District Court Finds Personal Jurisdiction Over Chinese Company with Washington Subsidiary in Trade Secrets Action

The World in U.S. Courts: Fall 2015 - Personal Jurisdiction/Forum Non Conveniens | July.14.2015

T-Mobile USA, Inc. v. Huawei Device USA, Inc. et al., United States District Court for the Western District of Washington, July 14, 2015

T-Mobile, a national U.S. mobile phone network provider, sued Huawei Device USA ("Huawei USA") and its Chinese parent company Huawei Technologies Co., Ltd. ("Huawei China"), alleging, among other things, that the defendants violated Washington State laws relating to trade secrets and consumer protection through their alleged misappropriation of T-Mobile's trade secrets relating to the testing of cell phone handsets by robot. Among other issues, the Court considered whether it could exercise specific personal jurisdiction over Huawei China.

In determining whether it could exercise specific jurisdiction over Huawei China, the Court considered whether: (i) T-Mobile could show (in a tort case) that Huawei China "purposefully directed" its activities toward or consummated a transaction with Washington or a Washington resident, or (in a contract case) "purposefully availed" itself of the privileges of conducting business in Washington; (ii) T-Mobile's claim arose out of or was related to Huawei China's activities in Washington; and (iii) the Court's exercise of jurisdiction over Huawei China would be reasonable. In considering whether the case was based on allegations that Huawei China "purposefully directed" conduct at Washington, the Court applied the "effects" test, which required T-Mobile to sufficiently allege that Huawei China committed an intentional act expressly aimed at Washington that caused a harm that it knew would be likely to be suffered in Washington.

Huawei China sought dismissal based on an affidavit stating that the company neither had a physical presence nor transacted business in Washington. The Court concluded, however, that such facts, even if true, would not be dispositive because the present case most resembled one alleging a tort, and so the relevant test was whether Huawei China "purposefully directed" conduct alleged in the complaint toward Washington. In this regard the Court noted that Huawei China's exercise of control over its USA employees was a reasonable inference based on the company's admission that it took disciplinary actions against the Huawei USA employees that allegedly misappropriated T-Mobile's confidential information, and their U.S.-based supervisors. Further, the Court noted that Huawei China failed to refute T-Mobile's claim that the Chinese company directed its US-based employees to steal information from T-Mobile's facilities in Washington. Finally, the Court held that Huawei China did not demonstrate that the Court's exercise of personal jurisdiction over it would be unreasonable, and thus precluded by the Due process Clause of the U.S. Constitution.

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