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This article was published on November 19, 2012

Color Inc. lawsuit confirms ‘key assets’ being sold to Apple

Color Inc. lawsuit confirms ‘key assets’ being sold to Apple
Matthew Panzarino
Story by

Matthew Panzarino

Matthew Panzarino was Managing Editor at TNW. He's no longer with the company, but you can follow him on Twitter. Matthew Panzarino was Managing Editor at TNW. He's no longer with the company, but you can follow him on Twitter.

Today, a lawsuit by Adam Witherspoon, a founder of Color Inc. was uncovered by Techcrunch. In the suit, which is frankly a bit insane to read, Witherspoon accuses founder Bill Nguyen of many incredibly shocking things.

In the introduction of the suit is a confirmation of news that we broke. Namely, that Color Inc. has sold assets to Apple. We’re still reading through the suit, which is pretty nuts.

The suit document states the following regarding the sale of Color assets:

Finally, When the company failed and key assets were being sold to Apple, Nguyen specifically retaliated against Witherspoon by blocking his job opportunities at Apple, offering him a de minimis severance package, disparaging him in the workplace and communicating to others that Witherspoon was being punished for cooperating with an investigation into Nguyen supervised by Color’s outside counsel Gunederson Dettmer.

According to the suit documents, after Color’s product failed to perform well in the marketplace (around September 2012), Nguyen brokered a deal with Apple. That same month, Apple representatives visited Color and met with the technical team of about 20 employees. Witherspoon says that he was specifically excluded by Nguyen, and the only technical employee to receive this treatment.

When Witherspoon called Nguyen to see what his future was like, Nguyen replied “I think you would be crucial to what we are trying to do at Apple” and promised him a spot on the transition team. Witherspoon says that, since every other member of the engineering team was going to be hired by Apple, there was no reason why he should be excluded. He alleges that Nguyen lied when he responded positively.

The suit alleges that Nguyen later brought Witherspoon into a meeting and indicated that Apple was interested “only in Color’s intellectual property and its engineering team.”  This would exclude Witherspoon, but Nguyen gave no reason why he would not be part of the team transitioning to Apple. Apparently Witherspoon was asked to give a number that it would take for him to walk away from the deal and Witherspoon gave it. Witherspoon’s suit alleges that Nguyen ‘threatened that their social capital’ would be ruined if they held up the deal with Apple.

Witherspoon says that, on October 13th he was then offered a $165K package by Nguyen in compensation. He alleges that employees with much less time at Color were offered far more in severance.

There are a lot more pretty nutso accusations in the suit, including physical and verbal abuse, abuse of expense accounts and more.

We have reached out to Color for comment on the case. Apple previously acquired Nguyen’s company Lala for $80 million in December, 2009.

Many became skeptical of Color when it was announced that investors like Bain Capital Ventures, Silicon Valley Bank, and Sequoia Capital had invested $41M before a product was even launched. The company was founded by Nguyen and Peter Pham, but Pham left the startup in June 2011 over unknown reasons and went to work at Los Angeles incubator Science.

More conflicting news emerged last month as it was reported that the company was going to shut its doors, something that was quickly refuted.

Image Credit: AFP/Getty Images

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