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Hong Kong Ucloudlink Network Technology Ltd. v. Simo Holdings Inc.

United States District Court, N.D. California

September 12, 2019

HONG KONG UCLOUDLINK NETWORK TECHNOLOGY LIMITED, et al., Plaintiffs,
v.
SIMO HOLDINGS INC., et al., Defendants.

          ORDER GRANTING PLAINTIFFS' MOTION TO DISMISS FIFTH AND SIXTH COUNTERCLAIMS DOCKET NO. 75

          EDWARD M. CHEN UNITED STATES DISTRICT JUDGE

         The instant case began as a patent infringement lawsuit filed by certain uCloudlink entities against certain SIMO entities. The case now includes counterclaims brought by certain SIMO entities against certain uCloudlink entities for trade secret misappropriation.

         Counterclaimants are three SIMO entities:

(1) SIMO Holdings Inc. (“SIMO”).
(2) Skyroam, Inc. (“Skyroam, Inc.”).
(3) Shenzhen Skyroam Technology Co., Ltd. (“Skyroam Shenzhen”).

         Counterdefendants (also Plaintiffs in the case) are two uCloudlink entities:

(1) Hong Kong uCloudlink Network Technology Limited (“uCloudlink Hong Kong”).
(2) uCloudlink (America) Ltd. (“uCloudlink America”).

         Currently pending before the Court is Plaintiffs'/Counterdefendants' motion to dismiss the counterclaims for trade secret misappropriation (the fifth and sixth causes of action). The Court previously granted Counterdefendants' motion to dismiss these counterclaims but gave Counterclaimants leave to amend. See Docket No. 67 (order). Counterdefendants argue that the amended counterclaims are still deficient.

         Having considered the parties' briefs and accompanying submissions, as well as the oral argument of counsel, the Court hereby GRANTS the motion to dismiss the trade secret misappropriation counterclaims.

         I. FACTUAL & PROCEDURAL BACKGROUND

         In the operative second amended counterclaims (“SACC”), Counterclaimants allege as follows with respect to the trade secret misappropriation claims.

         “The overall technology at issue involves providing users of mobile devices such as phones and hotspots (‘uCloudlink devices') the ability to travel internationally and access data through those devices without having to pay expensive roaming fees or purchase a country-specific SIM card for each new country visited.” SACC ¶ 26.

         “In 2008, SIMO founded and patented its virtual SIM technology, some of which” it disclosed in patents. SACC ¶ 87. “In 2013, SIMO launched its vSIM platform, ” which “delivers local data, internationally, allowing the user to connect to dozens of different cellular networks without changing his or her SIM card.” SACC ¶ 88.

         Skyroam[1] owns trade secrets related to

solutions for optimizing the virtual SIM technology. Skyroam's trade secrets include, inter alia, methods and solutions for optimizing the distribution of seed SIM, protocol for upgrade designs, methods of use for proxy communication servers, virtual SIM allocation, design of the backend billing system, and data link management for carrier re-authentication.

SACC ¶ 95. The trade secrets “significantly increase the usability, reliability, and consistency of the connections required for mobile hotspot users through vSIM technology.” SACC ¶ 99.

         In April 2013, Skyroam hired Wang Bin as its Systems Architect.[2] See SACC ¶ 112. Previously, Wang Ban had “worked with Counterdefendants' CEO Gao Wen and other uCloudlink founders and/or individual investors at . . . Huawei.”[3] SACC ¶ 9. In 2011, Gao Wen and “several other Huawei colleagues” left Huawei to form Counterdefendants and related uCloudlink entities to compete with Counterclaimants. SACC ¶ 11. Wang Bin did not go with Gao Wen and these colleagues but instead joined Skyroam Shenzhen in April 2013 (i.e., some two years later). See SACC ¶ 11.

