Skyroam permitted to add trade secret misappropriation counterclaims in patent suit

By Charmaine Little | Feb 1, 2019

SAN FRANCISCO – On Jan. 25, the U.S. District Court for the Northern District of California granted in part and denied in part a company's motion for leave to file an amended answer and counterclaims in a patent infringement lawsuit.

U.S. District Judge Edward M. Chen ruled on the case between plaintiffs Hong Kong uCloudlink Network Technology Limited and uCloudlink and defendants SIMO Holdings and Skyroam Inc.

Skyroam Inc. filed the motion in hopes of convincing the court to allow it to add counterclaims of allegations of trade secret misappropriation and also include new parties in the case - Shenzhen Skyroam Technology Co. LTD and two more counterdefendants. The court granted its motion for a leave to amend and to add counterclaims and one company as a counterclaimant.

Skyroam sued uCloudlink over allegations of patent infringement in a federal court in New York. Amid the discovery phase, uCloudlink provided Skyroam with Skyroam’s own documents that included trade secrets. The order states uCloudlink had Skyroam documents after it hired a certain employee who left his job at Skyroam Shenzhen and later worked uCloudlink Shezhen, one of the companies Skyroam sought to include as a counterdefendant.  

Skyroam was granted leave to get the employee’s deposition, where the employee claimed the Skyroam documents were copied and transferred to his uCloudlink computer by accident. The employee also said no uCloudlink employee saw the documents but did invoke the Fifth Amendment for various questions and topics.

Still, uCloudlink fired the worker shortly after the deposition was completed. Skyroam then asked the New York court for leave so it could add claims for trade secret misappropriation to the case. The New York court wouldn’t allow it, so Skyroam asked for leave in the current case and in the current court.

As for leave to add trade secret misappropriation claims, Chen ruled that uCloudlink’s argument that the motion should be denied because of futility and prejudice is "without merit." 

The order states uCloudlink’s futility angle is founded on the employee’s testimony, and there is no indication that Skyroam was even able to take more time for discovery to investigate the statements the employee made during the disposition. 

uCloudlink's prejudice argument faced a similar ruling from the court. 

“Whether or not uCloudlink misappropriated trade secrets from SIMO is almost entirely irrelevant to the question of whether uCloudlink infringed SIMO’s patents,” Chen wrote.

Considering this, the court allowed Skyroam to amend its counterclaims and plead causes of action for trade secret misappropriation.

Since the court denied the futility and prejudice arguments, it also gave Skyroam leave to add Skyroam Shenzhen as a counterclaimant.

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