ASUS Can’t Escape|Patent Theft Claims

SAN JOSE (CN) - Tech workers accused of stealing controller chip technology and defecting to ASUS Computer, garnering "virtually overnight" success, cannot duck patent claims, a federal judge ruled.

VIA Technologies sued ASUS Computer International (ACI), ASUSTeK Computer and ASMedia Technology (ASM) in August 2014 in Federal Court.

VIA claimed that its president Chewei Lin left it in 2007 to become president of ASM.

"Dozens of other VIA employees, including senior product managers and R&D engineers, also joined ASM at around the same time, including Chi Chang, who is now the head of research and development at ASM," the complaint states.

VIA claimed that "the majority of current ASM analog designers, production control staff, and product managers are from VIA. As a result of ASM's mass raiding of VIA's employees, the former employees of VIA who joined ASM collectively had knowledge of substantially all of VIA's confidential trade secret information relating to USB 3.0 Technology, including hub controller chips, host controller chips, and device controller chips."

VIA claimed that employees who joined ASM, "downloaded and printed numerous circuit diagrams for high speed controller integrated circuits (ICs) from VIA's workstations" before they left.

"Prior to the migration of VIA's former employees to ASM in 2007, ASM had no expertise in the high-speed I/O field at all, including with the legacy USB 1.0/1.1/2.0 technologies critical to implementing the USB 3.0 protocol. Rather, ASM's original business since its founding in 2004 was making digital photo frames," VIA said.

"Nevertheless, in 2008, shortly after luring away VIA's former employees, ASM announced that it would start to develop high speed I/O products, including USB 3.0 products and was able to take USB 3.0 device controller chips into mass production in 2009, approximately one year later. In 2010, ASM also launched USB 3.0 host controller chips. In January 2011, ASM, who previously had only sought trademark protection for marks used in connection with a narrow subset of digital photo frame-related products and accessories, filed applications in both Taiwan and the United States to register a trademark for use in connection with a wide range of ICs and high speed I/O products."

VIA said Taiwanese investigators uncovered the scheme. Default judgment was entered against the defendants in San Francisco Federal Court in October 2014.

VIA filed an amended complaint this March, seeking "to put an end" to the "continued willful infringement and wrongful commercial exploitation."

U.S. District Judge Beth Freeman on June 18 rejected ASUS Computer's motion to dismiss, ruling that Taiwanese courts were not an adequate alternative forum.

"The case is not, as defendants repeatedly characterize it, 'rooted in Taiwan,'" Freeman wrote.

"As plaintiffs note, this suit centers on the acts of ACI that allegedly took place in this district, and many of the 'relevant ACI documents and witnesses will be located in this district.' Though defendants may bear costs to transport witnesses to this district, plaintiffs would be subject to a reciprocal burden were the case to be dismissed and instead litigated in Taiwan. Further, defendants have not named a single third-party witness in Taiwan who would fall outside the court's subpoena power, and though some documents and testimony may need to be translated into English, courts in the United States deal with such issues regularly." (Citation omitted.)

Freeman added that ASUS "produced no evidence that trial would be quicker in Taiwan than in this district."

All was not in VIA's favor, however. Freeman granted ASUS's motion to dismiss willfulness and inducement claims, with leave to amend, and denied in part a motion regarding trade secret claims, also with leave to amend.

Freeman said VIA did not "sufficiently" allege that ASUS knew about a patent on the controller chips before the filing date of the original complaint.

"Plaintiffs have sufficiently alleged knowledge of the '187 Patent as of Aug. 7, 2014 and the '747 Patent as of March 10, 2015, and can proceed on their willfulness and inducement claims as of those dates even if they do not amend the FAC [first amended complaint]," Freeman wrote.

The amended complaint must be modified to state a claim against ASM.

Via has "not pled sufficient facts establishing that ACI is ASM's agent," Freeman wrote. "Plaintiffs in fact plead that ASM 'does substantial business on an ongoing basis in the United States ... both directly, as well as through distributors and its sister company, ACI.' Pleading that ASM uses ACI as a distributor, just as it does other, unrelated companies, fails to show that ACI was engaged in activities that 'but for its existence' ASM would otherwise have to undertake." (Citation omitted, ellipsis in ruling.)

Company representatives did not respond to requests for comment.

VIA must file a second amended complaint by July 10.

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