ORDER GRANTING PLAINTIFFS' MOTION TO DISMISS FIFTH AND SIXTH COUNTERCLAIMS

Docket No. 75

EDWARD M. CHEN, District Judge.

The instant case began as a patent infringement lawsuit filed by certain uCloudlink entities against certain SIMO entities. The case now includes counterclaims brought by certain SIMO entities against certain uCloudlink entities for trade secret misappropriation.

Counterclaimants are three SIMO entities:

Counterdefendants (also Plaintiffs in the case) are two uCloudlink entities:

Currently pending before the Court is Plaintiffs'/Counterdefendants' motion to dismiss the counterclaims for trade secret misappropriation (the fifth and sixth causes of action). The Court previously granted Counterdefendants' motion to dismiss these counterclaims but gave Counterclaimants leave to amend. See Docket No. 67 (order). Counterdefendants argue that the amended counterclaims are still deficient.

Having considered the parties' briefs and accompanying submissions, as well as the oral argument of counsel, the Court hereby GRANTS the motion to dismiss the trade secret misappropriation counterclaims.

I. FACTUAL & PROCEDURAL BACKGROUND

In the operative second amended counterclaims ("SACC"), Counterclaimants allege as follows with respect to the trade secret misappropriation claims.

"The overall technology at issue involves providing users of mobile devices such as phones and hotspots (`uCloudlink devices') the ability to travel internationally and access data through those devices without having to pay expensive roaming fees or purchase a country-specific SIM card for each new country visited." SACC ¶ 26.

"In 2008, SIMO founded and patented its virtual SIM technology, some of which" it disclosed in patents. SACC ¶ 87. "In 2013, SIMO launched its vSIM platform," which "delivers local data, internationally, allowing the user to connect to dozens of different cellular networks without changing his or her SIM card." SACC ¶ 88.

Skyroam1 owns trade secrets related to

SACC ¶ 95. The trade secrets "significantly increase the usability, reliability, and consistency of the connections required for mobile hotspot users through vSIM technology." SACC ¶ 99.

In April 2013, Skyroam hired Wang Bin as its Systems Architect.2 See SACC ¶ 112. Previously, Wang Ban had "worked with Counterdefendants' CEO Gao Wen and other uCloudlink founders and/or individual investors at . . . Huawei."3 SACC ¶ 9. In 2011, Gao Wen and "several other Huawei colleagues" left Huawei to form Counterdefendants and related uCloudlink entities to compete with Counterclaimants. SACC ¶ 11. Wang Bin did not go with Gao Wen and these colleagues but instead joined Skyroam Shenzhen in April 2013 (i.e., some two years later). See SACC ¶ 11.

As Systems Architect for Skyroam, Wang Bin "obtained detailed knowledge" of Skyroam's trade secrets, "including solutions for roaming SIM cards, virtual SIM allocation, [and] design of backend billing system." SACC ¶ 113. In addition, while employed by Skyroam, "Wang Bin authored numerous specification documents based on information that Skyroam engineers disclosed to him." SACC ¶ 120. During his employment with Skyroam, Wang Bin copied certain Skyroam trade secrets to a USB drive and then downloaded them to his personal computer. See SACC ¶ 125.

In August 2013 — i.e., just four months after he started working at Skyroam — Wang Bin left employment with Skyroam. See SACC ¶ 12. Then, "just one month after leaving Skyroam," Wang Bin started working for uCloudlink Shenzhen (actually, a predecessor entity of uCloudlink Shenzhen) "as a system engineer for testing, maintenance, and technical support of backend servers." SACC ¶ 126. Although Wang Bin was formally hired by uCloudlink Shenzhen, he actually interviewed with Tan Zhu, a Vice President of uCloudlink Hong Kong. See SACC ¶ 127. At some point, Wang Bin was promoted from being a system engineer to Director of Operation and Maintenance Department "to support operation and maintenance of backend servers." SACC ¶ 128. Then, in March 2017, Wang Bin "began serving as the leader of the Security Group at uCloudlink Shenzhen, responsible for establishing information security systems, security compliance, and audit." SACC ¶ 131.

