Nexans Inc. et al v. Belden Inc. et al
Filing
42
MEMORANDUM OPINION. Signed by Judge Sue L. Robinson on 8/6/2013. (nmfn)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
NEXANS INC. and BERK-TEK LLC,
Plaintiffs,
v.
BELDEN INC., BELDEN
TECHNOLOGIES, INC., and BELDEN
TECHNOLOGIES, LLC,
Defendants.
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)
)
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) Civ. No. 12-1491-SLR
)
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Steven J. Balick, Esquire, Tiffany Geyer Lydon, Esquire, and Andrew C. Mayo, Esquire
of Ashby & Geddes, Wilmington, Delaware. Counsel for Plaintiffs. Of Counsel: James
S. Blank, Esquire, and David Soofian, Esquire of Kaye Scholer LLP.
Adam W. Poff, Esquire, and Pilar G. Kraman, Esquire of Young Conaway Stargatt &
Taylor, LLP. Counsel for Defendants. Of Counsel: Matthew B. Lowrie, Esquire, and
Aaron W. Moore, Esquire of Foley & Lardner LLP.
MEMORANDUM OPINION
Dated: August 6, 2013
Wilmington, Delaware
~
I. INTRODUCTION
Plaintiff Nexans Inc. ("Nexans") filed this declaratory judgment and patent
infringement action against Belden Inc., Belden Technologies, Inc., and Belden
Technologies, LLC (collectively, "Belden"). (D. I. 5) Nexans seeks declaratory judgment
of noninfringement and invalidity of U.S. Patent Nos. 6,074,503 ("the '503 patent"),
7,135,641 ("the '641 patent"), and 7,977,575 ("the '575 patent") (/d.
at~~
27, 29, 31-35,
38-43) and affirmatively asserts infringement of U.S. Patent No. 5,796,046 ("the '046
patent"). (/d.
at~~
37, 46-49) In an amended complaint, Nexans also seeks declaratory
judgment of noninfringement and invalidity of U.S. Patent No. 7,663,061 ("the '061
patent"). (/d.
at~~
36-37)
Currently before the court is Nexans' motion to enjoin Belden from prosecuting a
related action filed in another district, Belden's motion to dismiss the declaratory
judgment claims in this action in favor of that related action, and Belden's motion to
dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) or, in the alternative, strike
the amended complaint. (D. I. 12; D. I. 18, D. I. 24) The court has jurisdiction over this
matter pursuant to 28 U.S.C §§ 1331, 1338(a), 2201, and 2202.
II. BACKGROUND
Nexans and Belden are Delaware corporations that use, make, and/or sell data
cables. (D. I. 5
at~~
1-4) On April 3, 2012, Belden sent a letter ("the warning letter") to
Berk-Tek LLC ("Berk-Tek"), a division of Nexans, accusing Berk-Tek of using Belden's
patented technology. 1 (/d. at~~ 13-14) In the warning letter, Belden also referenced
previous litigation against Superior Essex Inc. and Superior Essex Communications LP
(collectively, "Superior Essex"), explaining that, at the conclusion of that litigation,
Superior Essex elected to enter into a license agreement, including payment of a
royalty. 2 (/d. at ~ 16)
Following receipt of the warning letter, Nexans and Belden entered into a
Protected Communications and Standstill Agreement ("the Standstill Agreement") on
June 25, 2012. (/d.
