Commc'ns Test Design, Inc. v. Contec LLC
367 F. Supp. 3d 350
| E.D. Pa. | 2019Background
- CTDI filed a declaratory judgment action (Sept. 21) seeking declarations of noninfringement of Contec's patents ('732 and '071) after Contec threatened suit.
- Contec sent CTDI a September 12 letter (with a draft complaint) setting a Sept. 19 deadline to negotiate a license or face litigation; parties were negotiating up through Sept. 19.
- CTDI continued negotiating communications through Sept. 19 but filed its declaratory complaint on Sept. 21, beating Contec's infringement suit filed six days later in the Northern District of New York.
- Both actions involve the same parties, patents, accused products, and issues; the Northern District of New York action (Contec) is duplicative of CTDI's first-filed declaratory action.
- The court found evidence suggesting CTDI filed to preempt Contec (anticipatory filing) and to take tactical advantage of ongoing negotiations; many key witnesses and Contec's records are located in the Northern District of New York.
- The court concluded that considerations of equity, ongoing negotiations, forum convenience, and witness availability weigh against exercising declaratory-judgment jurisdiction in the first-filed action.
Issues
| Issue | Plaintiff's Argument (CTDI) | Defendant's Argument (Contec) | Held |
|---|---|---|---|
| Existence of an Article III actual controversy | No dispute that one exists; CTDI sought to remove the licensing "cloud" | Contec asserted infringement and sought license/relief | Court: actual controversy exists but jurisdiction discretionary under Declaratory Judgment Act |
| Whether court should decline jurisdiction under Declaratory Judgment Act / first-to-file rule | CTDI: filing was not improper anticipatory forum shopping; first-filed should be honored | Contec: CTDI anticipated suit, engaged in bad-faith forum shopping and interfered with negotiations | Court: declined to exercise jurisdiction over first-filed declaratory action due to CTDI's anticipatory filing and inequitable conduct |
| Effect of ongoing negotiations on declaratory jurisdiction | CTDI: negotiations had broken down; litigation necessary | Contec: meaningful negotiations were ongoing and CTDI took tactical advantage of them | Court: ongoing negotiations supported declining jurisdiction—declining vindicates policy favoring extrajudicial resolution |
| Forum convenience / important witnesses and parties | CTDI: key witnesses located at CTDI HQ in Pennsylvania; many facilities worldwide | Contec: witnesses, records, inventors, and use of accused systems are centered in Northern District of New York | Court: Northern District of New York is more convenient; supports dismissal in favor of Contec's later-filed infringement suit |
Key Cases Cited
- Wilton v. Seven Falls Co., 515 U.S. 277 (1995) (Declaratory Judgment Act confers broad judicial discretion to decline jurisdiction)
- Genentech, Inc. v. Eli Lilly & Co., 998 F.2d 931 (Fed. Cir. 1993) (first-filed rule preference may yield for sound reasons; dismissal requires justification)
- Serco Servs. Co. v. Kelley Co., 51 F.3d 1037 (Fed. Cir. 1995) (anticipatory declaratory suits can warrant dismissal in favor of later-filed infringement action)
- EMC Corp. v. Norand Corp., 89 F.3d 807 (Fed. Cir. 1996) (ongoing serious negotiations can justify declining declaratory jurisdiction)
- SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372 (Fed. Cir. 2007) (actual controversy exists when patentee asserts rights and alleged infringer claims right to engage in activity without a license)
- Sony Elecs. Inc. v. Guardian Media Techs., Ltd., 497 F.3d 1271 (Fed. Cir. 2007) (improper anticipatory filings and interference with negotiations bear on jurisdictional discretion)
- Merial Ltd. v. Cipla Ltd., 681 F.3d 1283 (Fed. Cir. 2012) (first-to-file rule explained as doctrine of federal comity to avoid conflicting decisions)