IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

FUJITSU LIMITED, CIVIL ACTION NO. 1:12-CV-03229

PLAINTIFF,

JUDGE JAMES F. HOLDERMAN

V.

TELLABS, INC., TELLABS OPERATIONS, INC. AND

TELLABS NORTH AMERICA, INC.

JURY TRIAL DEMANDED

DEFENDANTS.

FUJITSU LIMITED’S AND FUJITSU NETWORK COMMUNICATIONS’

MEMORANDUM IN SUPPORT OF MOTION TO DISMISS

TELLABS’ TRADE SECRET MISAPPROPRIATION COUNTERCLAIM

PURSUANT TO FED. R. CIV. P. 12(b)(6)

[PUBLIC REDACTED VERSION]

Nearly four years after learning of the relevant facts, Tellabs Operations, Inc., Tellabs

North America, Inc., and Tellabs, Inc. (collectively hereinafter, “Tellabs”) assert a trade secret

misappropriation counterclaim against Fujitsu Limited and Fujitsu Network Communications

(“FNC”) (collectively hereinafter, “the Fujitsu parties”). Tellabs’ belated counterclaim,

however, falls woefully short of alleging sufficient facts to state a claim for trade secret

misappropriation under either Texas or Illinois trade secret law. Rather, Tellabs’ trade secret

counterclaim is a thinly veiled attempt to smear the Fujitsu parties by injecting wholly irrelevant

facts into this case. This Court should not entertain such legally groundless and irresponsible

accusations. Accordingly, Tellabs’ counterclaim for misappropriation of trade secrets should be

dismissed.

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I. BACKGROUND

On May 1, 2013, Tellabs filed its Answer and Counterclaims to Fujitsu Limited’s

Complaint for Patent Infringement (“Answer”),1in which Tellabs asserted a Misappropriation of

Trade Secrets Counterclaim (“Trade Secret Counterclaim”) against the Fujitsu parties. Answer

at 35-44. Tellabs’ Trade Secret Counterclaim is based on three sets of factual allegations. Id.

First,

.

Second,

1 Defendants Tellabs, Inc.’s, Tellabs Operations Inc.’s and Tellabs North America, Inc.’s Answer to

Plaintiff Fujitsu Limited’s Complaint for Patent Infringement and Counterclaims Against Plaintiff Fujitsu

Limited and Fujitsu Network Communications, Inc., Dkt. #54.

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. Id.

Third,

. Id.

All of Tellabs’ factual allegations, even if true, fall short of meeting the legal elements of

a trade secret misappropriation claim. Through this Motion, and pursuant to Rule 12(b)(6) of the

Federal Rules of Civil Procedure, the Fujitsu parties thus respectfully request that Tellabs’ Trade

Secret Counterclaim be dismissed for failure to state a cause of action upon which relief can be

granted.

II. LEGAL STANDARD

To survive a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), a plaintiff must plead

“enough factual matter” that, when taken as true, “state[s] a claim to relief that is plausible on its

face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 570 (2007). To meet this plausibility

requirement, a plaintiff must “plead[] factual content that allows the court to draw a reasonable

inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S.

662, 678 (2009).

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A court must dismiss a claim when there is a “lack of a cognizable legal theory” or

“absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica

Police Dept, 901 F.2d 696, 699 (9th Cir. 1990). “Threadbare recitals of the elements of a cause

of action, supported by mere conclusory statements, do not suffice. . . .” Iqbal, 556 U.S. at 678.

If there is insufficient factual content set forth in the complaint to state a claim after the court

“correctly disregard[s plaintiff’s] legal conclusions,” then the complaint fails to pass muster

under Rule 8 and should be dismissed at the pleading stage. See Golod v. Bank of Am. Corp.,

403 F. Appx. 699, 702-03 (3d. Cir. 2010); see also Twombly, 550 U.S. at 555 (“[O]n a motion to

dismiss, courts are not bound to accept as true a legal conclusion couched as a factual

allegation”) (internal quotation marks and citation omitted).

III. ARGUMENT

A. Texas Law Governs Tellabs’ Trade Secret Counterclaim Because the Fujitsu

Parties’ Alleged Actions Occurred in Texas.

As a preliminary matter, Texas law should be applied to Tellabs’ trade secret

misappropriation because Texas is both the state where the alleged misappropriation took place

and where the Fujitsu parties allegedly obtained the primary benefit of their misappropriation. A

district court asserting diversity jurisdiction must apply the choice-of-law principles of the forum

state to determine which state’s substantive law is applicable. Salton, Inc. v. Philips Domestic

Appliances & Pers. Care B.V., 391 F.3d 871, 879 (7th Cir. 2004). “Under Illinois trade secrets

law, courts must apply the law of the state where the alleged wrong took place or where the

benefit was obtained, which is typically the defendant’s principal place of business.” C.H.

Robinson Worldwide, Inc. v. Command Transp. LLC, No. 05 C 3401, 2005 WL 3077998, at *5

(N.D. Ill. Nov. 16, 2005); see Salton, 391 F.3d at 878 (stating the same); Cognis Corp. v.

CHEMCENTRAL Corp., 430 F. Supp. 2d 806, 811 (N.D. Ill. 2006) (“Under Illinois law, a

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misappropriation claim is subject to either the law of the defendant’s principle place of business

or the law of the state where the misappropriation took place.”).

It is undisputed, and Tellabs expressly states in its pleading, that FNC’s principal place of

business is in Richardson, Texas. Answer at 33.

. Under

Illinois law, a court regards the principal place of business as the location where the defendant

benefitted from its misappropriation, and should thus apply Texas law to Tellabs’ Trade Secret

Counterclaim. See Wilson v. Electro Marine Sys., 915 F.2d 1110, 1115 (7th Cir. 1990) (applying

New York law where defendant’s principal place of business was in New York and where

defendant “would have obtained any benefit there.”)

. Importantly,

, Tellabs does not allege a single instance of misconduct relating to its

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Trade Secret Counterclaim occurring outside of Texas. Accordingly, Illinois choice-of-law rules

dictate that Texas law governs Tellabs’ Trade Secret Counterclaim.2

B. Tellabs’ Trade Secret Counterclaim Fails To State a Claim Upon Which

Relief May Be Granted and Must Be Dismissed.

For each of the three occurrences where Tellabs alleges the Fujitsu Parties have

misappropriated trade secrets, Tellabs has failed to plead sufficient facts to state a claim under

Fed. Rule Civ. P. 12(b)(6). Under Texas law, a misappropriation of trade secrets claim requires:

(1) the existence of a trade secret; (2) that the trade secret was acquired through breach of

confidential relationship or discovered by improper means; (3) the use of the trade secret; and (4)

damages. Daniel Health Sciences, L.L.C. v. Vascular Health Sciences, L.L.C., 710 F.3d 579, 583

2

In the alternative, should the Court find that Illinois law applies, Tellabs’ pleadings would also fail to

state a claim under the Illinois Trade Secrets Act (765 ILCS 1065/1 et seq.). The statute defines

“improper means” and “misappropriation” as follows:

(a) “Improper means” includes theft, bribery, misrepresentation, breach or inducement of a

breach of a confidential relationship or other duty to maintain secrecy or limit use, or espionage

through electronic or other means. Reverse engineering or independent development shall not be

considered improper means.

(b) “Misappropriation” means:

(1) acquisition of a trade secret of a person by another person who knows or has reason to know

that the trade secret was acquired by improper means; or

(2) disclosure or use of a trade secret of a person without express or implied consent by another

person who:

(A) used improper means to acquire knowledge of the trade secret; or

(B) at the time of disclosure or use, knew or had reason to know that knowledge of the

trade secret was:

(I) derived from or through a person who utilized improper means to acquire it;

(II) acquired under circumstances giving rise to a duty to maintain its secrecy or

limit its use; or

(III) derived from or through a person who owed a duty to the person seeking

relief to maintain its secrecy or limit its use; or

(C) before a material change of position, knew or had reason to know that it was a trade

secret and that knowledge of it had been acquired by accident or mistake.

765 ILCS 1065/2. For the same reasons set forth in this Motion, Tellabs’ Trade Secret Counterclaim may

also be dismissed under Illinois law.

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(5th Cir. 2013) (citing Taco Cabana Int’l, Inc. v. Two Pesos, Inc., 932 F.2d 1113, 1123 (5th Cir.

1991), aff’d, 505 U.S. 763 (1992)).

1.

