Ruckus Wireless, Inc. v. Harris Corporation

Filing 31

Order by Hon. Lucy H. Koh granting 19 Motion to Dismiss.(lhklc1, COURT STAFF) (Filed on 2/22/2012)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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RUCKUS WIRELESS, INC.,

United States District Court
For the Northern District of California

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Plaintiff,
v.
HARRIS CORPORATION,
Defendants.

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Case No.: 11-CV-01944-LHK
ORDER GRANTING DEFENDANT
HARRIS CORPORATION’S MOTION
TO DISMISS WITHOUT PREJUDICE

Before the Court is Defendant Harris Corporation’s (“Harris”) motion to dismiss, or in the

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alternative, to transfer venue to the Middle District of Florida. ECF No. 19. Plaintiff Ruckus

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Wireless, Inc. (“Ruckus”) contends that venue in this District is proper and opposes the motion.

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See ECF No. 22. Pursuant to Civil Local Rule 7-1(b), the Court finds this motion appropriate for

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determination without oral argument. Accordingly, the hearing on the motion set for February 16,

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2012, was vacated on February 15, 2012. Having considered the parties’ briefing and the relevant

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law, and for the reasons set forth below, the Court GRANTS Harris’s motion to dismiss without

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prejudice. Ruckus shall refile its declaratory judgment claims in the Middle District of Florida.

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I. Factual and Procedural Background

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On April 15, 2011, Harris filed a complaint against Ruckus in the Middle District of Florida

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alleging infringement of U.S. Patent No. 6,504,515 (“the ’515 Patent”). See Harris Corp. v.

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Ruckus Wireless, Inc., No. 6:11-cv-00618-CEH-KRS (M.D. Fla. filed Apr. 15, 2007), (hereinafter

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“Florida Action”). Six days later, on April 21, 2011, Ruckus filed a complaint for declaratory

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judgment against Harris in this Court, which alleged unenforceability of the ’515 Patent

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Case No.: 11-cv-01944-LHK
ORDER GRANTING DEFENDANT HARRIS CORPORATION’S MOTION TO DISMISS
WITHOUT PREJUDICE

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(hereinafter “California Action” or “this Action”). 1 ECF No. 1. On May 23, 2011, Harris filed an

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amended complaint in the Middle District of Florida, additionally alleging infringement of U.S.

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Patent No. 7,916,684 (“the ’684 Patent”) and seeking injunctive relief against Ruckus. Fla. Action,

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ECF No. 13.

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On June 29, 2011, Ruckus filed a motion to dismiss the Florida Action. Fla. Action, ECF
No. 23. In that motion, Ruckus contends that because the ’515 Patent was expired at the time

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Harris filed its complaint in the Florida Action, Harris lacked Article III standing. See Fla. Action,

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ECF No. 23, at 2-6. On the same day, Ruckus filed an amended complaint in this Court, adding

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United States District Court
For the Northern District of California

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claims for a declaratory judgment of noninfringement and invalidity of the ’684 Patent. See ECF

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No. 8, at 6-7.

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On July 15, 2011, Judge Mary Scriven of the Middle District of Florida issued a Case

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Management Order that set pre-trial deadlines and a trial date of December 3, 2012. See Fla.

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Action, ECF No. 28. On July 18, 2011, Harris filed an opposition to Ruckus’s motion to dismiss in

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the Florida action. Fla. Action, ECF No. 29. Ruckus does not appear to have filed a reply to

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Harris’s opposition to Ruckus’s motion to dismiss in the Florida Action, and the Middle District of

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Florida does not appear to have held a hearing on Ruckus’s motion to dismiss. On December 20,

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2011, the Florida Action was reassigned to Judge Charlene Honeywell, also in the Middle District

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of Florida. Fla. Action, ECF No. 42. Apart from discovery motions practice, see Fla. Action, ECF

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Nos. 33, 36, 40 and 41, activity in the Middle District of Florida is in its preliminary pleading

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stages, as Ruckus has not yet filed an answer to Harris’s complaint in the Florida Action.