York City. (ld.
at~
at~
19) On September 21, 2012 counsel for the parties met in New
20) The parties then kept in contact until the Standstill Agreement
expired on October 31, 2012. (/d.
at~~
21-23)
Nexans filed the instant suit on November 19, 2012, with claims for declaratory
judgment of non infringement and invalidity of the '503, '641, and '575 patents and
claims for infringement of the '046 patent. Two days later, on November 21, 2012,
Belden filed a parallel suit against Nexans in the Southern District of Indiana ("the
Indiana action") alleging infringement of the '503, '641, and '575 patents, as well as the
'061 patent (collectively, "the Belden patents"). (D.I. 13 at 2) On the same day, Belden
filed a separate action against Hitachi Cable America Inc. and Hitachi Cable
Manchester, Inc. in the Southern District of Indiana alleging infringement of the Belden
1
0n April 17, 2013, the parties stipulated to add Berk-Tek as a plaintiff. (D. I. 40)
2
Belden has filed three suits against Superior Essex in this court. Belden filed its
first suit against Superior Essex on January 29, 2008 alleging infringement of the '503
patent. (D. I. 5 at~ 24) On October 31, 2008, Belden filed a second suit against
Superior Essex and other parties, alleging infringement of the '641 and the '503 patents.
(ld. at~ 25) Finally, on August 1, 2011, Belden filed a third suit against Superior Essex
over the '061 and the '575 patents. (/d. at 1{26)
2
patents ("the Hitachi litigation"). (/d.) On December 2, 2012, Nexans filed an amended
complaint in the instant action to add the '061 patent to its claims for declaratory
judgment. (/d.)
Ill. STANDARD OF REVIEW
A. Motion to Dismiss for Lack of Subject Matter Jurisdiction
Not only may the lack of subject matter jurisdiction be raised at any time, it
cannot be waived and the court is obliged to address the issue on its own motion. See
Moodie v. Fed. Reserve Bank of NY, 58 F.3d 879, 882 (2d Cir. 1995). Once jurisdiction
is challenged, the party asserting subject matter jurisdiction has the burden of proving
its existence. See Carpet Grp. lnt'l v. Oriental Rug Imps. Ass'n, 227 F.3d 62, 69 (3d Cir.
2000).
Under Rule 12(b)(1), the court's jurisdiction may be challenged either facially
(based on the legal sufficiency of the claim) or factually (based on the sufficiency of
jurisdictional fact). See 2 James W. Moore, Moore's Federal Practice§ 12.30[4] (3d ed.
1997). Under a factual attack, the court is not "confine[d] to allegations in the ...
complaint, but [can] consider affidavits, depositions, and testimony to resolve factual
issues bearing on jurisdiction." Gotha v. United States, 115 F.3d 176, 179 (3d Cir.
1997); see also Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891-92 (3d
Cir. 1977). In such a situation, "no presumptive truthfulness attaches to plaintiffs
allegations, and the existence of disputed material facts will not preclude the trial court
from evaluating for itself the merits of jurisdictional claims." Carpet Grp., 227 F.3d at 69
(quoting Mortensen, 549 F.2d at 891 ). Although the court should determine subject
matter jurisdiction at the outset of a case, "the truth of jurisdictional allegations need not
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always be determined with finality at the threshold of litigation." 2 Moore§ 12.30[1].
Rather, a party may first establish jurisdiction "by means of a nonfrivolous assertion of
jurisdictional elements and any litigation of a contested subject-matter jurisdictional fact
issue occurs in comparatively summary procedure before a judge alone (as distinct from
litigation of the same fact issue as an element of the cause of action, if the claim
survives the jurisdictional objection)." Jerome B. Grubart, Inc. v. Great Lakes Dredge &
Dock Co., 513 U.S. 527, 537-38 (1995) (citations omitted).
B. Motion to Enjoin
It has long been settled that "a United States district court which first obtains
jurisdiction of the parties and issues may ... enjoin proceedings involving the same
issues and parties begun thereafter in another United States district court." Crosley
Corp. v. Hazeltine Corp., 122 F.2d 925, 927 (3d Cir. 1941). While the invocation of this
"first-filed" rule is the norm, exceptions are not rare, and district courts are given
discretion in retaining jurisdiction "when justice or expediency requires." Genentech,
Inc. v. Eli Lilly & Co., 998 F.2d 931, 937 (Fed. Cir. 1993); EEOC v. Univ. of Pa., 850
F.2d 969, 972 (3d Cir. 1988).
