1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 SOUTHERN DISTRICT OF CALIFORNIA 8 9 MU TECH, INC., Case No.: 3:24-cv-01976-JAH-VET
10 Plaintiff, ORDER GRANTING PLAINTIFF’S 11 v. MOTION FOR PRELIMINARY INJUNCTION 12 CATHERINE CHAN KOK YIN,
THOMAS LESS CHEUK WAI, 13 [ECF No. 6] MAJESTIC PLAN INVESTMENTS 14 LIMITED, BELTON TECHNOLOGY, INC., AND DOES 1 THRU 50, 15 Defendants. 16
17 Pending before the Court is Plaintiff Mu Tech’s (“Plaintiff” or “Mu Tech”) motion 18 for a preliminary injunction to prevent Defendants Catherine Yin, Thomas Lee, Majestic 19 Plan Investments, and Belton Technology Inc. (“Defendants”) from the unauthorized use 20 of Plaintiff’s trade secrets and from interference with Plaintiff’s contracts. ECF No. 6 21 (“Motion” or “Mot.”). For the foregoing reasons, the Court HEREBY GRANTS Plaintiff’s 22 motion. 23 /// 24
28 1 BACKGROUND 2 A. Factual Background 3 On October 23, 2024, Plaintiff filed its complaint against Defendant Belton 4 Technology Inc., a company incorporated in California, Defendant Majestic Plan 5 Investments, and individual Defendants Catherine Yin and Thomas Lee for claims of trade 6 secret misappropriation, breaches of fiduciary duty and self-dealing, breach of contract, 7 and tortious interference with prospective business interests. ECF No. 1 (“Complaint” or 8 “Compl.”). Plaintiff alleges that Defendants worked in concert to harm Plaintiff and Asia 9 Top Loyalty (“ATL”), a company which has exclusively assigned its intellectual property 10 rights and litigation rights in the United States to Plaintiff. Id. at ¶¶ 10-14.1 ATL and its 11 assignee in North America, Mu Tech, operate in the loyalty rewards and e-commerce field, 12 providing customers with benefits and promotional discounts based on their commercial 13 transactions. Id. at ¶¶ 5, 10. 14 Plaintiff claims that Defendants Belton Technology Inc., Majestic Plans Investment, 15 Catherine Yin, and Thomas Lee have conspired together to prevent Plaintiff from 16 deploying ATL’s proprietary rewards program in the North American market. Id. at ¶ 54. 17 Plaintiff claims that the above Defendants have exercised control over Plaintiff’s 18 intellectual property, obtained during Defendants Yin and Lee’s tenure on the ATL board, 19 to support a new company, “Asia Top Loyalty Alliance,” with Defendant Lee serving as 20 the purported CEO of the new company. Id. at ¶¶ 13-15, 51. Plaintiff alleges, in essence, 21 that Defendants have sought to strip ATL of its intellectual property and customers in order 22 to force ATL into bankruptcy, so that Belton may absorb ATL and its intellectual property. 23 Specifically, Plaintiff states that Defendants formed the second company, “Asia Top 24 Loyalty Alliance,” in order to generate confusion for ATL’s existing clients to prevent ATL 25 from completing its initial public offering in the United States. Id. at ¶¶ 13-19; Id. at ¶¶ 26 27 1 Unless otherwise stated, page numbers referenced herein refer to page numbers generated 28 1 21-24; Id. at ¶¶ 47-49. Plaintiff, as the purported assignee of all litigation rights for ATL, 2 alleges that this conduct is in express violation of terms of the Guarantee Agreement, 3 signed by Andy Chen, the CEO of ATL, and Defendants Yin, Lee, and Majestic Plan 4 Investments, which bars parties from utilizing the name and likeness of “Asia Top Loyalty” 5 in other products. See Guarantee Agreement, Ex. A (Compl. at 13, 16). Plaintiff alleges it 6 has lost clients as a result of Defendants’ conduct, and that its efforts to support ATL’s 7 initial public filing plan have been significantly frustrated by the actions of the Defendants. 8 Compl. at ¶¶ 22-23, 26-27. 9 B. Procedural Background 10 On December 9, 2024, Plaintiff filed a motion for a temporary restraining order and 11 preliminary injunction. ECF No. 6. On December 13, 2024, the Court denied the motion 12 for a temporary restraining order and set a briefing schedule for Plaintiff’s motion for 13 preliminary injunction. ECF No. 7. On January 2, 2025, Defendant Belton Technology 14 Inc. filed its brief in opposition to Plaintiff’s motion for preliminary injunction. ECF No. 15 14 (“Opposition” or “Opp.”). On January 7, 2025, Plaintiff filed its reply. ECF No. 15 16 (“Reply”). The Court heard oral arguments on Plaintiff’s motion on January 22, 2025. 17 ECF No. 20. 18 DISCUSSION 19 Plaintiff currently seeks a preliminary injunction enjoining Defendants Belton 20 Technology Inc., Majestic Plans Investment, Catherine Yin, and Thomas Lee from using 21 ATL’s name and business model without authorization; from utilizing ATL’s intellectual 22 property; and from engaging in breach of the Guarantee Agreement. Mot. at 6. Plaintiff 23 raises claims in the complaint under (1) the Defense of Trade Secrets Act, 18 U.S.C. § 1836 24 et seq. against all named Defendants; (2) breach of fiduciary duty against Defendants 25 Catherine Yin and Thomas Lee; (3) self-dealing claims against Defendants Catherine Yin 26 and Thomas Lee; (4) breach of contract against Defendants Catherine Yin, Thomas Lee, 27 and Majestic Plans Investment; and (5) tortious interference with prospective business 28 interests against all named Defendants. The Court will first evaluate its authority to issue 1 injunctive relief while arbitration is pending before reaching the merits of Plaintiff’s 2 motion. 