During his time with uCloudlink Shenzhen, Wang Bin transferred the Skyroam trade secrets he had copied to his uCloudlink work computer. See SACC ¶ 129. "Counterclaimants were able to identify at least one Chinese patent application, CN105491555A, [submitted by uCloudlink Shenzhen4] that discloses the contents of the Skyroam Confidential Documents copied over from Wang Bin's Skyroam computer to his uCloudlink computer." SACC ¶ 132 (adding that this patent application lists Wang Bin and Gao Wen as co-inventors). The technical disclosure for this patent application "includes large sections that were copied word for word from the stolen Skyroam trade secret document." SACC ¶ 133 (emphasis in original). Other patents "that uCloudlink applied for and owns that list Wang Bin as an inventor and that are based on or otherwise include some of Counterclaimants' stolen trade secrets" can be identified in ¶ 137 of the SACC. SACC ¶ 137 (identifying five other patent applications). The patent applications appear to have been filed in 2015 and/or 2016. See SACC ¶¶ 137, 173. There is a "lack of evidence of any conception or reduction to practice" for "any of the inventions allegedly conceived and reduced to practice" which is indicative of the fact that "[t]he `inventors' did not memorialize any of their `ideas' [because] they already existed word for word in documents stolen from Skyroam." SACC ¶ 139 (emphasis in original).

"Counterdefendants manufacture, offer for sale, and sell products and services in the United States that embody the Wang Bin Patents, and therefore, are based, at least in part, on Skyroam's trade secrets and the Skyroam Confidential Documents." SACC ¶ 179.

On October 12, 2018, as part of a patent infringement lawsuit that Skyroam entities filed against uCloudlink entities in a New York district court, uCloudlink Hong Kong and uCloudlink America supplemented a response to an interrogatory and identified Wang Bin as a current uCloudlink employee who had formerly worked for Skyroam Shenzhen. See SACC ¶ 140. On the same day, the uCloudlink entities produced nearly 30,000 pages of documents and "[b]uried in this massive production were 14 internal Skyroam documents. Many of these documents were labeled by Skyroam as `Confidentiality Level: Top Secret' and/or bore Skyroam's trademark." SACC ¶ 141 (referring to these documents as the "Skyroam Confidential Documents").

On October 19, 2018, a hearing was held before the New York district court during which the parties discussed Wang Bin and the Skyroam documents. During the hearing, uCloudlink Hong Kong and uCloudlink America admitted that Wang Bin "explicitly refused to cooperate with [their] forensic expert . . . hired to create an image and preserve the contents of Wang Bin's personal computer." SACC ¶ 145.

On November 7, 2018, Wang Bin was deposed as part of the New York patent infringement case. See SACC ¶ 149. During the deposition, he refused to answer many questions "based on a vague assertion of `personal privacy.'" SACC ¶ 151 (alleging that there were "at least 16 different occasions" where this happened). The SIMO entities moved to compel his testimony and the New York district court granted the motion. See SACC ¶ 151. The next day, when Wang Bin's deposition was scheduled to continue, uCloudlink Hong Kong and uCloudlink America "unilaterally cancelled the deposition citing that a conflict had recently `arisen' between [them] due to the Court's order compelling Wang Bin's testimony." SACC ¶ 152. Wang Bin's deposition was rescheduled for November 12, 2018. See SACC ¶ 153. During this deposition, "Wang Bin's new personal counsel, who[m] uCloudlink Hong Kong and America paid for, advised him on multiple occasions to refuse to answer questions based on the Fifth Amendment," and, thus, "Wang Bin refused to answer more than forty (40) questions on Fifth Amendment grounds." SACC ¶ 154. And "[e]ven when he did answer, Wang Bin was evasive or provided clearly disingenuous answers" — e.g., claiming "not to remember the technology that Skyroam was developing" or "not to have an understanding of the technologies that Skyroam was developing while he worked there." SACC ¶ 155. "uCloudlink terminated Wang Bin either immediately after the second day of his deposition or close in time thereto." SACC ¶ 158.

According to Counterclaimants, "Wang Bin's misappropriation of Skyroam trade secrets was the fulfillment of a conspiracy with senior management at Counterdefendants to obtain Skyroam trade secrets in order to unfairly compete with Skyroam." SACC ¶ 159. That is,

SACC ¶ 174 (emphasis added); see also SACC ¶ 183.

In support of this alleged conspiracy, Counterclaimants point to the following:

Based on, inter alia, the above allegations, Counterclaimants have asserted two causes of action for trade secret misappropriation: one based on federal law (Defend Trade Secrets Act or "DTSA") and one based on state law (California Trade Secrets Act or "CTSA").

