Billion-dollar security company LifeLock has filed a lawsuit against Xapo that some say could jeopardize the existence of the Swiss-based Bitcoin wallet and debit card company, as Lifelock seeks to declare ownership of the technology.
In December of 2013, LifeLock acquired for US$42.6 million all the ongoing businesses, including existing intellectual and physical property, of a digital wallet company called Lemon, which was led by Xapo founder Wences Casares.
The complaint for breach of contract submitted by LifeLock to the superior court of the state of California claims that:
“Former executives of Lemon ... launched their new business, called Xapo, using a product developed by Lemon’s employees, in Lemon’s facilities, on Lemon’s computers and on Lemon’s dime.”
In the complaint, LifeLock explained that the work product and the source code of the Xapo Wallet belonged to Lemon at the time of acquisition and that Lemon continued their development after the merger. Furthermore, LifeLock seeks to declare the ownership of the technology developed by Lemon personnel, “including but not limited to [work performed by] each of Casares, Murrone, Apesteguia and Cuesta, on Lemon’s computers, in Lemon’s facilities and on Lemon’s payroll.”
“As a result of [those] breaches, Lemon has suffered injury and is entitled to remedies to be proven at trial.”
Xapo was launched on March 13, 2014, with investments totaling US$20 million from Ribbit Capital, Benchmark and Fortress Investment Group. In conjunction with the launch, The New York Times reported that three full-time Lemon/LifeLock employees were on the team of Xapo.
Following the report, Lemon began its investigation and forensically analyzed all Lemon computers and servers. Lemon claimed that the evidence from the investigation proves that Casares and other employees had secretly developed Lemon’s bitcoin technology on Lemon computers during Lemon-paid business hours. The covertly developed bitcoin technology was branded as Xapo and launched six weeks after the acquisition of Lemon.
LifeLock stated, “Electronic artifacts on Casares’ computer indicate that Casares too had Xapo-related files on his Lemon computer going back to December 2013, but that Casares deleted those files from his Lemon computer shortly before tendering his resignation.”
CoinTelegraph reached out to Xapo founder Casares, but he declined to comment. Casares’ attorney Steven Ragland has said, however:
”This is a baseless lawsuit. LifeLock has no right to any Bitcoin-related business or IP that Wences Casares or his colleagues may have worked on during their time at Lemon or after. As LifeLock’s President has attested in a legally binding document, LifeLock does not have any right, claim or interest to any Bitcoin IP. LifeLock’s claims lack merit and we look forward to proving their allegations false.”