IMAX Says Trade Secrets Ended Up in China

LOS ANGELES (CN) - IMAX claims in court that a former employee swiped its big-screen digital movie trade secrets and used them to start his own company in China.

IMAX sued GDC Technology USA, and two companies called GDC Technology Limited, one based in the British Virgin Islands and one in the Cayman Islands. The lead defendant is a California LLC. IMAX is a Canadian corporation.

The federal complaint states: "IMAX has filed this action to stop GDC's illegal commercial exploitation of IMAX's trade secret large format digital theatre projection system and film conversion technologies. Former IMAX employee, Gary Tsui, stole this proprietary technology from IMAX, then surreptitiously provided it to film companies in China, including a company now called China Giant Screen, for which he is the 'chief engineer.' China Giant Screen uses IMAX's trade secrets under the name 'China Film Giant Screen' ('CFGS'). Defendant GDC is now knowingly and actively using IMAX's trade secrets through, among other things, its relationship with CFGS, in its efforts unfairly to compete globally with IMAX,"

Neither Tsui nor China Film Giant Screen are parties to the complaint.

It continues: "Prior to this filing, IMAX delivered an unambiguous cease and desist letter to GDC which was ignored. Indeed, GDC is actively touting its CFGS-based large format film projection systems and conversion technology that, as described herein, IMAX is informed and believes were derived from and incorporate the trade secrets stolen by Tsui. Significantly, as a part of its current initial public offerings ('IPO'), GDC has stated that its large format film technologies are dependent upon CFGS and that IPO proceeds will be used for 'geographical expansion to existing and new markets, research and development including on our new business initiatives such as private digital cinema and China Film Giant Screen.' Unabated, defendants will be the knowing participants in this high tech piracy, to their financial benefit and IMAX's detriment.

"The illegal activities at issue here began several years ago. In 2009, IMAX discovered that Tsui had stolen its proprietary and trade secret information relating to IMAX's core projection and conversion technologies, including software source code. While employed by IMAX, but unbeknownst to it, Tsui formed his own company in competition with IMAX, and used IMAX's trade secrets to compete against - and beat out - IMAX on a bid for a significant project in China.

"Following Tsui's trail from Ontario, Canada to Beijing, China (and now to Los Angeles), IMAX conducted its own investigation into Tsui's activities and, after finding incriminating information, IMAX initiated lawsuits against Tsui in both Canada and China. Through those suits, IMAX uncovered voluminous, conclusive proof of Tsui's retention and theft of IMAX's confidential and proprietary trade secrets, including CDs containing the source code for IMAX's 2D/3D conversion process and re-mastering technology, as well as the repeated use of IMAX's trade secrets to form companies in Canada and China in direct competition with IMAX. Based on that evidence, IMAX has obtained extraordinary relief from two foreign tribunals, including a rarely granted, multi-site search and seizure order, a contempt order, and ultimately an arrest warrant issued by the Canadian court, and a broad search and seizure order issued by the Beijing court and executed by several Chinese judges. Tsui remains an international fugitive, and his plan to profit unlawfully from the technology stolen from IMAX has now touched U.S. soil with defendant GDC's efforts to market CFGS with the benefit of public funding."

IMAX claims the theft of its trade secrets and their sale to competing companies has hurt its profits and its relationship with its customers, and reduced the value of its trade secrets.

It seeks declaratory judgment, an injunction, and punitive damages for misappropriation of trade secrets, unjust enrichment and unfair competition. It also seeks "reasonable royalties" for its trade secrets.

IMAX is represented by Chad Hummel with Shari Mulrooney Woolman and Erin Witkow with Manatt, Phelps & Phillips.

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