II. DISCUSSION

A. Legal Standard

To overcome a Federal Rule of Civil Procedure 12(b)(6) motion to dismiss after the Supreme Court's decisions in Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), a plaintiff's "factual allegations [in the complaint] `must . . . suggest that the claim has at least a plausible chance of success.'" Levitt v. Yelp! Inc., 765 F.3d 1123, 1135 (9th Cir. 2014). The court "accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the nonmoving party." Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). But "allegations in a complaint . . . may not simply recite the elements of a cause of action [and] must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively." Levitt, 765 F.3d at 1135 (internal quotation marks omitted). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. "The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (internal quotation marks omitted).

B. Misappropriation/Conspiracy Theory

As an initial matter, the Court takes note of the specific misappropriation — or rather, conspiracy — theory Counterclaimants have committed themselves to, namely:

SACC ¶ 174; see also SACC ¶ 183.

This is notable because, in its prior order granting Counterdefendants' motion to dismiss the trade secret misappropriation counterclaims, the Court took note that Counterclaimants had offered two different theories:

Docket No. 67 (Order at 1-2); see also Docket No. 67 (Order at 2-3) (noting that, under the second theory, Wang Bin was the original wrongdoer and Counterdefendants only became wrongdoers after learning of Wang Bin's misappropriation during his deposition).

In the current counterclaims, Counterclaimants have now abandoned the second theory.5 Accordingly, the Court focuses on the viability of the first conspiracy theory.6

C. Plausibility of First Conspiracy Theory

As noted above, under the first conspiracy theory, there was a conspiracy at the outset — i.e., all the way back in 2013, which was two years after Gao Wen had left Huawei to form the uCloudlink entities, Gao Wen and Wang Bin (and possibly others) conspired to send Wang Bin to Skyroam Shenzhen so that he could steal trade secrets for the benefit of Counterdefendants and/or uCloudlink Shenzhen.

In the SACC, Counterclaimants have made new allegations not contained in the previously dismissed pleading to support this conspiracy theory. The main new allegations are as follows: (1) after having left Huawei in 2011, Gao Wen "directed" Wang Bin to leave Huawei "in early 2013 to join Skyroam," SACC ¶ 165; see also SACC ¶ 11 (alleging that Gao Wen and others had left Huawei two years earlier in 2011); (2) Gao Wen claimed that he could not remember who helped him found the uCloudlink entities, see SACC ¶¶ 160-62; (3) there was no operational uCloudlink product until a few months after Wang Bin joined uCloudlink Shenzhen, see SACC ¶ 171; and (4) there is a "lack of evidence of any conception or reduction to practice" for "any of the inventions allegedly conceived and reduced to practice." SACC ¶ 139.

The Court concludes that these new allegations, along with the allegations previously made, are still not enough to support a plausible conspiracy, especially given Counterclaimants' contention that there was a conspiracy between Gao Wen and Wang Bin at the outset in 2013 (i.e., when Wang Bin left employment with Skyroam Shenzhen and was subsequently hired by uCloudlink Shenzhen). Notably, most of the allegations in the counterclaims shed little light on whether there was an agreement at the outset. The only allegation that addresses the timing allegation is the allegation that Gao Wen "directed" Wang Bin to leave Huawei in 2013. But this allegation is conclusory in nature; there are no specific factual allegations to back up this claim and, in the absence of supporting allegations, the Court cannot credit such a conclusory allegation under Twombly and Iqbal. Moreover, the plausibility of any "direction" given by Gao Wen is questionable given that it was given two years after Gao Wen left Huawei, where he and Wang Bin both worked — at least in the absence of any specific factual allegation corroborating the claim.

Putting aside the "directed" allegation, the Court finds that the remaining allegations are consistent with there being a conspiracy, but they do not establish a plausible allegation of a conspiracy — in particular, a conspiracy originating in 2013 before Wang Bin left Skyroam Shenzhen — within the meaning of Twombly. See Twombly, 550 U.S. at 553-57 (noting that, in a Sherman Act § 1 case, the critical question is whether the challenged anticompetitive conduct stems from an agreement to restrain trade; "when allegations of parallel conduct are set out in order to make a § 1 claim, they must be placed in a context that raises a suggestion of a preceding agreement, not merely parallel conduct that could just as well be independent action"); Iqbal, 556 U.S. at 678 (stating that, "[w]here a complaint pleads facts that are `merely consistent with' a defendant's liability, it `stops short of the line between possibility and plausibility of "entitlement to relief"'").

