Concepts NREC, LLC v. Qiu

Full title: CONCEPTS NREC, LLC, Plaintiff, v. Xuwen QIU, TurboTides, Inc., and Hong…

Court: United States District Court, D. Vermont

Date published: Jan 18, 2023

662 F. Supp. 3d 496 (D. Vt. 2023)

Opinion

Civil Action No. 5:20-cv-00133-gwc-kjd

2023-01-18

CONCEPTS NREC, LLC, Plaintiff, v. Xuwen QIU, TurboTides, Inc., and Hong Ying Zhang, Defendants.

R. Bradford Fawley, Esq., Fawley, PLLC, Stamford, CT, for Plaintiff. Mark D. Oettinger, Esq., Montroll, Oettinger & Barquist, Burlington, VT, Timothy K. Cutler, Esq., Cutler PC, Wellesley, MA, for Defendants Xuwen Qiu, TurboTides, Inc. Timothy K. Cutler, Esq., Cutler PC, Wellesley, MA, for Defendant Hong Ying Zhang.

Kevin J. Doyle, United States Magistrate Judge

R. Bradford Fawley, Esq., Fawley, PLLC, Stamford, CT, for Plaintiff.

Mark D. Oettinger, Esq., Montroll, Oettinger & Barquist, Burlington, VT, Timothy K. Cutler, Esq., Cutler PC, Wellesley, MA, for Defendants Xuwen Qiu, TurboTides, Inc.

Timothy K. Cutler, Esq., Cutler PC, Wellesley, MA, for Defendant Hong Ying Zhang. ORDER

Kevin J. Doyle, United States Magistrate Judge

Plaintiff Concepts NREC, LLC (Concepts)—a Delaware limited liability corporation with its principal place of business in Vermont—sues its former employee Xuwen Qiu, Qiu's wife Hong Ying Zhang, and TurboTides, Inc. (TurboTides), alleging that Qiu founded TurboTides to compete with Concepts in the business of software for turbomachinery. Concepts contends that Qiu used trade secrets wrongfully obtained during his employment with Concepts to develop competing software for use in TurboTides' business. (See Second Am. Compl., Doc. 52.)

During the course of discovery, Concepts served two Rule 45 subpoenas (the "Subpoenas") on Qiu on behalf of Hefei Taize Turbine Technology Company, Ltd. (Hefei Taize), a Chinese software company, for records and documents pertaining to the TurboTides Software and Hefei Taize's operation and structure. (See Pl.'s Subpoenas to Hefei Taize, Doc. 73-1.) Chief Judge Geoffrey Crawford denied Defendants' Motion to Quash and ordered Hefei Taize to comply with the Subpoenas. (Order on Mot. for Prot. Order and to Quash and on Mot. for Contempt and Coercive Sanctions, Doc. 87.) Hefei Taize subsequently entered a special appearance in this litigation and filed a Motion to request modification of the Subpoenas and to assert a claim that compliance with the Subpoenas exposed it to legal liability under China's 2021 Data Security Law (DSL). (Notice of Special Appearance, Doc. 91; Mot. to Modify Subpoenas, Doc. 92.) Concepts moved for Hefei Taize to be held in contempt and sanctioned for not responding to the Subpoenas in accordance with Judge Crawford's Order. (Opp'n to Mot. to Modify and Cross-Mot. for Contempt and Sanctions, Doc. 93.) The Court determined that an evidentiary hearing was necessary to develop facts relevant to the contempt issue, including the potential effect of Chinese law on Hefei Taize's compliance with

the Subpoenas. The undersigned conducted evidentiary hearings on July 6 and July 11, 2022, receiving testimony from Xuwen Qiu and evidence from Plaintiff's Attorney Bradford Fawley, Defendants' Attorney Timothy Cutler, and Hefei Taize's Attorney Shapleigh Smith. (See Docs. 170, 171.) The Court also received post-hearing memoranda from all parties and non-party Hefei Taize. (See Docs. 173-175.)

Presently before the Court are (i) Concepts' Cross-Motion to Find Hefei and Defendant Qiu in Contempt and Impose Discovery Sanctions (Doc. 102);¹ and (ii) Hefei Taize's Motion to Quash for Lack of Personal Jurisdiction (Doc. 156). For the reasons set forth below, the Court DENIES both Motions.

1 Concepts requests sanctions only against Hefei Taize and Qiu. Accordingly, references to "Defendants" do not include Defendant Hong Ying Zhang.

Background

I. The Pleadings

The Second Amended Complaint generally alleges that TurboTides is a New Hampshire corporation with its principal place of business in New Hampshire and an office in Hefei, China. (Doc. 52 at 2, ¶ 4.) Concepts further asserts that "Defendant Qiu is the principal stockholder, founder, President and Director of Defendant TurboTides and, on information and belief, is also the controlling owner and principal corporate officer of Hefei Taize Toping Technology Co., Ltd., TurboTides Technology Co., Ltd., Taize Turbine Technology Co., Ltd., Hefei TurboTides Turbomachinery Technology Co.[,] Ltd.[,] and [Hefei Taize] (collectively "the Hefei Entities")." (Id. ¶ 5.) Defendants represent that Hefei Taize was formed in China in April 2016 and that TurboTides was incorporated in New Hampshire in May 2018. (Defs.' Reply to Pl.'s Opp'n to Defs.' Mot. to Amend Answer, Doc. 48 at 1.)

Concepts alleges that TurboTides and the Hefei Entities "all share the same offices in Hefei, China and their various employees and agents work for the collective benefit of Mr. Qiu's single enterprise offering the same products and services to the same customers world-wide." (Second Am. Compl., Doc. 52 at 2, ¶ 6.) Concepts further asserts that the Hefei Entities are also "affiliates of TurboTides," all of which are "wholly controlled by Defendant Qiu," as he "owns the controlling interest in all entities." (Id. ¶ 7.) According to Concepts, the Hefei Entities are "the alter ego of Defendant Qiu" to the point where "their affairs are so conducted as to make them merely an instrument, agent, conduit, or adjunct of Defendants TurboTides, Inc. and Qiu." (Id. ¶ 8.) Concepts alleges "such a unity of interest and ownership between the Hefei Entities and TurboTides, Inc. and Defendant Qiu that the separate personalities of the entities no longer exist, or are merged, so that each entity is a mere adjunct of the other or the entities form a single enterprise." (Id. at 2-3, ¶ 9.)

In its Original and Amended Complaints, Concepts alleges that TurboTides has an office in Hefei, China. (Original Compl., Doc. 1 at 1-2, ¶ 3; First Am. Compl., Doc. 11 at 1-2, ¶ 3.) Defendants initially admitted the truth of this allegation. (Answer to First Am. Compl., Doc. 18 at 1, ¶ 3.) Defendants' initial disclosures represented that the "TurboTides China Office" had several employees. (Doc. 85-2 at 3-4.) These disclosures further stated that the "[d]ocuments concerning the nature, and features of the TurboTides software" and "[t]he code for the TurboTides software" were in the Defendants' possession, custody, or control. (Id. at 6.) In April 2021, Qiu and TurboTides acquired new counsel, who filed an Amended Answer.

(Doc. 50.) Defendants also amended their Initial Disclosures. (See Hefei Taize's Post-Hr'g Mem., Doc. 173 at 12.)

II. Prior Proceedings Regarding the Subpoenas

In July 2021, Concepts served two Subpoenas on Qiu for discovery from Hefei Taize. One Subpoena requested the production of documents and materials, and the other requested a Rule 30(b)(6) deposition. (Doc. 92-1.) As Judge Crawford explained, "[c]onsistent with Concepts' theory that Defendants wrongfully obtained and used its software trade secrets, the subpoenas seek a wide variety of information regarding Hefei Taize and the conception and development of turbomachinery software." (Order on Mot. for Prot. Order and to Quash and on Mot. for Contempt and Coercive Sanctions, Doc. 87 at 2; see Pl.'s Subpoenas to Hefei Taize, Doc. 92-1.) Defendants filed a Motion to Quash the Subpoenas, claiming that (i) Qiu was not an agent of Hefei Taize, and (ii) the Court could not enforce the Subpoenas because it lacked personal jurisdiction over Hefei Taize. (Doc. 61.) Judge Crawford declined to quash the subpoenas based on improper service and further found that Concepts had made a prima facie showing of personal jurisdiction over Hefei Taize under an alter ego theory based on its contacts with the United States through TurboTides (Order on Mot. for Prot. Order and to Quash and on Mot. for Contempt and Coercive Sanctions, Doc. 87 at 6-10). The Court also granted Concepts' Motion for Contempt and Sanctions against Hefei Taize, but "only insofar as Hefei Taize [was] ordered to comply with the subpoenas within 30 days." (Id. at 12.)

On October 20, 2021, Hefei Taize moved to modify the Subpoenas, contending that modification was necessary to prevent disclosure of trade secrets and confidential business information, and to ensure that Hefei Taize's compliance with the Subpoenas would not violate China's recently enacted DSL. (Doc. 92.) Hefei Taize also reserved "its right to challenge the assertion that the Court has personal jurisdiction over it." (Id. at 1 n.1.) Concepts filed an Opposition and Cross-Motion to find Hefei Taize and Qiu in contempt and to impose discovery sanctions under Rule 37(b) for failing to comply with the Subpoenas. (Pl.'s Cross-Mot. for Contempt and Sanctions, Doc. 102.)

Judge Crawford acknowledged both the legal and practical issues associated with enforcement of the Subpoenas against a Chinese company:

[A] subpoena addressed to a Chinese company raises special problems. The foremost is Hefei's obligation to follow Chinese law. The second is the court's difficulty in enforcing a civil contempt sanction against a foreign corporation. A third is the still-open issue of whether service on Mr. Qiu was good as well as the court's jurisdiction to compel discovery from a foreign corporation. As the attorney for Hefei points out, the Chinese company has not been heard fully on these issue[s].

(Order on Pending Disc. Mots., Doc. 140 at 13.) Although the Court declined to modify the Subpoenas, it also observed that "overlooking Hefei's legal risk in China if it violates Chinese law is not appropriate either." (Id.) Presented with choices that "[we]re not fully satisfactory," Judge Crawford chose to defer the contempt motion in favor of an evidentiary hearing addressing the potential ramifications under Chinese law were Hefei Taize to comply with the Subpoenas, as well as providing the opportunity for Hefei and the other parties to be heard on issues pertaining to service of the Subpoenas and jurisdiction. (Id. at 13-15.) As the discovery process continued, Concepts obtained a copy of a July 30, 2018 contract between Pennsylvania company Flexware Inc. and TurboTides, Inc. (the "Flexware Contract"). (Doc. 145-2.) Concepts asserted in a supplemental filing to the Court that the Flexware Contract represented that the source code and intellectual property rights to the TurboTides software program "are and shall remain the property of TurboTides Inc." (Pl.'s Suppl. Mem. in Supp. of Mot. for Contempt and Sanctions, Doc. 145 at 2.) According to Concepts, the Flexware Contract confirms that TurboTides, not Hefei Taize, owns the software code and related software documents and therefore Chinese law does not prohibit TurboTides from disclosing the information demanded in the Subpoenas. (Id. at 1-2.) Hefei Taize discounts the significance of the Flexware Contract, arguing first that the contract does not "irrefutably establish that TurboTides owns the software" because TurboTides is only a reseller of Hefei Taize's software and therefore cannot have ownership rights in a contract with a third party. (Opp'n to Pl.'s Suppl. Mem. in Supp. of Mot. for Sanctions, Doc. 158 at 3.) Hefei Taize also asserts that, separate from software-related discovery, Concepts' Subpoena demands an additional "vast array of information," production of which could subject Hefei to "significant legal consequences" under Chinese law. (Id. at 4.)

Hefei Taize also seeks to quash the Subpoenas based on a lack of personal jurisdiction, contending that Concepts has not established the alter ego relationship between TurboTides and Hefei Taize that, in Concepts' view, obligates Hefei Taize to respond to the Subpoenas. (Doc. 156.) Concepts and Hefei Taize have submitted expert opinions on the effect of Chinese law on the information sought in the contested Subpoenas. Concepts offers the affidavit of Beijing attorney Erica Liu (Liu Yuping), who opines on the DSL that Hefei Taize asserts is an obstacle to production of the requested documents. (Liu Decl., Doc. 145-1.) Attorney Liu generally opines that the DSL should not bar production of documents pursuant to the Subpoenas, and that the appropriate next step is for Hefei Taize to seek approval from Chinese authorities to release the information. (Id. at 8-9.) Hefei Taize responds with the affidavit of Beijing attorney Eva (Yue) Niu, who asserts that the information requested in the Subpoenas comes within the proscriptions of the DSL and cannot be produced without the approval of appropriate authorities in China. (Niu Decl., Doc. 165 at 2-4.)

