Comcast Corporation et al v. Rovi Corporation et al
Filing
75
OPINION AND ORDER re: 57 LETTER MOTION to Stay addressed to Judge J. Paul Oetken from Dana M. Seshens dated 6/22/2016. filed by Comcast STB Software I, LLC, Comcast Corporation, Comcast Cable Communications, LLC, Comcast of Houston, LLC, Comcast Shared Services LLC, Comcast Business Communications, LLC, Comcast Holdings Corporation, Comcast Cable Communications Management, LLC, 49 MOTION to Dismiss Notice of Motion To Dismiss, Or Alternatively, Stay Or Transfer Comcasts Later Filed Declaratory Judgment Action filed by Rovi Technologies Corp., Rovi Corporation, Veveo, Inc., Rovi Guides, Inc., 25 MOTION for Preliminary Injunction filed by Comcast STB Software I, LLC, Co mcast Corporation, Comcast Cable Communications, LLC, Comcast of Houston, LLC, Comcast Shared Services LLC, Comcast Business Communications, LLC, Comcast Holdings Corporation, Comcast Cable Communications Management, LLC. For the foregoin g reasons, and based on all arguments at the preliminary injunction hearing, the Court concludes that the first-filed rule applies in this case, and that the EDTX is best positioned, in the first instance, to decide whether any exceptions should trum p that rule. Because the EDTX has yet to rule on the pending motions, however, the Court determines that it would inappropriate to dismiss or transfer this action at this time. Accordingly, Defendant Rovi's motion to dismiss, or alternatively, s tay or transfer is GRANTED in part and DENIED in part. The request for a stay is granted and this matter is hereby STAYED pending a ruling by the Eastern District of Texas on the pending motions to transfer. In other respects the motion is denied wit hout prejudice. Comcast's motion for a preliminary injunction is DENIED without prejudice, and Comcast's motion for a stay pursuant to 28 U.S.C. § 1659(a) is DENIED as moot.The parties are directed to update the Court as to the status of the EDTX action within sixty days of the date of this Order, and every sixty days thereafter, until that action is resolved. Should the EDTX court render a final judgment, the parties are directed to notify the Court within thirty days. The Clerk of Court is directed to close the motions at Docket Numbers 25, 49 and 57.SO ORDERED. (Signed by Judge J. Paul Oetken on 9/16/2016) (ama)
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
COMCAST CORPORATION, COMCAST
:
:
CABLE COMMUNICATIONS, LLC,
COMCAST CABLE COMMUNICATIONS
:
:
MANAGEMENT, LLC, COMCAST OF
HOUSTON, LLC, COMCAST BUSINESS
:
COMMUNICATIONS, LLC, COMCAST
:
:
HOLDINGS CORPORATION, COMCAST
SHARED SERVICES, LLC, and COMCAST
:
:
STB SOFTWARE I, LLC,
:
Plaintiffs, :
:
:
-v:
ROVI CORPORATION, ROVI GUIDES, INC., :
ROVI TECHNOLOGIES CORP., and VEVEO, :
INC.,
:
Defendants. :
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16-CV-3852 (JPO)
OPINION AND ORDER
J. PAUL OETKEN, District Judge:
Plaintiffs filed a motion for preliminary injunction on June 1, 2016, and a letter motion
for a stay pending a concurrent action in the International Trade Commission (“ITC”) on June
22, 2016. Defendants filed a motion to dismiss, or alternatively, to stay or transfer on June 10,
2016. A preliminary injunction hearing on this matter was held on July 12, 2016. For the
reasons that follow, Plaintiffs’ motion for a preliminary injunction is denied, Defendants’ motion
is granted to the extent that it requests a stay, and Plaintiff’s letter motion to stay is denied as
moot.
I.
Background
Plaintiffs are Comcast Corporation; Comcast Cable Communications, LLC; Comcast
Cable Communications Management, LLC; Comcast of Houston, LLC; Comcast Business
Communications, LLC; Comcast Holdings Corporation; Comcast Shared Services LLC; and
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Comcast STB Software I, LLC (collectively, “Comcast”). They filed this action for breach of
contract and declaratory judgment of patent noninfringement against Rovi Corporation; Rovi
Guides, Inc.; Rovi Technologies Corp.; and Veveo, Inc. (collectively, “Rovi”) on May 23, 2016.
