In the matter of Snap One, LLC v. AVA, Inc, and Josh.ai, Inc., we finally see a substantive move after the initial filing by plaintiff Snap One and subsequent answers from the defendants AVA and Josh.ai. And that subsequent move is a doozy – Josh.ai has gone on offense and filed a motion to dismiss multiple major claims in the Snap One lawsuit.
Josh.ai’s filing is well written and puts Snap One on defense, forcing them to submit genuine facts and evidence to support their many claims, including a few allegations that were really quite salacious.
See more on Josh.ai’s Motion to Dismiss putting Snap One on defense
Originally filed in August last year, literally on the eve of the CEDIA Expo which was probably done purposefully, Snap One filed a lawsuit against AVA, Inc. and Josh.ai, Inc. alleging all sorts of sordid activities with some 73 pages of shocking allegations that – at least in the case of Josh.ai, a brand beloved by many integrators – suggested shady and unethical business practices.
All Parties were in the Discovery Phase
Both defendants filed the appropriate responses denying the allegations and the matter was moving into the discovery phase, in which each side provides copies of documents, communications, and other items related to the allegations and defenses. Also, it is typical for each side to take depositions of key executives from the other parties, trying to build their case to prosecute or defend at trial. This period can last several months (if not longer) and can often be quite contentious with a magistrate assigned to keep the process moving along. There are often multiple hearings to resolve myriad discovery disputes, such as motions to compel a response to questions…or motions to compel the production of documents…or motions to compel executives to sit for depositions, etc.
Since the initial filing in this case, there has been quite a bit of behind-the-scenes maneuverings, with a change of the judge (due to a recusal for no specified reason) and issues related to filings by a multiplicity of lawyers seeking to appear Pro Hac Vice – which is a Latin phrase that means “for this occasion.” Pro Hac Vice is a procedure that allows attorneys to appear before a judge in a jurisdiction in which they are not licensed to practice.
In April, Things Begin to Heat Up – Snap One Amends Its Complaint; Josh.ai Moves to Dismiss
Then, in April, things began to heat up appreciably. First, on April 12th, Snap One filed a motion for “leave to file an amended complaint.” That motion was granted, and four days later on April 18th, Snap One filed a new, First Amended Complaint (FAC).
Then, just twelve days later on April 30th – this week on Tuesday – Josh.ai filed an impressive motion to dismiss much of Snap One’s amended complaint. In the body of the text of that motion, we learn that Josh.ai may be the reason that Snap One even amended their complaint in the first place – as during discovery, Josh.ai claims that Snap One could not produce evidence to support their claim relative to one of the patents it says was infringed by the two defendants.
Snap Dropped One Patent and Added Another
Of Snap One’s “First Amended Complaint,” here is what Josh.ai had to say…
…Snap One’s patent claims were so poorly investigated before it filed suit that Snap could not articulate an infringement contention for one of its patents asserted in the initial complaint (U.S. Pat. No 10,756,984 (“‘984 Patent”)). It was only after Snap failed to serve any proper accused instrumentality disclosures for that patent per the Local Patent Rules, and Josh.ai complained, that Snap dropped its ‘984 patent claim (only to replace it with another frivolous patent claim).”
Snap’s remaining claims in the FAC fare no better.
Josh.ai filing, Defendant Josh.ai’s Motion to Dismiss First Amended Complaint
So, according to Josh.ai’s filing, Snap One dropped one patent out of the suit that they were allegedly struggling to defend, and replaced it with another that it presumably is in a better position to assert.
Josh.ai Motion to Dismiss Would Eliminate at Least 5 Claims
Josh.ai’s motion seeks an order from the court dismissing several key provisions of the lawsuit, including Snap One’s seventh and eighth claims for patent infringement “…because Snap fails to allege direct infringement of patent method claims and fails to allege indirect infringement” and also the seventh and eighth claims “…because they are based on patents that are invalid for claiming patent-ineligible subject matter.” Finally, Josh.ai’s motion also seeks to dismiss the first, tenth, and eleventh claims “…because they are based on breach-of-contract theories that are contrary to the express language of the applicable written agreements.”
With the patent claims summarily dispatched, Josh.ai turned its invective on Snap One’s contract claims – to which it seemed particularly perturbed, and the language of this motion reflects this feeling.
Josh’s Motion is Even More Dismissive of Snap’s Contract Claims
By way of background, I’d like to remind the reader that Snap One had alleged contract claims relative to two contractual agreements it had with Josh.ai. The first is an allegation of a violation of its Software Development Kit (SDK) which allowed Josh to develop Control4 drivers for its systems. The second contract was a Distributor Agreement to allow Snap One to distribute Josh.ai products to Snap One dealers. Generally, the violation of the terms of the SDK revolved around an allegation of a kind of conspiratorial arrangement in which Josh.ai helped AVA get around a blockade of its products to prevent them from connecting with Control4 products. The defendants both deny such a scheme.