3 A. Injunctive Relief Pending Arbitration 4 “[A] district court may issue interim injunctive relief on arbitrable claims if interim 5 relief is necessary to preserve the status quo and the meaningfulness of the arbitration 6 process—provided, of course, that the requirements for granting injunctive relief are 7 otherwise satisfied.” Toyo Tire Holdings of Am. v. Cont’l Tire N. Am., Inc., 609 F.3d 975, 8 981 (9th Cir. 2010). “[J]udicial interim relief may be necessary to preserve the 9 meaningfulness of the arbitral process” because “if [a party] loses its customers before 10 interim relief is possible, any subsequent relief could be useless.” Id. at 980-981. If the 11 district court is satisfied after studying the underlying arbitration provision that injunctive 12 relief is not barred by the terms of the contract’s arbitration clause, the court may issue 13 such relief if the requirements of an injunction are met. Id. Without injunctive relief during 14 the lengthy course of arbitration–limited to preserving the status quo between the parties 15 pending an adjudication in arbitration–any value or assets that a party has been trying to 16 protect can be completely lost during the course of arbitration and before a final resolution 17 of the matter on the merits has been reached. Id. The Ninth Circuit’s decision in Toyo Tire 18 Holdings “is consistent with… the holdings of a majority of our sister circuits.” Id. at 981- 19 82. 20 Here, Defendants signed the Guarantee Agreement and agreed that disputes or 21 controversies arising under the Agreement shall be settled by the Hong Kong International 22 Arbitration Centre “under its prevailing arbitration rules.” See Guarantee Agreement § 7.3 23 (“Arbitration”), Ex. A, Compl. at 16. Under the prevailing rules of the Arbitration Centre, 24 the 2024 Hong Kong International Arbitration Centre Rules expressly state that a “request 25 for interim measures addressed by any party to a competent authority shall not be deemed 26 incompatible with the arbitration agreement.” 2024 Hong Kong International Arbitration 27 Centre Administered Arbitration Centre Rules, Article 23.9 (“Interim Measures of 28 Protection and Emergency Relief”) (emphasis added). A review of the Guarantee 1 Agreement demonstrates that there is no additional clause limiting interim relief solely to 2 the Hong Kong International Arbitration Centre. The arbitration clause simply states that 3 the parties agree to the Hong Kong International Arbitration Centre’s prevailing rules. See 4 Guarantee Agreement § 7.3, Ex. A, Compl. at 16. Because the Guarantee Agreement 5 allows the parties to seek interim relief from other judicial authorities, as allowed by Article 6 23.9 of the Hong Kong International Arbitration Centre, this Court retains the authority to 7 issue interim relief as the matter proceeds in arbitration. See also Toyo Tire Holdings, 609 8 F.3d at 983 (finding that even if the arbitration tribunal has been impaneled, a district court 9 may still issue interim relief if allowed by the underlying contract and prevailing rules). 10 The arbitration panel that will decide the case may review the interim relief provided by a 11 district court as the matter proceeds in arbitration. Id. at 983. 12 B. Legal Standard 13 A party seeking a preliminary injunction must establish: (1) a likelihood of success 14 on the merits; (2) irreparable injury that is likely to result in the absence of relief; (3) that 15 the balance of equities tips in its favor; and (4) that an injunction is in the public interest. 16 Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). When a party demonstrates 17 a “fair chance of success on the merits” and that “the balance of harm tips decidedly” 18 towards the party, a district court may enter a preliminary injunction in the party’s favor 19 upon a showing of the remaining Winter factors. Benda v. Grand Lodge of Int’l Ass’n of 20 Machinists & Aerospace Workers, 584 F.2d 308, 314-15 (9th Cir. 1978). Injunctive relief 21 may also be had when the movant presents “serious questions” that require litigation for 22 their resolution and when the balance of harm tilts clearly towards the movant. Id. at 314- 23 15. See also All. for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1134-1135 (9th Cir. 2011) 24 (finding that the majority opinion in Winter did not displace the Ninth Circuit’s “serious 25 questions” approach). A district court may consider hearsay and even inadmissible 26 evidence in deciding whether to issue a preliminary injunction for the purpose of 27 preventing irreparable harm, so long as sufficient facts are alleged by the movant. Johnson 28 v. Couturier, 572 F.3d 1067, 1083 (9th Cir. 2009) (citations omitted). 1 C. Analysis 2 a. Plaintiff’s Trade Secrets Claim 3 Plaintiff alleges that Defendants are liable under the federal Defense of Trade Secrets 4 Act, 18 U.S.C. § 1836 et seq., because they obtained Plaintiff’s trade secrets through their 5 roles as board members of ATL and subsequently launched “Asia Top Loyalty Alliance” 6 to compete for ATL’s customers and investors. To plead a trade secrets claim under the 7 Defense of Trade Secrets Act, Plaintiff must show: “(1) that the plaintiff possessed a trade 8 secret, (2) that the defendant misappropriated the trade secret; and (3) that the 9 misappropriation caused or threatened damage to the plaintiff.” InteliClear, LLC v. ETC 10 Glob. Holdings, Inc., 978 F.3d 653, 657-58 (9th Cir. 2020). 11 i. Possession of a Trade Secret 12 Plaintiff alleges that the trade secrets it possesses include confidential information 13 related to “ATL’s loyalty points exchange and proprietary system for eCommerce, pay- 14 with-points, co-brand Mastercard and buy-now, pay-later system.” Compl. at ¶ 10.2 As 15 explained in an attachment to the complaint, ATL’s system is based on a software program 16 that connects businesses to individuals and allows businesses to design and launch 17 promotional campaigns, including discounts on goods and services, to consumers. Id., Ex. 18 F at 30-33. The ATL software may also be used by banks, financial institutions, and 19 companies that provide card-processing services in order to connect their consumers and 20 clients with the discounts provided by participating businesses. Id. The software includes 21 the ability for businesses and financial institutions to set an agreed-upon internal price for 22 a discounted good or service and a slightly higher, consumer-oriented price for the same 23 24 25 2 Plaintiff is the exclusive licensee of all intellectual property rights of ATL in the United 26 States and can bring suit for alleged trade secret misappropriation by Defendant Belton 27 Technology. Compl. at ¶ 10, and see License Agreement, Ex. G (Compl. at 41) (“Licensor agrees to grant to Licensee…an exclusive license under the Patents, Technical Information 28 1 good or service, and the software allows for participating financial institutions and ATL to 2 share in the profit margin between the two prices. Id. 3 Plaintiff alleges that ATL’s program was confidential and accessible to Defendants 4 only through their directorships as board members of ATL, which they used to access and 5 disclose the software program in furtherance of their efforts to launch the competitor “Asia 6 Top Loyalty Alliance.” Compl. at ¶¶ 13-15, 23. Plaintiff alleges that the software program 7 is central to ATL’s business model and a source of economic value. Id. at ¶ 13. Plaintiff 8 also alleges that its trade secrets extend to client lists, which have been allegedly accessed 9 by Defendant Lee to sign contracts without ATL or Plaintiff’s approval. Compl. at ¶¶ 26- 10 27. 