Corning Inc. v. Shenzhen Xinhao Photoelectric Tech. Co.

Decision Date13 August 2020
Docket Number18-CV-6739L
Citation478 F.Supp.3d 456
Parties CORNING INCORPORATED, Plaintiff, v. SHENZHEN XINHAO PHOTOELECTRIC TECHNOLOGY CO., LTD., Defendant.
CourtU.S. District Court — Western District of New York

Arthur W. Coviello, Pro Hac Vice, Wilmer Cutler Pickering Hale & Dorr LLP, Palo Alto, CA, Kevin S. Prussia, Pro Hac Vice, Michael J. Summersgill, Pro Hac Vice, Wilmer Cutler Pickering Hale and Dorr LLP, Boston, MA, William R. Leinen, Eric J. Ward, Ward Greenberg Heller & Reidy LLP, Rochester, NY, for Plaintiff.

Calvin E. Wingfield, Mark J. Abate, Goodwin Procter LLP, New York, NY, Erin Elizabeth Elmouji, William G. Bauer, Woods Oviatt Gilman LLP, Rochester, NY, for Defendant.

DECISION AND ORDER

DAVID G. LARIMER, United States District Judge

Plaintiff Corning Incorporated ("Corning") brings this action against defendant Shenzhen Xinhao Photoelectric Technology Co., Ltd. ("Xinhao"). Plaintiff asserts two causes of action, both of which allege that Xinhao has breached the terms of a contract between Corning and Xinhao relating to Xinhao's "finishing" of certain glass products manufactured by Corning. Jurisdiction is premised on diversity of citizenship under 28 U.S.C. § 1332.

Xinhao has moved to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons that follow, the motion is denied.

FACTUAL BACKGROUND

According to the complaint, the allegations of which are accepted as true for purposes of Xinhao's motion, Corning is a New York corporation with its principal place of business in Corning, New York. Xinhao is a Chinese corporation with its principal place of business in Shenzhen, China. Complaint ¶¶ 15, 16.

In 2007, Corning, a leading manufacturer of glass products, developed a "cover glass" for use with mobile electronic devices such as smartphones and tablets. Corning's product, which it markets under the name "Gorilla Glass," is "exceptionally durable, thin, lightweight, scratch resistant, [and] impact resistant ...." Gorilla Glass has now been used in over six billion devices worldwide. Complaint ¶¶ 3, 4.

To create Gorilla Glass, Corning first manufactures sheets of glass, which it sends to outside companies for "finishing," a process that further strengthens the glass. To enable the "finishers" to accomplish the desired result, Corning shares its proprietary technology with them, subject to strict confidentiality requirements and restrictions.

Effective April 22, 2016, Corning and Xinhao entered into a General Commercial Framework Agreement ("CFA"), for Xinhao to finish Gorilla Glass. The CFA included restrictions on Xinhao's use of specifically defined "Corning Technology" that Corning agreed to disclose to Xinhao. Effective March 9, 2017, Corning and Xinhao entered into a "First Amendment" to the CFA, which in part related to the definition of Corning Technology. Id. ¶¶ 8, 9. The CFA and First Amendment will be collectively referred to herein as the "Agreement."

Under the terms of the Agreement, Xinhao agreed that it would keep the disclosed Corning Technology confidential, and would only use it to finish Gorilla Glass. Corning alleges, however, that after entering into the Agreement, it found reason to believe that Xinhao was using Corning Technology in violation of the Agreement to finish and produce glass products made from glass that was not supplied by Corning. Id. ¶ 10. Specifically, Corning alleges that at least as early as the spring of 2018, Xinhao began using Corning Technology to finish non-Corning cover glass in mobile devices, including Vivo smartphones. Id. ¶ 53.

Corning alleges that it has purchased commercially available Vivo smartphones, and after testing their cover glass, determined that the phones’ cover glass–which was not manufactured by Corning–was finished by Xinhao using Corning Technology. Id. ¶ 56. Corning alleges that the Vivo phones’ cover glass has been finished using Corning Technology in at least two respects.

First, the non-Corning, Xinhao-finished cover glass uses Corning Technology described in Corning patents, the disclosures of which are included within the Agreement's definition of "Corning Technology." Corning alleges that the non-Corning glass in the tested Vivo smartphones meets each of the requirements of certain claims of Corning's patents encompassed within the Agreement's definition of Corning Technology. Id. ¶¶ 58, 59.

Second, Corning's testing of the Vivo phones’ glass indicates that it was finished by means of Corning Technology. Corning alleges that its testing shows that the glass displays certain characteristics that match those obtained from finishing cover glass using Corning Technology. Id. ¶ 60. In short, the complaint alleges that both the glass itself and its finishing were made or accomplished by means of Corning Technology.

Based on its belief that Xinhao was violating the Agreement, on August 15, 2018 Corning sent a "Notice Letter" to Xinhao, demanding that Xinhao "[i]mmediately cease making, using, or selling ... glasses that infringe the Corning Patents," and "[c]ooperate with Corning on a comprehensive audit as required by the CFA to determine if Corning's confidential and proprietary information is being used by Xinhao to produce non-Corning ... strengthened glasses." (Dkt. #19-3 at 5.) The demand for an audit was based on a provision in the CFA giving Corning "the right to audit and inspect [Xinhao's] operations and security procedures to ensure that [Xinhao] is using reasonably prudent and diligent efforts to protect Corning Technology from further disclosure and/or misuse." Id. at 10.