(Dkt. No. 1.) Before Comcast commenced the present action, Rovi filed two complaints against
Comcast for patent infringement in the Eastern District of Texas (“EDTX”), both on April 1,
2016. Rovi, et al. v. Comcast Corp., et al., No. 2:16-cv-00321-JRG-RSP (E.D. Tex. Apr. 1,
2016); Rovi, et al. v. Comcast Corp., et al., No. 2:16-cv-00322-JRG-RSP (E.D. Tex. Apr. 1,
2016). Rovi also filed one action with the ITC. In the Matter of Certain Digital Video Receivers
and Hardware and Software Components Thereof, Inv. No. 337-TA-1001 (ITC Apr. 6, 2016).
The declaratory relief of noninfringement sought by Comcast in this action relates to the same
fifteen patents at issue in the cases filed in the EDTX and ITC actions. Comcast’s complaint
further asserts state law breach of contract claims and the defenses of express license, implied
license, and patent exhaustion. (Dkt. No. 1.)
Comcast’s motion for a preliminary injunction is based on the forum selection clauses in
two separate licensing agreements between Comcast and Rovi. Comcast argues that these
clauses mandate that all of the actions described above be litigated exclusively in New York state
or federal courts. In its pending motion for preliminary injunction, Comcast asks this Court to
enjoin Rovi from continuing to prosecute its infringement actions in the EDTX and ITC, and to
order Rovi to terminate those actions. (Dkt. No. 25.) For its part, Rovi seeks to dismiss, or
alternatively, to stay or transfer this action to the EDTX based on its view that the law directs
that this Court defer resolution of substantially similar matters to the first-filed forum. (Dkt. No.
49). Finally, Comcast has filed an unopposed letter motion to stay the overlapping patent
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infringement action until the ITC action is terminated or finalized pursuant to 28 U.S.C.
§ 1659(a). 1 (Dkt. No. 57.)
II.
Legal Standards
A.
The “First-to-File” Rule
In a patent case, this Court looks to the law of the Court of Appeals for the Federal
Circuit in applying the first-to-file rule. See Futurewei Techs., Inc. v. Acacia Research Corp.,
737 F.3d 704, 708 (Fed. Cir. 2013) (“Resolution of whether the second-filed action should
proceed presents a question sufficiently tied to patent law that the question is governed by this
circuit’s law.”). The first-to-file rule is a principle of federal comity that permits a district court
to decline to exercise jurisdiction when a substantially similar complaint is already filed in
another district. “This ‘first-to-file’ rule exists to ‘avoid conflicting decisions and promote
judicial efficiency.’” Id. (quoting Merial Ltd. v. Cipla Ltd., 681 F.3d 1283, 1299 (Fed. Cir.
2012)).
The Supreme Court has repeatedly observed that, under the doctrine of comity, when
cases involving substantially overlapping issues are pending before two different federal district
courts, “[w]ise judicial administration” counsels the avoidance of duplicative litigation. Colo.
River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976) (alteration in original)
(quoting Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S. 180, 183 (1952)) (emphasizing
that, “in situations involving the contemporaneous exercise of concurrent jurisdictions,” courts
should “giv[e] regard to conservation of judicial resources and comprehensive disposition of
litigation” (citation and internal quotation mark omitted)); Kerotest, 342 U.S. at 183 (noting that
1
Comcast notes that this motion was filed “[s]olely to preserve its statutory rights.” (Dkt.
No. 62, at 4 n.3.)
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“[w]ise judicial administration . . . does not counsel rigid mechanical solution of such problems”
and that “[t]he factors relevant to wise administration here are equitable in nature”).
The Federal Circuit has announced a general rule to aid in the disposition of cases where
a later-filed declaratory judgment action sufficiently overlaps with an earlier-filed patent
infringement action: “When two actions that sufficiently overlap are filed in different federal
district courts, one for infringement and the other for declaratory relief, the declaratory judgment
action, if filed later, generally is to be stayed, dismissed, or transferred to the forum of the
infringement action.” Futurewei, 737 F.3d at 708. There are exceptions to the first-to-file rule,
but “[t]he general rule favors the forum of the first-filed action, whether or not it is a declaratory
action.” Genentech, Inc. v. Eli Lilly & Co., 998 F.2d 931, 937 (Fed. Cir. 1993). Exceptions to
this general rule may be based on “the convenience and availability of witnesses, [the] absence
of jurisdiction over all necessary or desirable parties, . . . the possibility of consolidation with
related litigation, or considerations relating to the real party in interest.” Futurewei, 737 F.3d at
708 (alterations in original) (quoting Genentech, 998 F.2d at 938). 2
B.