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II. Discussion

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Harris argues that this Court should exercise its discretion under the “first to file rule” to

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dismiss or transfer this Action to the Middle District of Florida because: (1) the general rule in

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patent cases favors jurisdiction in the forum of the first-filed action; (2) Ruckus’s claims in this

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Action are compulsory counterclaims to Harris’s claims in the first-filed Florida Action, and (3)

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judicial economy and convenience factors weigh in favor of dismissal or transfer. Mot. 10-11.

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Ruckus did not serve its complaint on Harris in this Action until October 10, 2011.
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Case No.: 11-cv-01944-LHK
ORDER GRANTING DEFENDANT HARRIS CORPORATION’S MOTION TO DISMISS
WITHOUT PREJUDICE

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Alternatively, Harris argues that the Court should exercise its discretion under the Declaratory

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Judgment Act to dismiss or transfer this case to the Middle District of Florida because doing so

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would promote judicial efficiency, convenience, and fairness. Mot. 3-4. Finally, Harris argues that

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Ruckus’s first count in this Action, for a declaration of unenforceability as to the ’515 Patent,

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should be dismissed for failure to state a claim for which relief can be granted. Mot. 11-12.
For the reasons explained below, the Court exercises its discretion under the first to file rule

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and dismisses this Action, without prejudice. Ruckus shall refile its declaratory judgment claims in

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the Middle District of Florida. Accordingly, the Court need not and does not address Harris’s other

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United States District Court
For the Northern District of California

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arguments.

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A. First to File Rule

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The first to file rule is a “generally recognized doctrine of federal comity which permits a

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district court to decline jurisdiction over an action when a complaint involving the same parties and

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issues has already been filed in another district.” Pacesetter Sys., Inc. v. Medtronic, Inc., 678 F.2d

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93, 94-95 (9th Cir. 1982). This rule promotes judicial efficiency and prevents the risk of

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inconsistent decisions that would arise from multiple litigations of identical claims. Accordingly, it

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“should not be disregarded lightly.” Alltrade, Inc. v. Uniweld Prods., Inc., 946 F.2d 622, 625 (9th

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Cir. 1991). At the same time, it is “not a rigid or inflexible rule to be mechanically applied, but

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rather is to be applied with a view to the dictates of sound judicial administration.” Pacesetter, 678

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F.2d at 95. Thus, the Ninth Circuit has recognized exceptions to the first to file rule under various

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circumstances, such as bad faith, anticipatory suit, and forum shopping. Alltrade, 946 F.2d at 628.

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A court may also decline to apply the first to file rule when the balance of convenience weighs in

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favor of the later-filed action. See id. at 628. The Federal Circuit has made clear that the first to

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file rule applies to patent cases and thus likewise requires deference to the first-filed action “unless

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considerations of judicial and litigant economy, and the just and effective disposition of disputes,

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require otherwise.” Elecs. for Imaging, Inc. v. Coyle, 394 F.3d 1341, 1347 (Fed. Cir. 2005).

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Here, Ruckus does not dispute that the Florida Action was filed before this Action. The

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Florida Action was filed on April 15, 2011. This Action was filed on April 21, 2011. Ruckus also

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Case No.: 11-cv-01944-LHK
ORDER GRANTING DEFENDANT HARRIS CORPORATION’S MOTION TO DISMISS
WITHOUT PREJUDICE

does not dispute that the identity of the parties is identical in both actions. Finally, the issues

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involved are “closely related patent infringement questions.” 14D Charles Alan Wright, Arthur R.

