Amimon, Inc. v. Shenzhen Hollyland Tech Co. Ltd

Background

Amimon develops wireless video-streaming technology, including software used in transmitters and receivers. The software begins as editable source code and is then compiled into encrypted binary code placed on chipsets. Amimon alleged that it does not disclose, sell, or distribute the source code, and that it protects confidential information through restricted access and confidentiality agreements. Amimon also alleged that it obtained a copyright registration for the source code.

Amimon alleged that a Hollyland product called the Cosmo contained one of Amimon’s chipsets. After examining the product, Amimon allegedly found that the source code on the chipset was almost identical to Amimon’s source code but had been slightly modified. Amimon alleged that Hollyland and EC Pro obtained and modified its source code without authorization. EC Pro was described as Hollyland’s U.S. distributor and exclusive service center.

Amimon brought claims under the federal Defend Trade Secrets Act, New York trade-secret law, the U.S. Copyright Act, and New York unfair-competition law. Hollyland and EC Pro moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint adequately states a legal claim. Hollyland also moved to dismiss for lack of personal jurisdiction, lack of subject-matter jurisdiction, forum non conveniens, and international comity.

Rulings on Hollyland’s Additional Grounds for Dismissal

The court denied Hollyland’s motion to dismiss for lack of personal jurisdiction. At the pleading stage, the court accepted Amimon’s allegations as true and concluded that Hollyland’s relationship with EC Pro and its efforts to sell products in New York were sufficient to show that Hollyland transacted business in New York. Because Amimon’s claims arose from those sales, the court found specific personal jurisdiction under New York’s long-arm statute. The court also concluded that exercising jurisdiction was consistent with constitutional due-process requirements.

The court rejected Hollyland’s argument that the claims were impermissibly extraterritorial—that is, based only on conduct occurring outside the United States. The court reasoned that Amimon alleged Hollyland purposely shipped products containing the source code to the United States for sale through EC Pro. The court therefore concluded that the alleged conduct included activity in the United States.

The court denied Hollyland’s motion based on forum non conveniens, a doctrine allowing a court to dismiss when another available forum would be substantially more appropriate. Hollyland did not show that EC Pro could be sued in China or that Chinese courts would hear the specific claims under U.S. and New York law. The court therefore found that Hollyland had not established an adequate alternative forum.

The court also denied Hollyland’s request for dismissal based on international comity, which concerns respect for proceedings in another country. Although Amimon had an earlier, ongoing copyright case in China, the U.S. case involved EC Pro, claims under U.S. and New York law, alleged sales in New York, and requested relief beyond the relief sought in the Chinese proceeding. The court found no exceptional circumstance requiring dismissal.

Rule 12(b)(6) Claims

The court held that Amimon plausibly pleaded a trade-secret claim under the Defend Trade Secrets Act and New York law. Amimon identified the alleged trade secret as the source code for its zero-latency transmission software. The allegations that Amimon kept the source code confidential, distributed only an encrypted compiled version, and spent substantial amounts on research and development were sufficient at this stage to suggest that the source code had trade-secret status.

The court also found that Amimon plausibly alleged misappropriation. Amimon alleged that the source code could be modified, that it did not distribute the source code, and that a Hollyland product sold by EC Pro contained a compiled version that had been slightly changed. The court said these allegations were sufficient, although only minimally so, to support a plausible inference that Hollyland and EC Pro misappropriated the source code.

The court concluded that Amimon adequately pleaded copyright infringement. Amimon alleged that it owned a registered copyright in the source code, that the code appeared on Hollyland products sold through EC Pro, and that Amimon had never provided the code or chipsets to either defendant. The court explained that evidence proving actual copying and substantial similarity was not required to survive a motion to dismiss, particularly because the source-code materials had not yet been provided for comparison.

The court rejected Hollyland’s statute-of-limitations argument. Hollyland argued that a 2016 Chinese patent involving a product containing Amimon’s chipset should have started the three-year limitations period. The court concluded that Amimon’s claims concerned the underlying source code, not the chipset itself, and that the complaint did not clearly show that the claims were untimely.

Finally, the court declined to dismiss the unfair-competition claim as duplicative of the trade-secret claim. The court noted that courts sometimes dismiss duplicative unfair-competition claims, but other courts analyze the claims together. It chose the latter approach.

Disposition

Judge Ramos denied Hollyland’s and EC Pro’s motions to dismiss. The parties were directed to attend an initial pretrial conference, and the Clerk of Court was directed to terminate the motions.