Although courts hearing patent cases must apply "the procedural law of the
regional circuit in matters that are not unique to patent law, ... the regional circuit
practice need not control when the question is important to national uniformity in patent
practice." Lab. Corp. of Am. Holdings v. Chiron Corp., 384 F.3d 1326, 1330 (Fed. Cir.
2004). The Federal Circuit has held that "injunctions arbitrating between co-pending
patent declaratory judgment and infringement cases in different district courts are
reviewed under the law of the Federal Circuit." /d. at 1331. In this context, co-pending
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patent infringement and declaratory judgment actions are those involving "the same
patents and the same parties." /d. at 1328.
IV. DISCUSSION
Nexans and Belden dispute whether the declaratory judgment claims in this
action should be litigated in the instant action or in the Indiana action, and whether the
declaratory judgment claims regarding the '061 patent were properly added in the
amended complaint. As a threshold matter, Nexans chose a traditional and legitimate
venue for the instant action, that is, Belden's state of incorporation.
A. Motion to Dismiss for Lack of Subject Matter Jurisdiction or, in the
Alternative, Strike the Amended Complaint
Belden asserts that the court has no jurisdiction over the '061 patent, which was
added in Nexans' amended complaint, because there is no actual controversy regarding
that patent. (0.1. 19 at 11) In the alternative, Belden contends that Nexans' amended
complaint should be stricken because it addresses a case or controversy that occurred
after the filing of the original complaint. (0.1. 25 at 6)
According to Belden, the case or controversy with respect to the '061 patent did
not arise until Belden's filing of the Indiana action, which asserted, inter alia,
infringement of the '061 patent. (0.1. 25 at 6) Since the filing of the Indiana action
occurred after the filing of the original complaint in this action, Belden contends that the
amended complaint in this action must be treated as a supplemental complaint that
does not relate back to the events that are described in the original complaint. (/d.)
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Contrary to Belden's assertions, even if the amended complaint were considered
instead to be a supplemental complaint, 3 said complaint relates back pursuant to
Federal Rule of Civil Procedure 15(c)(1)(B), for it was not the filing of the Indiana action
that caused a case or controversy to arise out of the '061 patent, but the same events
that led to the filing of the original complaint that caused the case or controversy. To
wit, on April 3, 2012, Belden sent the warning letter to Nexans stating, in part, "Belden
has secured judgments that certain of its patents are valid, enforceable and infringed by
Superior Essex" and "Belden has patents directed to (among other things) data cables
(or their method of manufacture) with a tape separator ... cross-web separator ...
separator with a ribbed jacket." (0.1. 29 at 7) This general infringement accusation did
not name any specific patents. During a September 21, 2012 meeting among the
parties, Belden separated its patents into two groups, stating that the '503, '641, and
'575 patents could fall into either group. (0.1. 27 at 1f 6) Belden further stated that other
patents, including the '061 patent, may also fall into these groups and cover Nexans'
products. (/d.)
When an actual controversy exists over one patent, it can also cover patents
relating to the same technology between the same parties. See Teva Pharms. USA Inc.
v. Novartis Pharms. Corp., 482 F.3d 1330, 1344-45 (Fed. Cir. 2007). The '575 patent is
nearly identical to the '061 patent, possessing the same title, the same inventors, and
3
See Innovative Therapies, Inc. v. Kinetic Concepts, 599 F.3d 1377, 1383 (Fed.
Cir. 201 0) (stating that a supplemental complaint adds issues based on events that
occurred after the filing of the original complaint).
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substantially the same specification. 4 (D.I. 5, exs. C, D) In light of the relationship
between the '575 and '061 patents and the nature of the discussions, the general
dispute gave rise to the specific controversy over the '061 patent.