It is not apparent whether Xinhao ever formally responded to Corning's demand. The complaint states that "Xinhao refused Corning's requests," and that it has done so "[d]espite multiple requests from Corning," but Corning also asserts in its motion papers that Xinhao has "failed to respond" to Corning's audit requests. Complaint ¶ 63; Pl. Mem. (Dkt. #21) at 12. What is clear is that Corning has requested that it be allowed to audit Xinhao's operations, and that Xinhao has not granted that request.

Corning filed the complaint in this action on October 15, 2018. In the first cause of action, Corning alleges that Xinhao has violated §§ 3(b) and 6(a) of the Agreement, in two ways. First, Corning alleges that Xinhao has finished non-Corning cover glass using Corning Technology, which Xinhao is prohibited from doing under the Agreement. Section 3(b) provides that "Corning Technology may only be practiced on Gorilla Glass purchased by [Xinhao] from Corning." Dkt. #19-3 at 10 § 3(b)(ii). Section 6(a) states that Xinhao "represents, warrants and covenants that it will not use any Corning Technology other than as permitted in clause 3(b) ...." Id. at 11.

Second, Corning alleges that, even apart from Xinhao's finishing of the non-Corning cover glass, the glass itself uses Corning Technology that is included within the definition of Corning Technology under the Agreement. Corning contends that this also violates the Agreement.

In the second cause of action, Corning alleges that "Xinhao has breached Section 3(b)(iv) of the Agreement by refusing Corning's request in its August 15, 2018 Notice Letter to audit and inspect Xinhao's operations and security procedures for further misuse and/or unauthorized disclosure of Corning Technology." Complaint ¶ 76.

For relief, Corning seeks: a declaration from the Court that Xinhao has breached and is breaching the Agreement; an order enjoining Xinhao from using or disclosing Corning Technology in violation of the Agreement; money damages for Xinhao's breach of the Agreement; restitution and/or disgorgement of all revenues and profits that Xinhao has received as a result of its breaches of the Agreement; specific performance of the audit provision of the Agreement, allowing Corning to conduct an audit of Xinhao's facilities; and an award of litigation costs and attorney's fees. Complaint at 27-28.

DISCUSSION
I. Motions to Dismiss–General Standards

In deciding a motion to dismiss a complaint for failure to state a claim upon which relief can be granted, the court must accept all well-pleaded factual allegations in the complaint as true, and draw all reasonable inferences in favor of the plaintiff. GE Investors v. General Elec. Co. , 447 Fed.Appx. 229, 230 (2d Cir. 2011) (citing Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555-56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ).

To survive a motion to dismiss brought pursuant to Rule 12(b)(6), the complaint must allege "enough facts to state a claim to relief that is plausible on its face." Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ; see also Ashcroft v. Iqbal , 556 U.S. 662, 663, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (stating that a claim will have "facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged"). A complaint "that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do,’ ... [n]or does a complaint suffice if it tenders ‘naked assertion[s] devoid of ‘further factual enhancement.’ " Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly , 550 U.S. at 678, 127 S.Ct. 2162 ).

Although Twombly makes clear that a plaintiff must allege more than just a "conceivable" basis for its claim, it is equally clear that the Supreme Court has not "imposed a heightened standard that requires a complaint to include specific evidence, factual allegations in addition to those required by Rule 8, and declarations from the persons who collected the evidence ...." Arista Records, LLC v. Doe 3 , 604 F.3d 110, 119 (2d Cir. 2010). As stated in Twombly , Rule 8(a)(2) of the Federal Rules of Civil Procedure "requires only ‘a short and plain statement of the claim showing that the pleader is entitled to relief,’ in order to give the defendant fair notice of what the ... claim is and the grounds upon which it rests." 550...

To continue reading

Request your trial
4 cases
  • Corning Inc. v. Shenzhen Xinhao Photoelectric Tech. Co.
    • United States
    • U.S. District Court — Western District of New York
    • 24 d4 Junho d4 2021
    ...#28) denying Xinhao's motion (Dkt. #16) to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. 478 F.Supp.3d 456. Familiarity with that decision is assumed.On August 27, 2020, Xinhao filed an answer to the complaint (Dkt. #29), asserting several affirmat......
  • Murphy Med. Assocs. v. Centene Corp.
    • United States
    • U.S. District Court — District of Connecticut
    • 6 d1 Março d1 2023
    ... ... WellCare Health Insurance of Connecticut, Inc., and; WellCare ... of Connecticut ... Corning Inc. v. Shenzhen Xinhau Photoelectric Tech. Co., ... ...
  • Kochan v. Kowalski
    • United States
    • U.S. District Court — Western District of New York
    • 13 d4 Agosto d4 2020
    ... ... CSX Transp., Inc. , 70 F.3d 255, 257 (2d Cir. 1995). "The major ... ...
  • Rivera v. S.C. Johnson & Son, Inc.
    • United States
    • U.S. District Court — Southern District of New York
    • 24 d5 Setembro d5 2021
    ... ... See Corning Inc. v. Shenzhen Xinhao Photoelectric Tech ... Co. , ... ...

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT