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Quintel Technology, LTD. v. Huawei Technologies USA, Inc.

United States District Court, E.D. Texas, Sherman Division

January 18, 2018

QUINTEL TECHNOLOGY, LTD. Plaintiff,
v.
HUAWEI TECHNOLOGIES USA, INC., ET AL. Defendants.

          Magistrate Judge Craven

          ORDER ADOPTING REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

          AMOS L. MAZZANT, UNITED STATES DISTRICT JUDGE

         Came on for consideration the report of the United States Magistrate Judge in this action, this matter having been referred to the United States Magistrate Judge pursuant to 28 U.S.C. § 636. On December 18, 2017, the Magistrate Judge issued a Report and Recommendation, recommending Defendants' Motion for Summary Judgment on Trade Secret Misappropriation, Correction of Inventorship, and Fraud be granted in part and denied in part (Dkt. #143). Specifically, the Magistrate Judge recommended Quintel's correction of inventorship claim be dismissed with prejudice. Otherwise, the Magistrate Judge recommended Defendants' motion be denied. In the Report and Recommendation, the Magistrate Judge also denied Defendants' Motion to Strike Michael A. Jensen's Declaration in Support of Plaintiff's Opposition Brief to Defendants' Summary Judgment on Trade Secret Misappropriation, Correction of Inventorship, and Fraud (Dkt. #163).[1]

         Quintel Technology Ltd. (“Quintel”) filed objections to the part of the Report and Recommendation which recommends dismissal of Quintel's correction of inventorship claim against Defendants Huawei Technologies USA, Inc., FutureWei Technologies, Inc., and Huawei Technologies Co., Ltd. (collectively, “Huawei”), and Zhengxiang Ma (together with Huawei, “Defendants”). Defendants filed a response to Quintel's objections (Dkt. #238).

         Defendants also filed objections to parts of the Report and Recommendation. According to Defendants, Quintel's claims for misappropriation of trade secrets and fraud should be dismissed. Quintel filed a response to Defendants' objections (Dkt. #235).

         The Court conducts a de novo review of the Magistrate Judge's findings and conclusions.

         BACKGROUND

         On May 15, 2015, Quintel filed the above case against Defendants. In its First Amended Complaint (“FAC”) filed December 1, 2015, Quintel asserted the following claims against Defendants: (1) breach of contract; (2) misappropriation of trade secrets; (3) unfair competition by misappropriation; (4) common law fraud and fraud in the inducement; (5) promissory estoppel; (6) unjust enrichment; (7) accounting; and (8) correction of patent inventorship-35 U.S.C. § 256.[2]

         Defendants moved for summary judgment dismissing Quintel's claims for misappropriation of trade secrets (Count II), fraud (Count IV), and correction of inventorship (Count VIII). Regarding Quintel's misappropriation of trade secret claim, Defendants assert Quintel has alleged Defendants misappropriated trade secrets in the form of the concept it calls “Per User Tilt” (“PUT”), certain simulation results showing how the concept performed, and a block diagram sometimes referred to as a “schematic.” According to Defendants, the alleged trade secrets consist of a concept that was undisputedly known prior to September 2009 when Quintel and Huawei began their discussions, and the simulation results are certain PowerPoint slides that Quintel provided to third parties-before and after September 2009- without confidentiality restrictions. Defendants contend the block diagram/schematic was a simple diagram that Huawei did not copy. Thus, Defendants assert the alleged trade secret information was not secret, and there was no misappropriation.

         Regarding Quintel's correction of inventorship claim, Defendants assert summary judgment is warranted because the alleged contribution of David Barker consists of the Per User Tilt concept- which was in the public domain since at least 1999- and there is no credible evidence of collaboration between Mr. Barker and Dr. Ma as required. Finally, Defendants assert Quintel's claim of fraud and fraud in the inducement fails because there is no credible evidence to support the essential elements of the claim.

         REPORT AND RECOMMENDATION

         On December 18, 2017, the Magistrate Judge issued a 65-page Report and Recommendation, recommending Defendants' motion be granted as to Quintel's correction of inventorship claim. Otherwise, the Magistrate Judge recommended Defendants' motion be denied.

         With regard to Quintel's claim for misappropriation of trade secrets, the Magistrate Judge found Quintel had presented sufficient evidence to create a genuine issue of material fact that the information at issue constituted trade secrets. The Magistrate Judge also found sufficient evidence in the record to create a genuine issue of material fact as to whether Defendants used Quintel's information without authorization. Therefore, the Magistrate Judge recommended this part of Defendants' motion for summary judgment be denied.

         The Magistrate Judge also recommended Defendants' motion for summary judgment regarding Quintel's claim of fraud and fraud in the inducement be denied, finding sufficient evidence in the record to create a genuine issue of material fact as to each element of fraud.

         However, the Magistrate Judge recommended Quintel's claim of correction of inventorship be dismissed. Assuming there is sufficient evidence to determine that Mr. Baker conceived of some significant portion of the invention, the Magistrate Judge found insufficient evidence to satisfy the ...


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