WeRide Corp. v. Kun Huang

• Decision Date: 22 March 2019
• Docket Number: Case No. 5:18-cv-07233-EJD
• Citation: 379 F.Supp.3d 834
• Parties: WERIDE CORP., et al., Plaintiffs, v. KUN HUANG, et al., Defendants.
• Court: U.S. District Court — Northern District of California

379 F.Supp.3d 834

WERIDE CORP., et al., Plaintiffs,

v.KUN HUANG, et al., Defendants.

Case No. 5:18-cv-07233-EJD

United States District Court, N.D. California, San Jose Division.

Signed March 22, 2019

Filed April 1, 2019

Ryan Sadler Landes, Quinn Emanuel, Los Angeles, CA, Michael Francis LaFond, Quinn Emanuel Urquhart & Sullivan, LLP, Redwood City, CA, Claude M. Stern, Quinn Emanuel Urquhart & Sullivan, LLP, Redwood Shores, CA, for Plaintiffs.

Yitai Hu, Lenny Huang, Wilson Sonsini Goodrich & Rosati, Palo Alto, CA, Jennifer Liu, Wilson Sonsini Goodrich & Rosati, Washington, DC, Gregory Philip Farnham, Gregory S. Gilchrist, Mehrnaz Boroumand Smith, Susan Wallis Pangborn, Taylor Jacqueline Pfingst, Kilpatrick Townsend and Stockton LLP, Howard Holderness, Michael D. Lane, Greenberg Traurig, LLP, San Francisco, CA, Kurt A. Kappes, Alicia Intriago, Michelle L. DuCharme, Todd Alexander Pickles, Greenberg Traurig LLP, Sacramento, CA, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART WERIDE'S MOTION FOR PRELIMINARY INJUNCTION

Re: Dkt. No. 34

EDWARD J. DAVILA, United States District Judge

Autonomous vehicle companies WeRide Corp. and WeRide, Inc. (collectively "WeRide") have filed suit against Zhong Zhi Xing Technology Co. Ltd. ("ZZX"), AllRide.AI, Inc. ("AllRide" unless otherwise noted), former WeRide CEO Jing Wang, and former WeRide Director of Hardware Kun Huang (collectively "Defendants"). WeRide brings claims against all Defendants under the federal Defend Trade Secrets Act and California's Uniform Trade Secrets Act, against Wang and Huang for breach of contract, against Huang for breach of fiduciary duty, and against Wang for defamation and intentional interference with prospective economic advantage. This Court has jurisdiction through the Defend Trade Secrets Act claim and 28 U.S.C. § 1331, and supplemental jurisdiction over the state law claims under 28 U.S.C. § 1367.

Currently before the Court is WeRide's Motion for Preliminary Injunction and Expedited Discovery. Wang and Huang each filed an opposition. ZZX and AllRide filed a single opposition.¹ WeRide filed a reply. With leave from the Court, Huang filed a sur-reply. Three days before the hearing, ZZX and AllRide moved for leave to file supplemental briefing. The next day, WeRide filed objections to the ZZX and AllRide's motion for leave. In addition, the parties have filed numerous declarations and exhibits. Having heard oral argument and considered the timely-filed papers, the Court grants the Motion in part and denies it in part.²

I. Background

In the past number of years, each of the parties has worked to develop autonomous vehicles for the Chinese market. Autonomous vehicle technology is still young, but it could well be the next disruptive technology worth trillions of dollars over the coming decades. Roger Lanctot, Strategy Analytics, Accelerating the Future: The Economic Impact of the Emerging Passenger Economy 5 (2017), available at https://newsroom.intel.com/newsroom/wp-content/uploads/sites/11/2017/05/passenger-economy.pdf. It has the potential to remake the industry and market for both vehicles and ride-hailing services. See generally id. Unsurprisingly, the autonomous vehicle industry is crowded with competitors. See Huang Decl. ¶ 6. WeRide claims to have invested at least $ 45 million to develop its code base alone. Li Decl. ¶¶ 10-11. Last year, AllRide and/or ZZX announced plans to hire 100 engineers before the end of 2018. Zhang Decl. ¶ 29.

Autonomous vehicles are based on complex technology that requires significant time and resources to develop. It may take weeks to develop basic computer modules before starting road tests with a safety driver at the steering wheel. Walter Decl. ¶¶ 58, 62. Developers use a process called "deep learning" to teach the autonomous vehicle systems how to respond to new or unexpected events by entering large amounts of exemplary data into the systems' algorithms. Id. ¶ 10. Development is an iterative process that cannot be accelerated without hiring a "very large number" of employees. Id. ¶¶ 27-33.

Wang and Huang have worked in this competitive and demanding industry since 2012 and 2016 respectively when they were employed by Baidu—a Chinese technology company. Wang. Decl. ¶ 9; Huang Decl. ¶ 2. Huang worked as a Senior Software Architect in Baidu USA's autonomous driving unit. Huang Decl. ¶ 2. Wang was an executive overseeing various divisions before joining Baidu's autonomous vehicle project. Wang Decl. ¶¶ 7-11.

