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Certified Translation of Documents from Chinese to English in Trade Secret Litigation.

There’s a growing need for Chinese to English certified translation services for trade secret litigation.  In In Re General Capacitor, the plaintiffs (a corporation and its owner, Linda Zhong (“Zhong”)), filed a lawsuit in federal court against several defendants alleging claims of breach of contract, misappropriation of trade secrets, and declaratory relief. A brief summary of the facts is as follows:

In 2014, the plaintiff, a designer of electrodes, entered into a technology licensing and servicing agreement (“agreement”) with the defendant, a Hong Kong corporation. Pursuant to the agreement, written in Chinese, the defendant had the right to sell electrodes to the defendant’s licensees but the defendant was prohibited from sub-leasing the technology to third parties.

In 2015, the defendant hired Zhong, one of the plaintiffs, to be its CEO and Chief Technology Officer. Zhong alleges that when she began her employment, she was under the impression that one of the defendants was a wholly-owned subsidiary of the other defendant. During her employment, Zhong invented a novel way of attaching lithium to a negative electrode with the use of lithium foil. She subsequently filed a patent for her idea in August of 2015. Zhong also told the individual defendants about her idea. In October of 2015, the corporate defendants filed a non-provisional patent application involving the use of lithium foil as a lithium source. The defendants claimed that their patent was based on work independent of Zhong’s by one of the individual defendants.

In 2016, Zhong was terminated from her employment. The Defendants asserted that Zhong deleted a “Dropbox” folder from her computer containing 577 files and 50 folders with the defendant corporation’s data. The defendants allegedly demanded that Zhong return the Dropbox files pursuant to law and the company’s bylaws, but Zhong refused.

The plaintiffs subsequently filed a federal lawsuit alleging that Zhong’s lithium foil discovery belonged to them and that the defendants misappropriated the plaintiffs’ trade secret.

Court Denies Chinese Defendants’ Motion for Summary Judgment in Lawsuit Involving Trade Secret Misappropriation.

At the close of discovery, the defendants each moved for summary judgment as to the plaintiffs’ respective claims against them. The defendants did not include an English translation of the licensing and servicing agreement that was originally written in Chinese along with their motion for summary judgment. The defendants later filed an English translation of the agreement along with their reply briefs, but the plaintiffs objected to that Chinese to English translation on the grounds that it was not properly authenticated and that it violated the parties’ protective order. The defendants also objected to the translated documents submitted by the plaintiffs in response to the defendants’ motion for summary judgment. The court reportedly did not rely on these Chinese to English translations for purposes of deciding the motion for summary judgment, however.

Trade Secret Misappropriation.

The defendants first claimed that the defendants could not prove the two elements necessary to establish trade secret misappropriation under the California Uniform Trade Secrets Act: (1) the existence of a trade secret; and (2) misappropriation of the trade secret. The court, however, disagreed, finding that there were triable issue of fact as to whether the defendants knew that they had a duty to maintain the secrecy of Zhong’s invention. The court thus held that the plaintiffs’ claim for misappropriate of trade secrets survived the summary judgment state.

Breach of Contract.

The defendants also argued that the plaintiffs could not pursue a claim for breach of contract against them. The plaintiffs alleged that the defendants breached their agreement by using technology beyond the scope of the agreement and by improperly sub-licensing the technology. Specifically, the plaintiffs allege that one of the defendants was not the subsidiary of the other defendant, making the use of the plaintiffs’ technology between the two entities impermissible per the contract. As with the trade secret misappropriation claim, the court held that there was a genuine dispute as to the existence of a subsidiary relationship between the defendants.

Inducement of Breach of Contract.

The defendants also unsuccessfully moved to dismiss the plaintiffs’ claim for inducement of breach of contract. The court held that at the summary judgment phase of the proceedings, there was insufficient evidence to determine which personal or corporate interests one of the named individuals served.

Computer Fraud and Abuse Act.

Finally, the defendants sought summary judgment on the defendants’ claims against the plaintiffs under the Computer Fraud and Abuse Act (“CFAA”), arguing that plaintiff Zhong violated the Act when she took data files and emails from her work computer. However, the court also rejected this claim. The court reasoned that CFAA was intended to apply to computer hackers rather than employment disputes. The court further reasoned that allegations surrounding plaintiff Zhong’s forwarding of emails involved issues of scope of employment and authority, issues not covered or intended to be covered by the CFAA. The court also held that the defendants’ CFAA claim failed because the alleged deletion of data files occurred while Zhong was employed by the defendants, at which time it was undisputed that Zhong was authorized to access the files.

The case is In Re General Capacitor, Case No. 16-cv-02458-HSG, decided on June 29, 2018 in the United States District Court for the Northern District of California.

This certified translation blog article should not be construed as legal advice. You should always consult an attorney regarding your specific legal needs.

All Language Alliance, Inc. provide certified translation services from Chinese, Swedish, German, French, Portuguese, Korean to English. Contract us to retain court-certified interpreters for depositions in trade secret litigation.

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