Elite Semiconductor, Inc. v. Anchor Semiconductor, Inc.

Opinion

1 2

4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7

8 ELITE SEMICONDUCTOR, INC., Case No. 5:20-cv-06846-EJD 9 Plaintiff, ORDER GRANTING THE ANCHOR 10 DEFENDANTS’ MOTION TO v. DISMISS; GRANTING DEFENDANT 11 LIN’S MOTION TO DISMISS FOR ANCHOR SEMICONDUCTOR, INC., et LACK OF PERSONAL JURISDICTION 12 al., 13 Defendants. Re: Dkt. Nos. 109, 125

14 Elite Semiconductor, Inc. (“ESI”) brings this suit against its former employee Chin-Hsen 15 Lin (“Lin”), Anchor Semiconductor, Inc. (“Anchor”), and the Chairman and President of Anchor 16 China, Chenmin Hu (“Hu”), in connection with the alleged misappropriation of ESI’s trade 17 secrets. Anchor and Hu (“the Anchor Defendants”) move to dismiss ESI’s fourth cause of action 18 for conversion pursuant to Federal Rule of Civil Procedure 12(b)(6). See Dkt. No. 109 (“MTD”). 19 ESI filed an opposition, Dkt. No. 113 (“Opp.”), and the Anchor Defendants filed a reply, Dkt. No. 20 115 (“Reply”). Defendant Lin separately moves to dismiss the claims asserted against him 21 pursuant to Federal Rules of Civil Procedure 12(b)(2) and (5). See Dkt. No. 125 (“PJ MTD”). 22 ESI filed an opposition, Dkt. No. 132 (“PJ Opp.”), and Lin filed a reply, Dkt. No. 137 (“PJ 23 Reply”). The Court GRANTS the respective defendants’ motions to dismiss.1 24 25

26 1 Pursuant to N.D. Cal. Civ. L.R. 7-1(b), the Court finds these motions suitable for consideration 27 without oral argument. Case No.: 5:20-cv-06846-EJD 1 I. BACKGROUND 2 ESI is a Taiwanese based software company known for its semiconductor manufacturing 3 verification tools. First Amended Complaint (“FAC”), Dkt. No. 101 ¶ 33. ESI has developed 4 defect identification technology which allows for defects in an inspection image to be reviewed 5 automatically by a machine, system, or computer such that a defect judgment can be achieved 6 accurately in a small period of time. FAC ¶¶ 33–36. 7 To protect its work, ESI secured patent protection for its inventions and enacted and 8 followed internal and external security measures to protect the company’s trade secrets. FAC 9 ¶ 37. ESI is the owner of all rights and title to fifteen patents, including U.S. Patent Nos. 10 8,095,895; 8,312,401; 8,473,223; and 9,129,237 (“the ESI Patents”). FAC ¶ 37. For its trade 11 secrets, ESI’s security measures include both physical security for its facilities and electronic 12 measures to limit access to its trade secret information. FAC ¶ 53. ESI set up specific username 13 and password controls for each authorized user to ensure compliance with electronic security 14 measures. FAC ¶ 53. ESI also implemented additional security measures for accessing ESI 15 source code, such as restricting access to three top company executives and creating an intellectual 16 property management system. FAC ¶¶ 57, 59. 17 In March 2009, ESI hired Defendant Lin as its chief technology officer (“CTO”). FAC 18 ¶ 42. ESI alleges that as CTO, Lin had access to ESI’s trade secrets because, by virtue of his 19 position, he was able to access ESI’s electronic source code repository, confidential software 20 architectural plans, and patent invention disclosures. FAC ¶¶ 43, 45 (“Defendant Lin had access 21 to all of ESI’s most sensitive and highly confidential projects, products, and all of the company’s 22 trade secret electronic and paper files.”). In January 2010, ESI began creating the Killer Defect 23 Screen System, which would become a primary product for the company. FAC ¶ 48. Lin helped 24 create ESI’s trade secret software code for the Killer Defect Screen System and continued to have 25 access to all electronic and paper records related to ESI’s trade secrets. FAC ¶¶ 48–49. However, 26 ESI maintains that Lin did not keep the company’s innovations confidential. While serving as 27 Case No.: 5:20-cv-06846-EJD 1 CTO, ESI believes that Lin was “secretly hired” by Anchor, a competitor of ESI. FAC ¶¶ 7, 30, 2 69. ESI contends that the Anchor Defendants hired Lin so that they could access and steal ESI’s 3 intellectual property. FAC ¶ 69. 4 ESI alleges that in April 2011, Lin accessed and made illicit copies of patent invention 5 disclosure documents related to the ESI Patents so that he could transmit the disclosure documents 6 to Anchor. FAC ¶¶ 68–69, 88. After receiving the patent invention disclosure documents, Anchor 7 allegedly copied the ESI technology described in the documents and incorporated the information 8 into its own U.S. Patent Application, which Anchor filed in April 2011. FAC ¶ 94. ESI also 9 alleges that Lin visited its Taiwan offices after hours in June 2012 and several times thereafter to 10 download source code and system architecture documents from the ESI server, which he then 11 transferred from his ESI laptop to Anchor or to an external device or system. FAC ¶¶ 1, 61–64. 