11 Plaintiff claims that after ATL board members Catherine Yin and Thomas Lee 12 became disgruntled by ATL’s financial performance, they began to transfer ATL’s 13 intellectual property and client lists to other entities, including Belton Technology Inc. and 14 “Asia Top Loyalty Alliance”, a competitor entirely fronted by Defendants Catherine Yin 15 and Thomas Lee. Id. at ¶¶ 17, 22-24, 26-28. Plaintiff alleges that all named Defendants 16 worked together to “setup and operate ATLA…to illegally steal and misappropriate ATL 17 IP’s and client lists from ATL, and to directly and illegally compete with ATL…[given 18 that] ATLA has illegally: (a) solicited ATL’s clients, (b) stolen trade secrets from ATL, (c) 19 disclosed ATL’s intellectual properties; and (d) caused significant and serious confusion 20 in the global….market places of the Plaintiff.” Id. at ¶ 14. 21 Defendant Belton Technology Inc. argues as its main and only argument under the 22 Defense of Trade Secrets Act that Plaintiff’s claimed trade secrets are too general and 23 vague to support a claim under the federal statute. Opp. at 11. Defendant Belton argues 24 that the purported trade secrets are presented at a level of generality that prevents the 25 Defendant from effective notice of the boundaries of the alleged trade secret. Id. 26 The purpose of pleading trade secrets with specificity is to provide the defendant 27 with “concrete identification” of the trade secret so that the defendant may prepare a 28 rebuttal. InteliClear, 978 F.3d at 658. In InteliClear, the court found that, at a point “where 1 no discovery whatsoever had occurred,” plaintiff had pled its trade secrets claim with 2 sufficient particularity when it had described specific features and tables of the InteliClear 3 system as trade secrets. Id. at 658-59. In ruling for the plaintiff, the court found that, 4 instead of providing an entire database to the court and requesting that the judge do the 5 sifting, the plaintiff had clearly pointed to at least one trade secret with sufficient 6 particularity. Id. at 659-60. The court also found that a plaintiff may plead a trade secret 7 in broader terms early in the proceedings and be allowed to proceed to discovery, with the 8 terms of the trade secret to be further refined and narrowed through the discovery process. 9 Id. at 662. 10 The court explained that “[f]ederal cases analyzing whether a plaintiff’s trade secrets 11 are described with ‘sufficient particularity’ typically arise in the battleground of discovery. 12 In such cases, discovery provides an iterative process where requests between parties lead 13 to a refined and sufficiently particularized trade secret identification.” Id. (citations 14 omitted). When a party claiming a trade secret fails to narrow the definition of its trade 15 secret during the course of discovery, and when a party “does not clearly refer to tangible 16 trade secret material,” the party has failed to achieve the level of specificity necessary to 17 continue prosecution of its trade secrets claim. See also Imax Corp. v. Cinema 18 Technologies, Inc. 152 F.3d 1161, 1165-67 (finding that the claimant had on multiple times 19 failed to provide the specific dimensions of its purported trade secret despite discovery 20 requests, and that a competitor in the projector business could not be expected to prepare 21 its rebuttal to a trade secrets claim on general references to the “dimensions and tolerances” 22 of the claimant’s projector system). 23 At this stage, the Court finds that Plaintiff has pled its trade secrets claim under the 24 Defense of Trade Secrets Act with sufficient particularity and has provided Defendant 25 Belton Technology Inc. with “concrete identification” of its claimed trade secret, namely 26 the loyalty rewards system developed by ATL and replicated in full, as alleged, by “Asia 27 Top Loyalty Alliance.” See InteliClear, 978 F.3d at 658. Plaintiff has provided Defendant 28 Belton Technology Inc. and other Defendants with sufficient information “to ascertain at 1 least the boundaries within which the secret lies” and at most, the relevant consumer 2 platform for loyalty points rewards that is at the heart of Plaintiff’s claimed proprietary 3 material. See Alta Devices, Inc. v. LG Elec., Inc., 343 F. Supp. 3d 868, 880-882 (N.D. Cal. 4 2018) (finding that claimant had provided both the court and opposing party with notice of 5 the boundaries of the trade secret, and that even if the claims resembled “broad categories 6 of trade secret information,” they were specific enough to survive a motion to dismiss). 7 Plaintiff has demonstrated a likelihood of success on its possession of a trade secret. 8 See Alta Devices, 343 F. Supp. 3d at 882 (finding no heightened pleading requirement for 9 trade secrets claims and that the plaintiff was not required to publicly disclose in the 10 complaint the very information it was seeking to protect). Because Plaintiff claims that all 11 named Defendants, including Defendant Belton Technology Inc., worked in concert to 12 graft the entirety of the ATL consumer platform into the alleged rival “Asia Top Loyalty 13 Alliance” platform, Defendant Belton Technology Inc. has requisite notice of the specific 14 subject matter being claimed by Plaintiff to prepare its rebuttal. See Compl. at ¶¶13-15; 15 see also Cisco Systems, Inc. v. Chung, 462 F. Supp. 3d 1024, 1049-1050 (stating that the 16 test of whether a trade secret satisfies the particularity requirement is not whether the trade 17 secret is spelled out in detail, but whether the claimant has provided sufficient information 18 for the opponent to ascertain the boundaries within which the secret resides). 19 Furthermore, under the standard for a preliminary injunction articulated in Benda, 20 success for the movant may also be had when serious questions requiring litigation are 21 alleged. See 584 F.2d at 315. Here, the Court finds that Plaintiff has identified the loyalty 22 rewards program with sufficient specificity to create a serious question involving trade 23 secrets misappropriation by Defendants Belton Technology Inc., Catherine Yin, Thomas 24 Lee, and Majestic Plan Investments, and a triable issue of fact. See also InteliClear, LLC, 25 978 F.3d at 659 (finding a genuine issue of material fact as to whether claimant had 26 identified its trade secrets with sufficient particularity). 27 Finding that Plaintiff has demonstrated a fair chance of success on its possession of 28 a trade secret, the Court turns to analyzing the likelihood of success on the remainder of 1 the misappropriation analysis: whether the Defendant misappropriated the trade secret, and 2 whether the misappropriation caused or threatened damage to the Plaintiff. See InteliClear, 3 978 F.3d at 657-58. 4 ii. Misappropriation of the Trade Secret 5 Misappropriation of trade secrets under the Defense of Trade Secrets Act requires 6 either “(A) acquisition of a trade secret by another person who knows or has reason to 7 know that the trade secret was acquired by improper means” or “(B) disclosure or use of 8 a trade secret of another without express or implied consent” by a person who used 9 improper means to acquire knowledge of the trade secret, or who knew or had reason to 10 know that knowledge of the trade secret was derived through improper means, acquired 11 under circumstances giving rise to a duty to maintain the secrecy of the trade secret, or 12 derived from a person who owed a duty to another to maintain the secrecy of the trade 13 secret. 18 U.S.C. § 1839(5). 14 Plaintiff alleges, and Defendant Belton Technology Inc. has not disputed, that: 15 (1) Thomas Lee worked as an employee of Belton while serving on the board of 16 ATL (Reply at 11, Ex. A at ¶ 5) and that Lee transferred ATL’s software to Belton (Compl. 17 at ¶ 24) (alleging that Defendant Lee “has also been working for Belton without the consent 18 of the ATL Board and stealing ATL IPs to develop Belton’s market”), (Reply at 12, Ex. A 19 at ¶¶ 9-10); 20 (2) On two instances Thomas Lee sought to sell ATL’s platform to competitors 21 without authorization and re-routed ATL’s proceeds to his personal accounts (Reply at 12, 22 Ex. A at ¶¶ 9-10); 23 (3) Catherine Yin serves as a board member of Belton while also serving as a board 24 member of ATL (Reply at 11, Ex. A at ¶¶ 3-4)3; 25 26 27 3 Defendant Yin serves as one of two board members of the California company, Defendant 28 1 (4) Catherine Yin and Thomas Lee disclosed ATL’s intellectual property and 2 confidential information without ATL’s authorization in order to benefit Belton (Compl. 3 at ¶¶ 23-25); and 4 (5) Acting as agents of Belton, Defendants Yin and Lee initiated arbitration against 5 ATL through Defendant Yin’s corporation, Defendant Majestic Plan Investments,4 to force 6 ATL to buy back a magnitude of shares that will, as alleged, force ATL into bankruptcy 7 and susceptible to a takeover by Belton, the alternate company to which both Yin and Lee 8 are strongly connected (Compl. at ¶¶ 23-25, ¶¶ 34-35). 9 Based on the facts as alleged, Plaintiff has met its burden of proving a likelihood of 10 success on its claim that Defendants Belton Technology Inc., Catherine Yin, and Thomas 11 Lee misappropriated Plaintiff’s trade secrets under 18 U.S.C. § 1839(5), while Defendants 12 Catherine Yin and Thomas Lee worked as employees, agents, or assignees of Belton. See 13 also Alta Devices, Inc., 343 F. Supp. 3d at 882. As alleged, the broader intent by all 14 Defendants was to prevent the launch of Plaintiff and ATL’s consumer rewards software 15 program in the United States and to place ATL in financial distress so that it may become 16 a subsidiary of Belton. Compl. at ¶¶ 23-25. 17 “Under the doctrine of respondeat superior, an employer is vicariously liable for the 18 torts of its employees committed within the scope of [their] employment.” Cisco Systems, 19 462 F. Supp. 3d at 1056. Liability extends to intentional torts as well, even if the employer 20 has not authorized the employees to perform the tortious activity, when the conduct occurs 21 within the scope of the individuals’ employment and when the conduct serves, at least in 22 part, to benefit their employer–even if “the employer may forbid it.” See id. at 1056-57. 23 Given that Plaintiff alleges that both Defendants Yin and Lee worked as employees and/or 24 board members of Defendant Belton Technology Inc., Plaintiff has sufficiently pled, in 25 light of the factual allegations detailed above, that its trade secrets were misappropriated 26 27 4 Defendant Yin is alleged to be the sole shareholder and director of Defendant Majestic 28 1 by Defendant Belton Technology Inc. under a theory of vicarious liability. See Cisco 2 Systems, 462 F. Supp. 3d at 1056-57 (finding that a company is properly held liable under 3 vicarious liability for misappropriating trade secrets allegedly taken by one of its 4 employees when that employee utilized trade secrets for the company’s benefit). 