Wang left Baidu to form WeRide, originally called JingChi Corp., with four others in early 2017. Wang Decl. ¶¶ 11-12. Wang began serving as CEO in April 2017. Lu Decl. ¶ 7. Around that time, WeRide co-founders Tony Han and Yan Li recruited Huang to join as the Director of Hardware Engineering. Id.

WeRide has developed modules in its code base related to three areas relevant here: HD mapping, sensor fusion-based localization, and state machines. Autonomous vehicles require special maps, called HD maps, which are constructed by test vehicles repeatedly driving through a certain area while collecting data with multiple sensors. Walter Decl. ¶¶ 23-25. Sensor fusion-based localization is the process of combining data collected by the various sensors on a vehicle (the "sensor-fusion") and then using that data to pinpoint the vehicle's location in a mapped area (the "localization"). Id. ¶ 68. State machines are decision models that decide how an autonomous vehicle will act or preform in different scenarios or "states." Id. ¶ 80. WeRide did not invent these concepts, but it claims the source code and algorithms it developed to implement them are its trade secrets. Walter Ex. B.

WeRide takes steps to maintain the secrecy of its proprietary code. WeRide employees, including Wang and Huang, are required to sign its Proprietary Information and Inventions Agreement ("PIIA"). Zhang Decl. ¶ 4; Zhang Ex. B; Lu Ex. B. The PIIA provides that WeRide employees will "hold in confidence and not disclose or, except within the scope of [their] employment, use any Proprietary Information." Zhang Ex. B ¶ 4. The PIIA defines "Proprietary Information" as "all ... business, technical and financial information ... [the employee] develop[s], learn[s], or obtain[s] during the term of [their] employment that relate to Company or the business or demonstrably anticipated business of Company or that are received by or for Company." Id. The PIIA includes a provision prohibiting the solicitation of WeRide employees away from WeRide for one year following the end of an individual's employment with WeRide. Id. ¶ 5. WeRide controls physical access to its offices; restricts access to its source code to WeRide network locations so off-site employees must use a VPN—with a unique username and password—to connect to the WeRide network; and encrypts its source code so that it can only be accessed by providing a valid username and password, as well as a special file called a "token." Liu Decl. ¶¶ 6-8, 9, 11, 14.

In 2017, WeRide grew quickly and aggressively recruited engineers. Huang Decl. ¶ 5. On May 12, 2017, it completed its first driverless test on a closed track. AllRide RJN Ex. 1 at 9. And it completed its first public road test on June 24, 2017, making it the fastest autonomous vehicle company to complete such a test. Id. ; Li Decl. ¶ 4. In December 2017, Baidu sued Wang—who was still the CEO of WeRide at the time—and WeRide in China for trade secret theft. Lu Decl. ¶ 10; Wang Decl. ¶ 18. On January 31, 2018, the WeRide Board voted to remove Wang as CEO. Lu Decl. ¶ 13; Wang Decl. ¶ 19. Wang signed a separation agreement that included a non-disparagement clause. Lu Decl. ¶ 16; Lu Ex. C at ¶ 12. WeRide and Baidu subsequently reached a settlement agreement. Lu Decl. ¶ 14.

Wang and WeRide dispute his actions after they parted ways. WeRide contends that Wang founded a competing autonomous vehicle company, Defendant ZZX. Mot. at 7. WeRide sets this belief on reports from Chinese media (id. n.2) and Huang's alleged statements that he planned to join "Jing Wang's new company." (Xu Decl. ¶¶ 34-42). Wang, though, states that WeRide is mistaken and that he is not—and never has been—an employee of ZZX, that he was not one of ZZX's founders, that he is neither an officer nor a board member of ZZX, that he does not own stock in ZZX nor in any entity that has stock or a financial interest in ZZX, and that he has not received consulting payments from ZZX. Wang Decl. ¶ 27. Wang further states that he refuted the "assumptions" of the reporter who wrote the original Chinese media report, but the reporter ran the story regardless. Wang Decl. ¶¶ 28-29. Huang—a current employee of ZZX—has represented to this Court, "To the best of my knowledge, Mr. Jin Wang does not hold any formal position at ZZX or AllRide.ai, Inc." Dkt. No. 18-1 at 3. Wang, though, concedes that the founders of ZZX approached him about joining ZZX, that he has "generally discuss[ed]" the autonomous vehicle industry with them, and that he has referred investors to ZZX even though he has not received financial gain for doing so. Wang Decl. ¶¶ 26, 29. Wang says that during 2018 he founded a venture capital fund called Nanjing Intelligent Travel Industry Fund that focuses on innovation in artificial intelligence. Id. ¶ 32.

The precise connection between AllRide and ZZX is a bit unclear. WeRide contends that Defendants AllRide and ZZX are "closely affiliated if not one and the same." Mot. at 7. AllRide and ZZX do not dispute that characterization. See generally AllRide O'ppn. AllRide.AI, Inc. was incorporated in Delaware on July 19, 2018, which is the day before ZZX registered the website www.allride.ai. Landes Ex. A; Landes Ex. B. That website states that "ALLRIDE.AI" has a research and development center in Silicon Valley. Mot. at 8; AllRide, Campus-AllRide, http://allride.ai/en/campus.php (last visited March 21, 2019). In the fall of 2018, Huang posted on social media that he was looking for office...