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Miller, Mary Kane, & Richard L. Marcus, Fed. Prac. & Proc. § 3823 (3d ed. 2011). Indeed,

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Harris’s complaint in the Florida Action alleges Ruckus’s infringement of the ’515 and ’684

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Patents, which are the same two patents that are the basis for Ruckus’s declaratory judgment claims

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of invalidity, unenforceability, and noninfringement in this Action. Accordingly, jurisdiction in the

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Middle District of Florida, the forum of the first-filed action, is preferred, “unless considerations of

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judicial and litigant economy, and the just and effective disposition of disputes, require otherwise.”

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United States District Court
For the Northern District of California

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Elecs. for Imaging, 394 F.3d at 1347.

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B. Compulsory Counterclaims

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Harris argues that dismissing or transferring under the first to file rule would promote

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judicial economy and fairness, especially because Ruckus’s claims in this Action are compulsory

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counterclaims to Harris’s claims in the first-filed Florida Action. The Court agrees.

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Federal Rule of Civil Procedure 13(a) requires a pleading to “state as a counterclaim any

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claim that—at the time of its service—the pleader has against an opposing party if the claim: (A)

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arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim;

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and (B) does not require adding another party over whom the court cannot acquire jurisdiction.”

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Rule 13(a) “was designed to prevent multiplicity of actions and to achieve resolution in a single

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lawsuit of all disputes arising out of common matters.” S. Const. Co. v. Pickard, 371 U.S. 57, 60

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(1962).

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A court may dismiss a claim under Rule 12(b)(6) if the claim is barred by Federal Rule of

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Civil Procedure 13. See SDMS, Inc. v. Rocky Mountain Chocolate Factory, Inc., No. 08 CV 0833

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JM (AJB), 2008 WL 4838557, at *2 (S.D. Cal. Nov. 6, 2008) (citing Baker v. Gold Seal Liquors,

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417 U.S. 467, 469 n.1 (1974)); see also Avante Int’l Tech., Inc. v. Hart Intercivic, Inc., Civil No.

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08-832-GPM, 2009 WL 2431993, at *5 (S.D. Ill. July 31, 2009). Once a Court determines “that an

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action on its docket involves a claim that should be a compulsory counterclaim in another pending

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federal suit, it will stay its own proceedings or will dismiss the claim with leave to plead it in the

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Case No.: 11-cv-01944-LHK
ORDER GRANTING DEFENDANT HARRIS CORPORATION’S MOTION TO DISMISS
WITHOUT PREJUDICE

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prior action.” 6 Wright & Miller, supra, § 1418; see also Mitchell v. CB Richard Ellis Long Term

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Disability Plan, 611 F.3d 1192, 1201 (9th Cir. 2010); Genentech v. Eli Lilly and Co., 998 F.2d 931,

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937 (Fed. Cir. 1993).

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Ruckus does not dispute, and other district courts routinely hold that declaratory judgment
claims for invalidity, unenforceability, and noninfringement are compulsory counterclaims to

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claims of infringement of the same patent. See, e.g., Oplink Commc’ns, Inc. v. Finisar Corp., No.

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11-CV-2361-EMC, 2011 WL 3607121, at *2 (N.D. Cal. 2011); Avante Int’l, 2009 WL 2431993, at

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*5; cf. Vivid Techs., Inc. v. Am. Sci. & Eng’g, Inc., 200 F.3d 795, 801 (Fed. Cir. 1999)

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United States District Court
For the Northern District of California

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(infringement claim is a compulsory counterclaim to a declaratory judgment claim of non-

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infringement of the same patent). Thus, Ruckus’s declaratory judgment claims of unenforceability

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of the ’515 Patent and noninfringement and invalidity of the ’684 Patent in this Action are

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compulsory counterclaims to Harris’s first-filed claims of infringement of the same ’515 and ’684

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Patents in the Florida Action.

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Accordingly, under the first to file rule and Federal Rule of Civil Procedure 13(a), the Court
has discretion to dismiss, transfer, or stay this Action.