Preliminary Injunction
To be entitled to an injunction, a movant must establish (1) a likelihood of success on the
merits of the case; (2) that it will suffer irreparable harm in the absence of injunctive relief; (3)
that considering the balance of the hardships between plaintiff and defendant, a remedy at equity
is warranted; and (4) that the public interest would not be disserved by a preliminary injunction.
2
See also Adam v. Jacobs, 950 F.2d 89, 92 (2d Cir. 1991) (“‘[W]here there are two
competing lawsuits, the first suit should have priority, absent the showing of balance of
convenience . . . or . . . special circumstances . . . giving priority to the second.’ Deference to the
first filing ‘embodies considerations of judicial administration and conservation of resources.’
The decision whether or not to stay or dismiss a proceeding rests within a district judge’s
discretion.” (quoting First City Nat'l Bank and Trust Co. v. Simmons, 878 F.2d 76, 79-80 (2d Cir.
1989) (alterations in original)).
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See Winter v. Natural Res. Def. Council, 555 U.S. 7, 20 (2008); see also Tex. Instruments Inc. v.
Tessera, Inc., 231 F.3d 1325, 1328 (Fed. Cir. 2000); N.Y. Progress & Prot. PAC v. Walsh, 733
F.3d 483, 486 (2d Cir. 2013).
III.
Discussion
A.
Motion to Dismiss, Stay, or Transfer
The parties agree that the declaratory judgment action filed by Comcast in this Court
raises substantially the same issues as the patent infringement action field by Rovi in the EDTX.
(See Dkt. No. 50, at 8 (Rovi noting that “the cases substantially overlap”); Dkt. No. 72, at 7:1921 (Counsel for Comcast noting that “[w]e have got plaintiffs or parties who have run to two
different forums and are trying to adjudicate the same issue”).) They disagree, however, as to
whether this Court or the EDTX should be the first to interpret the forum selection clause. Rovi
contends that Comcast should make its case through motions to transfer in the EDTX, the firstfiled forum. (See Dkt. No. 50, at 4–5.) Indeed, Comcast has already filed such motions in the
EDTX to transfer the relevant actions from the EDTX to this Court. (See Dkt. No. 62 at 4.)
Comcast argues that the first-to-file rule does not apply in this case “because the parties agreed in
[two separate licensing agreements] that this dispute would be heard in New York.” (Id. at 7.)
In other words, Comcast contends that the forum-selection clauses trump the first-to-file rule.
In support of its position, Comcast relies heavily on General Protecht Group, Inc. v.
Leviton Manufacturing Co., 651 F.3d 1355 (Fed. Cir. 2011). There, as here, a licensor
commenced actions against a licensee outside the forum indicated in the license agreement. Id.
at 1358. The licensee in that case commenced a new action “asserting declaratory-judgment
claims for breach of contract, [and] non-infringement” in the forum indicated in the license
agreement, just as Comcast did in the present action. Id. In General Protecht, the Federal
Circuit determined that the district court in the forum indicated in the license agreement did not
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abuse its discretion in granting a preliminary injunction against the continued litigation of the
dispute outside of the indicated forum. Id. at 1366. But General Protecht, at most, permits this
Court to enter a preliminary injunction when a forum selection clause likely governs an action
brought in other forums. It does not compel that determination.
As discussed above, the Federal Circuit has held that, “[w]hen two actions that
sufficiently overlap are filed in different federal district courts, one for infringement and the
other for declaratory relief, the declaratory judgment action, if filed later, generally is to be
stayed, dismissed, or transferred to the forum of the infringement action.” Futurewei Techs., Inc.
737 F.3d at 708. In Futurewei, as here, the Federal Circuit adhered to the first-to-file rule
notwithstanding the possibility that a forum selection clause in a license agreement might justify
transfer, explaining that the first-filed forum could decide issues involving the forum selection
clause. Id. at 709. This general rule is expressly intended “to ‘avoid conflicting decisions and
promote judicial efficiency.’” Id. at 708 (quoting Merial Ltd., 681 F.3d at 1299).
Litigants who believe that a forum selection clause governs an action brought in an
alternative forum should first seek to resolve the venue issue in the first-filed forum, absent
exceptional circumstances. As the Supreme Court has held, “a forum-selection clause . . . may
be enforced through a motion to transfer under § 1404(a).” Atl. Marine Const. Co. v. U.S. Dist.
Court for W. Dist. of Texas, 134 S. Ct. 568, 579 (2013). In this case, just such a motion is
currently pending before the EDTX court and Comcast fails to demonstrate why the relief
requested in that motion would be insufficient.