Josh’s Motion to Dismiss was dismissive of the contract claims from Snap. Like the patent claims, the MTD says, “Snap’s contract claims are similarly frivolous. The express language of both contracts (neither of which were attached to the FAC) permits Josh.ai to do the exact things that Snap claims constitute breach.”
A Completely Different Narrative of Just What Happened
Josh’s narrative of the way the situation evolved is quite different from the one told by Snap’s original complaint. Josh says that it “developed an application with Snap [emphasis in original]”. And as allowed in the SDK (according to Josh) they then put this application into the Android app store under the Josh.ai brand.
Snap had no problem with any of this. It was only once co-defendant AVA, a Snap competitor, loaded that same app on its Android-based remote control that Snap accused Josh.ai of breach….the claim of breach is nothing more than a bald anti-competitive gambit because Snap doesn’t like Josh.ai doing business with a competitor [emphasis added].
Josh.ai Motion to Dismiss
All of this means, according to Josh, that Snap One has failed to “allege any facts to show that Josh.ai breached a term of the SDK Agreement.”
Motion Implores Judge to Refer to the Direct Language of the Agreement
Turning to the Distribution Agreement, Josh was able to pull wording directly out of the contract that permitted its actions. And, like the SDK agreement, the company filed a copy of the Josh.ai Distribution Agreement with Snap One to prove its point.
For example, one of Snap One’s claims was that they had an “exclusive” agreement with Josh.ai, and that the company violated this by selling directly to Snap One dealers. Hold on a minute there, Josh effectively says, “Snap mischaracterizes the agreement as broadly ‘exclusive’… But the reality is that Josh.ai expressly retained the right to sell its products to ‘any dealer,’ including Snap’s, and directly to the public.”
There were other allegations by Snap One beyond Josh.ai violating exclusivity and stealing Snap One dealers. It also alleged that Josh undercut Snap One’s prices to motivate dealers to buy directly from it. Nonsense, says Josh, the parties knew they would be competing with each other and the agreement “had extensive contract terms governing how pricing would be set in light of that direct competition.” Consequently, Josh says there is no evidence it did anything other than abide by the letter of the contract.
Only Special Item Agreed to by Josh was to Not Sell Any Other Distributor
Perhaps the precision of the language visible in each of these contracts – the SDK and the Distributor Agreement – was why Snap One chose not to include them as exhibits to the lawsuit. However, that’s just speculation on my part.
“The only commitment Josh.ai made in the Distributor Agreement was that it would not sell to other wholesalers that compete with Snap at that level, and there is no allegation in the FAC (nor could there be) that Josh.ai violated that limited exclusivity.”
Snap Using the Court to ‘Subdue Its Competitors’
Perhaps most striking, is the burn that Josh included in summarizing its view of the Snap One allegations and their overt contravention with the actual facts of the situation.
What is clear is that Snap – never meaningfully profitable itself – cannot abide by lawful competition in the market and is using this Court’s resources as a way to subdue its competitors. The present motion should be granted, the defective claims dismissed, and the case narrowed so that the parties can focus on resolving the remaining claims.
Josh.ai, Motion to Dismiss
Josh Provides Documents to Prove Its Points; AVA Says They Can as Well
One last point I’ll make about all of this – first, and foremost, we need to wait to see the response to this motion by Snap One to get a better sense of where this is heading. But let me say this, at the time of the initial filing, I interviewed both Snap One and Josh.ai directly. While Snap One stuck to its general narrative, Alex Capecelatro told me unequivocally that Josh.ai did NOT violate the terms of any agreement and that he was confident that they have the evidence to prove it.
Also, in a separate published interview with Raphael Oberholzer of co-defendant AVA, he said this, “In fact, we even disclosed our plans for AVA to Snap One before going live and got their approval in writing.”
As I noted above, Josh.ai attached exhibits of both contracts to prove that the language expressly permitted its actions. I presume we’ll see the same type of filing by AVA at some point that will contain Snap One’s sign-off on the launch of AVA.
If Josh.ai’s motion to dismiss is successful, it will essentially gut the case for Snap One, so the stakes are high in this action.
Rapidly Approaching ‘Put Up or Shut Up’ Time for Snap One
When the motion hearing comes, it will be “put up or shut up” time for Snap One – the ball will be in its court to prove its many allegations.
Learn more about Josh.ai by visiting josh.ai.
Find out more about AVA at ava.com.
See all that Snap One has to offer at snapone.com.
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