Inventus Power, Inc. v. Shenzhen Ace Battery Co.
| Decision Date | 13 July 2020 |
| Docket Number | Case No. 20-cv-3375 |
| Parties | INVENTUS POWER, INC. and ICC ELECTRONICS (DONGGUAN) LTD., Plaintiffs, v. SHENZHEN ACE BATTERY CO., LTD., Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
Plaintiffs Inventus Power, Inc. ("Inventus") and ICC Electronics (Dongguan) Ltd. ("ICC") (together, "Plaintiffs") bring suit against Defendant Shenzhen Ace Battery Co., Ltd. ("ACE" or "Defendant") for trade secret misappropriation under the Defend Trade Secrets Act, 18 U.S.C. §§ 1836(b), 1839 et seq. ("DTSA"), and the Illinois Trade Secrets Act, 765 ILCS 1065 et seq. ("ITSA"). Currently before the Court are Plaintiffs' motion for temporary restraining order ("TRO") [6] and motion for expedited discovery [16]. For the following reasons, Plaintiffs' motion for TRO [6] is granted. Plaintiffs' motion for expedited discovery [16] is granted in part and denied in part; expedited discovery shall be mutual and limited to the matters at issue in the motion for preliminary injunction. A bond in the amount of $50,000 shall be posted by Plaintiffs. This case is set for a telephonic status hearing on July 17, 2020 at 10:30 a.m. Counsel should use the Court's toll-free call-in number 877-336-1829, conference access code is 6963747.
Plaintiff Inventus is a Delaware corporation headquartered in Woodridge, Illinois. Inventus has built advanced battery and power systems for global original equipment manufacturers ("OEMs") for more than sixty years. Inventus specializes in the design and manufacture of lithium ion battery packs, smart chargers, and efficient power supplies across a broad range of portable, mobile, and stationary applications. According to the governing complaint and materials submitted in support of the TRO motion, Inventus invests heavily to support its engineering and business teams to create industry leading technologies and products. Inventus relies on its trade secrets to guard the intellectual property created by the ingenuity and industry of its employees.
Plaintiff ICC is a Chinese corporation and wholly owned subsidiary of Inventus located in Guangzhou, China. According to the complaint and additional materials submitted with Plaintiffs' TRO motion, Inventus' research and development ("R&D") team, based out of its Woodridge headquarters, works regularly with the R&D engineering team in Guangzhou to "review source code for Inventus projects, provide critical feedback from customer testing, provide requirements specifications, hardware-software interfaces, and state machine diagrams, which are all integrated into Inventus's source code." [1] at 9. The two teams share a network drive that allows the Guangzhou team (including several team members who subsequently became ACE employees and are accused of taking Plaintiffs' trade secrets) to request and access highly confidential materials that originated in the Woodridge headquarters and enables the Woodridge team to upload those materials for use by the Guangzhou team.
Defendant ACE was founded in Shenzhen, China in 2014 and entered the battery market that Inventus claims to have developed. According to the complaint, Defendant, "[e]ager to tap into the battery market developed by Inventus," "embarked on an unlawful plot to surreptitiously take Inventus's confidential and proprietary trade secrets, and use those trade secrets to build and test competing products." [1] at 2. "Rather than design its own products to compete fairly in the marketplace," the complaint alleges, Defendant "instead misappropriated Inventus's proprietarytechnologies and critical business strategies." Id. "This included surreptitiously taking Inventus's confidential documents and source code embodying critical technologies for Inventus's products and other highly valuable confidential Inventus information." Id.
Defendant's plan allegedly began with a plot to recruit high-ranking personnel from Inventus, including individuals who had substantial access to Inventus's proprietary technologies ("ACE Employees").1 The complaint alleges that these individuals, at Defendant's direction, downloaded more than 100,000 confidential technical documents and source code from Inventus's computers in the weeks and days prior to their departure in order to benefit Defendant's business. The highly confidential materials included documents concerning Inventus's products and business operations, including numerous requirement documents, design documents, testing documents, source code, and detailed specifications regarding Inventus's small and medium-to large battery pack projects.
