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What is Produced in the Southern District, Stays in the Southern District: Judge Rakoff Denies Plaintiff’s Requests to Use Documents In Chinese Proceeding

Last year we reported on the patent dispute between Plaintiff SIMO Holdings, Inc. (“SIMO”) and Defendants Hong Kong uCloudlink Network Technology Limited and uCloudlink (America), Ltd. (collectively, “uCloudlink”).  (See posts from June 2019 and October 2019.)  With the trial concluded—and with numerous pre- and post-trial disputes on appeal to the Federal Circuit—all was momentarily quiet on the district court front.  The parties, however, recently returned to the Southern District of New York with a fresh controversy. 

SIMO sought to use documents produced during pretrial discovery in a foreign proceeding against uCloudlink’s subsidiary.  SIMO asked the district court to allow such use by either (i) modifying the protective order or (ii) granting its application for discovery in aid of a foreign proceeding pursuant to 28 U.S.C. § 1782(a).  On May 5, 2020, Judge Jed S. Rakoff (S.D.N.Y.) denied both requests.

SIMO’s Trade Secret Case in China

SIMO’s subsidiary launched a trade secret misappropriation action in Shenzhen, China against, inter alia, uCloudlink’s subsidiary.  As part of that lawsuit, according to SIMO, its subsidiary needed to show the Chinese Court “some evidence of uCloudlink’s misappropriation” and wanted to make that showing by way of three documents that were produced by uCloudlink in the Southern District patent litigation.  Those documents were designated as “confidential-attorneys’ eyes only” by defendant uCloudlink.  And uCloudlink of course opposed the request, arguing that disclosure of the three documents ran afoul of provisions in the protective order in place in the Southern District patent litigation.

SIMO’s Application to the District Court

After determining that the Court maintained jurisdiction to decide the discovery dispute,[1] Judge Rakoff first denied SIMO’s motion to modify the protective order.  While the Court could exercise its discretion to lift or modify the protective order, it determined that it would be inappropriate to do so here because the potential private benefit inuring to SIMO (or, more specifically, to its subsidiary) does not justify such a modification.

Second, the Court rejected SIMO’s application to grant it discovery pursuant to 28 USC § 1782(a).  To obtain discovery under Section 1782(a), SIMO needed to establish that (1) the person from whom discovery is sought resides (or is found) in the district; (2) the discovery is for use in a foreign proceeding before a foreign tribunal; and (3) the application is made by a foreign or international tribunal or any interested person.  See Mees v. Buiter, 793 F.3d 291, 297 (2d Cir. 2015).  The Court found that SIMO failed to meet the second prong.  SIMO, who is not a party to the trade secret litigation in China, failed to sufficiently explain how it would go about injecting that evidence into the Chinese proceedings, as case law requires.  The Court was “left with the impression that SIMO [sought] these documents so that it may turn them over to [its subsidiary], which in turn may provide them to the Chinese Court.”  Absent SIMO’s ability to direct the subsidiary to submit the evidence to the Chinese Court—and SIMO made no allegation that it had such power—its § 1782(a) application fell short.

The case is SIMO Holdings, Inc. v. Hong Kong uCloudlink Network Tech, Ltd., et al., No. 18-cv-5427 (S.D.N.Y.).

[1] The Court stated:  “While the filing of a notice of appeal does limit the district court’s
jurisdiction, it only ‘divests the district court of its control over those aspects of the case involved in the appeal,’” citing Griggs v. Provident Consumer Disc. Co., 459 U.S. 56, 58 (1982).  Although the parties “appealed nearly every order the Court has issued in th[e] case, … the parties ha[d] notably not appealed” (i)  the entry of the protective order or (ii) any motion for discovery pursuant to § 1782.  Thus, the Court had jurisdiction to resolve the instant dispute.