By Marisa Kendall, From The Recorder

SAN FRANCISCO — A San Francisco-based start-up lost its first round against Yahoo Inc. this week in litigation over an invention designed to improve targeted advertising.

Yahoo, represented by Morrison & Foerster, sued Media Relevance Inc. in May, claiming the company’s founder has tried to assert intellectual property rights over technology he worked on as a Yahoo engineer.

Media Relevance tried to knock out Yahoo’s patent ownership claims on a motion to strike under California’s anti-SLAPP law. San Francisco solo Charles Seavey portrayed the litigation as an uneven legal match-up pitting an eight-employee start-up against one of the largest Internet companies.

On Monday, Santa Clara County Judge Patricia Lucas tentatively rejected the motion, siding with Yahoo’s legal team. “Defendants have not met their burden of demonstrating that the causes of action in the complaint arise from protected activity,” she wrote.Morrison & Foerster partners Richard Hung and Michael Jacobs represent Yahoo. Jacobs declined to comment. Yahoo didn’t return an email seeking comment.

Seavey said his client plans to contest the tentative ruling at a hearing Tuesday.

“Morrison & Foerster was ordered: figure out some way to sue this guy so they could put pressure on him,” Seavey said.

Media Relevance’s founder Steven Clark-Martin was a software engineer at Yahoo from 2003 to 2007. According to Yahoo, he signed an agreement granting the company the rights to inventions he developed that related to his work, made use of Yahoo resources or contributed to its business.

In 2005, Clarke-Martin submitted an idea to Yahoo for a system that would use sub-titles and lyrics in television shows and songs to place relevant advertisements.

After he left Yahoo in 2007, the company patented the idea. Clarke-Martin, who is named as an inventor, refused to participate in the process. Meanwhile, he founded his own company in 2009 to pursue the idea for targeted advertising.

In 2011, Clark-Martin filed an agreement with the U.S. Patent and Trademark Office attempting to transfer ownership of the patent to his start-up, then called 41 Ads.

Now Yahoo and the start-up are squaring off before Judge Lucas for control of the patent.

Seavey argued Yahoo’s suit should be thrown out because state anti-SLAPP law protects his client’s declaration with the PTO. The agreement was issued in connection with an official legal proceeding, he wrote, and therefore cannot be the basis for a lawsuit.

But Lucas agreed with Yahoo’s lawyers that the suit is based on the execution of the patent, not the PTO document itself.

“The recording of the assignment is merely evidence of the wrongful act, which is the execution of the assignment,” she wrote.Yahoo also has accused Clarke-Martin of stealing other confidential company information. He stopped reporting to work on Jan. 2, 2007, according to Yahoo lawyers. Two days later he copied all the data from his Yahoo laptop, including trade secrets, onto eight compact discs. Clarke-Martin never went back to work, or returned the CDs. His employment officially ended three months later.

Lucas addressed the alleged IP theft with a brief line: “Not a protected activity.”

IMAGE: Richard Hung, Morrison & Foerster partner

For more on this story go to: http://www.therecorder.com/id=1202674055621/Judge-OKs-Suit-Against-Former-Yahoo-Engineer-for-IP-Theft#ixzz3GmQ5qIxz