5 Plaintiff has also alleged that Defendant Belton Technology Inc. worked together 6 with the other named defendants to launch the look-alike company for the purpose of 7 harming ATL’s market position and preventing it from deploying its technology with the 8 Plaintiff in the United States. Compl. at ¶ 31, ¶¶ 41-43, ¶ 47, ¶ 51. Especially since 9 discovery has not yet commenced, Plaintiff has alleged sufficient facts to support its claim 10 for trade secrets misappropriation. See Alta Devices, Inc., 343 F. Supp. 3d at 883 (finding 11 that it is unreasonable to require plaintiff to demonstrate the precise ways in which 12 defendants utilized misappropriated trade secrets at an early stage in the proceedings, since 13 those defendants “are the only ones who possess such information.”). 14 iii. Damage Caused by Trade Secret Misappropriation 15 Under the final element of a trade secrets claim, the claimant must prove harm or 16 damage connected with the trade secret misappropriation. See InteliClear, 978 F.3d at 658. 17 Here, Plaintiff points to two sources of harm connected with the unauthorized disclosures. 18 Plaintiff alleges that Orix Asia Limited has brought a lawsuit against the Plaintiff and ATL 19 for breaches of contract in light of the disclosures made by Defendants Yin and Lee, as 20 such disclosures violated the terms of an agreement between ATL and Orix. Compl. at 21 ¶ 31. Plaintiff also alleges, based on a declaration submitted by the CEO of ATL, that 22 Plaintiff and ATL have lost significant investments as a result of the misappropriation of 23 its trade secrets, to the extent that eight investors have declined to invest in ATL due to the 24 presence of a competitor on the market with the same technology and similar name. Reply 25 at 6, Ex. A at ¶ 7. Plaintiff has identified tangible harm connected to the unauthorized 26 disclosure of its trade secrets, and the costs of litigation or loss of market position are 27 clearly cognizable harms. See e.g. Lamb-Weston, Inc. v. McCain Foods., Ltd., 941 F.2d 28 970, 974 (9th Cir. 1991) (finding that the harm in loss of market position, even without the 1 movant quantifying its loss, is sufficient to support a preliminary injunction in a trade 2 secrets case), and see WeRide Corp. v. Kun Huang, 379 F. Supp. 3d 834, 853-54 (N.D. 3 Cal. 2019) (same). As a result, Plaintiff has demonstrated a likelihood of success on all 4 three elements of its trade secrets claim under 18 U.S.C. § 1839 of the Defense of Trade 5 Secrets Act. 6 iv. Remainder of Winter Factors 7 Having found that Plaintiff has a likelihood of success on its claim of trade secrets 8 misappropriation, the Court proceeds to the remainder of the preliminary injunction 9 analysis. See Winter, 555 U.S. at 20. Under the irreparable harm prong, the movant must 10 demonstrate that irreparable harm is likely to occur absent injunctive relief. Id. 11 In the trade secrets context, courts have found the movant successful on 12 demonstrating irreparable harm based on the movant’s showing of market harm alone. See 13 WeRide Corp., 379 F. Supp. 3d at 853-54 (finding that “[i]t is well established that the loss 14 of market position and the disclosure of trade secrets can constitute irreparable harm,” and 15 finding that movant sufficiently pled that it was “likely to have its market position set 16 back.”) (citations omitted). See also Lamb-Weston, Inc., 941 F.2d at 974 (finding as 17 sufficient movant’s claim that it will be “irreparably harmed” by being pushed out of new 18 markets in foreign countries, even when its entry into those markets was nascent, and 19 concluding that the loss of market position faced by a movant in the absence of a 20 preliminary injunction constituted irreparable harm in the trade secrets context). 21 Furthermore, the loss of a trade secret to competitors on its own can constitute irreparable 22 harm, because once such secrets are lost, they are gone forever. See WeRide Corp., 379 F. 23 Supp. 3d at 853. 24 In addition, Plaintiff has alleged a significant level of harm done to its business 25 model by Defendants. Plaintiff has included factual allegations that eight investors have 26 sought to invest in Plaintiff’s intellectual property but declined to do so after their due 27 diligence revealed the presence of a competitor, “Asia Top Loyalty Alliance,” an outcome 28 that has left Plaintiff and ATL without the ability to raise capital. Reply at 6, 12, Ex. A at 7. 1 Alongside an inability to raise funds because of disruption caused by “Asia Top Loyalty 2 Alliance,” Plaintiff has alleged that it has lost a valuable client and must defend against a 3 costly enforcement lawsuit involving the client as a result of the Defendants’ conduct. 4 Compl. at ¶ 31. Plaintiff further alleges that the buy-back plan operated by the named 5 Defendants who fronted the “Asia Top Loyalty Alliance” competitor will lead to ATL’s 6 bankruptcy and the dissolution of Plaintiff’s intellectual property rights under its license 7 with ATL. Compl. at ¶ 35 (alleging that “ATL does not have sufficient liquid assets to buy 8 back the 52 million shares, and this reduction of capital would lead to the bankruptcy of 9 ATL[.]”). Finally, Plaintiff states that ATL’s contractual obligation to go public on a 10 reputable stock exchange, under Article 4.1 of the Guarantee Agreement, is being frustrated 11 by competition presented by “Asia Top Loyalty Alliance,” which will lead to ATL’s forced 12 breach of the Guarantee Agreement and the loss of Plaintiff’s intellectual property rights 13 when ATL is unable to buy-back Defendant Majestic Plan Investment’s shares under the 14 terms of the Agreement. Reply at 11-12, Ex. A at ¶¶ 6-8. 15 Because “[t]he threat of being driven out of business is sufficient to establish 16 irreparable harm,” the Court finds that Plaintiff has succeeded on presenting a reasonable 17 apprehension of irreparable harm. See Am. Passage Media Corp. v. Cass Commc’ns, Inc., 18 750 F.2d 1470, 1474 (9th Cir. 1985). Injunctive relief is also proper where the movant 19 alleges facts that support a finding of a “[r]easonable apprehension of threatened injury.” 