Corning Inc. v. DSM Desotech Inc. et al

Filing 42

MEMORANDUM ORDER granting 35 MOTION to file an amended complaint, denying 26 MOTION to Dismiss, denying 6 MOTION to Dismiss. Signed by Judge Sue L. Robinson on 4/16/2015. (fms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

CORNING INCORPORATED,
Plaintiff,

v.
DSM DESOTECH, INC. and DSM
l.P. ASSETS, B.V.,
Defendants.

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) Civ. No. 14-1081-SLR
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MEMORANDUM ORDER
At Wilmington this 16th day of April, 2015, having reviewed defendants' motion
to dismiss and the papers filed in connection therewith; and having heard oral argument
on same;
IT IS ORDERED that said motion (D.I. 6) is denied, based on the reasons that

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follow.
1. Background. The above declaratory judgment action was filed on August

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21, 2014 by plaintiff Corning Incorporated ("Corning"). Corning asserts that: (a)
defendant DSM l.P. Assets is the assignee, and defendant DSM Desotech the
exclusive licensee, 1 of certain patents; 2 (b) Corning does not infringe said patents; and
(c) said patents are invalid. (D.I. 1) Rather than filing an answer to the complaint, DSM

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Defendants shall be collectively referred to as "DSM."

United States Patent Nos. 7, 171, 103; 6,961,508; 6,339,666; 6,438,306;
6,298, 189; and 7 ,276,543.

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t.

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filed a motion to dismiss (D.I. 6), arguing that: (a) Corning is a party to an agreement
with DSM Desotech for the supply of optical fiber coatings ("the Supply Agreement"); 3
(b) Corning's allegations arise from and relate to the Supply Agreement; and (c) the
Supply Agreement mandates that any such disputes be heard in the courts of Illinois.
Corning responds by arguing that its patent claims do not relate to the Supply
Agreement; therefore, the forum selection clause of said agreement has no bearing on
the dispute at bar. On the same day that DSM filed its reply brief in support of its
motion to dismiss, DSM instituted suit in the United States District Court for the
Northern District of Illinois, asserting breach of contract claims against Corning in
connection with the Supply Agreement, as well as patent infringement claims against
Corning in connection with the same patents at issue in the above captioned case.
(See DSM Desotech Inc. and DSM J.P. Assets B. V. v. Coming Incorporated, Civ. No.

14-8111-MSS (N.D. Ill.) (D.I. 1)) The Supply Agreement expired by its own terms on
December 31, 2014.
2. Analysis. The court agrees with Corning's analysis. There is no dispute that
the breach of contract claims belong in Illinois. There is also no dispute that Corning
filed its declaratory judgment action in Delaware first and that, as such, DSM's patent
infringement claims are compulsory counterclaims in the Delaware case. Moreover,

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Under Article 1 of the supply agreement, Corning was obligated to obtain 100%
of its requirements for optical fiber coating from DSM Desotech. Article 3 of the supply
agreement anticipated the potential for the production of new products and provided
Corning with a limited exception to the 100% requirement. Under Article 3, Corning had
to provide DSM Desotech with the opportunity to produce the new coating, having
provided DSM with the technical and performance specifications and purchasing
requirements. (D.I. 8, Ex. A)

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counsel for DSM admitted during oral argument that the only issue in dispute vis a vis
the Illinois cause of action is whether "Corning misrepresented the volume" of their
"Kuna" optical coating; i.e., rather than producing the "Kuna" coating in a small volume
for a niche market, as contemplated under Article 3 of the Supply Agreement, Corning
intended that said coating was going to be its "workhorse coating" rather than using
DSM's workhorse coating. (D.I. 41 at 11) (emphasis added)
3. In sum, there are no overlapping substantive issues between the breach of
contract claim and the patent infringement and invalidity claims. The only possible
overlap is one of evidence in terms of the technical and performance specifications
related to Corning's "Kuna" product. The mere possibility of such a factual overlap,
however, supports neither a motion to dismiss nor a motion to transfer. Therefore,
DSM's motion to dismiss is denied.
IT IS FURTHER ORDERED that Corning's motion to file an amended complaint
(D.I. 35) is granted, as I have concluded that Corning's claims are not related to the
Supply Agreement, and that there is no compelling reason - in terms of preserving
judicial resources - to not follow the first-filed rule and allow the instant Declaratory
Judgment action to proceed in plaintiff's choice of venue. A scheduling conference
shall be conducted promptly upon receipt of DSM's answer to the amended complaint.

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