Dismissal Denied in X-Ray Tube Trade Secrets Case

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John Doe

Litigation Attorney

A lawsuit filed in 2019 alleged that GL Leading Technologies Inc., Kunshan Yiyuan Medical Technology Co. Ltd. (Yiyuan), and Kunshan Guoli Electronic Technology Co. Ltd. (GuoLi) misused Philips Medical Systems and Philips Medical Systems DMC GmbH’s (together, Philips) trade secrets to develop competing x-ray tubes after employees stole files. On Monday, the Northern District of Illinois court denied the defendants’ motion to dismiss on the basis that it has personal jurisdiction over them and that the plaintiffs’ process and service of process were sufficient.

The parties reportedly research, develop, and commercialize medical imaging technology. Monday’s opinion explained how two former Philips employees allegedly stole thousands of electronic files of proprietary information in 2017 that was then misappropriated by their new employer, GL Leading. According to the plaintiffs’ second amended complaint, the two employees used Philips’ proprietary information to design an x-ray tube for manufacture and sale by GuoLi and Yiyuan, among other things.

The motion to dismiss raised several arguments, including that the court lacked personal jurisdiction over the defendants because “they have not engaged in suit-related conduct in this jurisdiction,” and that Philips failed to serve them correctly. As to the first claim, the court held that the plaintiffs made a prima facie showing of personal jurisdiction by virtue of their proffered evidence suggesting that “Yiyuan received certain of Philips’ proprietary information from individuals who left Philips’ Illinois facility to work for GL Leading.”

As to service of process, the court held that Philips did not put forth enough evidence to confirm the corporate relationship between the defendants, and because the plaintiffs only served GL Leading, they did not properly notify the other defendants of the pendency of the litigation. However, the court found that the plaintiffs did properly serve a California employee of GuoLi and Yiyuan.

According to the court, the plaintiffs proved that the employee met the standard for a “general manager,” someone qualified under California law to receive service of process for a foreign corporation. The court reasoned that service was reasonably calculated to apprise the entities of the complaint, and service was proper as to all defendants.

Philips is represented by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C. and Steptoe & Johnson LLP. The Yiyuan and GuoLi by Rimon P.C. and GL Leading and the former employees by Burke, Warren, MacKay & Serritella P.C. and Dubyak Nelson LLC.