notice

16 prior to his resignation.


17 114. Upon information and belief, Zhong breached his obligations under the CIIAA by,

18 among other things, (1) disclosing Metas confidential, proprietary, and trade secret information to
19 Dreamworld and its employees; (2) using Metas confidential, proprietary, and trade secret
20 information to create a competing product; (3) copying Metas confidential, proprietary, and trade
21 secret information for his own use; (4) engaging in employment or other activities with Dreamworld;
22 (5) failing to keep and maintain adequate and current written records of all Company Inventions he
23 made or conceived; (6) failing to deliver to the Company any and all devices, records, data, notes,
24 reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, laboratory
25 notebooks, materials, flow charts, equipment, other documents or property, or reproductions of any
26 of the aforementioned items developed by him pursuant to his employment relationship or otherwise
27 belonging to the Company; (7) failing to sign and deliver the Termination Certification to Meta
28 upon his resignation; (8) participating in the ownership, management, operation, and/or control of,
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COMPLAINT FOR INJUNCTIVE RELIEF AND DAMAGES
Case 3:17-cv-03259-MEJ Document 1 Filed 06/06/17 Page 31 of 34

1 and/or serving as an officer, director, shareholder, partner, employee, agent, consultant, joint
2 venturer, independent contractor, advisor, developer, or in a similar capacity with Dreamworld; and
3 (9) assisting in the conduct of Dreamworld, a direct competitor of Meta.
4 115. As a direct and proximate result of Zhongs breach of his Employment Agreement

5 and the CIIAA, Meta has been damaged in an amount to be proven at trial.
6 FIFTH CAUSE OF ACTION

7 Intentional Interference with Contractual Relations

8 (Against Dreamworld)

9 116. Meta hereby incorporates by reference Paragraphs 11 through 28 as though fully set

10 forth herein.
11 117. Meta and Zhong were parties to the CIIAA, attached hereto as Exhibit B.

12 118. The CIIAA is a valid and binding agreement that (1) prevents Zhong from disclosing

13 Metas confidential information, (2) requires Zhong to devote his entire best business efforts to the
14 interests of Meta; (3) and prohibits Zhong from engaging in other employment or in any activities
15 detrimental to the best interests of the Company.
16 119. Upon information and belief, Dreamworld had knowledge of the fact that Meta and

17 Zhong were parties to the CIIAA and had knowledge of the terms of the same.
18 120. Despite its knowledge that Zhong was bound by the CIIAA, Meta intentionally and

19 knowingly induced Zhong to breach his agreement by disclosing Metas confidential information to
20 Dreamworld and/or its agents, by devoting his business efforts toward the interests of Dreamworld,
21 and by undertaking employment or other activities in support of Dreamworld that were detrimental
22 to the interests of Meta, as prohibited by the CIIAA, Exhibit B.
23 121. By engaging in the activities mentioned in this cause of action, Zhong breached the

24 provisions of his CIIAA.


25 122. As a direct result of Dreamworlds illegal conduct, Meta has been damaged, and will

26 continue to be damaged, in an amount to be proven at trial.


27 123. Dreamworlds conduct was carried out with malice and oppression, thereby entitling

28 Meta to an award of punitive damages.


-30- Case No.
SMRH:483109724.1
COMPLAINT FOR INJUNCTIVE RELIEF AND DAMAGES
Case 3:17-cv-03259-MEJ Document 1 Filed 06/06/17 Page 32 of 34

1 SIXTH CAUSE OF ACTION

2 Violation of Bus. & Prof. Code 17200, et seq.

3 (Against All Defendants)

4 124. Meta hereby incorporates by reference Paragraphs 11 through 23 and 76 as though

5 fully set forth herein.


6 125. Defendants engaged in fraudulent business practices in violation of the California

7 Business and Professions Code. Such acts and practices include, but are not limited to, Defendants
8 falsely holding out Dreamworlds products to be their own and uniquely developed by Dreamworld.
9 126. Defendants practices were fraudulent in that a reasonable person would likely be

10 deceived by their material misrepresentations and omissions.


11 127. Meta has been harmed as a result of Defendants fraudulent business practices. Meta
12 is entitled to (a) recover restitution, including, without limitation, all benefits that Defendants
13 received as a result of their fraudulent practices, and (b) an injunction restraining Defendants from
14 engaging in further acts of unfair competition.
15 PRAYER FOR RELIEF

16 WHEREFORE, Meta Company prays for judgment against Defendants Zhangyi Zhong,

17 Dreamworld USA, Inc., and Does 1 through 20, jointly and severally, as follows:
18 A. A judgment in Meta Companys favor against Defendants on all causes of action;

19 B. Preliminary and permanent injunctive relief enjoining Defendants, as well as their

20 agents, and all persons in active concert and participation with any of them, from, directly or
21 indirectly, obtaining, accessing, using, retaining, or disclosing any of Metas confidential,
22 proprietary, and/or trade secret information;
23 C. Preliminary and permanent injunctive relief requiring Defendants to return Metas

24 confidential, proprietary, and/or trade secret informationincluding proprietary information that


25 Meta owns pursuant to the CIIAA in forensically sound fashion, preserving all metadata;
26 D. Preliminary and permanent injunctive relief requiring Defendants to refrain from

27 selling any products that incorporate in any way proprietary technology that Zhong worked on while
28
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COMPLAINT FOR INJUNCTIVE RELIEF AND DAMAGES
Case 3:17-cv-03259-MEJ Document 1 Filed 06/06/17 Page 33 of 34

1 employed by Meta or that incorporate technology that is derived from work that Defendant did while
2 employed by Meta;
3 E. An award of compensatory damages to Meta in an amount to be proven at trial;

4 F. Punitive damages against Defendants;

5 G. Metas reasonable attorneys fees, costs, and expenses incurred in connection with

6 this action;
7 H. Prejudgment interest on any monetary award made part of the judgment against

8 Defendant; and
9 I. Any additional relief this Court deems equitable and just.

10
11 Dated: June 6, 2017
12 SHEPPARD, MULLIN, RICHTER & HAMPTON LLP
13
14 By /s/ Jennifer G. Redmond
JENNIFER G. REDMOND
15 PAUL S. COWIE
16 JOHN-PAUL S. DEOL

17 Attorneys for META COMPANY

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COMPLAINT FOR INJUNCTIVE RELIEF AND DAMAGES
Case 3:17-cv-03259-MEJ Document 1 Filed 06/06/17 Page 34 of 34

1 JURY DEMAND

2 Meta hereby asserts its right to a trial by jury and demands a jury trial on all causes

3 of action so triable. Meta will tender any required jury fee.


4
5 Dated: June 6, 2017
6 SHEPPARD, MULLIN, RICHTER & HAMPTON LLP
7
8 By /s/ Jennifer G. Redmond
JENNIFER G. REDMOND
9 PAUL S. COWIE
10 JOHN-PAUL S. DEOL

11 Attorneys for META COMPANY

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COMPLAINT FOR INJUNCTIVE RELIEF AND DAMAGES