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MAGicAll, Inc. v. Advanced Energy Industries, Inc.

United States District Court, D. Colorado

July 30, 2018

MAGICALL, INC., Plaintiff,
v.
ADVANCED ENERGY INDUSTRIES, INC., AE SOLAR ENERGY, INC., ADVANCED ENERGY (SHENZHEN) CO., LTD., EAGLERISE ELECTRIC AND ELECTRIC CO., LTD., EAGLERISE E & E USA, INC. (CA), EAGLERISE E & e USA, INC. (PA), and EAGLERISE POWER SYSTEMS, INC., Defendants.

          ORDER

          R. Brooke Jackson United States District Judge.

         The Eaglerise defendants in separate motions ask the Court to dismiss the complaint against them under various parts of Rule 12 of the Federal Rules of Civil Procedure. ECF Nos. 22 and 61. Both motions are granted.

         I. BACKGROUND.

         The following facts are alleged by plaintiff, MAGicAll, Inc., in its Amended Complaint, ECF No. 16, and are assumed to be true for purposes of the pending motion. MAGicAll is an electrical component manufacturer. Sometime before 2009 it developed an inductor that dramatically improved inverter efficiency. It considered this product (presumably its design and manufacturer) to be a trade secret.

         In 2009 MAGicAll entered into a confidentiality agreement with PV Powered, Inc. so that MAGicAll could provide proprietary information about the inductors to PV Powered, Inc. which was considering purchasing them. In 2019 defendant AE Solar Energy, Inc. acquired PV Powered, and MAGicAll consented to the assignment of PV Powered's rights and obligations under the confidentiality agreement to AE Solar. The same year MAGicAll entered into a nondisclosure agreement with AE Solar's parent company, defendant Advanced Energy Industries, Inc. (“AEI”), extending the agreement to maintain the confidentiality of information regarding MAGicALL's inductors to AEI and all its subsidiaries (the “AEI NDA”).

         AEI did begin to purchase the inductors from MAGicAll. Sometime thereafter AEI “rolled out” a new line of inverters that achieved high efficiency due, in part, to MAGicAll's inductor designs. In December 2012 and January 2013 AEI informed MAGicAll that it was planning to begin manufacturing inverters in China - first purchasing inductors from MAGicAll, and then shipping them to its Chinese operation where the inverters would be made.

         AEI and AEI Solar continued to purchase inductors from MAGicAll throughout 2013 but eventually stopped such purchases. Thereafter AEI incorporated “knock-off copies” of MAGicAll's inductors, manufactured by Eaglerise-China, into its inverters. That led to the present suit in which MAGicAll named AEI, AEI Solar, Eaglerise China, and Eaglerise affiliates in California, Pennsylvania and Idaho, as defendants. The Amended Complaint asserts 10 claims: (1) breach of contract against the AEI defendants; (2) breach of contract against AEI Solar; (3) misappropriation of trade secrets against the AEI defendants in violation of 18 US.C. §§ 1836 and 1839; (4) misappropriation of trade secrets in violation of 18 US.C. §§ 1836 and 1839 against the Eaglerise defendants; (5) misappropriation of trade secrets in violation of Colo. Rev. Stat. 7-73-103-105 against the AEI defendants; (6) misappropriation of trade secrets in violation of Colo. Rev. Stat. 7-73-103-105 against the Eaglerise defendants; (7) common law conversion against all defendants; (8) common law civil conspiracy against all defendants; (9) common law unjust enrichment against all defendants; and (10) declaratory judgment against all defendants.

         The parties have since stipulated to the dismissal of MAGicAll's claims against one of the Eaglerise defendants, Eaglerise E & E USA, Inc. (PA). ECF No. 76. The Court now addresses the motions filed on behalf of the remaining Eaglerise defendants.

         II. ALLEGATIONS CONCERNING THE EAGLERISE DEFENDANTS.

         The allegations in plaintiff's First Amended Complaint concerning the Eaglerise defendants, set forth in their entirety, are set forth below.[1]

         • “Defendant Eaglerise-China is, on information and belief, a Chinese company with its principal place of business in Guangdong, China.” ECF No. 16 at ¶5.

         • “Defendant Eaglerise-ID is, on information and belief, a corporation organized under the laws of the State of Idaho with a principal place of business in Meridian, Idaho.” Id. at ¶6.[2]

         • “This Court has personal jurisdiction over Eaglerise-China because Eaglerise-China has done business in Colorado.” ECF No. 16 at ¶11 (emphasis added)

         • “This Court has personal jurisdiction over Eaglerise-CA because, on information and belief, Eaglerise-CA has done business in Colorado.” Id. at ¶ 12 (emphasis added).