20 See id. at 1473; see also Los Angeles Memorial Coliseum Comm’n v. National Football 21 League, 634 F.2d 1197, 1202-3 (9th Cir. 1980). Here, Plaintiff has pled sufficient facts 22 relating to its reasonable apprehension of threatened injury, namely that ATL and its 23 intellectual property will no longer belong to Plaintiff if the competitor remains on the 24 market and if ATL is unable to comply with its public offering requirement under the 25 Guarantee Agreement. Without the ability to retain ATL’s trade secrets, which is the sole 26 source of value for Plaintiff, Plaintiff is placed in reasonable apprehension of irreparable 27 injury. 28 1 On the remaining Winter factors, Plaintiff also demonstrates success. The balance 2 of equities tips clearly and heavily in Plaintiff’s favor. Here, Plaintiff seeks a narrow and 3 reasonable preliminary injunction: to prevent Defendants Belton Technology Inc., 4 Catherine Yin, Thomas Lee, and Majestic Plan Investments from using Plaintiff’s trade 5 secrets without permission and to cease and desist from sponsoring the ATL look-alike 6 company, “Asia Top Loyalty Alliance,” and capturing ATL’s clients. Because Defendant 7 Belton Technology Inc. asserts that it has a business model centered on manufacturing 8 involving plastic molding, see Opp. at 7, instead of software services or mobile applications 9 oriented towards consumers, a preliminary injunction in Plaintiff’s favor is unlikely to 10 harm the Defendant. See Warner Bros. Ent. Inc. v. WTV Sys., Inc., 824 F. Supp. 2d 1003, 11 1014-15 (finding that the balance of equities tips in favor of Plaintiff when Defendant has 12 not pled tangible claims of harm associated with a preliminary injunction). Here, 13 Defendant Belton Technology has not asserted any harm that would arise from the issuance 14 of a preliminary injunction to protect Plaintiff’s trade secrets. On the public interest 15 analysis, the Court finds that the public interest is served by the issuance of a preliminary 16 injunction to prevent intellectual property theft. See Warner Bros., 824 F. Supp. 2d at 17 1015. 18 Having found that all elements of the Winter analysis are met, the Court enjoins 19 Defendants from aiding, abetting, or otherwise supporting “Asia Top Loyalty Alliance,” 20 and enjoins the Defendants from any continued use of ATL’s software and consumer 21 platform. The Court also recognizes the broad authority it has to issue an injunction upon 22 the Defendants, binding in this district and in foreign districts, especially when Plaintiff 23 has alleged interference by Defendants in foreign markets. See e.g. Lamb-Weston, 941 24 F.2d at 974 (finding that “[a] worldwide injunction here is consistent with those goals 25 because it ‘place[s the defendant] in the position it would have occupied if the breach of 26 confidence had not occurred prior to the public disclosure.’”) (citation omitted). The Court 27 also finds that Plaintiff has presented “serious questions” on its claim of trade secrets 28 misappropriation that require litigation for the resolution of those questions, and that the 1 balance of harm has been shown to tilt clearly in Plaintiff’s favor. See Benda, 584 F.2d at 2 314-15, and see Cottrell, 632 F.3d at 1131-32. 3 b. Claims for Breach of Fiduciary Duty and Self-Dealing 4 Plaintiff next brings claims against named Defendants Catherine Yin and Thomas 5 Lee for breach of fiduciary duty, self-dealing, and breach of contract law in connection 6 with their role as board members of ATL and as guarantors who signed the Guarantee 7 Agreement with Majestic Plan Investments. Plaintiff Mu Tech has standing to pursue 8 ATL’s claims against Defendants Catherine Yin and Thomas Lee given ATL’s assignment 9 of litigation rights to Mu Tech. Reply at 14, Ex. B. See Klamath-Lake Pharm. Ass’n v. 10 Klamath Med. Serv. Bureau, 701 F.2d 1276, 1282-83 (9th Cir. 1983) (finding assignment 11 of litigation rights sufficient to confer standing on a third party). Given the Court’s subject 12 matter jurisdiction over Plaintiff’s federal trade secrets claim, the Court may exert 13 supplemental jurisdiction over Plaintiff’s ancillary claims in its decision to grant injunctive 14 relief. 28 U.S.C. § 1367. 15 Under Hong Kong law, the laws under which ATL has been incorporated (ECF No. 16 1 at 2), the core fiduciary duty of a company director is “to act in the company’s bona fide 17 interests, or in other words, to promote the success of the company.” Teras Int’l Corp. v. 18 Gimbel, 2017 WL 3841869, *7 (S.D.N.Y. 2017) (citation omitted). Plaintiff alleges that 19 Defendant Yin, after learning about ATL’s financial status through information available 20 to her as a board member of ATL, directed Defendant Majestic Plan Investments to buy- 21 back its shares of ATL under the Guarantee Agreement through the initiation of arbitration 22 in the Hong Kong International Arbitration Centre. Compl. at ¶ 35. 5 Plaintiff has alleged 23 sufficient facts demonstrating its likelihood of success on Defendant Yin’s breach of her 24 fiduciary duty to ATL based on her conduct and significant conflicts of interest, given her 25 support of ATL’s competitor “Asia Top Loyalty Alliance” and her initiation of litigation 26 27 5 As noted earlier, Defendant Yin serves as the sole shareholder and director of Majestic 28 1 against ATL under the Guarantee Agreement based on the confidential information she 2 received through her position of trust within ATL. 3 The Court notes the remarkable intertwinement Defendant Yin has with Defendant 4 Majestic Plan Investments, Defendant Belton Technology Inc., and ATL. Plaintiff has also 5 presented facts that Defendant Thomas Lee, while serving as a board member of ATL, 6 transferred ATL’s intellectual property to his employer, Belton Technology Inc., and to the 7 fraudulent company he founded, “Asia Top Loyalty Alliance.” Compl. at ¶ 24. Plaintiff 8 states that Defendant Lee has also fraudulently billed ATL for legal services, attempted to 9 strong-arm ATL into a settlement with Defendants Yin and Majestic Plan Investments, and 10 has been excused from the pending arbitration by Majestic Plan Investments given his 11 cooperation with Defendant Yin’s alleged efforts to undermine ATL. Compl. at ¶ 37. As 12 claimed against Defendant Lee, Plaintiff also demonstrates a likelihood of success that 13 Defendant Lee did not act “to promote the success” of ATL, but served to harm it in favor 14 of Defendants Majestic Plan Investments and Belton Technology Inc. See Teras Int’l 15 Corp., 2017 WL at *7. 