Sandisk Corp. v. SK Hynix Inc.

84 F. Supp. 3d 1021, 2015 U.S. Dist. LEXIS 39000, 2015 WL 1395910
CourtDistrict Court, N.D. California
DecidedMarch 26, 2015
DocketCase No.: 14-CV-04940-LHK
StatusPublished
Cited by3 cases

This text of 84 F. Supp. 3d 1021 (Sandisk Corp. v. SK Hynix Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sandisk Corp. v. SK Hynix Inc., 84 F. Supp. 3d 1021, 2015 U.S. Dist. LEXIS 39000, 2015 WL 1395910 (N.D. Cal. 2015).

Opinion

ORDER GRANTING MOTION TO REMAND, AND DENYING MOTION TO COMPEL ARBITRATION AND MOTION TO DISMISS

Re: Dkt. Nos. 52, 53 & 75

LUCY H. KOH, United States District Judge

Before the Court are three motions. Plaintiff SanDisk Corporation (“SanDisk”) has filed a motion to remand the instant case to Santa Clara County Superior Court. ECF No. 75 (“Mot. Remand”). Defendants SK Hynix, Inc., SK Hynix America, Inc., and SK Hynix Memory Solutions (collectively, “Hynix”) have filed a motion to compel arbitration, ECF No. 53 (“Mot. Compel”), as well as a motion to dismiss for forum non conveniens, ECF No. 52 (“Mot. Dismiss”). Having considered the parties’ submissions, the record in this case, and the applicable law, the Court GRANTS SanDisk’s motion to remand, DENIES Hynix’s motion to compel arbitration without prejudice, and DENIES Hynix’s motion to dismiss for forum non conveniens without prejudice, for the reasons stated below.

I. BACKGROUND

A. Factual Background

SanDisk is a Delaware corporation with its principal place of business in Milpitas, California. ECF No. 2-12 (“Compl.”) ¶ 9. SanDisk designs, develops, and manufactures flash memory products, such as solid-state drives, flash memory cards, and USB flash drives. Id. ¶¶ 2, 9. Flash memory is an electronic, non-volatile computer storage medium. Id. ¶ 19. San-Disk’s flash memory products are used in, among other things, computers, mobile phones, and gaming devices. Id. ¶ 9.

Defendant SK Hynix, Inc. (“SK Hynix”) is a South Korean company with its princi[1024]*1024pal place of business in Incheon, South Korea. Id. ¶ 10. SK Hynix manufactures various digital memory products, including flash memory, which are distributed throughout the world. Id. Defendants SK Hynix America, Inc. and SK Hynix Memory Solutions are California corporations with their principal places of business in San Jose, California. Id. ¶¶ 11-12. SK Hynix America, Inc. and SK Hynix Memory Solutions are wholly-owned North American subsidiaries of SK Hynix, and sell and distribute SK Hynix’s flash memory products throughout the United States. Id.

1. The Patent Cross-License Agreement

On March 20, 2007, SanDisk and Hynix entered into a [Redacted] Patent Cross License Agreement. See EOF No. 50-2 (“PCLA”), § 6.14(dd). As part of the Patent Cross License Agreement, SanDisk granted to Hynix [Redacted] Id. § 2.1. The Patent Cross License Agreement defines [Redacted] as [Redacted] Id. § 6.14(bb). In consideration for the Patent Cross License Agreement, Hynix paid SanDisk a license fee of [Redacted]. Id. § 4.2.

The Patent Cross License Agreement includes two clauses that are of particular relevance to the instant dispute. First, the Patent Cross License Agreement contains an arbitration clause. That clause states: [Redacted] Id. § 6.10. The arbitration clause further provides that arbitration will take place in [Redacted]. Id.

Second, the [Redacted] of the Patent Cross License Agreement provides that [Redacted] Id. § 6.2(g).

2. Hynix’s Alleged Misappropriation . of SanDisk Trade Secrets

The instant litigation stems from San-Disk’s claimed trade secrets involving San-Disk’s designs, devices, processes, and recipes related to its flash memory products, including a type of flash memory known as NAND flash memory. See Compl. ¶¶ 20-21. SanDisk claims that its trade secrets related to flash memory give SanDisk a competitive edge over other its competitors, including Hynix. Id. ¶ 24.

