Communications Test Design v. Contec, LLC, 952 F.3d 1356

Background

CTDI, headquartered in West Chester, PA, designs and uses "Gen3" and "Gen5" test systems; Contec, headquartered in Schenectady, NY, owns two patents asserted against those systems.
From Sept. 2017–Sept. 2018 the parties engaged in pre-suit communications and a confidentiality exchange about CTDI’s systems; Contec sent a Sept. 2018 letter stating it would sue unless CTDI agreed to discuss a license by Sept. 19 and attached a draft complaint.
On Sept. 19 CTDI’s CEO agreed to continue license discussions and scheduled a follow-up; on Sept. 21 CTDI filed a declaratory judgment suit in the Eastern District of Pennsylvania; CTDI notified Contec’s counsel and delayed service to permit further talks.
On Sept. 27 Contec filed a patent-infringement action in the Northern District of New York; Contec moved to dismiss CTDI’s Pennsylvania DJ action as anticipatory and filed in bad faith to preempt Contec’s suit.
The EDPA district court dismissed CTDI’s declaratory-judgment complaint, finding the filing anticipatory, disruptive of ongoing negotiations, and that N.D.N.Y. was the more convenient forum; the Federal Circuit affirmed.

Issues

Issue	CTDI (Plaintiff) Argument	Contec (Defendant) Argument	Held
Whether the district court abused its discretion in declining to exercise jurisdiction over CTDI’s declaratory-judgment action under the Declaratory Judgment Act and the first-to-file rule	CTDI: First-filed DJ action is entitled to precedence; no sound reason to depart from first-to-file because DJA’s purpose (relief from uncertainty) justified proceeding in PA	Contec: CTDI’s DJ filing was anticipatory and tactical—filed during active licensing talks to preempt Contec; equitable reasons support declining DJ jurisdiction and deferring to N.D.N.Y. infringement suit	Court: No abuse of discretion; district court properly considered DJA discretion and first-to-file equitable exceptions and permissibly dismissed the DJ action
Whether the district court improperly relied on findings about CTDI’s motive without an evidentiary hearing	CTDI: Court’s "nefarious motive" finding required an evidentiary hearing or remand for factual development	Contec: Motive is inferred from objective communications; no jurisdictional hearing required because DJA discretion (not subject-matter jurisdiction) was exercised and parties had full briefing	Held: No remand or hearing required; motive language was not essential and objective record supported dismissing as anticipatory and disruptive
Whether the Eastern District of Pennsylvania was the proper forum (center of gravity)	CTDI: "Center of gravity" of accused activity is in Pennsylvania (headquarters, development) so PA is more appropriate	Contec: Key witnesses, inventors, records, and HQ favor New York; several witnesses are beyond EDPA subpoena power	Held: District court’s balancing of convenience factors was reasonable; N.D.N.Y. favored overall

Key Cases Cited

Genentech, Inc. v. Eli Lilly & Co., 998 F.2d 931 (Fed. Cir. 1993) (first-to-file rule and exceptions)
Wilton v. Seven Falls Co., 515 U.S. 277 (U.S. 1995) (DJA confers discretionary relief)
EMC Corp. v. Norand Corp., 89 F.3d 807 (Fed. Cir. 1996) (consideration of ongoing negotiations under DJA)
Sony Elecs., Inc. v. Guardian Media Techs., Ltd., 497 F.3d 1271 (Fed. Cir. 2007) (on anticipatory filings and motive)
Serco Servs. Co. v. Kelley Co., 51 F.3d 1037 (Fed. Cir. 1995) (preference for first-filed action)
Micron Tech., Inc. v. Mosaid Techs., Inc., 518 F.3d 897 (Fed. Cir. 2008) (equitable exceptions to first-to-file rule)
Elecs. for Imaging, Inc. v. Coyle, 394 F.3d 1341 (Fed. Cir. 2005) (national uniformity and DJA discretion)
Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S. 180 (U.S. 1952) (trial courts’ discretion in priority of similar proceedings)