“The courts of this district have adopted a ‘bright-line rule’ that ‘[t]he court before which
the first-filed action was brought determines which forum will hear the case.’” Noble v. U.S.
Foods, Inc., No. 14-CV-7743-RA, 2014 WL 6603418, at *3 (S.D.N.Y. Nov. 19, 2014)
(alteration in original) (quoting MSK Ins., Ltd. v. Emp’rs Reinsurance Corp., 212 F. Supp. 2d
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266, 267 (S.D.N.Y. 2002)). “Although this bright-line rule is largely identical to and rooted in
the first[-]filed rule, it does not provide for any special exceptions. It is a straight-forward rule to
be applied in a rote manner.” Pem Am., Inc. v. Lambert, No. 03 Civ. 3706–JFK, 2003 WL
22383369, at *2 (S.D.N.Y. Oct. 17, 2003). 3
These principles apply with equal force to Comcast’s claims that Rovi’s ITC action
should be enjoined. The parties do not dispute that the ITC action and one of the EDTX
actions—the -322 action—are essentially identical. (See Dkt. No. 50 at 9 (“The earlier-filed ITC
action substantially overlaps with the earlier-filed -322 EDTX case, and Comcast’s arguments
are substantially the same as to both.”); Dkt. No. 62 at 3 (“[T]he -322 and ITC actions assert
infringement of the same seven additional patents.”).) As such, resolution of the effect of the
forum selection clauses on the EDTX action would apply equally to the substance of the ITC
action.
One of the forum selection clauses at issue, however, applies only to suits over which a
New York court has subject matter jurisdiction. (See Dkt. No. 28-2 § 7.08 (“[T]his Agreement
or the transactions contemplated hereby shall be brought in the United States District Court for
3
Other district courts have likewise concluded that the first-filed forum shall determine the
applicability of the first-filed rule and whether exceptions to that rule exist. See Cellectis S.A. v.
Precision Biosciences, Inc., 881 F. Supp. 2d 609, 613 (D. Del. 2012) (concluding that the firstfiled forum should “determine whether exceptions to the first-filed rule apply”); EMC Corp. v.
Bright Response, LLC, No. C–12–2841–EMC, 2012 WL 4097707, at *5 (N.D. Cal. Sept. 17,
2012) (holding that “resolution of whether any exceptions should trump the rule is best
determined by the [court in which the first action was filed]”); Mycone Dental Supply Co. v.
Creative Nail Design, Inc., No. 11–4380 (JBS/KMW), 2012 WL 1495496, at *1 (D.N.J. Apr. 26,
2012) (“The same considerations of comity and efficiency that 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.”); Drew
Techs., Inc. v. Robert Bosch, L.L.C., No. 11–15068, 2012 WL 314049, at *6 (E.D. Mich. Jan. 31,
2012) (“[T]he determination of the appropriate venue for this dispute should not be made in this
court. Rather, that decision should be left to the Central District of California as the first-filed
court.”).
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New York or any New York State court sitting in New York County, so long as one of such
courts shall have subject matter jurisdiction over such suit, action or proceeding.”); Dkt. No. 284 § 12.09 (same).) Rovi asserts that even if this forum selection clause governs the substance of
the ITC action, this Court would not have subject matter jurisdiction over the ITC action, which
is brought under Section 337 of the Tariff Act, such that the forum selection clause would not
apply. (Dkt. No. 50 at 10.) It is the EDTX, however, that must first address the threshold issue
of whether the infringement action arises from the agreement.
Comcast argues that “it would itself breach the CLA and LDA if it sought to enforce
those agreements and enjoin the ITC action in Texas rather than in New York.” (Dkt. No. 62 at
13.) It asks this Court to find that the ITC action is covered by both forum selection clauses and
to enjoin Rovi from pursuing the action. Comcast puts the cart before the horse. If the EDTX,
as the first-filed forum, finds that the forum selection clauses do not apply to the current
actions—allowing the actions to remain in the EDTX—then this Court would not need to answer
the secondary question as to whether this Court has subject matter jurisdiction over the ITC
proceedings. If, on the other hand, the EDTX interprets the forum selection clauses to require
that the actions be brought in this Court, it will then become necessary to resolve whether this
Court has subject matter jurisdiction over the ITC action sufficient to justify enjoining that action
under the forum selection clauses. Premature resolution of the application of the forum selection
clauses to the ITC action would thwart the principles of comity and efficiency underlying the
first-to-file rule. Comcast fails, moreover, to argue persuasively for any of the exceptions to the
generally applicable first-to-file rule. See Futurewei, 737 F.3d at 708 (recognizing that
justifications for an exception include “the convenience and availability of witnesses, [the]
absence of jurisdiction over all necessary or desirable parties, . . . the possibility of consolidation
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with related litigation, or considerations relating to the real party in interest” (alterations in
original) (quoting Genentech, 998 F.2d at 938)).