12 The Anchor Defendants allegedly encouraged Lin to take ESI’s trade secrets to aid Anchor in 13 developing defect detection products. FAC ¶¶ 70, 86, 102. To hide his misconduct, Defendant 14 Lin purposely damaged his ESI laptop. FAC ¶¶ 65–66. ESI claims Lin and the Anchor 15 Defendants made direct and deliberate use of ESI’s trade secrets to develop Anchor’s competing 16 products, including its HPA detection tool. FAC ¶¶ 88, 91, 100. Anchor’s use of ESI’s trade 17 secrets dramatically sped up the timeline for the development and production of Anchor’s 18 competing products. FAC ¶ 88. 19 Lin served as ESI’s CTO until January 2013, when he transitioned to a senior consultant 20 position in the company. FAC ¶ 101. During Lin’s employment, he stayed at a dormitory room in 21 Taiwan that was provided to him by ESI. FAC ¶ 44. ESI contends that Lin left his position so 22 that he “could join Defendant Anchor and pillage trade secret information from ESI to Defendant 23 Anchor.” FAC ¶ 101. Lin served as a senior consultant from January 2013 until January 2017, 24 when he resigned. FAC ¶ 76. As part of his resignation, Lin agreed to and signed a 25 Confidentiality Agreement and Departure Clearance Checklist (collectively “Departure 26 Agreement”) which asked Lin to indicate whether he had taken any source code. FAC ¶ 79. By 27 Case No.: 5:20-cv-06846-EJD 1 signing, Lin asserted that he had not taken any ESI source code and that he would not disclose any 2 of ESI’s trade secrets or intellectual property. FAC ¶ 79. 3 On July 19, 2021, this Court granted Anchor Defendants’ motion to dismiss EMI’s tortious 4 interference and conversion claims and Lin’s motion to dismiss for insufficient service of process 5 and lack of personal jurisdiction. See Dkt. No. 94 (“Order Granting Anchor’s MTD”), Dkt. No. 6 93 (“Order Granting Lin’s MTD”). 7 The Court dismissed without leave to amend ESI’s tortious interference claim after 8 determining that it was superseded by the California’s Uniform Trade Secrets Act (“CUTSA”). 9 Order Granting Anchor’s MTD at 7, 11. The Court similarly concluded that ESI’s conversion 10 claim was superseded by CUTSA but allowed ESI the opportunity to amend the conversion claim. 11 Id. at 10–11. 12 In a separate order, the Court determined that Lin had not been properly served with 13 process as required by Federal Rule of Civil Procedure 4(f). Order Granting Lin’s MTD at 12. 14 The Court also concluded that it lacked both specific and general personal jurisdiction over Lin. 15 Id. at 12–18. The Court allowed ESI to amend its complaint “with respect to general jurisdiction,” 16 but did not allow amendment for specific jurisdiction. Id. at 18. To the extent ESI asks the Court 17 to reconsider or amend its prior ruling as to the lack of specific personal jurisdiction, the Court 18 declines and directs the Parties to pages 13 through 18 of its earlier order for an analysis of why 19 the Court lacks specific personal jurisdiction over Defendant Lin. 20 In its first amended complaint, ESI asserts claims for (1) misappropriation of trade secrets 21 in violation of CUTSA, California Civil Code § 3426 et seq. against all defendants; (2) violation 22 of the Defense of Trade Secrets Act, 18 U.S.C. § 1836 et seq. against all defendants; (3) breach of 23 contract against Defendant Lin; and (4) conversion against all defendants. 24 25 26 27 Case No.: 5:20-cv-06846-EJD 1 II. DISCUSSION 2 A. Anchor Defendants’ Motion to Dismiss 3 1. Legal Standard 4 a. Rule 12(b)(6) 5 Rule 8(a) of the Federal Rules of Civil Procedure requires a complaint to include “a short 6 and plain statement of the claim showing that the pleader is entitled to relief.” A complaint that 7 fails to meet this standard may be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6). 8 Rule 8(a) requires a plaintiff to plead “enough facts to state a claim to relief that is plausible on its 9 face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility 10 when the plaintiff pleads factual content that allows the court to draw the reasonable inference that 11 the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 12 “The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer 13 possibility that a defendant has acted unlawfully.” Id. (quotation marks omitted). 14 For purposes of ruling on a Rule 12(b)(6) motion, the Court “accept[s] factual allegations 15 in the complaint as true and construe[s] the pleadings in the light most favorable to the nonmoving 16 party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). The 17 Court need not accept as true allegations contradicted by judicially noticeable facts, see Shwarz v. 18 United States, 234 F.3d 428, 435 (9th Cir. 2000), and it “may look beyond the plaintiff’s 19 complaint to matters of public record” without converting the Rule 12(b)(6) motion into a motion 20 for summary judgment, Shaw v. Hahn, 56 F.3d 1128, 1129 n.1 (9th Cir. 1995). Nor must the 21 Court “assume the truth of legal conclusions merely because they are cast in the form of factual 22 allegations.” Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011) (per curiam) (quoting W. Min. 23 Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981)). Mere “conclusory allegations of law and 24 unwarranted inferences are insufficient to defeat a motion to dismiss.” Adams v. Johnson, 355 25 F.3d 1179, 1183 (9th Cir. 2004). 26 27 Case No.: 5:20-cv-06846-EJD 1 b. CUTSA Preemption Standard 2 CUTSA permits civil recovery of “actual loss” or other injury caused by the 3 misappropriation of trade secrets. See Cal. Civ. Code § 3426.3. It defines “misappropriation” as 4 the improper acquisition, or non-consensual disclosure or use of another’s trade secret. Id. 5 § 3426.1(b). 6 CUTSA includes a savings clause that “preempt[s] claims based on the same nucleus of 7 facts as trade secret misappropriation.” K.C. Multimedia, Inc. v. Bank of Am. Tech. & Operations, 8 Inc., 171 Cal. App. 4th 939, 962 (2009); see also Cal. Civ. Code § 3426.7(b). The savings clause 9 does not supersede “contractual remedies” and civil remedies “that are not based upon 10 misappropriation of a trade secret.” Silvaco Data Sys. v. Intel Corp., 184 Cal. App. 4th 210, 233 11 (2010), disapproved on other grounds by Kwikset Corp. v. Superior Ct., 51 Cal. 4th 310 (2010). 12 Numerous courts have held that CUTSA supersedes other state-law claims where the 13 wrongdoing alleged is the misappropriation of trade secret information. See, e.g., SunPower Corp. 14 v. SolarCity Corp., 2012 WL 6160472, at *13 (N.D. Cal. Dec. 11, 2012) (“[T]he Court concludes 15 that the wrongdoing alleged in connection with each of the Non-Trade Secret Claims is in essence 16 the same wrongdoing as was alleged in connection with SunPower’s Trade Secret Claim. The 17 Non-Trade Secret Claims are therefore supersed[ed].”). However, a common law tort claim is not 18 displaced by CUTSA where the alleged wrongdoing “is not based on the existence of a trade 19 secret.” Angelica Textile Servs., Inc. v. Park, 220 Cal. App. 4th 495, 508 (2013); see also Loop AI 20 Labs Inc. v. Gatti, 2015 WL 5158461, at *3 (N.D. Cal. Sept. 2, 2015) (declining to apply 21 CUTSA’s savings clause to the plaintiff’s conversion claim because the claim was based on the 22 employee’s “alleged theft of tangible property”). 23 Although the California Supreme Court has not clearly defined the scope of CUTSA’s 24 supersession of claims arising from the alleged misappropriation of non-trade secret information, 25 “the majority of district courts that have considered Silvaco have held that CUTSA supersedes 26 claims based on the misappropriation of information that does not satisfy the definition of trade 27 Case No.: 5:20-cv-06846-EJD 1 secret under CUTSA.” SunPower Corp., 2012 WL 6160472, at *6; see also Heller v. Cepia, 2 L.L.C., 2012 WL 13572, at *7 (N.D. Cal. Jan. 4, 2012) (holding that common law claims premised 3 on “the wrongful taking and use of confidential business and proprietary information, regardless 4 of whether such information constitutes trade secrets, are superseded by the CUTSA”); Mattel, 5 Inc. v. MGA Ent., Inc., 782 F. Supp. 2d 911, 987 (C.D. Cal. 2011) (“[T]he Court concludes that 6 CUTSA supersedes claims based on the misappropriation of confidential information, whether or 7 not that information meets the statutory definition of a trade secret.”) 8 2. Analysis 9 ESI alleges in its amended conversion claim that Anchor Defendants “intentionally and 10 substantially interfered with ESI’s exclusive ownership of the Products and Tools by stealing 11 ESI’s invention disclosures and including it in Anchor’s [patent applications].” FAC ¶¶ 156–57; 12 see also FAC ¶ 156 (defining “Products and Tools” as the ESI “software platform and software 13 tools that are essential to inline defect CAA analysis”). ESI maintains that these “Products and 14 Tools” have value independent from related confidential information because they function as an 15 “operative, functioning ecosystem that is adaptable and can be applied to potential customers’ 16 semiconductor manufacturing processes.” FAC ¶ 161 (“Confidential information alone does not 17 provide this.”). 18 Under Silvaco, if the only property identified in the complaint is confidential or proprietary 19 information, and the only basis for any property right is trade secrets law, then a conversion claim 20 predicated on the theft of that property is superseded. See Language Line Servs., Inc. v. Language 21 Servs. Assocs., Inc., 944 F. Supp. 2d 775, 780 (N.D. Cal. 2013) (citing Silvaco, 184 Cal. App. 4th 22 at 238). This rule applies even if the information at issue is embodied in tangible property such as 23 documents, computer disks or physical models, unless these physical objects have “some value 24 apart from the information they embod[y].” Mattel, Inc., 782 F. Supp. 2d at 997 (holding that 25 conversion claim “predicated upon the physical documents allegedly misappropriated by [the 26 defendant] [was superseded by the CUTSA] because [the defendant] [could not] show that the 27 Case No.: 5:20-cv-06846-EJD 1 documents had any value ‘apart from the information contained therein.’” (citing Thomas & Betts 2 Corp. v. Panduit Corp., 108 F. Supp. 2d 968, 973 (N.D. Ill. 2000))). 