         As Systems Architect for Skyroam, Wang Bin “obtained detailed knowledge” of Skyroam's trade secrets, “including solutions for roaming SIM cards, virtual SIM allocation, [and] design of backend billing system.” SACC ¶ 113. In addition, while employed by Skyroam, “Wang Bin authored numerous specification documents based on information that Skyroam engineers disclosed to him.” SACC ¶ 120. During his employment with Skyroam, Wang Bin copied certain Skyroam trade secrets to a USB drive and then downloaded them to his personal computer. See SACC ¶ 125.

         In August 2013 - i.e., just four months after he started working at Skyroam - Wang Bin left employment with Skyroam. See SACC ¶ 12. Then, “just one month after leaving Skyroam, ” Wang Bin started working for uCloudlink Shenzhen (actually, a predecessor entity of uCloudlink Shenzhen) “as a system engineer for testing, maintenance, and technical support of backend servers.” SACC ¶ 126. Although Wang Bin was formally hired by uCloudlink Shenzhen, he actually interviewed with Tan Zhu, a Vice President of uCloudlink Hong Kong. See SACC ¶ 127. At some point, Wang Bin was promoted from being a system engineer to Director of Operation and Maintenance Department “to support operation and maintenance of backend servers.” SACC ¶ 128. Then, in March 2017, Wang Bin “began serving as the leader of the Security Group at uCloudlink Shenzhen, responsible for establishing information security systems, security compliance, and audit.” SACC ¶ 131.

         During his time with uCloudlink Shenzhen, Wang Bin transferred the Skyroam trade secrets he had copied to his uCloudlink work computer. See SACC ¶ 129. “Counterclaimants were able to identify at least one Chinese patent application, CN105491555A, [submitted by uCloudlink Shenzhen[4] that discloses the contents of the Skyroam Confidential Documents copied over from Wang Bin's Skyroam computer to his uCloudlink computer.” SACC ¶ 132 (adding that this patent application lists Wang Bin and Gao Wen as co-inventors). The technical disclosure for this patent application “includes large sections that were copied word for word from the stolen Skyroam trade secret document.” SACC ¶ 133 (emphasis in original). Other patents “that uCloudlink applied for and owns that list Wang Bin as an inventor and that are based on or otherwise include some of Counterclaimants' stolen trade secrets” can be identified in ¶ 137 of the SACC. SACC ¶ 137 (identifying five other patent applications). The patent applications appear to have been filed in 2015 and/or 2016. See SACC ¶¶ 137, 173. There is a “lack of evidence of any conception or reduction to practice” for “any of the inventions allegedly conceived and reduced to practice” which is indicative of the fact that “[t]he ‘inventors' did not memorialize any of their ‘ideas' [because] they already existed word for word in documents stolen from Skyroam.” SACC ¶ 139 (emphasis in original).

         “Counterdefendants manufacture, offer for sale, and sell products and services in the United States that embody the Wang Bin Patents, and therefore, are based, at least in part, on Skyroam's trade secrets and the Skyroam Confidential Documents.” SACC ¶ 179.

         On October 12, 2018, as part of a patent infringement lawsuit that Skyroam entities filed against uCloudlink entities in a New York district court, uCloudlink Hong Kong and uCloudlink America supplemented a response to an interrogatory and identified Wang Bin as a current uCloudlink employee who had formerly worked for Skyroam Shenzhen. See SACC ¶ 140. On the same day, the uCloudlink entities produced nearly 30, 000 pages of documents and “[b]uried in this massive production were 14 internal Skyroam documents. Many of these documents were labeled by Skyroam as ‘Confidentiality Level: Top Secret' and/or bore Skyroam's trademark.” SACC ¶ 141 (referring to these documents as the “Skyroam Confidential Documents”).

         On October 19, 2018, a hearing was held before the New York district court during which the parties discussed Wang Bin and the Skyroam documents. During the hearing, uCloudlink Hong Kong and uCloudlink America admitted that Wang Bin “explicitly refused to cooperate with [their] forensic expert . . . hired to create an ...


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