Cadence Design Systems, Inc. v. Syntronic AB
- Susan Illston
- 3:21-cv-03610
- U.S. District Court · Northern District of California
- 5
In Cadence Design Systems v. Syntronic, Judge Illston denied defendants’ motions to stay and challenge orders requiring shipment of 24 computers to the United States.
The defendants were required to ship the 24 computers to the United States and participate with Cadence in selecting an independent company to isolate irrelevant personal information before forensic inspection.
What happened
Cadence Design Systems sued Syntronic AB, Syntronic Research and Development USA Inc., and Syntronic (Beijing) Technology R&D Center Co. over alleged unauthorized use of Cadence software. During the case, Cadence sought to inspect 24 computers that Syntronic had in China.
A magistrate judge ordered the defendants to ship the computers to the United States for inspection. Syntronic Beijing argued that China’s Personal Information Protection Law prevented shipment, and the defendants asked to stay the order and challenge the magistrate judge’s later order rejecting that argument. The defendants had also acknowledged that some computers were reformatted while the case was pending.
Judge Susan Illston denied both motions, agreeing that the magistrate judge’s orders were not clearly erroneous or contrary to law. She ordered the computers shipped by September 19, 2022, and required the parties to select an independent company to remove irrelevant personal information before the computers were reviewed.
The detailed version
- Cadence Design Systems, Inc. v. Syntronic AB · No. 3:21-cv-03610
- Susan Illston
- Sept. 12, 2022
Background
Cadence makes and licenses software used to design integrated circuits and printed circuit boards. Cadence brought claims for federal copyright infringement, circumvention of copyright-protection systems, and breach of contract against Syntronic AB, Syntronic Research and Development USA Inc., and Syntronic (Beijing) Technology R&D Center Co. Cadence alleged that the defendants obtained, copied, and used its software without authorization or valid license files.
Cadence asked to inspect computers identified by its system as using pirated software. After initially stating that the computers were no longer within the defendants’ possession, custody, or control, the defendants later acknowledged that they still had 24 requested computers, although all had been reformatted. They also acknowledged that computers were being recycled or reformatted after receiving notice of the lawsuit and while the lawsuit was pending.
Motions and legal standard
A magistrate judge ordered the defendants to produce the 24 computers in the United States. The defendants argued that Chinese law prevented shipment but initially did not identify the law. Syntronic Beijing later relied on Article 39 of China’s Personal Information Protection Law and sought reconsideration. The magistrate judge denied reconsideration, finding that Syntronic Beijing had not raised the objection diligently and rejecting its argument that the law prevented shipment.
The defendants then filed a motion to stay and a motion under Federal Rule of Civil Procedure 72 seeking relief from the magistrate judge’s nondispositive orders. Under Rule 72, the district court could modify those orders only if they were clearly erroneous or contrary to law. The court described this as a highly deferential standard.
Ruling
Judge Illston denied both motions. She agreed with the magistrate judge that Syntronic Beijing had not acted with reasonable diligence in raising its Personal Information Protection Law argument. She also agreed that, even if the argument had been timely raised, that law did not prevent shipment of the computers. The court further expressed concern about possible destruction or alteration of evidence because computers containing information central to the case had been reformatted while the case was pending.
The court ordered:
- The computers had to be shipped to the United States on or before September 19, 2022. - The parties had to hire an independent company to conduct a forensic review and isolate personal information irrelevant to the case. - The parties had to select that company and inform the court of their selection by September 19, 2022. - After the irrelevant personal information was isolated and removed, the parties were to continue with the computers’ ordinary discovery review.
The opinion concerns discovery and the defendants’ challenges to discovery-related orders; it does not decide the underlying copyright, circumvention, or contract claims.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.