3 In its earlier order, this Court dismissed ESI’s conversion claim because ESI had not 4 identified “any value the patent invention disclosure documents have apart from the confidential 5 information they contain.” Order Granting Anchor’s MTD at 10. That is, the Court determined 6 that ESI’s conversion claim failed because it was based on a claim that Anchor Defendants 7 violated ESI’s rights by misappropriating ESI’s proprietary information (i.e., its patents). ESI 8 repeats the same error here. ESI argues that the “Products and Tools” are separate and distinct 9 software from the “trade secrets” software because the “Products and Tools” are the ultimate 10 outcome of using and finetuning the ESI trade secrets. This argument fails for three reasons. 11 First, this Court has already considered and rejected ESI’s argument that the CUTSA’s 12 savings clause does not apply when the confidential information is a “protectible interest rather 13 than a trade secret.” Order Granting Anchor’s MTD at 9; cf. Opp. at 5. The nucleus of fact test 14 does not focus on whether a non-CUTSA claim requires the pleading of different elements than 15 the CUTSA claim, but rather on whether “there is [a] material distinction between the wrongdoing 16 alleged in [the] CUTSA claim and that alleged in [the non-CUTSA] claim.” SunPower Corp., 17 2012 WL 6160472, at *12 (quotation marks and citations omitted) (first and third alterations in 18 original). 19 Second, the Court notes that ESI’s conversion claim incorporates the same factual 20 allegations regarding ESI’s trade secret claims. See FAC ¶¶ 154; SunPower Corp., 2012 WL 21 6160472, at *13 (noting that prior cases finding non-CUTSA claims that incorporated earlier trade 22 secret allegations were preempted under the CUTSA savings clause). 23 Third, contrary to ESI’s argument that “the amended conversion claims make clear the 24 trade secrets are separate and distinct from the Products and Tools,” ESI’s conversion claim relies 25 on the same misappropriation of proprietary information as the trade secret claim. See FAC 26 ¶¶ 127–4 (trade secret claim that relies on Defendants’ misappropriation of ESI’s confidential 27 Case No.: 5:20-cv-06846-EJD 1 information); FAC ¶ 157 (“Defendants intentionally and substantially interfered with ESI’s 2 exclusive ownership of the Products and Tools by stealing ESI’s invention disclosures and 3 including it in Anchor’s Abandoned Patent Application . . . , which later was also included in 4 Anchor’s HPA 2013 product.” (emphasis added)); FAC ¶ 158 (“Defendants further intentionally 5 and substantially interfered with ESI’s exclusive ownership of the Products and Tools by stealing 6 the Products and Tools, which were later included in Anchor’s HPA 2013 product and others.” 7 (emphasis added)); Cal. Civ. Code § 3426.1 (“‘Misappropriation’ means: (1) Acquisition of a 8 trade secret of another by a person who knows or has reason to know that the trade secret was 9 acquired by improper means; or (2) Disclosure or use of a trade secret of another without express 10 or implied consent . . . .”). At bottom, ESI argues that Defendants misappropriated the proprietary 11 “Products and Tools” software. See Language Line Servs., 944 F. Supp. 2d at 780. 12 Indeed, ESI’s trade secret software and source code are the “architecture” and “blueprints” 13 that produce the finished, ready-to-go, and marketable “Products and Tools.” FAC ¶¶ 161–62; see 14 also SunPower Corp., 2012 WL 6160472, at *13. Thus, contrary to ESI’s argument, the value of 15 the “Products and Tools” is subsumed in the value of the alleged trade secrets and ESI’s 16 conversion claim is therefore superseded. See Controltec, Inc. v. MCT Tech., Inc., 2011 WL 17 13227734, at *7 (C.D. Cal. June 3, 2011) (“The complaint’s fifth claim alleges that MCT 18 converted the KinderTrack software when it ‘illegally cop[ied] the system and install[ed] it on a 19 computer system in Shanghai, China for [MCT’s] own use and benefit. This claim, based upon 20 the unauthorized acquisition and use of the KinderTrack software, is squarely superseded by 21 [CUTSA].” (emphasis added) (alterations in original)). 22 The Anchor Defendant’s motion to dismiss ESI’s conversion claim is therefore 23 GRANTED. The Court declines to allow leave to amend as it finds amendment would be futile. 24 See Leadsinger, Inc. v. BMG Music Pub., 512 F.3d 522, 532 (9th Cir. 2008). 