16 Plaintiff’s claim against Defendants Yin and Lee for self-dealing also stand in 17 conflict with their fiduciary duties. Hong Kong law recognizes multiple fiduciary duties 18 owed by a corporate officer, including “a duty (1) to act for a proper purpose, (2) to avoid 19 conflicts of interest, and (3) not to make a profit out of one’s trust.” Id. at *10 (citation 20 omitted). Plaintiff has demonstrated a likelihood of success on the merits based on the 21 facts alleged, specifically including but not limited to Defendants Yin and Lee working 22 against their fiduciary duties to ATL while simultaneously maintaining overlapping and 23 inconsistent allegiances with Belton and Majestic Plan Investments; misappropriating trade 24 secrets and proprietary information from ATL; and creating and operating “Asia Top 25 Loyalty Alliance” with the intent of defrauding ATL of its intellectual property and 26 providing Majestic Plan Investments with the grounds for initiating arbitration against ATL 27 for breach of the Guarantee Agreement, after ATL’s failure to list on a reputable stock 28 1 exchange by December 31, 2023 as allegedly caused by the interference generated by 2 Defendants. 3 Plaintiff has demonstrated irreparable harm from the Defendants’ conduct which 4 derives from Defendants’ failure to observe and carry out their fiduciary obligations to 5 ATL. Plaintiff has also demonstrated that the balance of equities tips in its favor, as an 6 injunction ordering Defendants to refrain from using ATL’s confidential information, 7 accessed during their time as board members, to ATL’s detriment serves to promote the 8 same obligations Defendants were bound to in the first instance. Injunctive relief 9 pertaining to the above claims places no more hardship upon Defendants than the 10 obligations they were bound to when they made the decision to serve on ATL’s board. 11 Finally, there exists a strong public interest in ensuring board members uphold their duties 12 of trust and loyalty to the company they have agreed to serve. On the whole, Plaintiff has 13 met the requirements for issuance of a preliminary injunction on its claims of breach of 14 fiduciary duty and self-dealing. The Court enjoins Defendants Catherine Yin and Thomas 15 Lee from any continued breaches of their fiduciary duties and orders the Defendants to 16 refrain from using any confidential information gained during their time as board members 17 of ATL to ATL’s commercial detriment. 18 c. Claims for Breach of Contract 19 Plaintiff next asserts that Defendants Yin and Lee are in breach of the Guarantee 20 Agreement, which they signed with ATL’s CEO, Andy Chen.6 Compl. at ¶¶ 45-49. The 21 Guarantee Agreement includes a non-compete clause in Article 6, which requires that no 22 23 6 In addition to the Assignment of Litigation Rights, Plaintiff has standing to pursue breach 24 of contract claims against Defendants, because it faces current litigation as a result of 25 Defendants’ breach. Compl. at ¶ 31 (asserting that Orix Asia Limited has sued Plaintiff and ATL for breach of contract as a result of the unauthorized activities of “Asia Top 26 Loyalty Alliance.”). See also Cummings v. Cenergy Int’l Services LLC, 271 F. Supp. 3d 27 1182, 1190-91 (E.D. Cal. 2017) (finding that “[t]he threat of litigation is a cognizable injury sufficient to confer standing in a contract dispute, even where the threatened 28 1 Guarantor shall create an alternative or competitor to ATL. See Guarantee Agreement, Ex. 2 A (Compl. at 15-16). Plaintiff argues that, upon signing the Guarantee Agreement, 3 Defendants Yin, Lee and Majestic Plan Investments “never had any intention of honoring 4 the Guarantee Agreement.” Compl. at ¶ 49. As Plaintiff has alleged throughout its 5 complaint and declarations in support of its Motion, Defendant Yin and Lee operated the 6 “Asia Top Loyalty Alliance” competitor with the purpose of defrauding ATL of its 7 intellectual property and providing Defendant Majestic Plan Investments with the grounds 8 for initiation of arbitration against ATL for breach of the non-compete clause. Because 9 Plaintiff presents a serious question for litigation on Defendants breach and fraud in 10 connection with the Guarantee Agreement, including the Defendants’ support of “Asia Top 11 Loyalty Alliance” despite the agreement’s non-compete clause, the Court finds a likelihood 12 of success for the Plaintiff on its fourth cause of action for breach of contract. For the same 13 reasons, Plaintiff has sufficiently pled its claim for irreparable harm, the balance of equities 14 tipping in its favor, and the public interest favoring Plaintiff’s position. 15 d. Claims of Tortious Interference 16 Plaintiff also alleges tortious interference with prospective business interests against 17 all defendants, including the California Defendant Belton Technology Inc. Compl. at 18 ¶¶ 50-54. Applying California law, federal courts require that a plaintiff claiming tortious 19 interference with prospective business interests plead: (1) a valid economic relationship 20 between the Plaintiff and a third party containing the probability of future economic benefit 21 to the Plaintiff, (2) Defendant’s knowledge, construed or actual, of that relationship, (3) 22 Defendant’s intentional and wrongful conduct taken to disrupt the relationship, and (4) 23 disruption of the Plaintiff’s business relationship and resulting economic harm to the 24 Plaintiff. Fresno Motors, LLC v. Mercedes Benz USA, LLC, 771 F.3d 1119, 1125-26 (9th 25 Cir. 2014). Here, Plaintiff alleges under its claim for tortious interference of prospective 26 business interests that Defendant Belton Technology Inc., along with the remaining 27 Defendants, exercised control over Plaintiff’s intellectual property as assigned by ATL, 28 that Plaintiff had entered into a licensing agreement with ATL for the purpose of 1 developing a North American market for the ATL consumer platform on July 12, 2024, 2 and that the named Defendants pursued arbitration with the specific intent of preventing 3 ATL from developing its presence in the United States and from completing its initial 4 public offering. 