SAP America, Inc. v. Purple Leaf, LLC et al

Filing 33

ORDER TRANSFERRING CASE. Signed by Judge Hamilton on 1/9/2012. (pjhlc1, COURT STAFF) (Filed on 1/9/2012)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAP AMERICA, INC.,

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Plaintiff,

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v.

ORDER TRANSFERRING CASE

PURPLE LEAF, LLC, et al.,

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For the Northern District of California

United States District Court

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No. C 11-4601 PJH

Defendants.
_______________________________/

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The present action was filed by plaintiff SAP America, Inc. (“SAP”), on September

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16, 2011. Defendants are Purple Leaf LLC (“Purple Leaf Delaware” – a Delaware limited

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liability company), Purple Leaf LLC (“Purple Leaf Texas” – a Texas limited liability

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company), and Rani Yadev-Ranjan (“Yadev-Ranjan”), an individual residing in San Jose.

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SAP seeks a declaratory judgment of invalidity and non-infringement as to U.S. Patent No.

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7,603,311 B1 (“the ‘311 patent”), and U.S. Patent No. 8,027,913 B1 (“the ‘913 patent),

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which is a continuation of the ‘311 patent. Yadev-Ranjan is named as the inventor on both

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patents.

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On May 31, 2011, three and a half months before the present action was filed,

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Purple Leaf Texas filed a complaint in the Eastern District of Texas, alleging infringement of

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the ‘311 patent, against six defendants, including SAP. The court finds that the present

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action must be transferred to the Eastern District of Texas pursuant to the first-to-file rule.

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In applying the first-to-file rule, a court looks to three factors – “(1) the chronology of

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the two actions; (2) the similarity of the parties, and (3) the similarity of the issues.” Z-Line

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Designs, Inc. v. Bell'O Int'l LLC, 218 F.R.D. 663, 665 (N.D. Cal. 2003). If the first-to-file rule

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does apply to a suit, the court in which the second suit was filed may transfer, stay or

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dismiss the proceeding in order to allow the court in which the first suit was filed to decide

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whether to try the case. Alltrade, Inc. v. Uniweld Products, Inc., 946 F.2d 622, 622 (9th Cir.

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1991). “Circumstances under which an exception to the first-to-file rule typically will be

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made include bad faith, anticipatory suit and forum shopping.” Id. at 628 (internal citations

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omitted).

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Another exception to the first-to-file rule is when “the balance of convenience weighs

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in favor of the later-filed action.” Ward v. Follett Corp., 158 F.R.D. 645, 648 (N.D. Cal.

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1994). This is analogous to the “convenience of parties and witnesses” under a transfer of

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venue motion, 28 U.S.C. § 1404(a). Genentech, Inc. v. GlaxoSmithKline LLC, 2010 WL
4923594 at *2 (N.D. Cal., Dec. 1, 2010); Intuitive Surgical, Inc. v. California, 2007 WL

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For the Northern District of California

United States District Court

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1150787 at *2 (N.D. Cal., April 18, 2007).

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It is the court with the first-filed action that should normally weigh the balance of

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convenience and any other factors that might create an exception to the first-to-file rule.

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See Alltrade Inc., 946 F.2d at 628; Intuitive Surgical, 2007 WL 1150787 at *3.

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Here, the Texas action was filed in May 2011, and the present case was filed three
and a half months later, in September 2011. Thus, the “chronology” requirement is met.

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With regard to the similarity of the parties, Purple Leaf Texas and SAP are parties to

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both actions, while Yadav-Rajan and Purple Leaf Delaware are parties only in the present

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action, and there are also five additional defendants in the Texas action (three of which

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have made no appearance to date). Thus, that factor is partially met.1
With regard to the similarity of the issues, the plaintiffs in the Texas case assert a

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claim of infringement of the ‘311 patent against (among others) SAP, while in the present

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action, SAP seeks a declaratory judgment of invalidity and non-infringement as to the ‘311

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patent and as to the ‘913 patent, which is a continuation of the ‘311 patent. Thus, the court

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finds that the issues are sufficiently similar to warrant transfer.

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It is not clear, however, whether all defendants in the Texas action were properly

joined.
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SAP argues that various exceptions to the first-to-file rule are applicable here. The

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court finds, however, that that determination should be made by the Texas court, in

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accordance with the above-stated authority. The court finds in addition that it is for the

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Texas court to determine whether Purple Leaf Texas did or did not have standing at the

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time the complaint was filed in the Texas action, or whether Purple Leaf Texas did or did

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not act in bad faith in filing the suit in the first place. As for the question of forum-shopping,

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SAP could just as easily have filed an answer and a counterclaim in the Texas action

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seeking a declaratory judgment of non-infringement and invalidity, rather than filing a

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second action in this district.

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For the Northern District of California

United States District Court

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Accordingly, the court finds that this action should be TRANSFERRED to the
Eastern District of Texas.

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IT IS SO ORDERED.

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Dated: January 9, 2012
______________________________
PHYLLIS J. HAMILTON
United States District Judge

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