The case of the day is Nidec Motor Corp. v. Broad Ocean Motor LLC (E.D. Mo. 2024). This is a patent infringement case that was brought in 2013 (!). The defendants are Chinese companies that refused to comply with requests for production under FRCP 34 on the grounds that complying with the requests could cause them to violate Chinese law. The main relevant Chinese law is Article 36 of the new Data Security Law, which provides:

The competent authorities of the People’s Republic of China shall handle requests for data made by foreign judicial or law enforcement authorities, in accordance with the relevant laws and international treaties or agreements concluded or acceded to by the People’s Republic of China, or in accordance with the principles of equality and reciprocity. Without the approval of the competent authorities of the People’s Republic of China, organizations or individuals in the People’s Republic of China shall not provide data stored within the territory of the People’s Republic of China to any overseas judicial or law enforcement body.

Does this statute, taken at face value, bar a Chinese company from responding to a request for production under FRCP 34? After all, a request for production is not an order of a US court to produce documents to the court, but only a request from one party to another party for production of documents to the requesting party. On the other hand, these disputes generally come before US courts when the requesting party seeks an order from the court to compel the Chinese company to produce the documents. Even then, though, the documents are not provided to the US court, but rather, to the requesting party. The cases are split. Several US decisions have held that the Chinese statute does not bar cooperation with US discovery requests for these reasons,¹See, e.g., Motorola v. Hytera Communications, 2023 U.S. Dist. LEXIS 161194 (N.D. Ill. 2023); Philips Medical Systems v. Buan, 2022 U.S. Dist. LEXIS 35635 (N.D. Ill. 2022). But another court has found the statute unclear in cases where the US court has ordered the production.²See Concepts NREC v. Xuwen Qiu, 662 F. Supp. 3d 496 (D. Vt. 2023). The Chinese defendants did come forward with a letter from the Zhonshan Municipal Bureau of Commerce, which probably they solicited, indicating that the companies should comply with the law, but without really explaining what that meant here. The Bureau of Commerce letter also seems to say that the statutory obligation to seek permission from Chinese authorities only extended to cases involving “important data,” which may or may not be a reference to new Chinese regulations discussed in a March 2024 client alert from WilmerHale, but I am not sure.

In any event, the court, in deciding an earlier motion to compel, had rejected the argument that the DSL was sufficient to require resort to the Hague Evidence Convention. The Chinese defendant threw a new element into the mix, arguing that since the decision on the earlier motion, China has amended the Counterespionage Law, which now provides that espionage includes:

“activities that endanger the national security of the People’s Republic of China,” and “activities carried out … to steal, pry into, purchase or illegally provide state secrets, intelligence, and other documents, data, materials, or items related to national security.”

But the defendant offered nothing to suggest that the new amendment increased the tangible risk of sanctions, and the declaration from a Chinese lawyer submitted with the motion did not even really address the new law.

The court therefore rejected the Chinese defendant’s position, holding that it had offered only speculation that it might be subject to penalties in China. The court went on to observe that:

No one forced Defendants to market products in the United States. They chose to, knowing that they could be haled into American courts, where they would be
subject to the applicable rules.

That last point is important, and it is at the heart of the bigger question of whether the Evidence Convention ought to be mandatory. The US view, and I think the better view from a common law perspective at least, is that once a court has decided you are within the court’s personal jurisdiction, there is no good reason, as a general matter, not to require you to provide evidence as any domestic party would have to, unless you can make a showing that you face a real risk of sanctions for violation of your state’s law.

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  See, e.g., Motorola v. Hytera Communications, 2023 U.S. Dist. LEXIS 161194 (N.D. Ill. 2023); Philips Medical Systems v. Buan, 2022 U.S. Dist. LEXIS 35635 (N.D. Ill. 2022).
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  See Concepts NREC v. Xuwen Qiu, 662 F. Supp. 3d 496 (D. Vt. 2023).