Discussion

I. Personal Jurisdiction over Hefei Taize

A. Standard of Review

A district court "must have personal jurisdiction over a nonparty in order to compel it to comply with a valid discovery request under Federal Rule of Civil Procedure 45." Gucci Am., Inc. v. Weixing Li, 768 F.3d 122, 141 (2d. Cir. 2014) (Gucci I). As the Second Circuit has explained, courts have "considerable procedural leeway" in deciding a motion to dismiss based on lack of personal jurisdiction:

It may determine the motion on the basis of affidavits alone; or it may permit discovery in aid of the motion; or it may conduct an evidentiary hearing on the merits of the motion. If the court chooses not to conduct a full-blown evidentiary hearing on the motion, the plaintiff need make only a prima facie showing of jurisdiction through its own affidavits and supporting materials.

Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981) (citations omitted). A plaintiff may make a prima facie

showing of jurisdiction by "pleading in good faith ... legally sufficient allegations of jurisdiction." Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990). In other words, "the plaintiff's prima facie showing may be established solely by allegations." Id. If the court conducts an evidentiary hearing, however, "the plaintiff must prove the existence of jurisdiction by a preponderance of the evidence." Id. "To establish a fact by a preponderance of the evidence means to prove that the fact is more likely true than not true." Fischl v. Armitage, 128 F.3d 50, 55 (2d Cir. 1997) (citation omitted). Given that the plaintiff has the burden of proof, the plaintiff "would lose in the event that the evidence is evenly balanced." Kosakow v. New Rochelle Radiology Assocs., P.C., 274 F.3d 706, 731 (2d Cir. 2001). As the Court has conducted an evidentiary hearing on the pending motions, Concepts must show by a preponderance of the evidence that personal jurisdiction over Hefei Taize is proper.

B. As Hefei Taize entered the case after the Court initially found personal jurisdiction, the Court may properly consider Hefei Taize's challenges to personal jurisdiction now.

Prior to Hefei Taize entering a special appearance, Defendants asserted that the Court lacked personal jurisdiction over Hefei Taize because (1) Hefei is a foreign corporation with no connection to Vermont; and (2) the requested documents are located in China. (Qiu's Mot. to Quash and for Prot. Order, Doc. 61 at 3.) Concepts countered that "Hefei is one and the same entity as TurboTides, Inc. and that Mr. Qiu and all three defendants engaged in a joint conspiracy 'purposefully directed' to damage Concepts in Vermont." (Pl.'s Opp'n to Qiu's Mot. to Quash and for Prot. Order, Doc. 62 at 7 (citing Second Am. Compl., Doc. 52 at 2-3, ¶¶ 4-10, 12; id. at 36-37, ¶¶ 171-75).) Judge Crawford concluded that Concepts had made a prima facie showing that the Court could exercise personal jurisdiction over Hefei Taize under an alter-ego theory. (Order on Mot. for Prot. Order and to Quash and on Mot. for Contempt and Coercive Sanctions, Doc. 87 at 10.) Judge Crawford based this conclusion on (i) the fact that TurboTides sells Hefei Taize's software in the United States, and (ii) Concepts' allegations that both companies are commonly owned and "all share the same offices in Hefei, China[,] and their various employees and agents work for the collective benefit of Mr. Qiu's single enterprise offering the same products and services to the same customers world-wide." (Id.)

As Hefei Taize did not enter an appearance until after the Court's Order, it did not have an opportunity to raise jurisdictional challenges to the Subpoenas on its own behalf. Therefore, the Court may properly consider Hefei Taize's arguments against personal jurisdiction.

C. Specific Jurisdiction over Hefei Taize Under an Alter-Ego Theory²

2 Because the Court may assert specific jurisdiction over Hefei Taize to enforce the Subpoenas, it does not address general jurisdiction. (See Pl.'s Reply to Qiu's Opp'n to Pl.'s Suppl. Mem., Doc. 163 at 5.)

Hefei Taize argues that (i) personal jurisdiction premised on an alter-ego theory is not appropriate in the context of enforcement of a Rule 45 subpoena directed to a non-party (Hefei Taize's Mot. to Quash, Doc. 156 at 5), and (ii) even if alter ego is an appropriate basis for enforcement of the subpoena, Concepts has not demonstrated that either Qiu or TurboTides

is Hefei Taize's alter ego (id. at 6; see Hefei Taize's Post-Hr'g Mem., Doc. 173 at 7-12). Specifically, Hefei Taize asserts that Concepts has not established by a preponderance of the evidence that Hefei Taize sufficiently availed itself of the United States to permit the exercise of personal jurisdiction; or that it indirectly availed itself of the United States through TurboTides acting as its agent or alter ego. (Hefei Taize's Post-Hr'g Mem., Doc. 173.)

1. Applicable Law

"Under the federal law governing the exercise of in personam jurisdiction, if a corporation is the alter ego of an individual defendant, or one corporation the alter ego of another, the [c]ourt may 'pierce the corporate veil' jurisdictionally and attribute 'contacts' accordingly." In re Lyondell Chem. Co., 543 B.R. 127, 141 (Bankr. S.D.N.Y. 2016) (quoting ADO Fin., AG v. McDonnell Douglas Corp., 931 F. Supp. 711, 715 (C.D. Cal. 1996)). "Federal common law allows piercing of the corporate veil where (1) a corporation uses its alter ego to perpetrate a fraud or (2) where it so dominates and disregards its alter ego's corporate form that the alter ego was actually carrying on the controlling corporation's business instead of its own." Status Int'l S.A. v. M&D Mar. Ltd., 994 F. Supp. 182, 186 (S.D.N.Y. 1998) (citations omitted). "Federal courts have also found that an individual shareholder's contacts can be imputed to an alter ego corporation." In re Lyondell, 543 B.R. at 142. An alter-ego determination "must be made in view of the totality of the facts." Clipper Wonsild Tankers Holding A/S v. Biodiesel Ventures, LLC, 851 F. Supp. 2d 504, 509 (S.D.N.Y. 2012) (internal quotation marks and citation omitted).

In assessing whether an entity functions as an alter ego of another entity, courts in this Circuit consider the following factors:

(1) disregard of corporate formalities; (2) inadequate capitalization; (3) intermingling of funds; (4) overlap in ownership, officers, directors, and personnel; (5) common office space, address and telephone numbers of corporate entities; (6) the degree of business discretion shown by the allegedly dominated corporation; (7) whether the dealings between the entities are at arm[']s length; (8) whether the corporations are treated as independent profit centers; (9) payment or guarantee of the corporation's debts by the dominating entity, and (10) intermingling of property between the entities.

Id. at 509-10; Wm. Passalacqua Builders, Inc. v. Resnick Devs. S., Inc., 933 F.2d 131, 139 (2d Cir. 1991). "No one factor is dispositive, and courts have considered additional factors as well." Clipper Wonsild Tankers, 851 F. Supp. 2d at 510. "Instead of a firm rule, the general principle guiding courts in determining whether to pierce the corporate veil 'has been that liability is imposed when doing so would achieve an equitable result.'" Williamson v. Recovery Ltd. P'ship, 542 F.3d 43, 53 (2d Cir. 2008) (quoting William Wrigley Jr. Co. v. Waters, 890 F.2d 594, 601 (2d Cir. 1989)); see Am. Protein Corp. v. AB Volvo, 844 F.2d 56, 60 (2d Cir. 1988) ("[D]isregarding corporate separateness as an equitable remedy is one that differs with the circumstances of each case.").

The record evidence in this case does not permit the Court to assess inadequate capitalization, intermingling of funds, payment or guarantee of the corporation's debts by the dominating entity, or whether the corporations are treated as independent profit centers. However, the remaining factors—the companies' disregard of corporate formalities; overlap in ownership, officers, directors, and personnel; common office space; degree of business discretion; and lack of arm's-length dealings

—demonstrate that TurboTides and Hefei Taize are alter egos of one another, and consequently the exercise of personal jurisdiction over Hefei Taize to compel compliance with the Subpoenas is appropriate to achieve an equitable result.

2. Disregard of Corporate Formalities

In determining whether companies have adhered to corporate formalities, the court considers "actions such as inadequate record keeping, lack of corporate kits, and failure to comply with governmental requirements—such as taxes." Ng v. Adler, 518 B.R. 228, 234 (E.D.N.Y. 2014); Cohen v. Schroeder, 248 F. Supp. 3d 511, 519 (S.D.N.Y. 2017) (considering corporate formalities such as "whether dividends were paid, corporate records kept, officers and directors functioned properly"), aff'd, 724 F. App'x 45 (2d Cir. 2018). In contrast, advertising and marketing materials are "intended to be read by the consuming public" and generally such content is not sufficient to pierce the corporate veil. Aerotel, Ltd. v. Sprint Corp., 100 F. Supp. 2d 189, 193 (S.D.N.Y. 2000); see also Reers v. Deutsche Bahn AG, 320 F. Supp. 2d 140, 157 (S.D.N.Y. 2004) ("[T]he fact ... that the parent decides to present several corporations on a website in a unified fashion, is insufficient to show lack of formal separation between two entities."). Therefore, the general rule is that advertising and marketing materials "do not trump the reality of documents evidencing adherence to corporate formalities." Gallelli v. Crown Imports, LLC, 701 F. Supp. 2d 263, 274 (E.D.N.Y. 2010) (citing Reers, 320 F. Supp. 2d at 157-58).

In support of its claim that TurboTides and Hefei Taize did not function as separate corporate entities, Concepts offers various public-facing materials from TurboTides, including press releases and presentation materials in which the company refers to itself as a large software development company. (See Pl.'s Opp'n to Hefei Taize's Mot. to Quash, Doc. 164 at 10-12 (citing Scott Hanratty Dep., Doc. 164-3; July 20, 2020 Press Release, Doc. 164-6; March 14, 2020 Press Release, Doc. 164-7; Recommendation Letter, Doc. 164-11; TurboTides' October 16, 2019 Presentation, Doc. 164-13; July 1, 2019 Sales Agent Indep. Contractor Agm't Between TurboTides and Scott Thibault, Ex. 143, Doc. 164-18;³ TurboTides' Presentation to BHEL, Doc. 164-21; TurboTides' Presentation for National Pump Company, Doc. 164-29; MP4 Video and Audio of TurboTides, Inc. Presentation, Ex. 418, Doc. 164-31; TurboTides Emails, Docs. 164-32, 164-33; January 28, 2020 Press Release, Doc. 164-34; R. Bradford Fawley Decl., Doc. 45-2).)

3 Exhibit subject to Stipulated Protective Order (see Doc. 25); claimed Highly Confidential Attorney's Eyes Only by Defendants.

The record does not include the types of documents typically "evidencing adherence to corporate formalities," Gallelli, 701 F. Supp. 2d at 274, such as payment of dividends, and records demonstrating the distinct corporate structures and operations of TurboTides and Hefei Taize. In fact, the Subpoenas in substantial part appear to seek records bearing on such issues. (See Pl.'s Subpoenas to Hefei Taize, Doc. 92-1.) Hefei Taize notes that the two companies' separate articles of incorporation, and Hefei Taize's Chinese copyright registrations for Version 1 of the TurboTides software, demonstrate that the two companies followed corporate formalities. (Doc. 173-1 at 9.) Hefei Taize also notes that TurboTides conducted business without Hefei Taize (see July 1, 2019 Sales Agent Indep. Contractor Agm't

Between TurboTides and Scott Thibault, Ex. 143, Doc. 164-18;⁴ Flexware Contract, Doc. 164-30), and the two companies eventually entered into a Strategic Partnership Agreement (Hefei Taize's and TurboTides' Strategic P'ship Agm't, Doc. 159-2), presumably an indication that the companies were independent entities before the strategic partnership. While such documentary evidence is relevant to the inquiry, the alter-ego analysis also looks to the practical operation of the companies to discern whether there is in fact a functional unity between apparently separate entities. However, the independent contractor agreement, the Flexware Contract, and the partnership agreement do not evidence compliance with corporate formalities.

4 Exhibit subject to Stipulated Protective Order (see Doc. 25); claimed Highly Confidential Attorney's Eyes Only by Defendants.

