Quintel Tech. Ltd. v. Huawei Techs. United States, Inc.

Decision Date27 September 2016
Docket NumberCIVIL ACTION NO. 4:15-cv-00307-GHD-CMC
PartiesQUINTEL TECHNOLOGY LTD. PLAINTIFF v. HUAWEI TECHNOLOGIES USA, INC.; FUTUREWEI TECHNOLOGIES, INC.; HUAWEI TECHNOLOGIES CO., LTD.; and ZHENGXIANG MA DEFENDANTS
CourtU.S. District Court — Eastern District of Texas
MEMORANDUM OPINION GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS

Presently before the Court is a motion to dismiss [25] brought pursuant to Rules 12(b)(2) and 12(b)(6) of the Federal Rules of Civil Procedure filed by Defendants Huawei Technologies USA, Inc.; FutureWei Technologies, Inc.; Huawei Technologies Co., Ltd.; and Zhengziang Ma (collectively, "Defendants"). Plaintiff Quintel Technology Ltd. ("Quintel") has filed a response, Defendants have filed a reply, and Quintel has filed a sur-reply. The matter is ripe for review. Upon due consideration, the Court finds that the motion to dismiss [25] should be granted in part and denied in part, as set forth below.

I. Factual and Procedural Background

Quintel asserts eight counts against Defendants in its first amended complaint [20], which is the subject of the present motion to dismiss [25] before the Court: (I) breach of contract, (II) misappropriation of trade secrets, (III) unfair competition by misappropriation, (IV) common law fraud and fraud in the inducement, (V) promissory estoppel, (VI) unjust enrichment, (VII) accounting, and (VIII) correction of patent inventorship—35 U.S.C. § 256.

Quintel alleges the following facts. Quintel "designs, develops, and delivers advanced high-efficiency, high-performance antenna solution for mobile operators to improve their delivery of wireless network services" and "has developed cutting-edge, proprietary antenna technology to better serve wireless network operators and users." Pl.'s Compl. [20] ¶ 10. Huawei1 is "a telecommunications equipment maker and, among other things, manufactures base stations for wireless networks." Id. ¶ 11. David Barker, the chief technology officer and an employee of Quintel, "conceived of a concept to improve reception between an antenna providing cellular telephone and/or data services, and a mobile receiving telephone and/or data services from the antenna"; this concept was and is referred to as the "Per User Tilt Concept." Id. ¶¶ 12-13. Due to "potential synergies in their respective business models, Quintel and Huawei explored whether they might partner together to service mobile operators in the wireless network industry." Id. ¶ 14. Quintel advised Huawei at the outset of their discussions that "the parties must execute a non-disclosure agreement ('NDA') in advance of the meeting and sent a draft NDA to Huawei." Id. ¶ 16. The parties subsequently executed a NDA, which is attached to the first amended complaint and referenced therein, and provides in part that "the recipient of confidential information agrees to accept such information 'solely for use in connection with Recipient's business discussions with' the disclosing party concerning potential areas of cooperation.' " Id. ¶ 22 (quoting NDA [20-1] ¶ 2). Quintel alleges that after entering into the NDA, Quintel began to share confidential and proprietary information and trade secrets, including its proprietary antenna technology, with Defendants. Id. ¶¶ 20, 30-45. In particular, Quintel showed Defendants how the "Per User Tilt Concept" works and provided some additional confidential and proprietary information regarding Quintel's antenna technology, including information about Quintel's patents—all information Quintel contends was information protected under the NDA. Quintel alleges that the parties "ultimately could notagree on final terms to any business or partnering relationship" and that "despite its professed interest, Huawei never intended to enter into a partnering relationship with Quintel." Id. ¶¶ 44-46.

Quintel next alleges that "[a]lthough Huawei had concealed it, Quintel recently learned that Defendant FutureWei Technologies, Inc. ['FutureWei'] filed a provisional patent application with the United States Patent and Trademark Office ('USPTO') . . . on or about October 30, 2009" wherein FutureWei "sought to establish priority for patent protection of an invention that is based on Quintel's confidential and proprietary antenna technology that Quintel had shared under the terms of the . . . NDA," including "a confidential Quintel slide that Quintel had provided to Dr. [Zhengxiang] Ma ['Dr. Ma']. . . ." Id. ¶ 49. Quintel additionally alleges that "Dr. Ma is listed as the sole inventor on the provisional patent application." Id. Quintel alleges that these actions came to light on March 16, 2015, when the European Patent Office rejected a patent application submitted by Quintel, citing the prior publication of FutureWei's United States application that resulted in the '647 Patent as prior art. Id. ¶ 54. Quintel maintains that the information was "fraudulently concealed" prior to that date, "in part by [Defendants'] continuing to feign interest in a partnership agreement." Id. ¶ 48.