. No cause of action for trade secret

misappropriation has accrued , since Tellabs fails to plead any of

the requisite elements of (1) the existence of a trade secret; (2) the trade secret was acquired

through breach of confidential relationship or discovered by improper means; (3) the use of the

trade secret; and (4) damages. Daniel Health Sciences, L.L.C., 710 F.3d at 583. Tellabs’ CIC

allegations thus cannot form the basis for a trade secret misappropriation cause of action. Cf.

Dresser-Rand Co. v. Schutte & Koerting Acquisition Co., WL 460275, at *8 (S.D. Tex. Feb. 13,

2012) (holding that there was neither improper discovery nor use of a trade secret where

defendant hired plaintiff’s former employees who copied files from plaintiff, but where

defendant itself did not obtain these files).

2.

.

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. See Restatement 3d of Unfair

Competition, § 43 (“A person who obtains a trade secret by inducing or knowingly accepting a

disclosure from a third person who has acquired the secret by improper means, or who induces or

knowingly accepts a disclosure from a third person that is in breach of a duty of confidence owed

by the third person to the trade secret owner, also acquires the secret by improper means.”)

(emphases added).

. See Gaia

Techs. Inc. v. Recycled Prods. Corp., 175 F.3d 365, 377 (5th Cir. 1999) (reversing lower court’s

finding of misappropriation and holding that there can be no misappropriation where plaintiff

“presents no evidence of a confidential relationship between it and the ... defendant[] ...”);

Hollomon v. O. Mustad & Sons (USA), Inc., 196 F. Supp. 2d 450, 459 (E.D. Tex. 2002) (granting

summary judgment to defendant on trade secret misappropriation claim “[b]ecause the court

finds no confidential relationship existed between the parties”).

.

4

3

4

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.

3.

.

See Joe N. Pratt Ins. v. Doane, No. V-07-07, 2009 WL

3157337, at *9 (S.D. Tex. Sept. 25, 2009) (“Improper means of acquiring another’s trade secrets

include theft, fraud, unauthorized interception of communications, inducement of or knowing

participation in a breach of confidence, and other means either wrongful in themselves or

wrongful under the circumstances of the case.”).

See Gaia

Techs., Inc., 175 F.3d at 376-77 (reversing the lower court’s finding of misappropriation and

holding that plaintiff’s reliance on the existence of defendant’s brochure advertising the same

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technology was not evidence of improper acquisition).

. There is insufficient factual content to sustain Tellabs’ claim once

its legal conclusions are “correctly disregard[ed]” by the Court. Golod, 403 F. Appx. at 702-03;

see also Twombly, 550 U.S. at 555 (“[O]n a motion to dismiss, courts are not bound to accept as

true a legal conclusion couched as a factual allegation”) (internal quotation marks and citation

omitted). Accordingly, Tellabs’ Trade Secret Counterclaim should be dismissed.

IV. CONCLUSION

For the foregoing reasons, the Fujitsu parties respectfully request that the Court grant

their motion and dismiss Tellabs’ Trade Secret Counterclaim.

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Dated: June 18, 2013

/s/ David C. Van Dyke

David C. Van Dyke (#6204705)

Howard & Howard

200 South Michigan Ave. Suite 1100

Chicago, IL 60604

Telephone: (312) 456-3641

Facsimile: (312) 939-5617

Email: dvandyke@h2law.com

James C. Brooks

Alyssa Caridis

Michael Owens

Orrick, Herrington & Sutcliffe, LLP

777 South Figueroa Street, Suite 3200

Los Angeles, CA 90017-5855

Telephone: (213) 629-2020

Facsimile: (213) 612-2499

Email: jbrooks@orrick.com

Email: acaridis@orrick.com

Email: mowens@orrick.com

David E. Wang

Orrick, Herrington & Sutcliffe, LLP

1000 Marsh Road

Menlo Park, CA 94025-1015

Telephone: (650) 614-7400

Facsimile: (650) 614-7401

Email: dwang@orrick.com

Mark P. Wine//Thomas S. McConville

Mark J. Shean//Glen Liu

Gino Cheng

Orrick, Herrington & Sutcliffe, LLP

2050 Main Street, Suite 1100

Irvine, CA 92614

Telephone: (949) 567-6700

Facsimile: (949) 567-6710

Email: mwine@orrick.com

Email: tmcconville@orrick.com

Email: mshean@orrick.com

Email: gliu@orrick.com

Email: gcheng@orrick.com

Attorneys for FUJITSU LIMITED

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