Specifically, in order to expand into the battery pack market, beginning at least as early as mid-2019, Defendant allegedly lured away several Inventus senior engineers who were extensively familiar with Inventus's technologies and intellectual property, and who had or could gain access to other confidential Inventus information. Defendant hired these employees to work in seniorpositions at Defendant, allegedly for the purpose of developing products that directly compete with those they previously worked on at Inventus. Defendant allegedly instructed the employees to unlawfully take Inventus's confidential trade secret materials to Defendant for use in their work at Defendant, including by using information taken from Inventus to develop and test battery components for Defendant's own products within their work responsibilities as engineers and managers at Defendant.
In its TRO submissions, Plaintiffs provide details concerning the forensic inspection of their computer systems performed between April and June, 2020. In a declaration filed under seal, Plaintiffs' outside forensic examiner details how, with Inventus' assistance, he obtained the computers of Kui (Gerrard) Liu ("Liu"), Lucken Cai ("Cai"), Yancey Yang ("Yang"), and Andy Quan ("Quan") and forensically imaged the hard drives. See [11] (sealed declaration of Zack Lau). He also obtained the forensic image of Yang's external hard drive used at Inventus. According to Lau, his investigation revealed that ACE employees had engaged in consistent mass downloading of tens of thousands of documents and large volumes of source code prior to their departure. All of the materials that were taken were kept strictly confidential within Inventus, and the systems are password protected. Lau opines that the ACE Employees' file access activities do not reflect legitimate usage of Inventus's systems or confidential materials. This conclusion is supported by the ACE Employees' use of USB external storage devices and attempts to conceal mass downloading of Inventus's confidential materials, e.g., by uninstalling Baidu Netdisk.
Plaintiffs' complaint, briefs in support of the TRO, and supporting declarations and other materials detail multiple examples of former employees, including Liu, Cai, Yang, and Quan, intentionally taking from Plaintiffs trade secrets that were developed in Illinois. As one example of alleged intentional misappropriation, the complaint alleges:
Robert Cao served as a Mechanical Engineering Manager at Inventus. Cao was one of the first engineers recruited by [ACE] to steal Inventus's trade secrets—his last day at Inventus was August 16, 2019. In accordance with [ACE]'s plan, during his last weeks at Inventus, Cao mass downloaded hundreds of documents encompassing Inventus's trade secrets, only to immediately depart to [ACE] with those documents pursuant to [ACE]'s direction. The documents accessed by Cao included confidential schematics, drawings, technical presentations, and design specifications describing Inventus's trade secret technologies. These materials included documents and information that [ACE] knew originated at Inventus's Illinois headquarters in this District as well as the technologies in them, including documents and information that originated from Inventus in Woodbridge, IL. Moreover, Cao requested and/or accessed these materials using his work computer. [ACE] used these confidential documents, including confidential schematics and design guidelines, to improve and design products that compete with Inventus. Cao is currently the Senior Manager in the Mechanical Team at [ACE]'s R&D department. Moreover, [ACE] used confidential Inventus's documents and information, including designs for products that Inventus has not yet released, to file patent applications in Cao's name shortly after he joined [ACE] from Inventus. In particular, Cao is the sole named inventor of the following patents, which list [ACE] as the assignee: Chinese Patent Nos. CN210467927U, titled "A lithium battery packaging container;" CN210272576U, titled "A lithium ion battery cell integration and packaging;" and CN210272484U, titled "A lithium ion battery formation cabinet." These patents include Inventus's trade secret information, and were filed on September 20, 2019—a mere 35 days after Cao joined [ACE][.] These patents include schematics, drawings, and descriptions of various aspects of the mechanical engineering and manufacturing processes that are substantially similar to the confidential technology designed by Inventus for its medium-to-large sized battery packs, which have not yet been released to the public.
[1] at 23-24.
Plaintiffs contend that Cao and the other ACE employees accused of taking trade secrets were acting within the scope of their employment with ACE when they engaged in acts of misappropriation. According to the complaint, ACE "acquired, used, and/or disclosed Inventus's trade secrets by instructing and allowing" Plaintiff's former employees "to acquire and/or use Inventus's trade secrets and confidential information in ... Defendant's products and strategies." [1] at 30. ACE's alleged design was to "avoid time-consuming and expensive investments in its own research and development, obtain a massive time savings in releasing its products to the market, and...
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