25 26 27 Case No.: 5:20-cv-06846-EJD 1 B. Lin’s Motion to Dismiss for Insufficient Service of Process/Jurisdiction 2 a. Service of Process 3 On September 30, 2022, ESI filed a complaint asserting claims against Mr. Lin and others 4 for misappropriation of trade secrets and breach of contract. See Dkt. No. 1. Thereafter, ESI 5 attempted to serve Lin by (1) leaving a copy of the summons and complaint with Mr. Lin’s adult 6 son at 985 Joshua Place, Fremont, CA 94539 (“the Fremont Residence”); and (2) mailing a copy 7 of the summons and complaint to a residence in Taiwan. Order Granting Lin’s MTD at 10–12. 8 This Court determined that these attempts failed to “substantially comply” with Federal Rule of 9 Civil Procedure 4. Id. at 12. 10 On August 18, 2021, ESI filed its First Amended Complaint. See Dkt. No. 101. ESI 11 argues that it effected hand delivery of the summons and complaint on Defendant Lin at his last 12 known address in Taipei, 2F., No. 3-1, Ln. 19, Sec. 3, Xinsheng S. Rd., Da’an Dist., Taipei City 13 106, Taiwan (R.O.C.), on September 1, 2021, when it delivered the summons and amended 14 complaint to Ms. Yu-Jie Yang at 2F. Dkt. No. 111 at ECF 2. Ms. Yang, a relative of Defendant 15 Lin, said she would deliver the documents to Lin. Id. Defendant Lin argues this service was 16 insufficient as it did not comply with Federal Rule of Civil Procedure 4(f)(2). 17 i. Legal Standard 18 “Before a federal court may exercise personal jurisdiction over a defendant, the procedural 19 requirement of service of summons must be satisfied.” Omni Cap. Int’l v. Rudolf Wolff & Co., 20 484 U.S. 97, 104 (1987). Thus, before a court may exercise personal jurisdiction over a defendant, 21 there must “be more than notice to the defendant and a constitutionally sufficient relationship 22 between the defendant and the forum.” Id. That is, there must be a basis for the “defendant’s 23 amenability to service of summons.” Id. Without consent, there must be authorization under the 24 Federal Rules of Civil Procedure for service of summons on the defendant. Id. 25 If service is challenged, the plaintiff bears the burden of establishing that service was valid 26 under Federal Rule of Civil Procedure 4. Brockmeyer v. May, 383 F.3d 798, 801 (9th Cir. 2004). 27 Case No.: 5:20-cv-06846-EJD 1 Upon a finding of improper service, it is within the district court’s discretion whether to quash the 2 service of process or dismiss the case. Stevens v. Sec. Pac. Nat’l Bank, 538 F.2d 1387, 1389 (9th 3 Cir. 1976). 4 Because ESI attempted to serve Defendant Lin in a foreign country, rather than in 5 California, this Court focuses its analysis on Federal Rule of Civil Procedure 4(f)(2).2 Rule 4(f)(2) 6 allows that an individual in a foreign country may be served “by a method that is reasonably 7 calculated to give notice: (A) as prescribed by the foreign country’s law for service in that country 8 in an action in its courts of general jurisdiction.” Several provisions of Taiwan’s Code of Civil 9 Procedure are relevant: 10 • Article 132—Where there is no limitation on an advocate’s authority to receive service, 11 service shall be effectuated upon the advocate, except where the presiding judge may order 12 the service to be effectuated upon the party represented when he/she considers it necessary 13 to do so. 14 • Article 136—Service shall be effectuated in the domicile or residence, office or place of 15 business of the person to be served; but service may also be effectuated at the place where 16 the person to be served is found. 17 • Article 137—When the person to be served cannot be found in his/her domicile/residence, 18 office, or place of business, service may be effectuated by leaving the paper with his/her 19 housemate or employee of suitable age and discretion. 20 • Article 145—Where service is to be made in a foreign country, it shall be effectuated by 21 the competent authorities of such country requested to do so, or the relevant R.O.C. 22 ambassador/minister/envoy/consul, or other authorized institutes or organizations in that 23 country. 24 Taiwan Code of Civil Procedure, https://law.moj.gov.tw/ENG/LawClass/ 25

26 2 For an analysis of why Federal Rule of Civil Procedure 4(e) was not satisfied, see Order 27 Granting Lin’s MTD at 6–10. Case No.: 5:20-cv-06846-EJD 1 LawParaDeatil.aspx?pcode=B0010001&bp=18 (last visited December 15, 2021). 2 ii. Analysis 3 ESI argues that it effected service on Defendant Lin through: (1) service in the United 4 States on Defendant Lin’s attorney and (2) hand delivery on Defendant Lin’s niece in Taiwan. 