         • “This Court has personal jurisdiction over Eaglerise-ID because, on information and belief, Eaglerise-ID has done business in Colorado.” Id. at ¶ 14 (emphasis added).

         • “The knock-off inductors used by AEI were manufactured by Eaglerise-China and were identical to MAGicAll's proprietary inductors.” Id. at ¶ 50.

         • “AEI and/or its subsidiaries breached the AEI NDA by copying MAGicALL's proprietary inductor technology and/or by providing Eaglerise-China with MAGicALL's inductor drawings and/or MAGicALL's inductors and requesting that Eaglerise-China manufacture and sell the same to AEI.” Id. at ¶58.

         • “On information and belief, one or more of the AE Defendants provided MAGicAll drawings to Eaglerise-China with specific intent to supplant MAGicAll as a supplier and in violation of the AEI NDA” Id. at ¶61.

         • “On information and belief, Eaglerise-China produced drawings having MAGicALL's inductor designs on them.” Id. at ¶62.

         • “After the AEI and AE Solar stopped purchasing inductors from MAGicALL but without MAGicALL's knowledge or consent, on information and belief, the AE Defendants continued manufacturing products incorporating MAGicALL's inductor design throughout 2014 and 2015 by purchasing the knock-off inductors from Eaglerise-China.” Id. at ¶63.

         • “On information and belief the Eaglerise defendants are now selling copies of MAGicAll's inductors to other customers in the marketplace.” Id. at ¶64.

         • “On information and belief, AEI breached its covenant of good faith and fair dealing by passing MAGicALL's technology to Eaglerise-China or others with the intent to avoid its contractual obligations to MAGicAll.” Id. at ¶66.

         • “The AE Defendants have also repeatedly breached the AEI NDA by continuing to order knock-off inductors from Eaglerise-China.” Id. at ¶67.

         • “On information and belief, AE Solar or its agents provided MAGicAll drawings to Eaglerise-China with specific intent to supplant MAGicAll as a supplier and in violation of the non-disclosure agreement.” Id. at ¶74.

         • “On information and belief, Eaglerise-China produced drawings having MAGicALL's inductor designs on them.” Id. at ¶75.

         • “After AEI and AE Solar stopped purchasing inductors from MAGicAll, on information and belief, without MAGicALL's knowledge or consent, the AE Defendants continued manufacturing products incorporating MAGicALL's inductor design throughout 2014 and 2015 by purchasing the knock-off inductors from Eaglerise-China.” Id. at ¶76.

         • “On information and belief, the Eaglerise Defendants are now selling knock-off copies of MAGicALL's inductors to other customers in the marketplace.” Id. at ¶77.

         • “On information and belief, AE Solar breached its covenant of good faith and fair dealing by, among other things, passing MAGicALL's technology to Eaglerise-China with the intent to avoid its contractual obligations to MAGicALL.” Id. at ¶79.

         • “AE Solar has also repeatedly breached the PV Powered NDA by continuing to order inductors from Eaglerise-China.” Id. at ¶80.

         • “On information and belief, knowingly and without authorization, AEI AE Solar, and or AEI-China communicated MAGicALL's trade secret information to Eaglerise-China by providing Eaglerise-China with a MAGicALL inductor.” Id. at ¶90.

         • “On information and belief, knowingly and without authorization, AEI, AE Solar, and/or AEI-China communicated MAGicAll's trade secret information to Eaglerise-China by providing Eaglerise-China with a copy of MAGicALL's inductor drawing.” Id. at ¶91.

         • “On information and belief, knowingly and without authorization, AEI, AE Solar, and/or AEI-China communicated MAGicALL's trade secret information to Eaglerise-China in another manner.” Id. at ¶92.

         • “On information and belief, AEI, AE Solar, and/or AEI-China knowingly conspired with Eaglerise-China or other Eaglerise Defendants to commit these offenses. Id. at ¶93 (emphasis added)

         • “On information and belief, AEI, AE Solar, and/or AEI-China communicated MAGicALL's trade secret information to Eaglerise-China with the intent to convert the trade secret to its own economic benefit. Specifically, AEI, AE Solar, and/or AEI-China intended to purchase inductors from ...


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