Although marketing materials generally are insufficient to demonstrate a lack of formal separation between corporate entities, the Court in the end must "achieve an equitable result." See Williamson, 542 F.3d at 53; Platina Bulk Carriers Pte Ltd. v. Praxis Energy Agents DMCC, No. 20 Civ. 4892 (NRB), 2021 WL 4137528, at *5 (S.D.N.Y. Sept. 10, 2021) (finding that plaintiff adequately pled jurisdiction under ten-factor test in part because companies "publicly h[e]ld themselves out on a single web address to conduct the exact same business"). This Court and other district courts have considered such materials under similar circumstances. See Mansfield Heliflight, Inc. v. Heli-One Can. Inc., Civil Action No. 2:12-CV-46, 2012 WL 4479851, at *7 (D. Vt. Sept. 28, 2012) (asserting personal jurisdiction over sister companies based on "a significant degree of integration" in press releases and marketing); cf. Cali v. E. Coast Aviation Servs., Ltd., 178 F. Supp. 2d 276, 287 (E.D.N.Y. 2001) (considering companies' "unified marketing image, including common design elements, logos and language" to be "the most compelling evidence" under Pennsylvania's alter-ego test); In re Latex Gloves Prods. Liab. Litig., No. MDL 1148, 2001 WL 964105, at *4 (E.D. Pa. Aug. 22, 2001) (noting companies appeared integrated when they "project[ed] a unified marketing image as a single company").

Regarding TurboTides' use of the marketing materials in question, Qiu testified that TurboTides "wanted to present [itself] as a larger company," to use the "Hefei Taize name ... to bolster sales in [the] United States," and to "claim ... Hefei's capability as their own." (Evid. Hr'g Tr., July 11, 2022, Doc. 171 at 72:4-15.) Defendants provided evidence that TurboTides is a four-person software reseller. However, Concepts has presented numerous statements, press releases, and documents from TurboTides where it presented itself as a large software developer. (MP4 Video and Audio of TurboTides, Inc. Presentation, Ex. 418, Doc. 164-31 (advertising TurboTides as a company involved in software development with the "majority" of its team dedicated to software development); TurboTides' October 16, 2019 Presentation, Doc. 164-13 at 3 (describing TurboTides as a company with more than "30 employees, the majority of whom are in software development"); TurboTides' Presentation to BHEL, Doc. 164-21 at 4 (describing TurboTides as a company with "38 total employees, the majority in software development"); TurboTides Presentation for National Pump Company, Doc. 164-29; Fawley Decl., Doc. 45-2 at 4-8, 20, 23 (containing various pages on TurboTides' website describing TurboTides as a

software developer).) Qiu also explained that "Hefei Taize sometimes was translat[ed] into Hefei TurboTides Technology Company" and these translations, coupled with their attempts to make the company appear "bigger," caused even Qiu at times to "confuse[] [the] two companies together." (Evid. Hr'g Tr., July 11, 2022, Doc. 171 at 16:16-20; see also Evid. Hr'g Tr., July 6, 2022, Doc. 170 at 47:9-15 (noting that Hefei Taize was sometimes called "Hefei TurboTide" because "the software was called TurboTide[s]" which "created a lot of confusion").)

These examples suggest a significant degree of integration between the two companies. Perhaps most compelling is Qiu's acknowledgment that TurboTides used Hefei Taize's name to present itself as a larger company, to increase U.S. sales, and to suggest that TurboTides shared in Hefei Taize's perceived capabilities. Qiu also acknowledged that the occasionally combined nomenclature of the companies ("Hefei TurboTides Technology Company") was a further example of presenting a larger company of combined capability. Notwithstanding TurboTides' representation that it was a software re-seller with fewer than five employees, the marketing materials' description of TurboTides as a company with over thirty employees—the majority in software development—further suggests a unity of operations between the two companies in software development.

Therefore, this factor weighs in favor of finding Hefei Taize to be an alter ego of TurboTides.

3. Overlap in Ownership, Officers, Directors, Personnel, and Common Office Space

The record also demonstrates common ownership, employees, and office space between the two companies. According to public records in China, Qiu owned a 31.5% share of Hefei Taize as of December 2021. (Private Co. Basic Registration Info. Search List, Doc. 136-1.) At the July 6, 2022 evidentiary hearing, Qiu testified that he currently owned 33% of Hefei Taize. (Evid. Hr'g Tr., July 6, 2022, Doc. 170 at 50:16-18.) However, Qiu's 2019 and 2020 U.S. tax returns reflect that he owned 80% of Hefei Taize during those tax years. (Tax Returns, Docs. 109-11, 109-12).⁵ Qiu testified that he was holding the stock on behalf of individuals who planned to join the company in the future, which created the appearance of an artificially large ownership stake in Hefei Taize. (Evid. Hr'g Tr., July 6, 2022, Doc. 170 at 50:21-51:11.)⁶ In his November 15, 2021 deposition, Qiu confirmed that he owned 95% of the stock of TurboTides. (Qiu's Dep. Tr., Doc. 164-4 at 5:16-18.) "While courts have found that ownership of [another company]'s stock is not determinative of an alter-ego relationship, it is one important factor in a court's analysis for finding that such a relationship exists." Cali, 178 F. Supp. 2d at 287. Qiu appears to have held a significant ownership stake in both TurboTides and Hefei Taize until recently.

5 Exhibits sealed subject to Amended Order (see Doc. 117) granting Stipulated Motions to File Under Seal (see Docs. 112, 113).

6 Qiu emphasized the legality of this arrangement under Chinese law at that time, but he noted that recently the Chinese government had begun to issue warnings indicating that the "practice was very frowned upon." (Id. at 51:3-14.) Qiu recently released the Hefei Taize shares he was holding because of these warnings from the Chinese government and because Concepts' attorney had "made a big case that [he] was a controlling shareholder for Hefei Taize." (Id. at 51:12-19.)

Qiu has also testified that he was the founder, President, and majority stockholder of TurboTides and the Chairman of Hefei Taize's board of directors. (Qiu's

Dep. Tr., Doc. 164-4 at 5:5-18; 14:19-24.) He works for both companies. At the evidentiary hearing, Qiu asserted that the "[h]ighest head count" of "full-time employee[s] at TurboTides, Inc." was three (four employees if the summer intern is included in the count) (Evid. Hr'g Tr., July 6, 2022, Doc. 170 at 61:12-14.) TurboTides' LinkedIn page confirms this number, listing Qiu, Scott Hanratty, Alec Li, and Zack Hoyle as the only TurboTides employees (see TurboTides, Inc.: People, LinkedIn, https://www.linkedin.com/company/turbotides/people (last accessed Dec. 28, 2022)). The TurboTides website lists only Qiu, Hanratty, and Hoyle on the page entitled "Meet our Team" (see TurboTides, Meet our Team, https://turbotides.com/about.html (last accessed Jan. 6, 2023)). Scott Hanratty, a TurboTides sales executive, testified that a Hefei Taize employee or contractor appeared to administer TurboTides' LinkedIn page. (Hanratty Dep., Doc. 164-3 at 45:1-47:4.)

Defendants' initial disclosures stated there were TurboTides employees at both Hefei Taize's office (Doc. 85-2 at 2-3) and TurboTides' "China Office," which shares an address with Hefei Taize (id. at 4). Specifically, Defendants' initial disclosures listed at least five employees who allegedly worked for TurboTides but listed their addresses as the Hefei office in China. (Id. at 2-4.) Concepts asserts that the fact that Defendants "[a]dmitted that TurboTides is a for profit New Hampshire corporation ... with an office in China" is evidence that the two companies share office space. (Evid. Hr'g Tr., July 6, 2022, Doc. 170 at 23:4-8 (quoting Defs.' Answer to Second Am. Compl., Doc. 18 at 1-2, ¶ 3).)

Ted Gresh, the President of Flexware, understood the Flexware Contract's reference to "our China office" to mean "TurboTides' office in China." (Gresh Dep., Doc. 164-2 at 16:5-17.) Further, before TurboTides, Inc. was registered as a corporation in 2018, Dr. Qiu wrote a recommendation letter as "Founder and President of TurboTides LLC" (TurboTides, Inc.'s predecessor) for an intern who worked in TurboTides LLC's "China office." (Recommendation Letter, Doc. 164-11.) Qiu testified that it is "not accurate" that TurboTides had a China office. Given Qiu's substantial financial investment in, and participation in the governance of Hefei Taize, the lack of an office in China only increases the likelihood that TurboTides' "China Office" is Hefei Taize. (Evid. Hr'g Tr., July 11, 2022, Doc. 171 at 65:19-24.) Scott Thibault, a TurboTides contractor, stated that "TurboTides' China office was our shorthand for Hefei" and "TurboTides did not have a China office." (See Thibault Dep., Doc. 128-2 at 26.) Thibault further testified that "[t]he only China thing having anything to do with the TurboTides software was this Hefei company." (See id.)

Defendants respond that the Court should not rely on information contained in the original initial disclosures because defendants have since amended their Answer and initial disclosures, and these amendments demonstrate the separation between the two entities. (See Defs.' Mot. to Amend Answer to Pl.'s First Am. Compl., Doc. 41; Evid. Hr'g Tr., July 6, 2022, Doc. 170 at 38:12-18; Evid. Hr'g Tr., July 11, 2022, Doc. 171 at 68:11-19, 69:11-13.) Defendants moved to amend their answer based on "communication challenges between Mr. Qiu and previous counsel" due to "linguistic issues" and prior counsel's misunderstanding of "the corporate structure of Hefei Taize ... and its relationship to TurboTides, Inc." (Defs.' Mot. to Amend Answer to Pl.'s First Am. Compl., Doc. 41 at 4-5.)

"A pleading prepared by an attorney is an admission by one presumptively

authorized to speak for his principal." United States v. GAF Corp., 928 F.2d 1253, 1259 (2d Cir. 1991) (quoting Kunglig Jarnvagsstyrelsen v. Dexter & Carpenter, 32 F.2d 195, 198 (2d Cir. 1929)). As the Second Circuit has explained, an amendment to a pleading does not render the representations in the original pleading of no evidentiary effect:

When a pleading is amended or withdrawn, the superseded portion ceases to be a conclusive judicial admission; but it still remains as a statement once seriously made by an authorized agent, and as such it is competent evidence of the facts stated, though controvertible, like any other extra-judicial admission made by a party or his agent.... If the agent made the admission without adequate information, that goes to its weight, not to its admissibility.

Id. at 1259-60 (omission in original). In other words, "[a] judicial admission is conclusive, unless the court allows it to be withdrawn; ordinary evidentiary admissions, in contrast, may be controverted or explained by the party." Lambert v. Credit Lyonnais (Suisse) S.A., No. 93 CIV. 6876(LMM), 2001 WL 357316, at *1 (S.D.N.Y. Apr. 10, 2001) (quoting Keller v. United States, 58 F.3d 1194, 1198 n.8 (7th Cir. 1995)). "The foregoing, however, does not mean that plaintiffs cannot introduce some evidence of admissions by [Defendants,] which may be inconsistent with [their] present position." Id. at *2. While Defendants' initial disclosures have "cease[d] to be a conclusive judicial admission," they are still "competent evidence of the facts stated." See GAF Corp., 928 F.2d at 1259. Consequently, the Court may consider Defendants' prior admissions on whether certain employees work at both companies and whether the companies share an office space. Defendants' amended disclosures affect the weight the Court gives the initial disclosures but not their admissibility. As the record suggests that Hefei Taize and TurboTides share ownership, employees, and office space, this factor weighs in favor of finding that the companies are alter egos of one another.

4. Degree of Business Discretion and Arm's-Length Dealing

Qiu testified that there are only three or four employees at TurboTides. (See Evid. Hr'g Tr., July 6, 2022, Doc. 170 at 36:16-17, 61:10-14.) He described the employees as "[o]ne ... guy involved with sales," who "demonstrate[s] the software to the potential customers," and Qiu himself, who has been "taking over a management role." (Id. at 61:21-62:2). Qiu testified that was the "minimum [the company] need[ed] to have to do any kind of business in [the] United States." (Id. at 61:23-24); see Ridge Clearing & Outsourcing Sols., Inc. v. Khashoggi, No. 07 Civ. 6611(RJH), 2011 WL 3586455, at *9 (S.D.N.Y. Aug. 12, 2011) (finding that defendant "dominated and controlled" a corporation when defendant "exercised nearly unbridled discretion" over the corporation's business activities and where "other officers ... occupied essentially ministerial roles at the company" (citation omitted)). Qiu made this structure possible as creator of TurboTides. (See Evid. Hr'g Tr., July 6, 2022, Doc. 170 at 36:9-11 (counsel representing that "TurboTides, Inc., was created so Mr. Qiu could serve as a reseller of the software"), 59:15-21.)