5 The Court addresses each argument in turn. 6 First, service on Defendant Lin’s attorney did not comply with either Taiwan or U.S. law 7 and thus does not constitute sufficient service of process. Read in full, Article 132 allows for 8 service on a party’s attorney only “where there is no limitation.” Here, service through Defendant 9 Lin’s attorney was not effective because Defendant Lin has not authorized his counsel to accept 10 service on his behalf. See Zest IP Holdings, LLC v. Implant Direct Mfg., LLC, 2013 WL 11 12064538, at *3 (S.D. Cal. Jan. 23, 2013) (“Service of process on an attorney who is not 12 authorized to accept service for his client is ineffective.”). ESI’s citation to Rang Dong Joint 13 Stock Co. v. J.F. Hillebrand USA, Inc., 2020 WL 3841185, at *8–10 (E.D. Cal. July 8, 2020) does 14 not change this analysis. There, the plaintiff moved the court to allow service through an 15 alternative method, service on the defendant’s U.S.-based counsel after two unsuccessful attempts 16 to serve the defendant personally, pursuant to Federal Rule of Civil Procedure 4(f)(3). 17 Second, ESI did not effect service of process under either Taiwan or U.S. law by leaving a 18 copy of the summons and complaint with Defendant Lin’s niece in Taiwan. ESI argues that 19 pursuant to Article 145 of the Taiwan Code of Civil Procedure, if service of process was 20 completed in Taiwan in a manner considered effective by United States law, it is effective by 21 Taiwan law. ESI cites to Rule 4(e)(2)(A) which allows a party to serve another by leaving a copy 22 of the complaint and summons at the party’s usual place of abode with someone of suitable age 23 and discretion who resides there. PJ Opp. at 8. ESI argues that Ms. Yang satisfies this standard.3 24 However, for this theory to function, ESI must establish either that Defendant Lin owned the 25

26 3 While ESI does not argue this, Articles 136 and 137 would permit the same type of service and 27 this analysis establishes why service was not effective under these articles. Case No.: 5:20-cv-06846-EJD 1 residence such that it would be reasonable to determine it was his abode or that he lives with Ms. 2 Yang. Problematically, ESI knew that Defendant Lin sold this residence to his sister in April 2015 3 and ESI has not alleged any facts from which this Court can infer that Defendant Lin continues to 4 remain at the residence. See Dkt. No. 47-1 (ESI declaration it “underst[ood] that on or about April 5 9, 2015 Defendant Lin sold his Taiwan residence located at 2F., No. 3-1, Ln. 19, Sec. 3, Xinsheng 6 S. Rd., Da’an Dist., Taipei City 106, Taiwan (R.O.C.)”). ESI argues that this Court can presume 7 that Defendant Lin lives at the Taipei Address because “[a] party’s old domicile is not lost until a 8 new one is acquired.” PJ Opp. at 8 (citing Int’l Venture Assocs. V. Hawayek, 2013 WL 2646188, 9 at *2 (N.D. Cal. June 12, 2013). This principle is not applicable to this case—domicile remains 10 for the purpose of determining diversity for jurisdictional purposes, not for determining a party’s 11 “usual place of abode” for service of process. Because ESI has not demonstrated that the Taiwan 12 Residence was Defendant Lin’s “usual abode,” service on Ms. Yang was also ineffective. 13 In the alternative, ESI asks for the Court to order service on Defendant Lin through his 14 counsel. PJ Opp. at 9. Alternative service under Rule 4(f)(3) must comport with “constitutional 15 notions of due process,” meaning “the method of service crafted by the district court must be 16 ‘reasonably calculated . . . to apprise interested parties of the pendency of the action and afford 17 them an opportunity to present their objections.” Rio Props., Inc. v. Rio Int’l Interlink, 284 F.3d 18 1007, 1016 (9th Cir. 2002) (citation omitted). ESI’s proposed method of service satisfies due 19 process and is not forbidden by an international agreement. See PJ Opp. at 9–10. As in Rang 20 Dong, ESI has made two prior, reasonable, and unsuccessful attempts to serve Defendant Lin. 21 Service on Defendant Lin’s counsel is reasonably calculated to apprise Defendant Lin of this 22 action because his counsel is aware of the procedural posture of this action and the substantive 23 issues related to Lin’s status as a named party. Counsel is familiar with the pleadings and with 24 ESI’s counsel. See Rang Dong, 2020 WL 3841185 at *11–12. 25 Accordingly, because ESI’s proposed alternative method of service is not prohibited by 26 international agreement and is reasonably calculated to apprise Defendant Lin of this action and 27 Case No.: 5:20-cv-06846-EJD 1 afford Defendant Lin an opportunity to be heard, the Court exercises its discretion under Rule 2 4(f)(3) and orders service of process upon Defendant Lin through his U.S.-based counsel, Mary 3 Ann Novak. 4 b. General Personal Jurisdiction 5 i. Legal Standard 6 Under Federal Rule of Civil Procedure 12(b)(2), defendants may move to dismiss for lack 7 of personal jurisdiction. While the plaintiff bears the burden of showing that the Court has 8 personal jurisdiction over the defendant, the court “resolves all disputed facts in favor of the 9 plaintiff.” See Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006) (quotation marks 10 and citation omitted). The Court may consider evidence presented in affidavits and declarations in 11 determining personal jurisdiction. Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1285 12 (9th Cir. 1977). But see Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995) (“When a district 13 court acts on a defendant’s motion to dismiss under Rule 12(b)(2) without holding an evidentiary 14 hearing, the plaintiff need make only a prima facie showing of jurisdictional facts to withstand the 15 motion to dismiss. That is, the plaintiff need only demonstrate facts that if true would support 16 jurisdiction over the defendant.” (citations omitted)). “The plaintiff cannot simply rest on the bare 17 allegations of its complaint, but uncontroverted allegations in the complaint must be taken as 18 true.” Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011) (quotation 19 marks and citation omitted). “The Court may not assume the truth of allegations that are 20 contradicted by affidavit.” In re Cathode Ray Tube (CRT) Antitrust Litig., 27 F. Supp. 3d 1002, 21 1008 (N.D. Cal. 2014) (citing Data Disc, Inc., 557 F.2d 1280, 1284 (9th Cir. 1977)). 22 If jurisdiction is proper under California’s long-arm statute and if the exercise of that 23 jurisdiction does not violate federal due process, a court may exercise personal jurisdiction over a 24 non-resident defendant. Fund Ins. Co. v. Nat’l Bank of Coops., 103 F.3d 888, 893 (9th Cir. 1996). 25 Because California’s long-arm statute authorizes the court to exercise personal jurisdiction over a 26 non-resident defendant on any basis not inconsistent with the California or federal Constitution, 27 Case No.: 5:20-cv-06846-EJD 1 the statutory and constitutional inquiry merge into a single due process test. See Cal. Code Civ. 2 Proc. § 410.10. 3 Due process requires that a non-resident defendant have “certain minimum contacts” with 4 the relevant forum “such that the maintenance of the suit does not offend ‘traditional notions of 5 fair play and substantial justice.’” In re Cathode, 27 F. Supp. 3d at 1008 (quoting Int’l Shoe Co. v. 6 Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). If a defendant has sufficient 7 contacts with the forum, personal jurisdiction may be either general or specific. See id. The 8 relevant forum for this case’s minimum contacts analysis is California and the Court only analyzes 9 Defendant Lin’s contacts for general jurisdiction purposes. 10 General personal jurisdiction confers “all-purpose jurisdiction.” That is, it allows a court 11 to exercise personal jurisdiction over a defendant to adjudicate any claim asserted against the 12 defendant, regardless of whether the claim arises from the defendant’s contacts with the forum. 13 Coremetrics, Inc. v. Atomic Park.com, 370 F. Supp. 2d 1013, 1016 (N.D. Cal. 2005). The 14 standard is limited and only allows a court to exercise personal jurisdiction over a non-resident 15 defendant who has such substantial, “continuous and systematic” contacts with the forum such 16 that it is fair to render the defendant “essentially at home in the forum State.” Daimler AG v. 17 Bauman, 571 U.S. 117, 127 (2014) (citations omitted); see also id. at 137 (“Goodyear made clear 18 that only a limited set of affiliations with a forum will render a defendant amenable to all-purpose 19 jurisdiction there.”); see also Int’l Shoe, 326 U.S. at 318 (allowing all-purpose jurisdiction in 20 “instances in which the continuous corporate operations within a state [are] so substantial and of 21 such a nature as to justify suit . . . on causes of action arising from dealings entirely distinct from 22 those activities” (emphasis added)). 23 For an individual, the paradigm forum for the exercise of general jurisdiction is the 24 individual’s domicile. Id. However, in rare instances, courts have exercised general jurisdiction 25 over an individual when the individual’s contacts with the forum are “so substantial, continuous, 26 and systematic that the defendant can be deemed to be ‘present’ in that forum for all purposes.” 27 Case No.: 5:20-cv-06846-EJD 1 Yahoo! Inc. v. La Ligue Contre Le Racisme Et L’Antisemitisme, 433 F.3d 1199, 1206 (9th Cir. 2 2006). An individual’s frequent visits to a forum, or even his owning property in the forum, do 3 not, alone, justify the exercise of general jurisdiction. See Span Constr. & Eng’ging, Inc. v. 4 Stephens, 2006 WL 1883391, at *5 (E.D. Cal. July 7, 2006) (collecting cases); see also Cardenas 5 v. McLane FoodService, Inc., 2010 WL 11465450, at *2 (C.D. Cal. Oct. 25, 2010) (“Courts in this 6 Circuit have required far more than property ownership prior to the exercise of general 7 jurisdiction.”). This Court is mindful that the Ninth Circuit has “regularly declined to find general 8 jurisdiction even where the contacts were quite extensive.” Amoco Egypt Oil Co. v. Leonis 9 Navigation Co., 1 F.3d 848, 851 n.3 (9th Cir. 1993). 