Sometime in the 2000s, SanDisk formed a series of joint ventures with another company in the industry, Toshiba Corporation (“Toshiba”). Id. ¶27. SanDisk and Toshiba both contributed employees and confidential information to the joint ventures. Id. ¶ 28. SanDisk’s and Toshiba’s contribution of confidential information was subject to confidentiality agreements, and both SanDisk and Toshiba allegedly took reasonable measures to maintain the confidentiality of information each company contributed to the joint venture. Id. One of the SanDisk-Toshiba joint ventures projects was a consolidated semiconductor fabrication plant located in Yokkaichi, Japan, which would develop advanced flash memory devices and processes related to NAND flash memory. Id. ¶ 29.

One of the SanDisk employees hired to work at the Yokkaichi plant was Yoshitaka Sugita (“Mr. Sugita”). Id. ¶ 31. Mr. Sugi-ta worked for SanDisk from approximately February 2003 until he resigned effective June 30, 2008. Id. Upon his resignation, Mr. Sugita went to work for Hynix. Id. ¶ 34. In or around May 2008, while working at the Yokkaichi. plant and before he left to work at Hynix, Mr. Sugita allegedly accessed and misappropriated 10 gigabytes of information, including SanDisk’s most sensitive- trade secrets related to NAND flash memory. Id. SanDisk alleges that Hynix solicited Mr. Sugita to download these files and misappropriate SanDisk’s trade secret information. Id. Mr. Sugita worked at Hynix in South Korea from July 2008 to June 2011. Id. ¶ 35.

SanDisk learned of the alleged misappropriation of its trade secrets in January 2014, from an informant who had first [1025]*1025worked at SanDisk and subsequently at Hynix. Id. ¶ 36. This informant told San-Disk that documents containing the legend “SanDisk/Toshiba Confidential” were distributed among Hynix employees and posted on Hynix’s internal database. Id. In addition, the informant reported that a document was printed on paper bearing a Hynix watermark, but it “clearly” contained evaluations, test' results, technical decisions and information co-developed by SanDisk and Toshiba and bearing the legend “SanDisk/Toshiba Confidential.” Id. SanDisk and Toshiba provided the Tokyo Metropolitan Police Department, with evidence supporting allegations that Mr. Su-gita and Hynix misappropriated SanDisk’s trade secrets. Id. ¶ 38. Japanese law enforcement detained Mr. Sugita on March 13,2014. Id.

According to counsel for SanDisk who attended Mr. Sugita’s criminal trial on January 20 and 21, 2015, Mr. Sugita testified that a Hynix director asked him to steal non-public semiconductor design information for SanDisk-Toshiba flash memory products while Mr. Sugita was employed at SanDisk. Declaration of Jeffrey Chanin in Support of SanDisk’s Opposition to Motion to Dismiss for Forum non Conveniens, ECF No. 113, ¶ 15. Mr. Sugita further testified that while he was negotiating with Hynix for employment there, Mr. Sugita told Hynix that he could provide Hynix stolen SanDisk-Toshiba NAND flash memory information in exchange for director-level compensation and benefits. Id. Mr. Sugita further testified that when he was employed at Hynix, Hynix pressured him heavily to disclose additional NAND flash semiconductor information that Mr. Sugita had stolen from SanDisk. Id. ¶ 16.

According to emails submitted as evidence during Mr. Sugita’s criminal trial, Ko Ahn, a Hynix director, emailed Mr. Sugita’ on March 18, 2008 (while Mr. Sugi-ta was still employed at SanDisk) to arrange for Mr. Sugita to meet with the person in charge of human resources at Hynix.1 Exhibit A to the Supplemental Declaration of Jeffrey R.

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Bluebook (online)
84 F. Supp. 3d 1021, 2015 U.S. Dist. LEXIS 39000, 2015 WL 1395910, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sandisk-corp-v-sk-hynix-inc-cand-2015.