As Qiu and the other two employees were the "minimum" required to function as a business in the United States, and that business "was to try to help Hefei Taize to sell TurboTides globally," TurboTides functioned for the benefit of Hefei Taize. (Evid. Hr'g Tr., July 6, 2022, Doc. 170 at 59:20-21, 61:23-24); cf. In re Madison Bentley Assocs., LLC, Case No. 09-15479(SHL), 2015 WL 6125893, at *8

(Bankr. S.D.N.Y. Oct. 16, 2015) (concluding that piercing the corporate veil was appropriate where there "can be no dispute that the Debtor was used to further the Defendants' goals of showing and selling automobiles"). Qiu was co-founder of both TurboTides and Hefei Taize (Evid. Hr'g Tr., July 11, 2022, Doc. 171 at 17:4-9), is President of TurboTides (Qiu's Dep. Tr., Doc. 164-4 at 5:11-12) and Chairman of Hefei Taize's board of directors (id. at 14:19-24), and his role as the only manager at TurboTides was to further Hefei Taize's global software sales. These facts suggest limited business discretion and the absence of arm's-length dealing between the two companies.

D. TurboTides had sufficient minimum contacts with the United States from which Hefei Taize's documents proximately resulted.

"Litigants have a substantive due process right not to be haled into court unless they have minimum contacts with the forum in which the court sits." City of Long Beach v. Total Gas & Power N. Am., Inc., 465 F. Supp. 3d 416, 434 (S.D.N.Y. 2020).⁷ Sufficient minimum contacts will be found for the exercise of specific jurisdiction if (1) the nonresident has "purposefully availed itself of the privilege of doing business in the forum," and (2) "the litigation results from alleged injuries that arise out of or relate to those activities." See U.S. Bank Nat'l Ass'n v. Bank of Am. N.A., 916 F.3d 143, 150-51 (2d Cir. 2019) (internal quotation marks and citations omitted). The purposeful-availment requirement "ensures that a [nonresident] will not be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts, ... or of the unilateral activity of another party or ... person." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (internal quotation marks and citations omitted). Examples of purposeful availment include "'exploit[ing] a market' in the forum State or entering a contractual relationship centered there." Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., — U.S. —, 141 S. Ct. 1017, 1025, 209 L.Ed.2d 225 (2021) (alteration in original) (quoting Walden v. Fiore, 571 U.S. 277, 285, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014)). If the Court "finds that one corporation is the alter ego of another, it may disregard the corporate form for minimum contacts analysis." City of Long Beach, 465 F. Supp. 3d at 437 (emphasis omitted).

7 Courts review contacts "with the United States as a whole" if a party is subject to statutory "nationwide service of process." SEC v. Sharef, 924 F. Supp. 2d 539, 544 (S.D.N.Y. 2013). As Judge Crawford explained, "Fed. R. Civ. P. 45(b)(2) permits service of a subpoena 'at any place within the United States.'" (Order on Mot. for Prot. Order and to Quash and on Mot. for Contempt and Coercive Sanctions, Doc. 87 at 8 n.6 (citing Gucci I, 768 F.3d at 142 n.21)).

As Judge Crawford explained, the Second Circuit has "offered guidance" on modifying the second step of the specific jurisdiction analysis to account for a nonparty witness's contacts with the forum. (Order on Mot. for Prot. Order and to Quash and on Mot. for Contempt and Coercive Sanctions, Doc. 87 at 8); see Gucci I, 768 F.3d at 141. In determining whether the discovery requests arise out of or relate to these contacts, "the court asks whether the material sought 'proximately resulted' from Hefei Taize's U.S. contacts." (Order on Mot. for Prot. Order, Doc. 87 at 8) (citing In re del Valle Ruiz, 939 F.3d 520, 530 (2d Cir. 2019)). In other words, Hefei Taize, through TurboTides, "having purposefully availed itself of the forum must be the primary or proximate reason that the evidence sought is available at

all." Id. The Court previously "conclude[d] that the contacts of a party can be imputed to a nonparty witness under an alter-ego theory. Thus, a corporate entity can 'purposely avail[] itself of the forum state through an entity acting as its alter ego.'" (Id.) (quoting Celgard, LLC v. SK Innovation Co., 792 F.3d 1373, 1379 (Fed. Cir. 2015)). Therefore, the Court considers whether TurboTides' contacts with the United States establish that Hefei Taize purposefully availed itself of the United States.

The record evidence demonstrates that Turbo Tides purposefully availed itself of the privilege of doing business in the United States. Although Qiu stated that he intended to sell TurboTides software "globally" (Evid. Hr'g Tr., July 6, 2022, Doc. 170 at 59:20-21), he incorporated TurboTides in New Hampshire (Articles of Inc., Doc. 164-22), and apparently the majority of the purchasers of the TurboTides software are located in the United States. (Evid. Hr'g Tr., July 11, 2022, Doc. 171 at 70:7-12; see TurboTides' Second Suppl. Resps. to Pl.'s First Set of Interrogs., Ex. 435, Doc. 164-35 at 3.⁸) (referencing Qiu's interrogatory responses representing that nineteen of twenty-two purchasers of TurboTides software are located in the U.S.)

8 Exhibit subject to Stipulated Protective Order (see Doc. 25); claimed Highly Confidential Attorney's Eyes Only by Defendants.

Citing Nuance Communications v. Abbyy Software House, 626 F.3d 1222 (Fed. Cir. 2010), Hefei Taize argues that "a foreign corporation does not purposefully avail itself of a forum by allowing its software to be sold pursuant to a licensing agreement." (Hefei Taize's Mot. to Quash, Doc. 156 at 13.) As Hefei Taize correctly notes, Nuance explained that personal jurisdiction may be proper where there was a licensing agreement, coupled with a defendant's expressed desire to "win the whole US market," and the distribution of the software to the defendant's related company in the United States. Nuance, 626 F.3d at 1232. Further, "[o]ver ninety-five percent of the profits resulting from the sale of that software flow[ed] to Abbyy Production." Id.

Hefei Taize has established similar contacts with the United States. Qiu testified that TurboTides used the Hefei Taize name "to bolster sales in [the] United States." (Evid. Hr'g Tr., July 11, 2022, Doc. 171 at 72:8-10; see Thibault Aff., Doc. 159-4 at 3, ¶ 10 (Thibault attesting that he entered agreements for TurboTides to help it establish "a foothold in the U.S. market").) Qiu testified that prior to 2018 he "spent most of [his] time ... in the United States." (Evid. Hr'g Tr., July 6, 2022, Doc. 170 at 49:10-12.) That most of their customers are based in the United States is further evidence that they targeted the U.S. market. According to the terms of the Strategic Partnership Agreement, it appears that Hefei Taize would receive the majority of the fees from each sale of software. Nuance, 626 F.3d at 1232; (Hefei Taize's and TurboTides' Strategic P'ship Agm't, Doc. 159-2). The "profit distribution" provisions of the agreement are somewhat vague regarding the details, but they nevertheless appear to direct a significantly higher percentage of the contract price to Hefei Taize. (Strategic P'ship Agm't, Doc. 159-2 at 5, ¶¶ 1-4.)

Hefei Taize further argues that the documents requested in the subpoena do not proximately result from Hefei Taize's contacts with the United States. It specifically objects to the requests related to its formation and software development, noting

that such documents existed prior to its alleged contacts with the United States. In Hefei Taize's view, therefore, these documents could not have proximately resulted from its U.S. contacts. (Hefei Taize's Post-Hr'g Mem., Doc. 173 at 6-7.) But Concepts' theory of the case rests on Qiu leaving the United States to form Hefei Taize in China, allegedly utilizing Concepts' misappropriated intellectual property there, and reselling that software in the United States through TurboTides. (See Second Am. Compl., Doc. 52.) Hefei Taize's formation documents therefore were allegedly created to further Qiu's sale of the infringing software in the United States. According to the theory, the company's contacts are the primary reason the corporate documents are "available at all." See In re del Valle Ruiz, 939 F.3d at 530. Documents created while allegedly developing the infringing TurboTides software exist because of the purported objective of reselling the software in the United States.

Accordingly, the documents and information requested by the Subpoenas proximately result from Hefei Taize's and TurboTides' contacts with the United States.

E. Whether the exercise of personal jurisdiction over Hefei Taize is consistent with principles of fair play and substantial justice.

When a court determines that a party has sufficient minimum contacts to satisfy due process, it must consider whether the exercise of personal jurisdiction would comport with "traditional notions of fair play and substantial justice." Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 568 (2d Cir. 1996). Several factors govern this assessment:

(1) the burden that the exercise of jurisdiction will impose on the [entity]; (2) the interests of the forum state in adjudicating the case; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of the controversy; and (5) the shared interest of the states in furthering substantive social policies.

Id. "When the entity that may be subject to personal jurisdiction is a foreign one, courts consider the international judicial system's interest in efficiency and the shared interests of the nations in advancing substantive policies." Gucci Am., Inc. v. Weixing Li, 135 F. Supp. 3d 87, 99 (S.D.N.Y. 2015) (Gucci II); see also First Am. Corp. v. Price Waterhouse LLP, 154 F.3d 16, 20 (2d Cir. 1998) ("[A] person who is subjected to liability by service of process far from home may have better cause to complain of an outrage to fair play than one similarly situated who is merely called upon to supply documents or testimony.").

1. Burden on Hefei Taize

With respect to the burden associated with the exercise of jurisdiction, Hefei Taize asserts that requiring compliance with the Subpoenas "would potentially subject [it] to serious penalties for violating China's newly enacted Data Security Laws." (Mot. to Quash, Doc. 156 at 14.)⁹ When evaluating this factor, however, "courts tend to focus their inquiry on the logistical difficulties facing a foreign entity forced to litigate in a given forum, such as the distance the entity would have to travel and the entity's unfamiliarity with the forum." Gucci II, 135 F. Supp. 3d at 100.

9 The Court addresses whether Chinese law bars compliance with the Subpoenas in Part III below.

As Hefei Taize acknowledges, "modern methods of communication and

travel have ... reduc[ed] the burden on foreign litigants." (Doc. 156 at 14 (quoting SEC v. China Energy Sav. Tech., Inc., No. 06-CV-6402 (ADS)(AKT), 2007 WL 9711174, at *4 (E.D.N.Y. Mar. 19, 2007))). Indeed, this case is an example of the reduced burden on litigants in foreign jurisdictions. Qiu testified at the evidentiary hearing in this case remotely from China. Presumably, Qiu could easily submit to the requested Rule 30(b)(6) deposition using a similar arrangement, if necessary. As the burden of litigation in this forum appears relatively minimal, this factor weighs in favor of exercising jurisdiction.

2. Interest of This Forum

In determining whether the forum has an interest in exercising jurisdiction, courts do not "compare the interest of the two sovereigns," but rather "determine whether the forum state has an interest." Nowak v. Tak How Invs., Ltd., 94 F.3d 708, 718 (1st Cir. 1996). In this case, the Court has an interest "in protecting intellectual property rights ... and in ensuring that third parties comply with discovery obligations so as to foster an efficient and effective judicial process." See Nike, Inc. v. Wu, 349 F. Supp. 3d 310, 333 (S.D.N.Y. 2018). This factor also weighs in favor of exercising jurisdiction.

3. Interest of the Plaintiff

Hefei Taize asserts that "Concepts' ability to obtain relief against Qiu and TurboTides does not depend on [the] information" it requested from Hefei Taize. (Mot. to Quash, Doc. 156 at 15.) The history of discovery in this case suggests otherwise. Qiu has refused to provide documents related to the TurboTides software development, asserting that he would be essentially "engag[ing] in an act of theft" if he procured this information from Hefei Taize. (Qiu's Mot. to Quash and for Prot. Order, Doc. 61 at 5; see Evid. Hr'g Tr., July 6, 2022, Doc. 170 at 39:18-22 (defense counsel claiming that Concepts is requiring them to "sneak in—some night into Hefei's building and pull out documents illegally and send them").) Absent Hefei Taize's compliance with the Subpoenas, it seems unlikely that Concepts will be able to obtain these documents or other evidence relevant to whether Concepts' code was utilized during the software's development. See Nike, Inc., 349 F. Supp. 3d at 334. Concepts has a distinct interest in obtaining convenient and effective relief through compliance with these subpoenas.