5 Defendant Belton Technology Inc. argues that Plaintiff has failed to allege with 6 factual support that any of the named Defendants had the requisite knowledge of the 7 licensing agreement between Plaintiff and ATL to state a claim under this tort. See Opp. 8 at 16-17. Defendant Belton Technology Inc. argues that, even if the Defendant had this 9 knowledge, the alleged interference in launching ATLA happened before ATL and 10 Plaintiff entered into their licensing contract on July 12, 2024. Id. 11 First, the Court finds that Defendant Belton Technology Inc. maintained the requisite 12 knowledge to be held liable under this tort. Because “construed” knowledge is sufficient, 13 the Court finds that, based upon the record in this matter, Defendant Belton Technology 14 Inc. knew or should have known about Plaintiff and ATL’s economic relationship, given 15 that its board member, Defendant Catherine Yin, also sat on the board of ATL. The 16 circumstantial and direct evidence proffered by Plaintiff supports a finding that Plaintiff 17 will likely have success on the merits of the second and third elements of this claim. 18 Second, Plaintiff has alleged that the wrongful conduct of “Asia Top Loyalty 19 Alliance” and its website and social media presence was functional and active at all relevant 20 times until it was removed from the internet by Defendants in an attempt to avoid liability 21 after the instant litigation was initiated. Mot. at 3-5. As alleged, Defendants continued to 22 maintain and support the competitor “Asia Top Loyalty Alliance” despite having 23 knowledge of ATL’s relationship with Plaintiff. In sum, Plaintiff has shown that the 24 alleged wrongful conduct was ongoing and the sustained presence of “Asia Top Loyalty 25 Alliance” on the market prevented multiple investors from investing in Plaintiff and ATL, 26 leading to lawsuits and the loss of clients by Plaintiff and ATL. See Reply at 11-12, Ex. 27 A, ¶¶ 6-8. Plaintiff has also demonstrated irreparable harm in connection with this conduct; 28 the balance of the equities tips sharply in Plaintiff’s favor because Defendants point to no 1 harm they would face by the issuance of an injunction; and there is a strong public interest 2 in restraining wrongful conduct aimed at harming business relationships between parties. 3 As a result, Plaintiff has demonstrated that it has a likelihood of success on the merits of 4 its claim of tortious interference with prospective business interests, or in the alternative, 5 that serious questions meriting litigation exist on Plaintiff’s claim for tortious interference 6 with prospective business interests by Defendants. 7 Because the Federal Rules of Civil Procedure Rule 65(d)(2)(C) allows this Court to 8 bind “other persons who are in active concert or participation with anyone” designated as 9 a party in this action, the Court’s injunction applies to Defendant Belton Technology Inc., 10 as well as to Defendants Catherine Yin, Thomas Lee, and Majestic Plan Investments as 11 “other persons” in active concert or participation with Defendant Belton Technology Inc. 12 For the foregoing reasons, the Court finds that Defendants have engineered a 13 sophisticated web of misconduct upon Plaintiff and ATL that supports the granting of 14 injunctive relief. 15 CONCLUSION 16 For the above reasons, the Court GRANTS Plaintiff’s motion for a preliminary 17 injunction. The Court is afforded wide discretion in setting the amount of the bond when 18 a preliminary injunction is issued, and that amount “may be zero if there is no evidence the 19 party will suffer damages from the injunction.” Conn. Gen. Life Ins. Co. v. New Images of 20 Beverly Hills, 321 F.3d 878, 882 (9th Cir. 2003). Here, the Defendant did not request a 21 bond or submit evidence regarding likely damages. As a result, this Court will set the bond 22 amount to zero. 23 Under the Federal Rules of Civil Procedure, Rule 65, the Court enters the following 24 injunction to be effective immediately: 25 1. Defendant Belton Technology Inc., and its agents, employees, assignees or board 26 members, including but not limited to Defendants Catherine Yin and Thomas Lee, 27 and including Defendant Majestic Plan Investments Ltd., may not utilize or employ 28 1 any of Plaintiff or ATL’s trade secrets in any location pending the resolution of 2 this case and the arbitration currently ongoing in the Hong Kong International 3 Arbitration Centre;’ 4 2. Defendant Belton Technology Inc., and its agents, employees, assignees or board 5 members, including but not limited to Defendants Catherine Yin, Thomas Lee, and 6 Majestic Plan Investments, are barred from assisting, aiding, or abetting “Asia 7 Top Loyalty Alliance” in any capacity or in otherwise commercializing ATL’s 8 trade secrets without ATL’s authorization; and 9 3. Under Rule 65(d)(2)(C), the Court enjoins Defendants Catherine Yin, Thomas Lee, 10 and Majestic Plan Investments by the two provisions above, as persons identified 11 “in active concert or participation” with Defendant Belton Technology Inc. 12 Defendants Catherine Yin and Thomas Lee shall also refrain from utilizing ATL’s 13 confidential information, accessed during their time as board members, for 14 commercial gain. 15 16 IT IS SO ORDERED. 17 18 DATED: September 29, 2025 19 20 | JOHN A. HOUSTON 21 UNITED STATES DISTRICT JUDGE 22 23 24 25 26 27 ||’ As described above, Plaintiff’s trade secrets cover the software program that serves as the 28 online platform between merchants and consumers known as the “Asia Top Loyalty” program, as licensed by ATL. Ay