Because the first-filed forum, the EDTX, is no less capable than this Court of determining
the appropriate forum, and in the interest of “[w]ise judicial administration”—in light of the
“ample degree of discretion” that this Court exercises in such matters—this Court grants Rovi’s
motion to stay the case pending resolution of the earlier-filed motions to transfer in the EDTX.
Kerotest Mfg. Co., 342 U.S. at 183–84.
B.
Preliminary Injunction
Having granted Rovi’s motion to stay the case, the Court concludes that it would be
inappropriate to rule on the likelihood of Comcast’s success on the merits for the same reasons
that animate the first-to-file rule. See Futurewei, 737 F.3d at 708. The determination of
Comcast’s likelihood of success on the merits of its breach of contract claims hinges on a
determination of the scope and effect of the forum selection clauses. In the interests of comity
among the federal courts, and to avoid conflicting decisions and promote judicial efficiency, this
determination should be made by the first-filed forum, the EDTX, by way of the currently
pending motions to transfer.
In any event, Comcast’s request for a preliminary injunction in this case would be denied
due to Comcast’s failure to demonstrate irreparable harm. Comcast argues that being “deprived
of its bargained-for forum” is alone sufficient to demonstrate irreparable harm, and that in the
absence of an injunction “Comcast will be forced to engage in burdensome, duplicative, and fastpaced litigation on multiple fronts.” (Dkt. No. 27, at 21.) The Court finds that Comcast’s
contentions concerning irreparable harm carry little weight in the face of the ability of the EDTX
to first evaluate the merits of its claim and, if appropriate, transfer the case to the allegedly
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bargained-for forum. To the extent that Comcast is concerned about the burden of litigating on
multiple fronts, this Court’s stay will serve to alleviate that burden.
These are precisely the concerns that the first-to-file rule is intended to address. “The
‘first-to-file’ rule . . . generally favors pursuing only the first-filed action when multiple lawsuits
involving the same claims are filed in different jurisdictions. Merial Ltd., 681 F.3d at 1299
(emphasis added). In this case, that means that the EDTX court is the proper court to determine
whether it is the appropriate forum for the pending claims. See EMC Corp. v. Parallel Iron,
LLC, 914 F. Supp. 2d 125, 129 (D. Mass. 2012) (“The first-to-file rule has generally been
interpreted to dictate not only which forum is appropriate, but also which forum should decide
which forum is appropriate.”); Adam, 950 F.2d at 92 (“We consider the propriety of the forum a
threshold issue that must be considered before addressing the merits.”).
Given the utmost confidence this court has in its sister court, and as that court has yet to
decide the pending motions to transfer, Comcast has not demonstrated at this early stage that it
has been deprived of its bargained-for forum. Accordingly, Comcast’s motion for a preliminary
injunction is denied.
IV.
Conclusion
For the foregoing reasons, and based on all arguments at the preliminary injunction
hearing, the Court concludes that the first-filed rule applies in this case, and that the EDTX is
best positioned, in the first instance, to decide whether any exceptions should trump that rule.
Because the EDTX has yet to rule on the pending motions, however, the Court determines that it
would inappropriate to dismiss or transfer this action at this time.
Accordingly, Defendant Rovi’s motion to dismiss, or alternatively, stay or transfer is
GRANTED in part and DENIED in part. The request for a stay is granted and this matter is
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hereby STAYED pending a ruling by the Eastern District of Texas on the pending motions to
transfer. In other respects the motion is denied without prejudice.
Comcast’s motion for a preliminary injunction is DENIED without prejudice, and
Comcast’s motion for a stay pursuant to 28 U.S.C. § 1659(a) is DENIED as moot.
The parties are directed to update the Court as to the status of the EDTX action within
sixty days of the date of this Order, and every sixty days thereafter, until that action is resolved.
Should the EDTX court render a final judgment, the parties are directed to notify the Court
within thirty days.
The Clerk of Court is directed to close the motions at Docket Numbers 25, 49 and 57.
SO ORDERED.
Dated: September 16, 2016
New York, New York
____________________________________
J. PAUL OETKEN
United States District Judge
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