4. Interest of the Judicial System/Shared Interests of the U.S. and China in Furthering Substantive Social Policies

The final two factors also weigh in favor of exercising jurisdiction. Regarding the judicial system's interest in obtaining the most efficient resolution of the controversy, the parties have litigated their claims in this Court for nearly two years. This district has become "intimately familiar with the parties, facts, and legal issues," and Hefei Taize "has already partially complied with [Concepts'] document requests." See Gucci II, 135 F. Supp. 3d at 100; (Special Appearance to Provide Notice to Ct. of Produc. of Docs., Doc. 114.) It would clearly be "significantly less efficient, extremely time consuming, and potentially fruitless" for this dispute to be resolved outside of this jurisdiction. Gucci II, 135 F. Supp. 3d at 100. As to the shared interests of the U.S. and China in furthering substantive social policies, both forums have an interest in promoting a legal process for the effective protection of property rights. Therefore, this factor suggests that the exercise of personal jurisdiction is consistent with notions of fair play. Cf. Risktimetry Analytics, LLC v. Altaira, LLC, 752 F. Supp. 2d 141, 147 (D. Mass.

2010) ("[T]he social policy in favor of protecting intellectual property counsels in favor of exercising jurisdiction."). The Court recognizes Hefei Taize's claim that compliance with the Subpoenas risks sanctions under Chinese law. Assuming this is a legitimate risk (a proposition that is not entirely clear, as discussed below), then this factor is neutral. See Nike, Inc., 349 F. Supp. 3d at 334.

Therefore, the Court's exercise of personal jurisdiction over Hefei Taize to compel compliance with the Rule 45 Subpoenas comports with fair play and substantial justice.

II. Possession or Control over the Requested Documents Under Rule 45

Under Rule 45, a subpoena must "command each person to whom it is directed to do the following at a specified time and place: attend and testify; produce designated documents, electronically stored information, or tangible things in that person's possession, custody, or control; or permit the inspection of premises." Fed. R. Civ. P. 45(a)(1)(A)(iii). The Subpoenas in this case request both a Rule 30(b)(6) deposition and various documents. As Judge Crawford observed, "[t]here can be little doubt that if Hefei were an American company, it would be required to respond to the subpoena in full," for "[t]he information sought is all potentially relevant." (Order on Pending Disc. Mots., Doc. 140 at 13.) Thus, for the Subpoenas to be enforced, the documents requested must be in the possession, custody, or control of Hefei Taize.

Courts define "control" over subpoenaed documents as "the legal right, authority, or practical ability to obtain the materials sought upon demand." SEC v. Credit Bancorp, Ltd., 194 F.R.D. 469, 471 (S.D.N.Y. 2000). "Regardless of the witness' legal relationship to a document, for the purposes of a Rule 45 subpoena, a document is within a witness's 'possession, custody, or control' if the witness has the practical ability to obtain the document." Tiffany (NJ) LLC v. Qi Andrew, 276 F.R.D. 143, 147 (S.D.N.Y. 2011), aff'd sub nom. Tiffany (NJ) LLC v. Andrew, No. 10 Civ. 9471(WHP), 2011 WL 11562419 (S.D.N.Y. Nov. 14, 2011); see also Shcherbakovskiy v. Da Capo Al Fine, Ltd., 490 F.3d 130, 138 (2d Cir. 2007) (holding that "production may be required" if a party has "access and the practical ability to possess" requested documents). "The test for the production of documents is control, not location." In re Flag Telecom Holdings, Ltd. Sec. Litig., 236 F.R.D. 177, 180 (S.D.N.Y. 2006) (quoting Marc Rich & Co., A.G. v. United States, 707 F.2d 663, 667 (2d Cir. 1983)).

"Where the respondent contests its ability to produce a document, '[t]he party seeking the production bears the burden of demonstrating that the other party has control over the documents sought.'" Chevron Corp. v. Salazar, 275 F.R.D. 437, 447 (S.D.N.Y. 2011) (alteration in original) (quoting In re Flag Telecom, 236 F.R.D. at 180); accord Credit Bancorp, 194 F.R.D. at 473. "[A] corporation is presumed to have custody and control of its own records ordinarily required in the course of business, and the burden of proving otherwise is on the corporation." Tiffany, 276 F.R.D. at 147 (citing Hunter Douglas, Inc. v. Comfortex Corp, No. CIV. A. M8-85 (WHP), 1999 WL 14007, at *3 n.6 (S.D.N.Y. Jan. 11, 1999)).

In its more recent submissions, Concepts emphasizes that copies of the software it seeks from Hefei Taize are in the United States and producible from a TurboTides employee in the U.S. (Compare Pl.'s Mot. for Contempt and Coercive Sanctions, Doc. 73; Pl.'s Cross-Mot. for Contempt and Sanctions, Doc. 102 with Pl.'s Reply to Qiu's Opp'n to Pl.'s Suppl.

Mem., Doc. 163 at 2-4; Pl.'s Opp'n to Hefei Taize's Mot. to Quash, Doc. 164 at 6-8.) Specifically, Concepts claims that a TurboTides employee in Michigan has the software on a laptop and therefore it can be produced. (Evid. Hr'g Tr., July 11, 2022, Doc. 171 at 91:13-17; see Hanratty Dep., Doc. 164-3 at 52:4-53:8.) Defendants have explained that the software in the employee's possession can only run with a "key" to the binary code, which Hefei Taize possesses and refuses to provide. (Status Conf. Tr., May 17, 2022, Doc. 159-1 at 36:4-7; Evid. Hr'g Tr., July 11, 2022, Doc. 171 at 49:10-13 ("The source code is definitely in China. They own it. And they send binary, which is executable, to [the] U.S. whenever U.S. TurboTides, Inc. make[s] a sale.").) It is therefore not clear that TurboTides can produce the software without Hefei Taize's assistance.

The parties also contest whether TurboTides legally owns the TurboTides software. Concepts asserts that the initial disclosures—prior to their amendment—admitted that the software was in TurboTides' "possession or control" and that TurboTides, not Hefei Taize, registered the copyright in China. (Pl.'s Opp'n to Hefei Taize's Mot. to Quash, Doc. 164 at 14 (citing Defs.' Initial Disclosures, Doc. 47-1 at 5-6).) However, Defendants submitted what they assert are Hefei Taize's Chinese copyright registrations from 2016 and 2017 for the TurboTides software (Doc. 43-9), attested to be true and correct copies of the registrations posted on Hefei Taize's website (Doc. 43-10 at 1, ¶ 1).¹⁰ Defendants also assert that Hefei Taize was formed in 2016, while TurboTides was formed in 2018 (Defs' Reply to Pl.'s Opp'n to Defs.' Mot. to Amend Answer, Doc. 48; Evid. Hr'g Tr., July 6, 2022, Doc. 170 at 45:23-24, Doc. 59:14-16), and Qiu attests that Hefei Taize never assigned source code or software to TurboTides after its formation (Evid. Hr'g Tr., July 6, 2022, Doc. 170 at 62:11-13).

10 The Court requested a certified translation of these registrations. (Evid. Hr'g Tr., July 6, 2022, Doc. 170 at 56:19-57:4). It does not appear that translations were filed. Nevertheless, Defendants represent that these registrations have not been contested in this litigation. (Id. at 56:14-17.)

Concepts also asserts that the Flexware Contract (Doc. 145-2) states that TurboTides owns the software and thus has legal control over it (Pl.'s Post-Hr'g Mem., Doc. 174 at 7-8). But former TurboTides independent contractor Scott Thibault, who drafted the agreement, stated that he misstated that TurboTides owned the software. He clarified in an Affidavit that "the software was created by and had always been owned by Hefei Taize." (Thibault Aff., Doc. 159-4 at 3, ¶ 13.) Further, Hefei Taize argues that the agreement's language alone does not dictate who owns the relevant intellectual property rights; as licensee, TurboTides "cannot declare itself to be the owner of Hefei's software in a contract with a third party" without the rights to that software. (Hefei Taize's Opp'n to Pl.'s Suppl. Mem. in Support of Mot. for Sanctions, Doc. 158 at 3); see S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1087 (9th Cir. 1989) ("A licensee infringes the owner's copyright if its use exceeds the scope of its license." (citing Gilliam v. Am. Broad. Cos., 538 F.2d 14, 20 (2d Cir. 1976))). Concepts similarly asserts that TurboTides' practical treatment of the software indicates it has ownership and control, since TurboTides represented in marketing presentations that their team was developing the software. (Pl.'s Post-Hr'g Mem., Doc. 174 at 8-9.) But Defendants claim that they described TurboTides as a software developer only because they wanted to inflate the size of the company to customers, as discussed above.

(Defs.' Post-Hr'g Mem., Doc. 175 at 12-13; Thibault Dep., Doc. 128-2 at 15, 16 (confirming Thibault's goal of "present[ing] the face of TurboTides as a single company" with Hefei Taize).)

Without the benefit of the discovery that Concepts ultimately seeks from Hefei Taize, the Court cannot decide who owns the software that contains Concepts' allegedly stolen intellectual property. Nevertheless, Hefei Taize "is presumed to have custody and control of its own records ordinarily required in the course of business," including the corporate documents requested in the Subpoenas. See Tiffany, 276 F.R.D. at 147. Defendants have consistently argued that only Hefei Taize has the legal right to the TurboTides software and any related documentation, and even Qiu as Hefei Taize's co-founder and board chairman cannot provide them. (See, e.g., Defs.' Reply to Pl.'s Opp'n to Defs.' Mot. to Quash, Doc. 67 at 1; Commc'n from Hefei Taize's Chinese Legal Counsel and Translation, Doc. 67-3 at 4 (stating that "the requested documents are the core assets of the company" and, without authorization from Hefei Taize, Qiu "ha[s] no authority to release any materials that belong[] to [Hefei Taize]").) Hefei Taize exercises possession, custody, and control over the documents requested in the Subpoenas.

In summary, the Court may exercise specific jurisdiction over non-party Hefei Taize to enforce the Rule 45 Subpoenas, and the exercise of personal jurisdiction comports with due process and notions of fair play and substantial justice. This does not end the analysis, however, as Hefei Taize further objects that its compliance with the Subpoenas would violate Chinese law.

III. China's 2021 Data Security Law

According to Hefei Taize, if the Court requires it to provide documents located in China, it "would potentially subject Hefei to serious penalties for violating China's newly enacted Data Security Laws." (Hefei Taize's Mot. to Quash, Doc. 156 at 14.) As an initial matter, "[f]oreign laws that block the production of discoverable material do not automatically excuse a party from its ... obligations." Philips Med. Sys. (Cleveland), Inc. v. Buan, No. 19 CV 2648, 2022 WL 602485, at *2 (N.D. Ill. Mar. 1, 2022). "It is well settled that [foreign blocking] statutes do not deprive an American court of the power to order a party subject to its jurisdiction to produce evidence even though the act of production may violate that statute." Société Nationale Industrielle Aérospatiale v. U.S. Dist. Ct. for S. Dist. of Iowa, 482 U.S. 522, 544 n.29, 107 S.Ct. 2542, 96 L.Ed.2d 461 (1987). The Court must first determine "whether [foreign] law actually bars the production at issue." Republic Techs. (NA), LLC v. BBC Tobacco & Foods, LLP, No. 16 C 3401, 2017 WL 4287205, at *1 (N.D. Ill. Sept. 27, 2017). "The party objecting to a discovery motion based on foreign law bears the burden 'of demonstrating that such law actually bars the production or testimony at issue.'" Wultz v. Bank of China Ltd., 942 F. Supp. 2d 452, 460 (S.D.N.Y. 2013) (Wultz II) (quoting Strauss v. Credit Lyonnais, S.A., 242 F.R.D. 199, 207 (E.D.N.Y. 2007) (Strauss I)). Therefore, Hefei Taize must establish that it is "more likely than not that" Chinese law prohibits it "from producing the materials requested." Id. at 464. Under the Federal Rules of Civil Procedure, when "determining foreign law, the court may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence." Fed. R. Civ. P. 44.1. The Advisory Committee Notes to the Rule explain that the court "is not limited by material presented by the parties; it may engage in its own research and consider any relevant material thus found.

The court ... may wish to reexamine and amplify material that has been presented by counsel in a partisan fashion or in insufficient detail." Fed. R. Civ. P. 44.1 advisory committee's note to 1966 adoption. Rule 44.1 "provides flexible procedures for presenting and utilizing material on issues of foreign law by which a sound result can be achieved with fairness to the parties." Id. A court's determination of foreign law "must be treated as a ruling on a question of law," rather than as a finding of fact. Animal Sci. Prods., Inc. v. Hebei Welcome Pharm. Co., — U.S. —, 138 S. Ct. 1865, 1873, 201 L.Ed.2d 225 (2018) (citing Fed. R. Civ. P. 44.1).