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C. Equitable Considerations

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Ruckus argues that equitable considerations militate against applying the first to file rule

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here. Opp’n 5. Ruckus contends that Harris knowingly asserted an expired patent in bad faith in

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the first-filed Florida Action. Id. Ruckus also contends that Harris filed the Florida Action to

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forum shop for the “home court advantage.” Id. n.4.

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The Court is not persuaded that Harris filed its suit in bad faith. Here, Ruckus argues that

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because Harris knew the ’515 Patent was expired when it filed suit, the “Florida action was, at best,

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filed with inadequate Rule 11 diligence or, in the alternative, filed in bad faith.” Opp’n 5 (citing

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Golan v. Pingel Enters., Inc., 310 F.3d 1360, 1372 (Fed. Cir. 2002)). As Golan states, a finding of

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bad faith requires clear and convincing evidence that the patentee acted in bad faith. Id. at 1371.

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On this record, the Court does not find that Ruckus has met this burden, and whether Harris filed

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its Florida lawsuit with proper Rule 11 diligence is a question more appropriately answered by the

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Case No.: 11-cv-01944-LHK
ORDER GRANTING DEFENDANT HARRIS CORPORATION’S MOTION TO DISMISS
WITHOUT PREJUDICE

Middle District of Florida. Accordingly, notwithstanding the fact that Ruckus has raised questions

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concerning Harris’s conduct, the Court declines to dispense with the first to file rule because of

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Ruckus’s allegations of bad faith. See Alltrade, 946 F.2d at 628 (affirming district court’s decision

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to apply first to file rule in spite of Alltrade’s allegations that Uniweld brought its suit in bad faith

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by, among other things, “hastily [bringing] portions of the confidential business documents into the

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public record [in the first-filed action] in violation of [a] protective order . . . in the hope of

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fortifying Uniweld’s first-to-file claim.”). Put differently, the Court finds that the alleged bad faith

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here is not a “consideration[] of judicial and litigant economy, and the just and effective disposition

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United States District Court
For the Northern District of California

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of disputes” that would require the Court to dispense with the general rule favoring the forum of

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the first-filed case. Elecs. for Imaging, 394 F.3d at 1347.
The Court is also not convinced that Harris filed the Florida Action in anticipation of suit to

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obtain a “home court advantage.” Opp’n 5 n.4. As an initial matter, the patent holder has the

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prerogative to choose its own forum. Pacesetter, 678 F.2d at 97 (acknowledging a district court’s

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“proper recogn[ition] of [a patentee’s] interest in choosing a forum.”). Although the parties

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correctly agree that the forum convenience factors are more properly addressed by the Middle

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District of Florida, Mot. 4, 10; Opp’n 6 n.5, the Court merely notes that Harris asserts legitimate

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reasons for bringing suit in the Middle District of Florida. Harris’s principal place of business is in

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Melbourne, Florida, Am. Compl., Fla. Action, ECF No. 13 ¶ 1. Moreover, Harris asserts that the

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technology at issue was conceived, developed and patented from Harris’s facilities in Florida; the

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documents relating to the conception and development of the patented technology are located in the

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Middle District of Florida; the inventors of the ’515 Patent all reside in the Middle District of

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Florida; and the inventors and the prosecuting attorneys all reside in the Middle District of Florida.

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See Mot. 11. The Court finds that Ruckus’s allegation of improper forum shopping is not a

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“consideration[] of judicial and litigant economy, and the just and effective disposition of disputes”

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that would require the Court to dispense with the general rule favoring the forum of the first-filed

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case. Elecs. for Imaging, 394 F.3d at 1347.

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Case No.: 11-cv-01944-LHK
ORDER GRANTING DEFENDANT HARRIS CORPORATION’S MOTION TO DISMISS
WITHOUT PREJUDICE

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Thus, the Court declines to dispense with the first to file rule because of equitable

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considerations. Accordingly, the Court must determine, in its discretion, whether to dismiss,

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transfer, or stay this Action.

