Lawsuit filed by former Color Labs employee confirms Apple acquisition of engineers and IP

color shutting down

It appears that even if Color is heading in the right direction, the troubled startup can’t avoid controversy. A lawsuit by former Color engineer, Adam Witherspoon, unveiled by TechCrunch reveals the drama going on at the company, as well as confirmed that Color’s talent and technology has been acquired by Apple. However the value of the deal wasn’t mentioned, although rumors suggest Color was to be acquired for approximately tens of millions of dollars.

The document affirms that Color’s CEO, Bill Nguyen, had shopped Color around for an acquisition as early as September 2012 to Apple. Apple sat down to discuss the deal with Nguyen and 20 engineering employees to sort out the deal, seeing as how Apple made it clear that it was interested in acquiring Color’s entire engineering team and intellectual property. However Witherspoon was left out of the discussion and ultimately became the sole engineer to be excised from the Apple acquisition deal. He was instead left with an unusually low severance package despite his history and position in the company.

For the record, Apple acquired Nguyen’s first company, Lala, for $80 million deal was Lala in 2009. 

When Color received its infamous $41 million in funding lead by Sequoia Capital, Bain Capital, and Silicon Valley Bank, the company had six pending patents. The patents, including “Sharing content among multiple devices,” will likely be wrapped up into Apple and its Photo Stream product. The details of some of these patents can be found published hereColor’s website has published a notification stating that the app will finally be put to rest at the end of December. 

While the lawsuit clues us into the deal with Apple, it also sheds some light on the sudden departure of Nguyen, who recently stepped back from day-to-day operations with the company. This initially thought to be a result of internal strife within the company, although Nguyen chalked up his leave to going on a sabbatical. “I take off for a while and I vacation. It’s nothing new or exciting,” Nguyen told TechCrunch in September.

The complaint suggests otherwise. The document indicates that on July 17, 2012, board member Doug Leone sent a company-wide email notifying employees that Nguyen was stepping down and that, “it was the Board’s fault that things had gotten to that point and that the Board should have been more involved with the way Color was run.”

If you want an entertaining read, we suggest digging into the rest of the lawsuit — it’s the stuff of melodramatic soap operas … at least, one focused on a doomed young startup.