"If the court determines that the foreign law in question blocks production of the documents at issue," the court must then "conduct an 'international comity' review involving 'a more particularized analysis of the respective interests of the foreign nation and the requesting nation' to determine whether to order production." Philips, 2022 WL 602485, at *3 (quoting Aérospatiale, 482 U.S. at 543-44, 107 S.Ct. 2542.) The Court must therefore ascertain whether Chinese law actually bars production of the information Concepts requests in the Rule 45 subpoenas. If it is determined that production of the subpoenaed information would more likely than not violate Chinese law, the Court must assess whether considerations of international comity nevertheless require enforcement of the Subpoenas.

A. The DSL does not appear to be an impediment to the production of the information requested in the subpoenas, but the ambiguity of key provisions in the law requires the conclusion that it may block compliance with discovery demands.

The purpose of the DSL is "to regulate data processing activities, guarantee data security, promote the development and utilization of data, protect the legitimate rights and interests of individuals and organizations, and safeguard the sovereignty, security and developmental interests of the State." Data Security Law (promulgated by the Standing Comm. Nat'l People's Cong., June 10, 2021, effective Sept. 1, 2021), art. 1. Notwithstanding its aim of protecting the sovereignty and security of the State, the law acknowledges China's interest in engagement with the international community on data issues, noting that "[t]he State actively carries out international exchange and cooperation in such fields as data security and data development and utilization, participates in the formulation of international rules and standards relating to data security, and promotes the safe and free flow of data across borders." Id. at art. 11.

Turning to the relevant provisions of the DSL, Article 36 states that "[n]o organization or individual within the territory of the People's Republic of China may provide foreign judicial or law enforcement authorities with the data stored within the territory of the People's Republic of China without the approval of the competent authorities of the People's Republic of China." Id. at art. 36. "Data" is defined as "any recording of information by electronic or other means." Id. at art. 3. Those who provide data to a foreign judicial or law enforcement agency without the requisite approval "will be given a warning by the relevant competent authority" and "may be concurrently fined not less than 100,000 yuan but not more than 1 million yuan." Id. at art. 48 (emphasis added). The DSL further provides that "if serious consequences are caused, a fine of not less than 1 million yuan but not more than 5 million yuan will be imposed." Id. In the case of a violation causing serious consequences, Article

48 permits, but does not require, sanctions on the business responsible for the violation:

[T]he organization may be ordered to suspend the relevant business, suspend the operation for rectification, or its relevant business permit or business license will be revoked, and the person directly in charge and other directly liable persons will be fined not less than 50,000 yuan but not more than 500,000 yuan.

Id.

As the DSL was only enacted in 2021, authoritative interpretive guidance on the law is limited. (See Niu Decl., Doc. 165 at 2, ¶ 8.) For example, the Court has not been presented with implementing regulations or decisional law from Chinese courts addressing the meaning of this new law. Rather, Hefei Taize and Concepts have each provided affidavits from Chinese attorneys, in which each attorney provides an opinion on the legal effects of the DSL were the documents to be produced. (See Liu Decl., Doc. 145-1; Niu Decl., Doc. 165.) Consistent with the "flexible procedures" contemplated in Rule 44.1 to reach sound determinations on issues of foreign law, courts may consider such affidavits. See Euromepa, S.A. v. R. Esmerian, Inc., 154 F.3d 24, 28 n.2 (2d. Cir. 1998) (concluding that "any relevant source" under Rule 44.1 includes affidavits submitted by the parties).

Eva (Yue) Niu, Hefei Taize's expert and a partner at the international law firm Dentons, compares the DSL to China's 2017 Cybersecurity Law. (Niu Decl., Doc. 165 at 2, ¶¶ 7-8.) Attorney Niu notes that the Cybersecurity Law requires a security assessment before data may exit China and explains that the DSL expands the restriction to include all data processors and all organizations and individuals in China. (Id. ¶¶ 8-9.) Further, while the Cybersecurity Law regulates only "important" and "personal data," she notes that the DSL includes "any data stored within China." (Id. at 2-3, ¶ 11.) According to Attorney Niu, this change was intended to "end situations where some foreign countries bypass the international judicial assistance mechanism under international treaties by enacting domestic laws to empower their own judicial agencies ... to compel access to data stored in China." (Id. at 3, ¶ 12.) Attorney Niu contends that Hefei must obtain approval from competent authorities in China before providing data to this Court, and if it does not it risks facing "serious legal consequences, including economic penalties and may even be ordered to suspend operations." (Id. ¶ 17.)

Concepts' expert, Erica Liu (Liu Yuping), is a partner at the Chinese law firm Hylands. (Liu Decl., Doc. 145-1 at 2, ¶ 3.) Attorney Liu agrees that violators of the DSL face serious legal consequences, but she opines that the law does not apply to the information sought in Concepts' subpoenas. (Id.) She asserts that to read the law literally, where it protects "any recorded information"—without reference to its accessibility—would not promote "the intent of the law," as it would "touch every facet of every aspect of Chinese life and could result in the potential complete and utter isolation of China and all of its citizens from the rest of the world." (Id. at 4-5, ¶ 24.) She construes the law to protect only "data that is and always has been 100% stored in China and is and always has been inaccessible to anyone outside of China." (Id. at 8, ¶ 30.) Attorney Liu emphasizes that the intent of the law is to protect personal and business data transactions from hacking and to "promot[e] the safe and free flow of data across international boundaries." (Id. at 6, ¶ 25 (internal quotation marks omitted).) She concludes

that because all of the data in this matter have either been accessed by those outside of China, including portions of the TurboTides software, or have otherwise been released from China, the law does not prohibit disclosure of the information requested in the Subpoenas. (Id. at 6-7, ¶¶ 28-29.)

Central to the claims in this case, Attorney Liu opines that the DSL does not prevent disclosure of the software source code, reasoning:

[T]he Chinese Data Security Law might apply to the TurboTide's software code if that code has never been accessed or been accessible to anyone outside of China. However, I am informed that TurboTides, Inc. has stated that the software was created by a U.S. citizen, Mr. Xuwen Qiu and a "core team" from the United States. Accordingly, if Mr. Qiu or any TurboTides, Inc. employee or consultant at anytime accessed the code or portions of it on a computer that left China, it was not data "stored" in China and, thus, not subject to the Data Protection Law.

....

Further, since Mr. Qiu is a U.S. citizen and claims to be the "chief architect" and inventor of the TurboTides, Inc. software, the software code has already been released by Hefei Taize to a U.S. citizen who comes and goes from China and, thus, cannot reasonably be viewed as "stored" in China.

(Id.)

In its construction of the DSL, the Court is not limited to the materials submitted by the parties. Bugliotti v. Republic of Argentina, 952 F.3d 410, 414 (2d Cir. 2020) (internal quotation marks and citation omitted). "The district court's task, in other words, is to arrive at an independent interpretation of the governing [foreign] law, aided by the most persuasive ... materials available to it." Id. As the Second Circuit has explained, a decision interpreting the law by a court in the country where the law arises is preferable to anything proffered by the parties, but "[i]n the absence of an authoritative answer to a foreign legal question, however, a district court's obligation to reach an independent determination remains." Id.

As the Court does not have a decision by a Chinese court interpreting the DSL, it is obligated to construe the meaning of the DSL independently. Under a plain reading of the DSL, by its terms it appears to prohibit only the provision of "data" that is "stored within the People's Republic of China" to "foreign judicial or law enforcement authorities" without approval from "[t]he competent authorities of the People's Republic of China." DSL at art. 36. Courts have held that this provision is not an impediment to compliance with a U.S. subpoena. Philips, 2022 WL 602485, at *6. The Philips court reasoned that "[w]hile the court oversees the process, it does not make the request and is not involved in the stewardship or use of the exchanged information—in other words, the data is not provided to the U.S. court." Id. (internal quotation marks and citation omitted). A court in the District of New Jersey has also endorsed this reasoning:

Of interest is the injunction in [the] DSL ... that information located in the [People's Republic of China] may not be given to U.S. courts. That injunction is inapplicable to these documents or indeed to any information produced in response to an FRCP discovery request. It is not U.S. courts that receive discovery in U.S. litigation, but the parties themselves who exchange information.

In re Valsartan, MDL No. 2875 (RBK), 2021 WL 6010575, at *10 (D.N.J. Dec. 20, 2021). By the reasoning of these courts, the DSL does not bar a Chinese entity

from compliance with a subpoena because the information is not provided to a "foreign judicial or law enforcement authority."

Although these decisions are technically correct that discovery between private parties is not the provision of data to a "foreign judicial authority," the decisions do not examine whether Article 36 of the DSL applies when a litigant calls upon a U.S. court where the case is pending to compel a foreign litigant's compliance with a subpoena. In other words, once the U.S. court compels compliance with a subpoena, does Article 36 consider production of the demanded information under these circumstances to be a prohibited production to a "foreign judicial authority?" Article 36 does not speak to this particular circumstance. In fact, the law appears to provide no definitions of terms, or implementing regulations further refining the intent of its various Articles. Given the general wording of the DSL, it is not implausible that an order from a U.S. court compelling an individual or entity in China to provide information in aid of litigation efforts in a U.S. court comes within the proscription of Article 36.

Nevertheless, Article 36 appears to require more for its provisions to be triggered—the requested "data" must be "stored within the territory of the People's Republic of China." The DSL broadly defines "data" to include "any recording of information by electronic or other means." DSL art. 3. The DSL does not state whether data provided in the course of commercial transactions with entities outside of China render such data no longer "stored within" China, and therefore outside the scope of Article 36. Finally, even assuming Article 36 bars production of the information Concepts seeks, disclosure of the information may occur with the approval of unidentified "competent authorities" of the Chinese government. In the end, the plain language of the DSL is susceptible to different interpretations. A broader construction of the DSL suggests that the information Concepts seeks is data stored within China and requires approval of Chinese authorities. A narrower construction of the DSL suggests that data made available at some point to individuals or entities outside China, as Concepts alleges, is not "stored within" China and therefore does not come within the scope of Article 36.

As described above, Hefei Taize's expert opines that the 2021 DSL represents an expansion of Chinese data restrictions: "Article 36 specifically addressed the data exit compelled by the foreign enforcement and judicial authorities and further expanded the data exi[]t restriction to apply to all organizations and individuals in China and all data stored in China." (Niu Decl., Doc. 165 at 2, ¶ 9.) Attorney Niu further interprets Article 36 to apply a broader definition of "data." Whereas previous Chinese laws referenced "important data" and "personal data," the 2021 DSL applies to "any data" stored within China. (Id. at 2, ¶ 11.) Attorney Niu articulates the legislative intent of Article 36 as follows:

The main legislative intent of ... Article 36 is to end situations where some foreign countries bypass the international judicial assistance mechanism under international treaties by enacting domestic laws to empower their own judicial agencies and administrative law enforcement agencies to compel access to data stored in China. The purpose of Article 36 is to block such extraterritorial jurisdiction of foreign countries through setting up a prior approval mechanism.

(Id. at 3, ¶ 12.)

Concepts' expert opines that such a broad conception of "data" potentially encompasses

every conceivable form of recorded information "whether in books, pamphlets, letters, emails, advertisements, contractual agreements, recorded music, movies, television, websites, web content and so on." (Liu Decl., Doc. 145-1 at 5, ¶ 24.) In Attorney Liu's opinion, "to interpret the law to restrict the dissemination of all information 'stored in China' ... would be to grind the entire Chinese economy and culture to a halt." (Id. at 6, ¶ 24.) It would also be inconsistent with the DSL's expressed objective to "promote[] the safe and free flow of data across international boundaries" (Id. ¶ 25 (citing DSL art. 11)), as well as "the development of the digital economy." (Id. ¶ 24 (citing DSL art. 7)). The Liu Declaration concludes that the DSL should be interpreted to promote its stated objective of promoting "cross-border commerce" and to ensure that China not be "shut off" from the rest of the world economy. (Id. ¶ 27.) Consistent with those objectives, Attorney Liu opines that "data already released from China or available to users outside of China is not 'data stored within' China." (Id. at 6-7, ¶ 27) Attorney Liu specifies the various types of information potentially relevant to this case that would not come within the proscriptions of the DSL, including among others: TurboTides software programs sold or licensed to customers outside of China; TurboTides software installed on TurboTides' employees' computers outside of China; "email communications, correspondence, contracts sent to or from Hefei Taize outside of China, even if such communications and documents first originated in China." (Id. at 7, ¶ 27(a)-(g)). Attorney Liu concludes that "the only data protected by the Chinese Data Protection law is data that is and always has been 100% stored in China and is and always has been inaccessible to anyone outside of China." (Id. at 8, ¶ 30.)

