Copy-and-Paste Glitches, Virtual-Reality Edition! (When Parties and Pronouns Don’t Match)

Today, my mole buried deep in the U.S. District Court for the Northern District of California—oh all right, it was @VBalasubramani—told me about Total Recall Techs. v. Luckey, No. C 15-02281 WHA, 2016 WL 199796 (N.D. Cal. Jan. 16, 2016) (PDF here).

It involves a dispute between plaintiff Total Recall Technologies (a general partnership of Thomas Seidl and Ron Igra) and defendant Palmer Luckey, founder of Oculus VR and inventor of the virtual-reality Oculus Rift headset, over alleged breach of a confidentiality agreement between Seidl and Luckey.

I’ll do another post about this dispute, but let’s start with an amuse bouche.

One issue was whether Total Recall had standing to pursue its claims. Total Recall conceded that it wasn’t named as a party in the contract between Seidl and Luckey. It argued that it nevertheless had standing to pursue its claims, either as an intended third-party beneficiary or as an undisclosed principal for which Seidl acted as an agent. Here’s part of what the court said in considering the third-party-beneficiary issue:

Although the agreement made no mention of Total Recall, it identified Seidl as a party “with its principal offices at Maui USA” (First Amd. Compl., Exh. A) (emphasis added). At this stage, the use of a neutral pronoun (“its”), rather than a gendered pronoun (“he”), is sufficiently ambiguous to suggest the parties intended some entity beyond Seidl as an individual to benefit from the agreement. The ambiguity is further compounded by the fact that the agreement concluded that each party “signed [the] Agreement through its authorized representative,” a statement that would appear unnecessary if both Luckey and Seidl signed solely on behalf of themselves.

The court the points to other factors suggesting that Seidl had intended the agreement to benefit Total Recall and that Luckey was aware of that. But I don’t think for a minute that the fact that the contract language was tailored for entities and not individuals somehow reflected the relationship between the parties.

Instead, because most business contracts are between entities, most contracts that people copy to create new contracts will be between entities. When you find yourself drafting a contract with one or more individuals as parties and you’re copying a contract between entities, one of the more annoying tasks is switching the pronouns and making other conforming changes. I suspect that routinely people do a less-than-perfect job of it, and I suspect that that’s what happened here.

One of the beauties of my now-offline automated confidentiality agreement is that all the pronouns switch automatically, even to the extent of reflecting the gender of any party whose gender is known at the time of drafting.

So Mr. Luckey, if you want to avoid copy-and-paste pronoun glitches in the future, have your people call my people. Virtually, of course.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.