Contec, LLC v. Communications Test Design, Inc.
1:18-cv-01172
| N.D.N.Y. | Sep 27, 2019Background
- Contec, LLC (Schenectady, NY) owns patents for systems to test/repair set-top boxes (the ’732 and ’071 patents) and alleges CTDI’s Gen3 and Gen5 test systems infringe.
- CTDI (West Chester, PA; business presence in Glenville, NY) filed a declaratory judgment action in the Eastern District of Pennsylvania on Sept. 21, 2018, six days before Contec filed its infringement complaint in the Northern District of New York.
- Prior to filing, the parties had ongoing negotiations and exchanged letters/emails in September 2018; Contec says it delayed filing based on those communications, while CTDI filed in Pennsylvania after communications continued.
- The EDPA dismissed CTDI’s declaratory-judgment action, finding CTDI used negotiations to secure a forum advantage and that N.D.N.Y. was the more appropriate forum.
- CTDI moved in N.D.N.Y. to dismiss, stay, or transfer under the first-filed rule; the N.D.N.Y. court denied the motion, deferring to the EDPA’s ruling and concluding exceptions to the first-filed rule applied.
- The court refused to stay the N.D.N.Y. action pending CTDI’s appeal of the EDPA dismissal, noting no basis to do so and that any reversal could be addressed later by transfer or other procedures.
Issues
| Issue | Plaintiff's Argument (Contec) | Defendant's Argument (CTDI) | Held |
|---|---|---|---|
| Whether the first-filed rule requires dismissal/stay/transfer to EDPA | First-filed rule shouldn't apply because CTDI improperly preempted Contec and EDPA already found N.D.N.Y. appropriate | CTDI: its EDPA filing was timely and proper; first-filed court should decide forum | Denied dismissal/stay/transfer; court defers to EDPA’s determination that N.D.N.Y. is the proper forum |
| Whether CTDI acted to preempt/induce delay in bad faith | CTDI led Contec to delay filing by negotiating, then raced to file in its preferred forum | CTDI says it legitimately broke off negotiations and litigated to obtain resolution | Court found CTDI’s conduct was a tactical preemption/delay tactic and weighed against applying the first-filed rule |
| Forum convenience and witnesses (transfer factors) | Contec: key development, inventors, and Contec’s place of business are in N.D.N.Y.; more witnesses available there | CTDI emphasizes locus where infringing systems were developed/managed and preferred forum | Court agreed convenience favored N.D.N.Y. and supported declining to enforce first-filed priority |
| Whether to stay proceedings pending CTDI’s appeal of EDPA dismissal | Contec: no stay necessary; action should proceed | CTDI requested stay to let EDPA resolve venue challenges | Court declined to stay; no persuasive reason to pause this action pending appeal |
Key Cases Cited
- D.H. Blair & Co. v. Gottdiener, 462 F.3d 95 (2d. Cir. 2006) (articulates the first-filed rule as guiding priority between parallel suits)
- Genentech, Inc. v. Eli Lilly & Co., 998 F.2d 931 (Fed. Cir. 1993) (exceptions to first-filed rule permissible when justice or expediency require)
- Elecs. for Imaging, Inc. v. Coyle, 394 F.3d 1341 (Fed. Cir. 2005) (intent to preempt another’s suit is a factor in first-filed analysis)
- Merial Ltd. v. Cipla Ltd., 681 F.3d 1283 (Fed. Cir. 2012) (court may dismiss, stay, or transfer a later-filed patent suit under first-filed principles)
- Commc’ns Test Design, Inc. v. Contec LLC, 367 F. Supp. 3d 350 (E.D. Pa. 2019) (EDPA dismissed CTDI’s declaratory action for tactical preemption and identified N.D.N.Y. as the more appropriate forum)
- Doc’s Dream, LLC v. Dolores Press, Inc., 766 F. App’x 467 (9th Cir. 2019) (dismissal under first-to-file is improper if it would prejudice the second-filed plaintiff)