Belden's litigation history with other parties based on related patents also has
relevance to the determination of declaratory judgment jurisdiction. See Micron Tech.,
Inc. v. Mosaid Techs., Inc., 518 F.3d 897, 899-901 (Fed. Cir. 2008). In three separate
instances, Belden filed lawsuits related to the cable technology at issue in the instant
case, including a suit for infringement of both the '061 and the '575 patents. (D.I. 29 at
12) Given this pattern of litigation, it would have been reasonable for Nexans to believe
that the '061 patent was related to the controversy between the parties. Accordingly,
the court denies Belden's motion to dismiss for lack of subject matter jurisdiction or, in
the alternative, strike the amended complaint.
B. Motion to Enjoin and Cross-Motion to Dismiss the Declaratory
Judgment Claims
Nexans also seeks to enjoin Belden from prosecuting the Indiana action, arguing
that, under the first-filed rule, the instant action should be litigated in favor of the Indiana
action. (D.I. 5) Belden's cross-motion seeks dismissal of the declaratory judgment
claims in the Delaware action in favor of prosecuting the Indiana action. (D. I. 18)
1. First-filed rule
The Federal Circuit prefers "to apply in patent cases the general rule whereby the
forum of the first-filed case is favored, unless considerations of judicial and litigant
economy and the just and effective disposition of disputes, require otherwise."
4
The '575 patent is a continuation of the '061 patent.
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Genentech, 998 F.2d at 937, rev'd on other grounds, Wilton v. Seven Falls Co., 515
U.S. 277 (1995). If applied, the rule counsels that a later-filed action involving the same
controversy should be dismissed, transferred or stayed in favor of the first-filed action.
See id. at 938. "The first-filed rule encourages sound judicial administration and
promotes comity among federal courts of equal rank. It gives a court 'the power' to
enjoin the subsequent prosecution of proceedings involving the same parties and the
same issues already before another district court." EEOC, 850 F.2d at 971.
The first-filed rule gives precedence to a first-filed declaratory judgment action
over a later-filed infringement action "when the declaratory action can resolve the
various legal relations in dispute and afford relief from the controversy that gave rise to
the proceeding .... " See Genentech, 998 F.2d at 938. It applies to mirror-image
litigation that, if resulting in two conflicting judgments, may require separate appeals.
See Cel/ectis S.A. v. Precision Biosciences, Inc., 858 F. Supp. 2d. 376, 384 (D. Del.
2012) (citing Hazeltine, 122 F.2d at 930).
The Indiana action asserts infringement of the Belden patents, which are the
same patents named in the declaratory judgment claims of the instant action. (D.I. 13 at
2) Although the declaratory judgment claims related to the '061 patent were added in
the instant action after the patent was asserted in the Indiana action, as discussed
supra, the controversy regarding the '061 patent relates back to the original filing date of
the instant action. As a result, the declaratory judgment claims in the instant action
would resolve the same controversy as the Indiana action, which is a mirror-image
litigation. Therefore, despite the later addition of the '061 patent to the amended
complaint, the Delaware action is the first-filed action to the later-filed Indiana action.
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2. Exceptions to the first-filed rule
The determination that the instant action is the first filed, however, does not
necessarily end the inquiry. Belden argues that exceptions to the first-filed rule apply in
this case. Factors that have been regarded as proper bases for departing from the firstfiled rule include bad faith, forum shopping, when the second-filed action has
"developed further than the initial suit," and "when the first-filing party instituted suit in
one forum in anticipation of the opposing party's imminent suit in another, less
favorable, forum." EEOC, 850 F.2d at 971 (citations omitted). "Courts must be
presented with exceptional circumstances before exercising their discretion to depart
from the first-filed rule." /d. at 976-79.
Belden contends the first-filed rule should not apply because the instant action is
anticipatory. The court has recognized that "a suit is 'anticipatory' for the purposes of
being an exception to the first-to-file rule if the plaintiff in the first-filed action filed suit on
receipt of specific, concrete indications that a suit by the defendant was imminent."
