SIMO Holdings Inc. v. uCloudlink Network Technology Limited

Background

After a trial in the patent-infringement case, the court entered judgment for SIMO Holdings Inc. and awarded damages against Hong Kong uCloudlink Network Technology Limited and uCloudlink (America), Ltd., collectively called uCloudlink in the opinion. Both sides appealed the judgment and various pretrial and post-trial rulings.

During the appeals, SIMO sought to use three documents that uCloudlink had produced during discovery. The documents were marked confidential and restricted to attorneys’ eyes only under a protective order entered in August 2018. SIMO wanted to use them in a trade-secret-misappropriation lawsuit in Shenzhen, China. That lawsuit was brought by SIMO’s wholly owned subsidiary, Shenzhen Skyroam Technology Co., Ltd., against uCloudlink’s subsidiary, Shenzhen uCloudlink Network Technology Co., Ltd., and others. SIMO represented that the documents were needed to show alleged misappropriation and help Skyroam maintain the Chinese lawsuit.

SIMO made two requests: it asked the court to modify the protective order so the documents could be disclosed to the Chinese court, and it alternatively sought discovery under 28 U.S.C. § 1782(a), a statute allowing a federal district court to order evidence production for use in a foreign or international proceeding.

Jurisdiction

The court rejected uCloudlink’s argument that the pending appeals deprived it of authority to decide the motions. An appeal generally removes the district court’s control over the parts of the case involved in the appeal, but the parties had not appealed the protective order, and the court had not previously ruled on a request under Section 1782. The court therefore concluded that these motions concerned issues outside the pending appeals and that it had jurisdiction to decide them.

Protective-order motion

The court explained that modification of a protective order is generally disfavored when a party reasonably relied on the order. Here, however, the parties’ protective order expressly reserved the court’s discretion to decide whether confidential treatment should continue for documents submitted in connection with a court proceeding. Because of that language, the parties could not reasonably rely on the order remaining unchanged, and no presumption against modification applied.

Even so, the court declined to exercise its discretion to modify the order. It found no public-interest reason to disclose the documents because SIMO sought to unseal them only for confidential submission to the Chinese court. The court also was not persuaded that the private benefit to SIMO or Skyroam would be substantial. Although SIMO argued that the Chinese lawsuit could not continue without the documents, the court noted that Skyroam had also brought trade-secret claims against uCloudlink entities in federal courts in California and Texas. The court therefore denied the request to modify the protective order.

Section 1782 motion

To obtain discovery under Section 1782, an applicant must show that the person from whom discovery is sought is found in the district, that the discovery is for use in a foreign proceeding, and that the application is made by a foreign tribunal or an interested person. Even when those requirements are met, the court has discretion whether to grant the discovery.

The court focused on the requirement that the requested evidence be “for use” in the foreign proceeding. Under the applicable standard, the applicant must show a means of placing the evidence into the proceeding in a way that provides some advantage. SIMO argued that a provision of Chinese civil-procedure law obligated it to provide testimony because it had information about Skyroam’s case.

The court found that SIMO had not adequately explained how that provision would allow it to submit these documents in response to a request for evidence directed to Skyroam, particularly because uCloudlink argued that the provision applied during hearings rather than at the preliminary stage involved here. The court also observed that SIMO appeared to seek the documents so it could give them to Skyroam, which could then submit them to the Chinese court. The court stated that Section 1782 discovery cannot rest only on a desire to provide useful information to a private litigant unless the applicant can direct that litigant to submit the information to the tribunal. SIMO had not alleged that it could direct Skyroam to do so and had not provided information about its corporate structure that would establish such power.

Disposition

Judge Jed S. Rakoff denied SIMO’s motion to modify the protective order and denied SIMO’s alternative motion for discovery under 28 U.S.C. § 1782(a).