Because the Court holds that no plausible conspiracy has pled, it need not address any of the other issues raised by the parties in their papers — e.g., whether it is plausible that uCloudlink America was part of any conspiracy, whether uCloudlink Hong Kong and/or uCloudlink American can be held liable on a single business enterprise theory,7 and whether the federal DTSA claim can apply extraterritorially.8

D. New Conspiracy Theory

In the counterclaims as pled, Counterclaimants tendered only the first conspiracy theory above and did not offer any new conspiracy theory — e.g., that Wang Bin was the original wrongdoer (i.e., there was no conspiracy at the outset) and that, only after Wang Bin started to work for uCloudlink Shenzhen, did Counterdefendants become aware that he had stolen Skyroam trade secrets and decide to use that windfall to their advantage (i.e., a conspiracy was later formed). At the hearing on the motion to dismiss, however, Counterclaimants asserted for the first time a new conspiracy theory along these lines. In particular, Counterclaimants argued that a conspiracy was formed at the very least on October 23, 2015, when Wang Bin was an employee of uCloudlink Shenzhen and participated in a patent evaluation conference with other uCloudlink employees. See SACC ¶ 134. Implicitly, Counterclaimants take the position that, during this patent evaluation conference, Wang Bin, for the first time, disclosed the fact that he had taken Skyroam trade secrets because such trade secrets were relevant to the patent evaluation.

As an initial matter, the Court emphasizes that this new conspiracy theory was not actually pled in the counterclaims. At the hearing, Counterclaimants insisted otherwise, pointing to, e.g., ¶ 134 in the SACC, but nowhere in that paragraph do Counterclaimants make an assertion of conspiracy as of October 23, 2015, when the patent evaluation conference took place. Furthermore, the other allegations in the counterclaims clearly predicate a conspiracy based on the first theory above only. See SACC ¶¶ 159-83 (allegations under the heading "Counterdefendants' Conspiracy with Wang Bin").

That being the case, the only question that remains for the Court is whether Counterclaimants should be given leave to amend to assert this new conspiracy theory in a third amended pleading. The Court denies leave to amend. Previously, Counterdefendants challenged the trade secret misappropriation claims (as asserted in the first amended counterclaims) based on a failure to plead a plausible conspiracy. The Court granted Counterdefendants' motion and gave Counterclaimants the opportunity to amend to correct deficiencies with their conspiracy theory. Nothing prevented Counterclaimants from asserting, in the SACC, a conspiracy as of, e.g., October 23, 2015, or even at any earlier date,9 but, for whatever reason, Counterclaimants — represented by able counsel — did not do so, relying instead solely on the theory that Gao Wen and Wang Bin entered into a conspiracy at or about the time he left Skyroam Shenzhen and went to work for uCloudlink Shenzhen. See Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (noting that a factor that a court may consider in deciding whether to give leave to amend under Federal Rule of Civil Procedure 15 is "`repeated failure to cure deficiencies by amendments previous allowed'"). Having committed themselves to this theory, Counterclaimants are not entitled to a second bite at the apple on a theory that they chose not to plead.10 See Wagh v. Metris Direct, Inc., 363 F.3d 821, 830 (9th Cir. 2003) ("The district court's discretion to deny leave to amend is particularly broad where the plaintiff has previously filed an amended complaint."); Chodos v. W. Publ'g Co., 292 F.3d 992, 1003 (9th Cir. 2002) ("[W]hen a district court has already granted a plaintiff leave to amend, its discretion in deciding subsequent motions to amend is `particularly broad.'"). See, e.g., Brown v. Fitzpatrick, 667 F. App'x 267, 268 (9th Cir. 2016) ("The district court did not abuse its discretion in dismissing [the pro se litigant's] amended complaint without leave to amend after providing [him] with one opportunity to amend."). This is especially true given that Counterclaimants have known about the alleged trade secret misappropriation since approximately October 2018 and been litigating the misappropriation issue since December 2018. See Docket No. 17 (motion for leave to add counterclaims for trade secret misappropriation). Almost a year has passed and the counterclaim pleading still is not settled, which is hampering this case from continuing on its normal course. Although the Court has not yet set a trial date in the case, the counterclaim pleading needs to be finalized. Cf. Trans Video Elecs., LTD v. Sony Elecs., Inc., 278 F.R.D. 505, 510 (N.D. Cal. 2011) (finding that a "motion to amend was taken in bad faith, more specifically, as a last-ditch attempt to avoid the case being dismissed in its entirety").

III. CONCLUSION

For the foregoing reasons, the Court grants Counterdefendants' motion to dismiss the trade secret misappropriation counterclaims. The dismissal is with prejudice; Counterclaimants do not have leave to amend.

This order disposes of Docket No. 75.

IT IS SO ORDERED.