MYCONE DENTAL SUPPLY CO., INC. v. CREATIVE NAIL DESIGN, INC. et al
Filing
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MEMORANDUM OPINION. Signed by Chief Judge Jerome B. Simandle on 4/26/2012. (TH, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
MYCONE DENTAL SUPPLY CO.,
INC., doing business as
KEYSTONE RESEARCH &
PHARMACEUTICAL,
Civil Action
No. 11-4380 (JBS/KMW)
Plaintiff,
MEMORANDUM OPINION
v.
CREATIVE NAIL DESIGN, INC., ET
AL.,
Defendants.
SIMANDLE, Chief Judge:
This matter is before the Court on Defendants’ motion to
dismiss Counts II-V [Docket Item 13]; motion to seal [Docket Item
14]; and motion to transfer, dismiss, or stay the case pursuant
to the First-filed Rule [Docket Item 16].
The principal issue
presented is, when two courts have cases that potentially
implicate the First-filed Rule, and motions to transfer are
pending in each court, whether the first-filed court should have
the first opportunity to decide whether to keep or transfer the
case under the First-filed Rule or under exceptions to that rule.
The Court finds as follows:
1.
Plaintiff Mycone Dental Supply Co., Inc., doing business
as Keystone Research & Pharmaceutical (“Keystone”), brings this
suit against Creative Nail Design, Inc. and distributors of
Creative’s products (“Creative”) alleging that Creative’s sale of
a nail polish called “Shellac” infringed on Keystone’s patent for
“Gel Polish.”1
2.
One day prior to Keystone’s filing this action, Creative
filed a declaratory judgment complaint against Keystone in the
Southern District of California, seeking a declaration that the
patent in question in both cases is invalid, not infringed, and
unenforceable.
See Creative Nail Design, Inc. v. Mycone Dental
Supple Co., Inc., Civil No. 11-1658 (S.D. Cal. 2011).
Both cases
address whether Shellac infringes Keystone’s patent for Gel
Polish.
The New Jersey action also raises several additional
related claims for unfair competition and false advertising, and
also seeks relief from Creative’s distributors.
3.
Both this Court and the Southern District of California
court have pending a motion to dismiss or transfer this matter to
the other court.
Each court is asked to decide the application
of the First-filed Rule – this rule requires that with some
exceptions, when two overlapping cases are filed in federal
district courts, the second-filed case should be dismissed,
stayed, or transferred.
971 (3d Cir. 1988).
See EEOC v. Univ. of Pa., 850 F.2d 969,
Although it is undisputed that the
California case was first-filed, the parties dispute whether one
of the exceptions to the First-filed Rule should apply.
4.
1
The same considerations of comity and efficiency that
The patent in question is U.S. Patent No. 5,965,147.
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animate the First-filed Rule also dictate that the court in which
the matter was first-filed should be the forum to determine which
court is the more appropriate forum to ultimately adjudicate the
merits of this matter.
See Pacesetter Sys., Inc. v. Medtronic,
Inc., 678 F.2d 93, 96 (9th Cir. 1982); Mann Mfg., Inc. v. Hortex,
Inc., 439 F.2d 403, 406 (5th Cir.1971); Schnabel v. Ramsey
Quantitative Sys., Inc., 322 F. Supp. 2d 505, 510-11 (S.D.N.Y.
2004); Tucker v. Am. Int'l Group, Inc., 728 F. Supp. 2d 114, 124
(D. Conn. 2010); Daimler-Chrysler Corp. v. Gen. Motors Corp., 133
F. Supp. 2d 1041, 1044 (N.D. Ohio 2001); PRPJ Bergen, Inc. v.
Plate, 774 F. Supp. 200, 202 n.4 (S.D.N.Y. 1991) (noting an
example of the District of New Jersey following this rule).
A
categorical rule that the first forum determines application of
the First-filed Rule carries similar drawbacks as a bright-line
application of the First-filed Rule: the risk that bad faith
forum shoppers will seek out beneficial precedent (on the issue
of application of the First-filed Rule) and choose a more
convenient forum (for litigation of the transfer issue).
But
this circumscribed version of the familiar maladies is easily
outweighed by the interest in judicial efficiency and comity in
not having the two courts simultaneously resolve the issue, with
the obvious possibility of conflicting results.
5.
Therefore, because there is no dispute that the
California case was the temporally first-filed matter (deserving
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of First-filed Rule deference or not), that Court is properly the
forum to determine whether the First-filed Rule or an exception
thereto applies.
Once the Southern District of California Court
decides that issue as part of the transfer motion before it, this
Court can then determine, as appropriate, the direction for the
New Jersey matter.
6.
Accordingly, the Court will stay this case and
administratively terminate the pending motions until a
determination is made regarding the motion to stay or transfer in
Creative Nail Design, Inc. v. Mycone Dental Supple Co., Inc.,
Civil No. 11-1658 (S.D. Cal. 2011).
The accompanying Order will
be entered.
April 26, 2012
Date
s/ Jerome B. Simandle
JEROME B. SIMANDLE
Chief U.S. District Judge
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