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D. Dismiss, Transfer, or Stay

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Ruckus argues that dismissing rather than staying this action would be an abuse of
discretion because there is a pending motion to dismiss in the Florida Action. Opp’n 6 (citing

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Alltrade, 946 F.2d 622). Ruckus repeats the Article III standing arguments from its pending

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motion to dismiss in the Florida Action and asserts that the Middle District of Florida’s jurisdiction

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United States District Court
For the Northern District of California

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is questionable. Ruckus argues that the likelihood of dismissal in the Florida Action weighs

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against dismissing this Action. See Opp’n 6-7. The Court disagrees.
Without commenting on how the Middle District of Florida should rule on Ruckus’s

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pending motion to dismiss, the Court notes that Alltrade v. Uniweld is inapposite. Alltrade

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involved an appeal from the Trademark Trial and Appeal Board (“Board”) and the right of “a party

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dissatisfied with the decision” of the Board to appeal the Board’s decision under 15 U.S.C. §

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1071(b)(1). 946 F.2d at 624. Uniweld, the trademark holder and prevailing party before the

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Board, filed suit in the Southern District of Florida first, asserting, among other things, trademark

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infringement and appealing the portions of the Board’s decision with which Uniweld disagreed. Id.

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The next day, Alltrade filed suit in the Central District of California also seeking review of the

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Board’s decision and a declaration of noninfringement of the same trademark asserted in the first-

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filed action. Id. The Central District of California dismissed Alltrade’s later-filed action under the

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first to file rule even though there was a pending motion to dismiss in the first-filed action. Id.

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The Ninth Circuit affirmed application of the first to file rule, but held that the Central

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District of California abused its discretion in dismissing, rather than staying the proceeding. Id. at

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629. The Ninth Circuit found that the jurisdiction of the first-filed court was questionable because,

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under 15 U.S.C. § 1071(b)(1), Alltrade, as the losing party before the Board, may have had the

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exclusive right to appeal the Board’s ruling. Id. at 626-29. The Ninth Circuit also noted that, once

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the Central District of California dismissed Alltrade’s action, if the Southern District of Florida

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Case No.: 11-cv-01944-LHK
ORDER GRANTING DEFENDANT HARRIS CORPORATION’S MOTION TO DISMISS
WITHOUT PREJUDICE

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were to subsequently dismiss Uniweld’s action, “Alltrade would have to file a new suit in

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California and would risk encountering statute of limitations problems.” Id. at 629. The Court

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noted that the statute of limitations for appealing the Board’s decision was only 60 days. Id. Thus,

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in holding that the Central District of California should have stayed, rather than dismissed, the

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Ninth Circuit relied on both the fact that: (1) the “the first-filed action present[ed] a likelihood of

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dismissal”; and (2) the Central District of California’s dismissal presented a risk that Alltrade’s

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statutory right to appeal the Board’s decision would be extinguished by the short statute of

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limitations.

United States District Court
For the Northern District of California

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Here, by contrast, Ruckus has raised no statute of limitations issues that warrant deviating

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from the general first to file rule favoring the forum of the first-filed suit in patent cases. Elecs. for

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Imaging, 394 F.3d at 1347. Indeed, unlike the short statute of limitations in Alltrade, patent claims

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and counterclaims have a six-year statute of limitations, 35 U.S.C § 286; see also Sierra Applied

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Scis., Inc. v. Adv. Energy Indus., Inc., 363 F.3d 1361, 1376 (Fed. Cir. 2004) (6-year statute of

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limitations applies to declarations of non-liability), and the Florida Action is scheduled to go to

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trial by December 2012. Accordingly, Alltrade does not control in this situation.

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The Court agrees with Harris that dismissing here would promote judicial economy and

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fairness. Two cases, Pacesetter Sys., 678 F.2d 93, and Avante Int’l Tech., 2009 WL 2431993, are

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instructive and counsel in favor of dismissal.

