The Wild (Kanye) West of Trade Secret Theft
Musical artist and fashion icon Kanye West is being sued by a video and ecommerce company called MyChannel Inc. (MYC) that claims he breached their mutual nondisclosure agreement and took “their proprietary and confidential technology and information to fuel the e-commerce engine” of his Yeezy brand. MYC filed its lawsuit in the US District Court for the Central District of California. The minority-owned business alleges that West made “lavish promises to MYC of millions of dollars in economic reward,” as well as the formation of a lucrative partnership providing millions more[.]” In return, MYC asserted that it agreed to provide Kanye West—and did in fact provide Kanye West—with “tens of thousands of hours of investment in Yeezy in reliance on those promises and the MYC-Kanye partnership.”
At the heart of MYC’s complaint is its allegation that it developed a unique video platform—including a unique, proprietary “shopability” function that was protected by a nondisclosure agreement—to grow the ecommerce operation of West’s Yeezy brand. According to MYC, West brazenly rebranded MYC as his own company, referring to it as “YZY Tech” to partners like Adidas. MYC claims that West and his Yeezy brand then breached their obligations to compensate MYC for its work, yet they nevertheless continued to use MYC’s ecommerce platform, including MYC’s shopability function. In fact, MYC alleges that West’s “closest confidents [sic] and business advisors reached out to MYC’s founders” noting similarities between their work and the platform West continued to use, reasonably believing that MYC was responsible for the content.
The veracity of MYC’s claims will be tested in court as it litigates its claims against Kanye West. In the meantime, this case demonstrates that theft of intellectual property does not always occur in the shadows with, for instance, employees clandestinely misappropriating trade secrets. Rather, misappropriation of intellectual property can sometimes occur in plain sight when business deals and/or partnerships deteriorate. It is important, then, to clearly delineate rights to intellectual property and carefully craft nondisclosure agreements that protect assets exchanged with prospective partners.