On December 30, 2015, Defendants filed the present motion to dismiss [25] the first amended complaint. Subsequently, Quintel filed a response, Defendants filed a reply, and Quintel filed a sur-reply. The matter is now ripe for review.

II. Discussion and Analysis

Defendants argue the case should be dismissed on the following grounds: (1) the Court lacks personal jurisdiction over Dr. Ma; (2) six of the eight counts are time barred, specifically, Quintel's counts for breach of contract, misappropriation of trade secrets, unfair competition bymisappropriation, common law fraud and fraud in the inducement, promissory estoppel, and unjust enrichment; and (3) Quintel fails to state a claim upon which relief can be granted on all claims except the breach of contract claim against Huawei. Quintel maintains that all claims asserted in its first amended complaint are timely and sufficiently pled, and that the Court has personal jurisdiction over Dr. Ma or should allow jurisdictional discovery on the issue prior to deciding otherwise. The Court will address first the Rule 12(b)(2) challenge and then the Rule 12(b)(6) challenge.

A. Rule 12(b)(2) - Personal Jurisdiction over Dr. Ma

Defendants move the Court under Rule 12(b)(2) to dismiss the claims against Dr. Ma for lack of personal jurisdiction. Based on the pleadings, the motion and responses, the record, and the applicable law, this Court orders jurisdictional discovery to determine whether this Court has personal jurisdiction over Dr. Ma. Therefore, Defendants' motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2) is denied without prejudice and with leave to reurge with the results of this targeted discovery. The reasons for this ruling are as follows.

On a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, "[t]he plaintiff bears the burden of establishing jurisdiction, but need only present prima facie evidence." Patterson v. Aker Sols. Inc., 826 F.3d 231, 233 (5th Cir. 2016) (internal quotation marks and citation omitted). "Although the non-moving party bears the burden, '[w]hen a court rules on a motion to dismiss for lack of personal jurisdiction without holding an evidentiary hearing, as in the present case . . . the nonmoving party need only make a prima facie showing, and the court must accept as true the nonmov[ant]'s allegations and resolve all factual disputes in its favor.' " Id. (quoting Guidry v. U.S. Tobacco Co., 188 F.3d 619, 625 (5th Cir. 1999)). The Court "must accept the plaintiff's uncontroverted allegations, and resolve in [its] favor all conflicts betweenthe facts contained in the parties' affidavits and other documentation." See Patterson, 826 F.3d at 233. The Court is not restricted to pleadings, but may consider affidavits, interrogatories, depositions, or any other appropriate method of discovery. Wilson v. Belin, 20 F.3d 644, 648 (5th Cir. 1994); see Jobe v. ATR Mktg., Inc., 87 F.3d 751, 752 (5th Cir. 1996). A court may grant jurisdictional discovery when the plaintiff makes a preliminary showing of jurisdiction. See Fielding v. Hubert Burda Media, Inc., 415 F.3d 419, 429 (5th Cir. 2005). A preliminary showing is less than a prima facie showing; if the plaintiff made a prima facie showing, jurisdictional discovery would be unnecessary.

In this Court's opinion, Quintel has made a preliminary—but not a prima facie—showing of personal jurisdiction over Dr. Ma, as more fully explained below.

"Historically the jurisdiction of courts to render judgment in personam is grounded on their de facto power over the defendant's person. Hence his presence within the territorial jurisdiction of court was prerequisite to its rendition of a judgment personally binding him." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 90 L. Ed. 95 (1945) (citing Pennoyer v. Neff, 95 U.S. 714, 733, 24 L. Ed. 565 (1877)). However, a court may exercise personal jurisdiction over a nonresident defendant if the defendant has "certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Id. "The minimum contacts inquiry is fact intensive and no one element is decisive; rather the touchstone is whether the defendant's conduct shows that it reasonably anticipates being haled into court." McFadin v. Gerber, 587 F.3d 753, 759 (5th Cir. 2009), cert. denied, 131 S. Ct. 68 (2010) (internal quotation marks and citation omitted).

"A federal court may exercise personal jurisdiction over a nonresident defendant if (1) the forum state's long-arm statute confers personal jurisdiction over that defendant, and (2) the exercise of personal jurisdiction comports with the [d]ue [p]rocess clause of the Fourteenth Amendment." Int'l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193, 212 (5th Cir. 2016) (internal quotation marks and citation omitted); 3D Sys.,...

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