Woodbolt Distribution, LLC v. Natural Alts. lnt'l, Inc., Civ. No. 11-1266, 2013 WL
247041, at *4 (Jan. 23, 2013). According to Belden, the parties were engaged in
serious negotiations prior to the filing date of the instant action. (D.I. 19 at 6) Nexans
then filed this action within three weeks of the Standstill Agreement's expiration and
stated in its complaint that it was "reasonably apprehensive of suit by Belden." (/d.)
Nexans, however, asserts that Belden can point to no specific and concrete threat of
imminent litigation. (D.I. 26 at 4-5) In addition, Nexans argues that the time line does
not give rise to an inference that the instant action was anticipatory because Belden
could have easily filed suit in the 19 days that elapsed between the expiration of the
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Standstill Agreement and the filing of the instant suit if it had intended to do so. (D.I. 26
at 6)
In other cases where the time line after the expiration of an agreement was less
protracted, courts have found that there was no anticipatory filing. See, e.g., Oak
Assocs., Ltd. v. Palmer, Civ. No. 05-4210, 2006 WL 293385, at *4 (E.D. Pa. 2006)
(stating there was no race to the courthouse when an action was filed 12 days after the
agreement expired); but see EEOC, 850 F.2d at 977 (holding that filing suit three days
prior to the end of a grace period was anticipatory). Here, there is no evidence of
record that Nexans had received any concrete indications of an imminent lawsuit. In
fact, Doug Brenneke, Belden's Vice President of Research and Development, stated in
his declaration that Belden tried to continue settlement negotiations after the expiration
of the Standstill Agreement and did not believe the parties were at an impasseindications that an infringement lawsuit was not imminent. (D.I. 20 at 1{4) Therefore,
the court does not find that the instant action was anticipatory.
Belden next argues that the instant suit, if not anticipatory, runs directly counter
to the objectives of the Declaratory Judgment Act because it was filed during the course
of settlement negotiations and in bad faith, with a nefarious motive to gain the upper
hand in negotiations. (D.I. 19 at 7 -8) The Declaratory Judgment Act specifically allows
declaratory judgment actions for parties facing accusations of patent infringement to
"clear the air" regarding their accused products. Elecs. for Imaging, Inc. v. Coyle, 394
F.3d 1341, 1345-46 (Fed. Cir. 2005) (internal quotation marks omitted) (stating that a
party that is "reasonably at legal risk because of an unresolved dispute" can obtain
judicial resolution of the dispute without waiting for the other side to file an action); see
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also Micron, 518 F.3d at 902 ("The purpose of the Declaratory Judgment Act ... in
patent cases is to provide the allegedly infringing party relief from uncertainty and delay
regarding its legal rights." (internal quotation marks omitted)). The parties dispute
whether there were ongoing negotiations at the time the instant suit was filed. (D.I. 19
at 7-8; D.l. 26 at 8; D.l. 27 at 118) From Belden's perspective, settlement discussions
were still ongoing, despite the expiration of the Standstill Agreement, because there
were no indications that the parties were at an impasse. (D.I. 19 at 8; D. I. 20 at 114)
Nexans contends that, as of November 1, 2012, Nexans was no longer pursuing
negotiations with Belden. (D.I. 26 at 8; D. I. 27 at 11117-8)
According to the record, as the October 31, 2012 expiration date approached,
each party requested certain preliminary information from the other party. (D. I. 27 at
116) Emails from Belden on November 1 and November 14, 2012 indicated that it would
not be able to provide the information requested by Nexans. (/d. at 11117-8, ex. E)
Nexans did not respond to Belden's November 1, 2012 email and, although the parties
on November 15, 2012 discussed the possibility of having another meeting, no meeting
was ever set up. (/d. at 118; D.l. 20 at 114) Based on the undisputed expiration of the
Standstill Agreement, Belden's inability to provide Nexans' requested information, and
the absence of any negotiations thereafter, the parties were not engaged in ongoing
negotiations at the time the instant action was filed. Therefore, there is no indication
that Nexans' filing of the instant action was done in bad faith or to gain an upper hand in
negotiations. Rather, the filing of the instant action falls within the objectives of the
Declaratory Judgment Act.