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In Pacesetter, as here, a patentee filed an infringement suit asserting three patents in a

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federal district court in Florida. The alleged infringer later filed a declaratory judgment action in a

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federal district court in California, seeking a declaration that the patents asserted in the Florida case

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were invalid, not infringed, and unenforceable. The California court dismissed under the first to

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file rule. In affirming, the Ninth Circuit reasoned that: (1) neither the first- nor second-filed action

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had proceeded past the pleading stage; (2) no apparent bar existed to a second-filing party’s

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presentation of its claims and defenses in the first-filed action; and (3) the first-filed forum was

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capable of efficiently resolving all issues. Pacesetter, 678 F.2d. at 96. So too here, neither the

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California Action nor the Florida Action has proceeded past the preliminary pleading stage. In

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Case No.: 11-cv-01944-LHK
ORDER GRANTING DEFENDANT HARRIS CORPORATION’S MOTION TO DISMISS
WITHOUT PREJUDICE

addition, the Court is not aware of and Ruckus has not suggested that there are any bars to

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Ruckus’s bringing its compulsory counterclaims in the Florida Action. Indeed, Ruckus has not yet

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filed an answer in the Florida Action. Finally, the Middle District of Florida is capable of

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efficiently resolving all issues, given that it is already tasked with familiarizing itself with and

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construing the terms of the patents-in-suit. Thus, as in Pacesetter, the goals of “[w]ise judicial

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administration, giving regard to conservation of judicial resources and comprehensive disposition

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of litigation” would be served by declining jurisdiction in deference to the Middle District of

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Florida. Id. at 95 (citing Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S. 180, 183-84

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United States District Court
For the Northern District of California

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(1952)).

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Similarly, in Avante, the Southern District of Illinois dismissed an action seeking a

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declaration of invalidity, unenforceability, and non-infringement as to the same patent that was

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already being asserted in a first-filed infringement suit between the same parties in the Eastern

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District of Texas. 2009 WL 2431993, at *1. As here, there was a pending motion to dismiss in the

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first-filed forum, the Eastern District of Texas, for lack of jurisdiction. Id. at *5 n.3. Nonetheless,

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the Southern District of Illinois dismissed the later-filed declaratory judgment action, concluding

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that “[i]n this instance the considerations of judicial economy that underlie the compulsory

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counterclaim rule . . . are best served by dismissal . . . with leave to refile the claim as a

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compulsory counterclaim in the” pending Eastern District of Texas litigation. Id. at *5.

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Thus, both Pacesetter and Avante militate in favor of dismissing this Action. Moreover, as

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discussed above, the Court does not find that “considerations of judicial and litigant economy, and

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the just and effective disposition of disputes, require otherwise.” Elecs. for Imaging, 394 F.3d at

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1347. Accordingly, the Court exercises its discretion under the first to file rule and Federal Rule of

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Civil Procedure 13, and DISMISSES this Action without prejudice. Ruckus shall refile its

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declaratory judgment claims in the Middle District of Florida.

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Case No.: 11-cv-01944-LHK
ORDER GRANTING DEFENDANT HARRIS CORPORATION’S MOTION TO DISMISS
WITHOUT PREJUDICE

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III. CONCLUSION

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For the foregoing reasons, the Court GRANTS Harris’s motion and DISMISSES Ruckus’s

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amended complaint without prejudice. Ruckus shall refile its declaratory judgment claims as

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compulsory counterclaims in the Middle District of Florida. The Clerk shall close the file.

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IT IS SO ORDERED.

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Dated: February 22, 2012

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_________________________________
LUCY H. KOH
United States District Judge

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United States District Court
For the Northern District of California

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Case No.: 11-cv-01944-LHK
ORDER GRANTING DEFENDANT HARRIS CORPORATION’S MOTION TO DISMISS
WITHOUT PREJUDICE