Philips Medical Systems (Cleveland), Inc. v. Buan
| Decision Date | 28 July 2021 |
| Docket Number | 19-cv-02648 |
| Parties | PHILIPS MEDICAL SYSTEMS (CLEVELAND), INC. and PHILIPS MEDICAL SYSTEMS DMC, GmbH, Plaintiffs, v. JOSE BUAN, GL LEADING TECHNOLOGIES, INC., KUNSHAN YIYUAN MEDICAL TECHNOLOGY CO., LTD., KUNSHAN GUOLI ELECTRONIC TECHNOLOGY CO., LTD., and SHERMAN JEN, Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Plaintiffs Philips Medical Systems (Cleveland), Inc. (“Philips Cleveland”) and Philips Medical Systems DMC, GmbH (“Philips Germany”) have brought suit against Defendants Jose Buan, GL Leading Technologies, Inc. (“GL Leading”), Kunshan Yiyuan Medical Technology Co., Ltd. (“Yiyuan”), Kunshan GuoLi Electronic Technology Co., Ltd. (“GuoLi”), and Sherman Jen alleging that Defendants misappropriated trade secrets and confidential information pertaining to the development and production of X-ray tubes that are used in medical imaging machines. In light of another lawsuit brought by Plaintiffs against them in China, Yiyuan and GuoLi (collectively, the “Kunshan Defendants”) now move to dismiss Plaintiffs' claims against them in this litigation on forum non conveniens grounds or, alternatively, to stay the claims based on the abstention doctrine set forth in Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236 (1976). (Dkt. No 285, Mot. to Dismiss; Dkt. No. 286, Mem. in Supp. of Mot. to Dismiss (“Mem.”).) Plaintiffs oppose the motion.[1] For the following reasons, we deny the Kunshan Defendants' motion in its entirety.
We take the following facts from the pleadings, other filings in this case, and the materials submitted or identified by Plaintiffs and the Kunshan Defendants in briefing this motion. Unless contradicted by other evidence in the record, we have accepted the allegations in Plaintiffs' Second Amended Complaint (the operative complaint) as true for purposes of this motion. See Deb v. SIRVA, Inc., 832 F.3d 800, 809 (7th Cir. 2016) (); Loughran v. Wells Fargo Bank, N.A., No. 19 C 4023, 2019 WL 6349890, at *2 (N.D. Ill. Nov. 27, 2019) (Colorado River abstention motion), aff'd, 2 F.4th 640 (7th Cir. 2021).
Philips Cleveland is a California corporation with its principal place of business in Cleveland, Ohio. [2] Philips Germany is a German entity with its principal place of business in Hamburg, Germany. (Id. ¶ 2.) Plaintiffs engage in “research, development, and commercialization of medical imaging technology.” (Id. ¶ 3.) In October 2001, Philips Cleveland acquired “a company with a facility in Aurora, Illinois that designed, manufactured, and distributed X-ray tubes for OEM and replacement applications.” (Id. ¶¶ 24, 25.) Philips Cleveland thereafter designed and manufactured X-ray tubes at the Aurora facility for Philips Germany. (Id. ¶ 64.) By the end of 2017, however, Plaintiffs had closed the Aurora facility and transferred the facility's operations to Hamburg, Germany. (See Dkt. No. 158-1, Ex. 1 to GuoLi's May 18, 2020 Mot. to Dismiss, at 2-3; Dkt. No. 158-4, May 18, 2020 Decl. of Xiaoqin Du (“Du Decl.”), ¶ 10.)
GuoLi and Yinyuan are Chinese corporations with their principal places of business in Kunshan, Jiangsu Province, China. (SAC ¶¶ 7, 9; Mem. at 4.) By the end of 2013, GuoLi had established a medical X-ray tube division, and in February 2014, it began developing a medical X-ray tube product known as GLA2153. (Du Decl. ¶ 4.) In May 2018, GuoLi formed Yinyuan “to focus on the medical x-ray vacuum tube business, ” and it transferred its medical X-ray business, including its work on GLA2153, to Yiyuan. of Feng Zhou ( ) GuoLi does not have any employees in Illinois or facilities in the United States, and it has not sold any medical X-ray tubes in the United States. (Dkt. No. 158-3, May 16, 2020 Decl. of Hao Huang (“Huang Decl.”), ¶ 5.) Yiyuan does not have any employees or facilities in the United States, and it has never sold any products in the United States. (Zhou Decl. ¶ 5.)