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As another basis for the court to depart from the first-filed rule, Belden accuses
Nexans of forum shopping. Nexans allegedly filed the instant action in Delaware in part
because Belden had previously litigated similar technology in Delaware with a less than
favorable outcome for some of its claims. (D. I. 19 at 13) The court declines, however,
to characterize a plaintiff's choice of venue as "forum shopping" when, by essentially
moving to transfer venue, a defendant is doing the same thing -choosing a venue that
it believes to be more favorable to its claims for whatever reason. See Cellectis, 858 F.
Supp. 2d at 385.
Finally, neither the Indiana action nor the Hitachi litigation has advanced any
further than the Delaware action. (D. I. 13 at 12) This consideration also does not
warrant a departure from the first-filed rule.
3. Additional considerations
Since the first-filed suit rule "will not always yield the most convenient and
suitable forum ... the trial court must [also] weigh the factors used in a transfer analysis
as for any other transfer motion." Micron, 518 F.3d at 904. These factors include "the
convenience and availability of witnesses, the absence of jurisdiction over all necessary
or desirable parties, and the possibility of consolidation with related litigation." /d.
Belden avers that the more appropriate forum is Indiana because its witnesses
reside there. (D. I. 19 at 8-9) Belden's prior choice to litigate the same patents in this
court, however, detracts from its argument citing the convenience and availability of its
witnesses. See Cellectis, 858 F. Supp. 2d. at 385 (stating that a party should not
oppose litigating in a court in which it had previously litigated without complaint). As
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such, the court does not give undue weight to the consideration of the convenience and
availability of witnesses.
Belden further contends that the instant action should be dismissed in favor of
the Indiana action because the Indiana action could be consolidated with the Hitachi
litigation that is also pending in Indiana. (D.I. 19 at 10-11) The Federal Circuit has
cautioned that "a patent holder may often easily file an artificially broader infringement
suit to avoid declaratory judgment jurisdiction. If ... a patent holder could simply name
another defendant ... to the later filed infringement, then the Supreme Court's more
lenient standard for the declaratory judgment plaintiff would lose its primary intended
effect." Micron, 518 F.3d at 903. Although the Indiana action is not a broader
infringement suit than the instant action because it involves the same patents and the
same parties, the court shares the concern that, akin to simply naming other
defendants, filing another infringement suit on the same patents against other
defendants should not be given much weight in deciding whether to apply the first-filed
rule. Accordingly, the possibility of consolidation, alone, is insufficient to warrant
departure from the first-filed rule in this case.
Other considerations of judicial efficiency also do not require departure from the
first-filed rule. Since this court has previously had the Belden patents before it, it is at
least as familiar with them than the Indiana court, and neither court is familiar with
Nexans' accused products. In addition, dismissal of the declaratory judgment claims in
favor of the Indiana action would still leave Nexans' affirmative claim for infringement of
its patent in the instant action and require the parties to litigate in two different separate
courts. Therefore, the facts of this case do not warrant an exception to the first-filed
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rule. There is no reason that it would be unjust or inefficient to continue the instant
action rather than the Indiana action. The court grants Nexans' motion to enjoin Belden
from prosecuting the later-filed Indiana action and denies Belden's motion to dismiss the
declaratory judgment claims.
V. CONCLUSION
For the foregoing reasons, the court denies Belden's motion to dismiss for lack of
subject matter or, in the alternative, strike the amended complaint (0.1. 24). The court
also grants Nexans' motion to enjoin (0.1. 12) and denies Belden's motion to dismiss the
declaratory judgment claims (0.1. 18). An appropriate order shall issue.
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