A broad interpretation of the DSL appears inconsistent with the free flow of data across borders, particularly in the context of international commercial transactions, as in this case. This interpretation would have an inequitable effect regardless of whether there is an alter-ego relationship between TurboTides and Hefei Taize or whether TurboTides is merely an independent re-seller of Hefei Taize's software. In either scenario, both TurboTides and Hefei Taize benefit from their engagement in commercial transactions with purchasers outside China. The sequestration of corporate information within China under these circumstances would deprive a potentially aggrieved party the meaningful opportunity for legal redress. Such a broad interpretation of the statute "would in essence permit the Chinese judiciary to oversee discovery decisions made by American courts regarding the responsibilities of Chinese litigants" and would "severely disadvantage parties opposing Chinese litigants in American courts." Philips, 2022 WL 602485, at *6. Hefei Taize is not a party litigant in this proceeding, but given the Court's finding of personal jurisdiction over Hefei based on an alter-ego theory, the principle applies similarly.

Although there are sound reasons to conclude that the DSL is not an impediment to the production of the information requested in the subpoenas, the Court must also acknowledge that the law is ambiguous in certain critical respects. First, its broad definition of "data" provides little meaningful guidance as to the parameters of the term. Second, the law provides no explanation of the meaning of "data stored within China." Third, it is unclear whether information produced in response to a U.S. court order constitutes data "provided to a foreign judicial authority." Finally, the DSL does not define when production of information results in the "serious consequences" that may occasion

the suspension of a business or the revocation of a business's license to operate in China. As noted, the Court is not aware of any Chinese judicial precedent addressing the precise contours of the DSL's prohibition on data production. In the absence of such interpretive guidance, it is likewise difficult to assess the legal conclusions in the parties' attorney affidavits. Given the unclear meaning of key provisions of the DSL, and Hefei Taize's concern for its liability under the law, the potential application of the DSL as a "blocking statute" in U.S. litigation requires that the court conduct a comity analysis to determine whether compliance with the Subpoenas is necessary notwithstanding the DSL.

B. The international comity factors weigh in favor of enforcement of the Rule 45 subpoenas.

The Supreme Court has decided that "the Hague Convention did not deprive the District Court of the jurisdiction it otherwise possessed to order a foreign national party before it to produce evidence physically located within a signatory nation." Aérospatiale, 482 U.S. at 539-40, 107 S.Ct. 2542. Accordingly, when overseeing the discovery process, a district court may utilize the Federal Rules of Civil Procedure instead of the Hague Convention. Id. at 540, 107 S.Ct. 2542. In deciding which rules apply, international comity "requires a ... particularized analysis of the respective interests of the foreign nation and the requesting nation." Id. at 543-44, 107 S.Ct. 2542. "[A] court should not uphold an international subpoena in possible contravention of foreign law[] without first performing a comity analysis pursuant to Section 442 of the Restatement (Third) of Foreign Relations Law." Nike, Inc., 349 F. Supp. 3d at 335; see Gucci I, 768 F.3d at 139-40. Courts in the Second Circuit apply the following comity factors:

(1) the importance to the investigation or litigation of the documents or other information requested; (2) the degree of specificity of the request; (3) whether the information originated in the United States; (4) the availability of alternative means of securing the information; and (5) the extent to which noncompliance with the request would undermine important interests of the United States, or compliance with the request would undermine the important interests of the state where the information is located.... (6) the hardship of compliance on the party or witness from whom discovery is sought; and (7) the good faith of the party resisting discovery.

Wultz v. Bank of China Ltd., 910 F. Supp. 2d 548, 552-53 (S.D.N.Y. 2012) (Wultz I).

1. Importance of Documents to the Litigation

The documents Concepts requests are central to its claims. The TurboTides software and documents pertaining to its development are critical to understanding whether the allegedly misappropriated code was utilized in the software development. An understanding of the company that Qiu allegedly established to develop Concepts' misappropriated trade secrets is similarly relevant to the claims "and may also lead to the identification of other evidence relevant to this case." See Wultz II, 942 F. Supp. 2d at 466. This factor weighs in favor of enforcement of the Subpoenas.

2. Degree of Specificity of the Request

The information that Concepts requests in the Subpoenas is sufficiently specific to its claims. As Judge Crawford observed, "[t]he information sought [in the Subpoenas] is all potentially relevant." (Order on Pending Disc. Mots., Doc. 140 at

13.) While the Subpoena and the documents associated with the Rule 30(b)(6) deposition each have nearly forty requests, the requests seek information relevant to the claims. For example, Concepts requests "documents comprising a transfer of any intellectual property rights to or from [TurboTides], Hefei or Qiu to or from any other entity," "Hefei employees' employment agreements," and "documents relating to the acquisition, use and testing of any copy of any software authored or owned by Concepts." (Pl.'s Subpoenas to Hefei Taize, Doc. 92-1 at 6.) The requested information may substantiate the claims in the Complaint. This factor also weighs in favor of enforcement of the Subpoenas.

3. Whether Information Originated in the United States

It is unclear whether the information requested originated in the United States. The origin of the code in the TurboTides software is at the center of this dispute. Concepts claims that the documents it requests "are located at or are electronically accessible in the United States." (Pl.'s Post-Hr'g Mem., Doc. 174 at 17.) Defendants, however, assert that the code and related documents were created in China, after Qiu left Concepts. (Defs.' Post-Hr'g Mem., Doc. 175 at 12-13.) In contrast, Concepts asserts that "none of these materials are sequestered in China nor are they subject to the China Data Protection Law." (Pl.'s Post-Hr'g Mem., Doc. 174 at 15.) However, "at least some of the documents to which the present comity analysis applies originated in China." See Wultz I, 910 F. Supp. 2d at 556. The documents related to the development of the software and the formation of Hefei Taize were all likely created in China. Because "the third factor only addresses the physical location of the documents," Milliken & Co. v. Bank of China, 758 F. Supp. 2d 238, 247 (S.D.N.Y. 2010) (quoting Gucci Am., Inc. v. Curveal Fashion, No. 09 Civ. 8458(RJS)(THK), 2010 WL 808639, at *3 (S.D.N.Y. Mar. 8, 2010) (Gucci III)), the reality of electronically created and stored documents complicates the analysis. Accordingly, Concepts maintains that "all of [the requested] information resides on or is accessible from [Qiu's] laptop computer in the United States." (Pl.'s Post-Hr'g Mem., Doc. 174 at 15.) Because the location of the information remains unclear—it may be physically located in China or electronically stored in China but accessible outside of China—the Court has insufficient information to reach a definitive determination as to this issue. Therefore, this factor is deemed neutral.

4. Availability of Alternative Means of Securing the Information

Based on the record before the Court, it does not appear that there is an alternative means of securing the information. Hefei Taize asserts that "there are alternative means to obtain the requested information" because "some of the requested material is in the custody and control of TurboTides Inc. and Qiu." (Hefei Taize's Post-Hr'g Mem., Doc. 173 at 15.) As discussed above, it is not apparent that the TurboTides software is obtainable within the United States. Hefei Taize has been clear that the software is under its control in China, and Qiu is not permitted to provide any of Hefei Taize's information to the Court without its permission. However, Concepts asserts that the TurboTides software, User Guide, and Training Tutorials "reside[] on or [are] accessible from [Qiu's] laptop in the United States." (Pl.'s Post-Hr'g Mem., Doc. 174 at 15.) Concepts further asserts that "[s]oftware training materials, sales presentation videos, tutorials, user[] manuals, and other manuals about the Software reside in discrete files on a 'OneDrive' cloud based vault maintained

and administered by TurboTides, Inc. employee Zack Hoyle" in the United States. (Id. at 16.)

However, according to Concepts, "[t]here is no alternative means of securing the information since Dr. Qiu and TurboTides, Inc. disclaim any ability to release the information from China absent approval of Hefei Taize." (Id. at 18.) At the very least, it appears that Hefei Taize's discovery position has made it difficult for Concepts to obtain the requested software in the United States. Hefei Taize is similarly declining to allow Qiu to provide the documents on its behalf. "[I]f the information cannot be easily obtained through alternative means, this factor is said to counterbalance the previous factor—the location of the documents and information—and weighs in favor of disclosure." Milliken, 758 F. Supp. 2d at 247 (quoting Gucci III, 2010 WL 808639, at *3). Accordingly, this factor weighs in favor of enforcement of the Subpoenas.

5. Respective Interests of the United States and China

The balancing of national interests "is the most important [factor], as it directly addresses the relations between sovereign nations." Wultz I, 910 F. Supp. 2d at 558 (internal quotation marks omitted). "It is axiomatic that the United States has 'a substantial interest in fully and fairly adjudicating matters before its courts.'" Strauss v. Credit Lyonnais, S.A., 249 F.R.D. 429, 443 (E.D.N.Y. 2008) (Strauss II) (quoting Minpeco S.A. v. Conticommodity Servs., Inc., 116 F.R.D. 517, 523-24 (S.D.N.Y. 1987)). "[F]or international commerce to operate efficiently, business obligations must be subject to enforcement and the resulting judgments subject to collection. The fair adjudication of commercial interests, in turn, requires full discovery." Milliken, 758 F. Supp. 2d at 249. This is particularly true where "the evidence at issue is vital to the litigation." Tansey v. Cochlear Ltd., No. 13-CV-4628 (SJF) (SIL), 2014 WL 4676588, at *4 (E.D.N.Y. Sept. 18, 2014). As relevant here, "the United States also has a significant interest in protecting its own trade secrets and intellectual property." Inventus Power v. Shenzhen Ace Battery, 339 F.R.D. 487, 504 (N.D. Ill. 2021).

Hefei Taize asserts that because "Hefei is a nonparty that has not specifically directed its business to the United States," "Hefei's noncompliance with the subpoena will not interfere with the United States' interest in ensuring that Concepts has a fair legal process and can obtain effective relief." (Hefei Taize's Post-Hr'g Mem., Doc. 173 at 16.) Concepts argues that "it is in the interest of the United States and this court to get to the truth and determine whether the intellectual property of Concepts, a United States corporation and defense contractor, was taken from the United States to China." (Pl.'s Post-Hr'g Mem., Doc. 174 at 18.)

"[E]very nation has a significant national interest in ensuring that its citizens abide by its laws." Nike, Inc., 349 F. Supp. 3d at 338. Further, Hefei Taize's "status as [a] non-part[y] does attenuate the United States['] interest in enforcing discovery obligations." Tiffany, 276 F.R.D. at 157. However, "[a] foreign government's failure to express a view that the disclosure at issue threatens its national interests militates against a finding that strong national interests of the foreign country are at stake." Laydon v. Mizuho Bank, Ltd., 183 F. Supp. 3d 409, 424 (S.D.N.Y. 2016) (quoting Alfadda v. Fenn, 149 F.R.D. 28, 34 (S.D.N.Y. 1993)). Hefei Taize does not appear to have requested the permission of the People's Republic of China to produce the information, or guidance from the relevant authorities that compliance with the Subpoenas would otherwise

violate Chinese law. Even if it had taken these steps, this alone would not compel a finding that a Chinese interest outweighs the United States' interests. Strauss II, 249 F.R.D. at 447-50 (compelling production even when French government submitted a letter requesting compliance with the Hague Convention); cf. Gucci III, 2010 WL 808639, at *6 (compelling production despite risk of criminal sanctions).

Furthermore, while Hefei Taize asserts that declining to enforce the Subpoenas would not undermine important United States' interests, it does not articulate any specific Chinese interest at stake were the Subpoenas to be enforced. Compared to the United States' specific commitment to protecting its intellectual property rights, combined with its goal of enforcing its procedures for the speedy resolution of disputes, the general Chinese objective of enforcing its laws does not outweigh the United States' interests. See Nike, Inc., 349 F. Supp. 3d at 339. ("[The United States'] interest [in protecting its trademarks] extends well beyond this nation's 'generalized interest in fully and fairly adjudicating matters before its courts,' which, without more, might not be sufficient to tip the balance in its favor."); cf. In re Air Cargo Shipping Servs. Antitrust Litig., 278 F.R.D. 51, 54 (E.D.N.Y. 2010) (finding interests of United States outweighed those of France when "the only French interest is a sovereign interest in controlling access to information within its borders, fueled at least in part by a desire to afford its citizens protections against discovery in foreign litigation").

Accordingly, in the absence of an articulated Chinese interest at stake in the enforcement of the Subpoenas, the United States' interest in the resolution of legal disputes involving intellectual property outweighs China's general interest in the enforcement of its laws. This factor weighs in favor of enforcement of the Subpoenas.

6. Hardship of Compliance

Hefei Taize will likely not face hardship if it is required to comply with the Subpoenas. Hefei Taize argues that it could face "serious legal consequences" if it is forced to provide data to the Court as a foreign judicial authority without prior approval from the People's Republic of China. (Hefei Taize's Post-Hr'g Mem., Doc. 173 at 16 (quoting Doc. 165 at 3, ¶ 17).) To the extent that Hefei Taize believes it must make its own determination regarding the application of Chinese law to these Subpoenas, Hefei Taize has been free to seek authorization from the appropriate Chinese authorities to produce the requested information. It appears that it has not done so.

Moreover, the Court has no information demonstrating that a Chinese individual or entity has been penalized under the DSL or other Chinese laws for compliance with a discovery demand in a U.S. court. See Inventus Power, 339 F.R.D. at 505 (rejecting defendant's speculation it may be subject to penalties under Chinese law where defendant "has not cited to any instance of a Chinese entity being penalized or prosecuted for producing documents for use in a United States litigation"); Wultz II, 942 F. Supp. 2d at 468 (crediting an expert's contention that "the Chinese authorities have apparently not yet actually sanctioned a bank for disclosing confidential information to a foreign court under threat of sanctions in violation of Chinese law"); cf. Wu v. Sushi Nomado of Manhattan, Inc., No. 17cv04661 (MKV) (DF), 2021 WL 7186735, at *11 (S.D.N.Y. Oct. 29, 2021) (rejecting hardship argument where party "was able to respond to interrogatories while apparently in China"), report and recommendation adopted in relevant part, 2022 WL 597280 (S.D.N.Y. Feb. 28, 2022).

Given that the Court has no evidence of sanctions levied on parties in China that comply with U.S. discovery demands, it appears unlikely that Hefei Taize will incur sanctions under the DSL for compliance with these Subpoenas. This factor weighs in favor of enforcement of the Subpoenas.

7. Good Faith of the Party Resisting Discovery

Concepts disputes that Hefei Taize has acted in good faith because "it is plain that [Hefei Taize and Defendants'] resistance to discovery has been orchestrated to deprive Concepts of evidence that would help prove its case," made clearer by Qiu's alleged "mid-litigation change in position" regarding "who owned and developed the software." (Pl.'s Post-Hr'g Mem., Doc. 174 at 19.) The Court cannot assess whether Defendants and Hefei Taize switched positions in bad faith. Hefei asserts "there is absolutely no evidence in the record suggesting that Hefei will not abide if the Court orders it to comply with the subpoena." (Hefei Taize's Post-Hr'g Mem., Doc. 173 at 17.) Hefei further notes that it has provided an "initial round of production" despite its objections to the Subpoena, an indication of its good faith. (Id.) Given the limited record on this factor, the Court "decline[s] to engage in a substantial analysis of this point given that analysis of the other factors already weighs against application of the Hague Convention." See Laydon, 183 F. Supp. 3d at 427.

The international comity factors weigh in favor of enforcement of the Subpoenas.

IV. A contempt order or sanctions are not warranted against Hefei Taize or Qiu.

Concepts requests that the Court hold Hefei Taize and Qiu in contempt or impose sanctions for failing to comply with Judge Crawford's prior Order requiring compliance with the Subpoenas. (Pl.'s Cross-Mot. for Contempt and Sanctions, Doc. 102; see Pl.'s Post-Hr'g Mem., Doc. 174.) Rule 37 of the Federal Rules of Civil Procedure permits the Court to impose sanctions for a party's failure to obey a discovery order. Fed. R. Civ. P. 37(b)(2)(A). Under Rule 37(b), courts have "broad discretion in fashioning an appropriate sanction." Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir. 2002). "Rule 37 does not identify the factors courts should weigh in considering whether to sanction a party for noncompliance with the court's discovery orders, but the Rule instructs that the sanctions must be 'just,' ... meaning that 'the severity of the sanction must be commensurate with the non-compliance.'" Linde v. Arab Bank, PLC, 269 F.R.D. 186, 195 (E.D.N.Y. 2010) (quoting Fed. R. Civ. P. 37(b)(2)(A); Shcherbakovskiy, 490 F.3d at 140).

In determining what is "just," courts use discovery sanctions to, "insofar as possible ... restor[e] the prejudiced party to the same position [it] would have been in absent the wrongful [withholding] of evidence by the opposing party." Kronisch v. United States, 150 F.3d 112, 126 (2d Cir. 1998). Further, "courts in the Second Circuit consider at the sanctions stage whether the party resisting discovery has acted in good faith." Linde, 269 F.R.D. at 195 (citing Strauss II, 249 F.R.D. at 438-39); see In re Westinghouse Elec. Corp. Uranium Contracts Litig., 563 F.2d 992, 997 (10th Cir. 1977) ("[T]hough a local court has the power to order a party to produce foreign documents despite the fact that such production may subject the party to criminal sanctions in the foreign country, still the fact of foreign illegality may prevent the imposition of sanctions for subsequent disobedience to the discovery order."). Hefei Taize correctly notes that the Court does not have the power to impose sanctions under Rule 37(b) upon a nonparty. See In re Dunne, No. 3:17-cv-1399 (MPS), 2018 WL 4654698, at *8 (D. Conn. Sept. 27, 2018) ("[T]he majority of district courts in the Circuit have found that Rule 37 cannot support sanctions for a non-party's failure to comply with a Rule 45 subpoena." (collecting cases)). However, the Rules provide that the Court "may hold in contempt a person who, having been served, fails without adequate excuse to obey the subpoena or an order related to it." Fed. R. Civ. P. 45(g); Chambers v. NASCO, Inc., 501 U.S. 32, 44, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991) ("[T]he power to punish for contempts is inherent in all courts." (quoting Ex parte Robinson, 86 U.S. 505, 510, 19 Wall. 505, 22 L.Ed. 205 (1874))). To show that a contempt order is warranted, "a movant must establish that (1) the order the contemnor failed to comply with is clear and unambiguous, (2) the proof of noncompliance is clear and convincing, and (3) the contemnor has not diligently attempted to comply in a reasonable manner." King v. Allied Vision, Ltd., 65 F.3d 1051, 1058 (2d Cir. 1995). A contempt order is a "potent weapon, to which courts should not resort where there is a fair ground of doubt as to the wrongfulness of the defendant's conduct." Id. (internal quotation marks and citations omitted).

There has been some doubt as to whether the Court had the power to compel Hefei Taize's compliance with the Subpoenas. Resolution of the issue has required several rounds of briefing, affidavits from Hefei Taize and Concepts containing expert opinions on Chinese law, and an evidentiary hearing spanning two days. Judge Crawford specifically requested that Hefei Taize submit briefing on personal jurisdiction, and he anticipated further examination of the foreign law implications associated with the Subpoenas. Judge Crawford requested this briefing after Concepts initially requested sanctions and entry of a contempt order against Hefei Taize. And as Hefei Taize represents, "there is absolutely no evidence in the record suggesting that Hefei will not abide if the Court orders it to comply with the subpoena." (Hefei Taize's Post-Hr'g Mem., Doc. 173 at 17.) Therefore, a contempt order is not warranted in these circumstances.

Similarly, Qiu has contested his ability to produce documents in the possession or control of Hefei Taize. While Defendants may have changed their positions regarding who controlled the requested documents for purposes of production in discovery, as discussed, the Court cannot determine whether this change was made in bad faith. Consequently, the Court cannot conclude on the present record that Hefei "fail[ed] without adequate excuse to obey the subpoena or an order related to it," the finding required to hold it in contempt. See Linde, 269 F.R.D. at 195; King, 65 F.3d at 1058. For similar reasons, the Court declines at this time to impose sanctions on Qiu. As this Order directs Hefei Taize to comply with the Subpoenas—which comes after both Judge Crawford's previous order granting Concepts' Motion for Contempt and directing Hefei Taize to comply with the Subpoenas, and extensive proceedings on Hefei's jurisdictional and foreign law objections—the discovery impasse has been resolved and the Court anticipates that production will occur promptly.

V. Further Proceedings

When ordering a foreign entity to comply with U.S. discovery demands notwithstanding the claim that another country's laws bar discovery, courts typically strike

a balance between the foreign entity's legitimate interest in complying with its own country's laws and the interest of U.S. plaintiffs in receipt of discovery in furtherance of their legal claims. For example, even in the context of defendants' potential criminal liability under Chinese law, one court ordered compliance with discovery demands within a reasonable amount of time, with the prospect of sanctions for non-compliance:

Defendants argue that the laws of the People's Republic of China limit discovery, impose secrecy, and punish violations under the criminal laws. Defendants will have to choose how to proceed, whether pursuant to the Federal Rules of Civil Procedure and the orders of this Court, or out of concern for their perceptions of the real strictures of Chinese laws, to the extent that such laws purport to punish compliance with the orders of this court. If defendants do not act in accordance with the law and practices of the United States courts, sanctions may be appropriate, including the striking of pleadings and other appropriate sanctions.

Munoz v. China Expert Tech., Inc., No. 07 Civ. 10531(AKH), 2011 WL 5346323, at *1 (S.D.N.Y. Nov. 7, 2011). Other courts have expressed similar reluctance to permit foreign laws to impede the orderly production of discovery in U.S. litigation. See In re Valsartan, 2021 WL 6010575, at *17. In Valsartan, the district court observed that while it appreciated the "dilemma" of the foreign entity's attempts to comply with both U.S. discovery demands and China's State Secret Law, it "cannot subordinate the legitimate interests of U.S. plaintiffs in determining civil liability and possibly money damages because of uncertain-at-this-point-but-perceived liability under the [State Secret Law]." Id. The court further expressed concern that the opaque nature of the approval process in China threatened to undermine the progress of U.S. litigation without justification:

[T]he lack of transparency and comity by which a PRC governmental entity determines how and whether a document contains information of vital national security interest leads to the inevitable questions as to that determination's timeliness and fairness.... Moreover, the process of getting even an initial answer seems generally to take longer than the typical U.S. litigation discovery period of over two years. Thus, from the perspective of U.S. Courts and U.S. plaintiffs, checking-in with a PRC governmental agency as to vital national security interests has the consequence of gumming up U.S. litigation, without a strong cause.

Id. Valsartan observed that the "legal uncertainty" as to what is proscribed under the Chinese law, and the likely delay in receiving a determination from Chinese authorities, "creates a blocking statute that is a textbook example of how to limit/avoid discovery of relevant information that may evidence a PRC defendant's liability to U.S. plaintiffs." Id. at *18. Imposing a "tempering realism" on the discovery impasse in that case, the court ultimately ordered production of the requested documents (with appropriate protections for state secrets concerns) within approximately two weeks, and reminded the parties that non-compliance "risks the imposition of ... sanctions." Id. at *19-20.¹¹ As the Court has determined that Hefei Taize must comply with the Subpoena, Hefei Taize requests an opportunity "to secure permission from the competent authorities of the People's Republic of China." (Doc. 173 at 17.) As noted, it does not appear that Hefei Taize requested permission of Chinese authorities during the course of this Rule 45 litigation. Mindful that the interests of U.S. plaintiffs in the orderly production of discovery should not be subordinate to speculative claims of liability under foreign law, In re Valsartan, 2021 WL 6010575, at *17, the Court will permit Hefei Taize 30 days to produce the information requested in the Subpoena. Failure to comply with this Order may warrant contempt proceedings. See Fed. R. Civ. P. 45(g).

11 Valsartan quoted at length from In re Activision Blizzard, Inc., a decision of the Court of Chancery of Delaware addressing defendants' claim that French law barred the production of discovery. See In re Activision Blizzard, Inc., 86 A.3d 531 (2014). In relevant part, the Court of Chancery required defendants to make a "good faith effort to obtain promptly the assistance of the appropriate French authority," but nevertheless held that failure to produce the discovery within just over a month's time would raise "the prospect of sanctions." Id. at 551.

Conclusion

For the reasons set forth above, the Court DENIES Concepts' Cross-Motion to Find Hefei and Defendant Qiu in Contempt and Impose Discovery Sanctions (Docs. 102) and DENIES Hefei Taize's Motion to Quash for Lack of Personal Jurisdiction (Doc. 156.) The Court ORDERS Hefei Taize to comply with the Subpoenas within 30 days of the date of this Order.

The Clerk of Court is requested to schedule this matter for a status conference within 10 days of the date of this Order. The status conference will address discovery deadlines and the status of any mediation proceedings before Hon. Margaret Hinkle (Ret.). See Order of Referral to U.S. Magistrate Judge (Doc. 150).