Cadence Design Systems, Inc. v. Suzhou Tianzhun Technology Co., Ltd., et al.

Background

Cadence Design Systems, Inc. alleges that HongKong TZTek Technology Ltd. (HK TZTek) obtained and used unauthorized copies of Cadence’s electronic design software. Cadence alleges that HK TZTek used cracked software and counterfeit license files to bypass Cadence’s protections and violated Cadence’s Software License and Maintenance Agreement (SLMA). The SLMA contains a clause requiring disputes to be brought in California federal or state courts.

Cadence asserts three claims: copyright infringement under 17 U.S.C. § 501, circumvention of copyright-protection systems under 17 U.S.C. § 1201, and breach of the SLMA. Cadence submitted data from its monitoring system showing more than 150,000 alleged unauthorized uses associated with the TZTek entities between January 2022 and June 2025, including more than 100 instances associated with Internet Protocol addresses geolocating to Hong Kong.

Motion and Evidentiary Rulings

HK TZTek moved to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). Because the court did not hold an evidentiary hearing, Cadence needed to make only a prima facie showing—meaning facts that, if true, would support jurisdiction. The court stated that disputes about jurisdictional facts could be resolved later when those facts overlap with the merits of the claims.

The court also ruled that the Federal Rules of Evidence do not strictly apply to this early jurisdiction motion. Instead, evidence must meet a standard no more demanding than the standard used at summary judgment. The court overruled HK TZTek’s objections that the Phone Home data was unauthenticated and hearsay because those objections challenged the form rather than the contents of the evidence. The court sustained in part objections to statements by Cadence’s declarant to the extent he offered opinions beyond his expertise and did not rely on the challenged statement.

Personal Jurisdiction

The court considered only specific personal jurisdiction. Under that framework, Cadence had to show that HK TZTek purposefully directed activities toward California, that the claims arose out of or related to those activities, and that exercising jurisdiction would be consistent with fairness. If Cadence met the first two requirements, HK TZTek had to present a compelling case that jurisdiction would be unreasonable.

Cadence relied on two related theories: that HK TZTek consented to California jurisdiction by accepting the SLMA while using Cadence’s software, and that HK TZTek purposefully directed its alleged misconduct toward California. The court focused on purposeful direction because both theories depended on the allegation that HK TZTek used Cadence’s software without a license.

Applying the Ninth Circuit’s effects test for intentional conduct directed at a forum, the court found that Cadence had made the required initial showing. Cadence alleged that HK TZTek intentionally obtained unauthorized software and bypassed Cadence’s protections, that the conduct targeted Cadence as a California forum resident, and that the conduct caused foreseeable harm in California by depriving Cadence of license fees.

The court also found that Cadence’s claims arose out of or related to HK TZTek’s alleged California-related conduct. The alleged infringement depended on bypassing technological measures to obtain unauthorized access to Cadence’s software, and the alleged loss of royalties and license fees was the type of injury that would tend to result from that conduct.

HK TZTek disputed whether the Phone Home data showed that its own computers or personnel were responsible for the alleged use. It argued that some Hong Kong Internet Protocol addresses belonged to virtual private network, cloud, or telecommunications providers; that activity appeared in different countries; and that some data associated the use with a different TZTek entity in Suzhou. The court did not resolve those disputes because they overlapped with the merits and were better addressed on a fuller record at summary judgment.

The court further held that HK TZTek had not shown that exercising jurisdiction would be unreasonable. Although HK TZTek identified burdens from litigating in California while its witnesses, documents, and evidence were in Asia, the court found those burdens did not outweigh the factors supporting jurisdiction.

Disposition

The court denied HK TZTek’s motion to dismiss for lack of personal jurisdiction without prejudice to renewal at summary judgment. The court granted Cadence’s motions to seal the Phone Home data and designated portions of the motion-to-dismiss record, finding compelling reasons to protect details that could help software infringers evade Cadence’s monitoring system. The parties were ordered to meet and confer and file a case-management statement with a proposed schedule by September 3, 2026.