10 ii. Analysis 11 ESI argues that this Court may exercise general personal jurisdiction over Defendant Lin. 12 Defendant Lin argues that general personal jurisdiction over him is improper because he is 13 currently domiciled in Taiwan and has not returned to the United States, or California, since 2011. 14 Declaration of Chin-Hsen Lin in Support of Motion to Dismiss (“Lin Decl.”) ¶ 8, Dkt. No. 125-1. 15 ESI contends that Defendant Lin’s contacts with California have been so substantial, 16 continuous, and systematic that it would be fair for this Court to exercise general personal 17 jurisdiction over Defendant Lin. ESI points out that Defendant Lin (1) attended U.C. Berkeley, a 18 California university, from 1983 to 1985, FAC ¶ 15; (2) worked at multiple Bay Area companies 19 from 1985 through 2009, FAC ¶¶ 16–22; (3) owned and financed a residence in Milpitas, which 20 he sold in 2000, PJ Opp. at 11; (4) owns and finances the Fremont Residence, where he worked 21 remotely from 2013 through 2017, FAC ¶¶ 14, 23; (5) maintains financial accounts in California, 22 FAC ¶ 28; (6) benefited from California resources, including the health care provided to his ailing 23 wife, FAC ¶ 25; and (7) sought and received the benefits of California’s robust educational and 24 employment opportunities, FAC ¶ 27. 25 These contacts do not render Defendant Lin “fairly at home” in California. First, property 26 ownership and the payment of property taxes alone are insufficient. See Cardenas, 2010 WL 27 Case No.: 5:20-cv-06846-EJD 1 11465450, at *2. Second, none of these allegations demonstrate that Defendant Lin continues to 2 use or enjoy the Fremont Residence. On the contrary, the declarations submitted to the Court 3 show that Defendant Lin’s ex-wife and son reside at the property and pay the taxes, utilities, and 4 upkeep on the residence. Lin Decl. ¶ 9. Third, while mail has been sent to the Fremont Residence 5 for Defendant Lin, his son has stated that he accepts the mail on Defendant Lin’s behalf. 6 Declaration of Derek Lin in Support of Motion to Dismiss (“Derek Lin Decl.”) ¶ 13. Fourth, 7 ESI’s assertions that Defendant Lin worked remotely from the Fremont Residence from 2013– 8 2017 contradict their allegations that they paid for a dorm room for Defendant Lin in Taiwan and 9 that Defendant Lin entered company headquarters during this time period to take trade secrets. 10 There is thus no reason for the Court to find that Defendant Lin’s declaration stating that he has 11 not entered California since 2011 is fraudulent. See Krypt, Inc. v. Ropaar LLC, 2020 WL 32334, 12 at *5 (N.D. Cal. Jan. 2, 2020) (“Nor is the court required to accept as true allegations that 13 are . . . unwarranted deductions of fact, or unreasonable inferences.” (quoting In re Gilead Scis. 14 Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008))). 15 To be sure, Defendant Lin has ties to California. But his connection to California is not so 16 substantial, continuous, and systematic that it can be said that Defendant Lin is “at home” in the 17 state. The fact that he went to college, worked in, and lived in California years before the relevant 18 time period further demonstrate that general personal jurisdiction is not appropriate. Compare In 19 re Wireless Facilities, Inc. Derivative Litig., 562 F. Supp. 2d 1098, 1103 (S.D. Cal. 2008) (finding 20 the exercise of general personal jurisdiction appropriate where the nonresident defendant “own[ed] 21 and pa[id] property taxes, own[ed] and register[ed] a car, maintain[ed] a driver’s license, 22 continu[ed] to maintain and wires money into a checking account, paid state income taxes . . . and 23 visits 30 times per year”); Coremetrics, Inc., 370 F. Supp. 2d at 1021–24 (high volume of business 24 contacts and sales within California, among other things, supported exercise of general personal 25 jurisdiction). Accordingly, the Court DISMISSES Defendant Lin from this action. See Laub v. 26 U.S. Dep’t of Interior, 342 F.3d 1080, 1093 (9th Cir. 2003) (district court need not allow 27 Case No.: 5:20-cv-06846-EJD 1 || jurisdictional discovery when “it is clear that further discovery would not demonstrate facts 2 || sufficient to constitute a basis for jurisdiction”). 3 Wl. CONCLUSION 4 The Court GRANTS without leave to amend Anchor Defendants’ motion to dismiss 5 || ESI’s conversion claim and Defendant Lin’s motion to dismiss for lack of personal jurisdiction. 6 || ESI is ordered to refile a second amended complaint consistent with this Order no later than 7 January 24, 2022. 8 IT IS SO ORDERED. 9 Dated: December 21, 2021 10 11 EDWARD J. DAVILA 12 United States District Judge

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Z 18 19 20 21 22 23 24 25 26 27 Case No.: 5:20-cv-06846-EJD 28 || ORDER GRANTING THE ANCHOR DEFENDANTS’ MOTION TO DISMISS; GRANTING DEFENDANT LIN’S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION