Futurewei Technologies, Inc. v. Acacia Research Corp.
737 F.3d 704
Fed. Cir.2013Background
- Access Co. owned five patents and granted APAC an exclusive license to enforce them; the license disclaimed any third-party beneficiary rights (§11.3) but contained a customer-protection clause (§2.1) and a California forum-selection clause (§9.1).
- APAC assigned its rights in the licensed patents to SmartPhone Technologies LLC; SmartPhone sued Huawei in the Eastern District of Texas for patent infringement.
- Huawei filed a declaratory-judgment action in the Central District of California seeking (1) noninfringement and invalidity declarations for the five patents, (2) a declaration that Huawei is a third-party beneficiary of the license, (3) tort claims for interference and unfair competition, and (4) a declaration that SmartPhone/Acacia are alter egos.
- The California district court dismissed counts 1–10 under the first-to-file rule, dismissed count 11 for failure to state a claim (pointing to the license’s no-third-party-beneficiary clause), held count 16 was a compulsory counterclaim under Rule 13(a), and denied leave to amend or discovery as futile.
- On appeal, the Federal Circuit affirmed, but relied primarily on the first-to-file rule to dismiss counts 11 and 16 as well, concluding those issues belong in the Texas action (and noting Rule 13 analysis supports that result).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Huawei’s declaratory claims of noninfringement and invalidity should proceed in California despite an earlier-filed Texas infringement suit | Huawei sought a declaratory forum in California | Defendants invoked the first-to-file rule and urged dismissal | First-to-file rule applies; declaratory claims belong in Texas and were properly dismissed |
| Whether Huawei sufficiently pleaded third‑party‑beneficiary status under the license (Count 11) | Huawei alleged it was an intended third‑party beneficiary entitled to enforce §2.1 and §9.1 | Defendants pointed to §11.3 expressly disavowing third‑party beneficiaries and argued dismissal | Dismissed under the first-to-file rule (and district court’s failure‑to‑state rationale noted); Texas court is the proper forum to adjudicate third‑party‑beneficiary issues |
| Whether Huawei’s alter‑ego declaratory claim (Count 16) must be litigated in Texas | Huawei sought a standalone declaratory finding that SmartPhone is Acacia’s alter ego | Defendants argued the alter‑ego claim is procedurally tied to the Texas case and is a compulsory counterclaim under Rule 13(a) | Dismissed under the first‑to‑file rule; Rule 13 compulsory‑counterclaim analysis supports consolidation in Texas |
| Whether Huawei was entitled to discovery or leave to amend to cure deficiencies | Huawei requested jurisdictional discovery and leave to amend | Defendants opposed as futile and untimely | Denied: discovery and amendment would not alter the first‑to‑file outcome or cure pleading defects |
Key Cases Cited
- Merial Ltd. v. Cipla Ltd., 681 F.3d 1283 (Fed. Cir. 2012) (first‑to‑file rule and handling of parallel infringement/declaratory actions)
- Electronics for Imaging, Inc. v. Coyle, 394 F.3d 1341 (Fed. Cir. 2005) (application of forum‑rule principles governed by Federal Circuit law)
- Genentech, Inc. v. Eli Lilly & Co., 998 F.2d 931 (Fed. Cir. 1993) (factors that may justify exception to first‑to‑file rule)
- Sprewell v. Golden State Warriors, 266 F.3d 979 (9th Cir. 2001) (pleading attachments and when contract governs over conclusory allegations)
- Pegasus Gold Corp. v. United States, 394 F.3d 1189 (9th Cir. 2005) (logical‑relationship test for compulsory counterclaims)
- Pochiro v. Prudential Ins. Co. of Am., 827 F.2d 1246 (9th Cir. 1987) (judicial‑economy focus of the logical‑relationship test)
- Martin v. Franklin Capital Corp., 546 U.S. 132 (2005) (district court discretion in procedural decisions)