GL Leading is an Illinois corporation with its headquarters and principal place of business in Aurora, Illinois. (SAC ¶ 5.) GL Leading was established in late 2017 as a company to consult in the design of replacement and OEM components for medical imaging equipment. (Id. ¶¶ 6, 98.) GL Leading provided consulting services first to GuoLi, and then to Yiyuan after Yiyuan's formation. (Du Decl. ¶¶ 12, 24; Suppl. Zhou Decl. ¶ 7.) GuoLi and Yiyuan have been GL Leading's only customers. of Xiaoqin Du ( )
GL Leading's services to GuoLi and Yiyuan involved the design of X-ray tube products. (Du Decl. ¶¶ 8, 12.) In early 2018, GL Leading reviewed GuoLi's designs for GLA2153 and provided comments and suggested improvements to the designs. GL Leading also participated in designing another X-ray tube, YY8019, which Yiyuan began developing in 2019. (Du Decl. ¶ 8; GL Leading's 3d Am. Resps. to Pls.' 1st Set of Interrogs. at 12 ().) When GL Leading provided services to GuoLi, GuoLi personnel visited GL Leading's facility in Illinois several times. (See Suppl. Du Decl. ¶ 8.) Similarly, once GL Leading began providing services to Yiyuan, Yiyuan personnel frequently traveled to GL Leading's facility to work with its personnel on projects. (Suppl. Zhou Decl. ¶ 2.) In particular, “Yiyuan held monthly meetings with GL Leading engineers” in the second half of 2018 “to understand GL Leading's progress with projects it was working on for Yiyuan and to ensure that GL Leading was making sufficient progress.” (Suppl. Du Decl. ¶ 13.) Yiyuan and GL Leading also share a file folder that engineers from both companies can access to upload and download technical documents for the projects they work on with each other. (Suppl. Zhou Decl. ¶ 5.)
Defendant Jose Buan is an Illinois citizen. (SAC ¶ 4.) Defendant Sherman Jen lives in Wisconsin but regularly conducts business in Illinois. (Id. ¶ 11; Dkt. No. 69-1, GL Leading's 2d Am. Resps. to Pls.' 1st Set of Interrogs., at 17.) In 2017, both Buan and Jen were working on X-ray tubes at Philips Cleveland's Aurora facility. (Dkt. No. 294-1, Ex. A to Opp'n, at 26, 31, 37.) They left Philips Cleveland's employ on December 29, 2017 and thereafter joined GL Leading, where they work as engineers. (SAC ¶¶ 11, 38, 52, 100, 102.) Several other individuals who used to work on Plaintiffs' X-ray tubes at the Aurora facility work or have worked for GL Leading as well. (Id. ¶ 103; GL Leading's 2d Am. Resps. to Pls.' 1st Set of Interrogs. at 17; GL Leading's 3d Am. Resps. to Pls.' 1st Set of Interrogs. at 12-13; Ex. A to Opp'n at 26, 28, 30, 34, 37-39.)
Between August 2017 and December 2017-and while still working for Philips Cleveland-Jen emailed documents belonging to Plaintiffs, including documents relating to Plaintiffs' X-ray tubes, to GuoLi personnel. .) During this time, he also worked “under the table” for GuoLi; this work included R&D planning, visiting GuoLi's manufacturing site in China in the summer of 2017, and preparing documents based on information from Plaintiffs. (SAC ¶ 101.) Upon leaving Philips Cleveland, Jen kept more than three thousand electronic files belonging to Plaintiffs that contained confidential information regarding Plaintiffs' X-ray tubes, and he later emailed some of this information to GuoLi and GL Leading personnel. (Id. ¶¶ 96, 97, 136, 138, 139, 141, 144, 155, 157.) As for Buan, he used his work computer to copy hundreds of Plaintiffs' files, including trade secret and other confidential information relating to Plaintiffs' X-ray tubes, from Plaintiffs' secured cloud storage system and download them onto high-capacity USB storage drives before leaving Philips Cleveland. (Id. ¶¶ 66, 69-83, 89-90.) Buan later used his work computer at GL Leading to access files from at least one of these USB drives. (Id. ¶¶ 88, 89, 91.) Plaintiffs allege that the information downloaded by Buan and disclosed by Jen to others reflects trade secret or confidential information; that GuoLi, Yiyuan, and/or GL Leading received this information; and that GuoLi, Yiyuan, and/or GL Leading have used this information to develop the GLA2153 and/or YY8019 X-ray tubes. (See, e.g., Id. ¶¶ 128, 130, 132, 134, 135, 137, 140, 142, 143, 145, 156, 158, 160, 163, 165, 172-76, 211-13.)
In April 2019, Plaintiffs brought this lawsuit against GL Leading and Buan. (Dkt. No. 1, Compl.) Plaintiffs added the Kunshan Defendants and Jen as defendants in November 2019 and March 2020, respectively. (Dkt. No. 46, First Am. Compl SAC.) Plaintiffs allege that the Kunshan Defendants are liable for (1) trade secret misappropriation under the Defend Trade Secrets Act (“DTSA”), 18 U.S.C. § 1836 et seq.; (2) trade secret misappropriation under the Illinois Trade Secrets Act (“ITSA”), 765 Ill. Comp. Stat. 1065/1 et seq.; and (3) unjust enrichment under Illinois law. (SAC Counts I, II, & IV; Opp'n at 14-15 ().)
The Kunshan Def...
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