IP Law Daily, PATENT—Fed. Cir.: Federal Circuit declines to block transfer of patent infringement suit, (Jan 18, 2022)

By Jonathan Anderson

The district court did not abuse its discretion in departing from the first-to-file rule, the appeals court concluded.

The U.S. Court of Appeals for the Federal Circuit has declined to issue a writ of mandamus requested by a company seeking to prevent transfer of a case from the District of New Jersey to the Western District of Texas. In ordering the transfer, the district court departed from the first-to-file rule citing “judicial and litigant economy, and the just and effective disposition of disputes.” The Federal Circuit concluded that the company failed to show the district court clearly abused its discretion (In re Amperex Technology Ltd., January 14, 2022, per curiam).

Background. On March 26, 2020, Maxell, Ltd. and Maxell Holdings, Ltd. (collectively, “Maxell”) and Amperex Technology Limited (“Amperex “) entered into a non-disclosure agreement to discuss licensing Maxell’s lithium-ion battery patent portfolio. The agreement included a clause preventing the parties from suing each other for one year.

As the litigation standstill was nearing conclusion, Maxell wrote to Amperex stating that it remained willing to resolve the matter and grant a license, but if an agreement could not be reached by a specified deadline, Maxell would pursue litigation. After multiple exchanges, Amperex told Maxell it would “be in touch” with materials for another meeting, but several hours later, Amperex filed suit in the District of New Jersey seeking a declaratory judgment of noninfringement of Maxell’s patents. Maxell sued Amperex two days later in the Western District of Texas, alleging infringement of the same products at issue in Amperex’s lawsuit.

Maxell moved the district court to either decline jurisdiction or transfer the case to the Western District of Texas. Maxell argued that Amperex brought its suit in bad faith and in anticipation of Maxell’s action. The New Jersey court granted Maxell’s transfer request. While the court recognized that a mirror image first-filed declaratory action should generally hold preference over a second-filed patent infringement action, the court departed from the first-to-file rule citing “judicial and litigant economy, and the just and effective disposition of disputes.” The court found that Amperex’s action was filed upon “receipt of specific, concrete indications” that Maxell would be bringing a patent infringement suit imminently.

The New Jersey court said Amperex’s choice of forum was not entitled to significant weight because the action was anticipatory, both parties are foreign corporations, New Jersey has no particular connection to the infringement claims, and the Texas case was already farther along and could be resolved faster.

Writ of mandamus petition. Amperex petitioned the Federal Circuit for a writ of mandamus to block the transfer. The Federal Circuit found that Amperex failed to show the transfer ruling was a clear abuse of discretion.

First, the Federal Circuit found that Amperex had not shown a right under the first-to-file rule to prevent transfer. The Federal Circuit observed that it has previously found the first-to-file rule is not absolute, that declaratory judgment actions can be dismissed even when not filed first, and that a “court may consider whether a party intended to preempt another’s infringement suit when ruling on the dismissal of a declaratory action.” Applying those factors here, the Federal Circuit wrote that the district court reasonably concluded the Amperex suit was anticipatory; that Amperex “feigned cooperation and interfered with the ongoing negotiations”; no evidence, party, or witness is in New Jersey; that Amperex had not effectively served Maxell in the New Jersey action, but Maxell had effectively served Amperex in the mirror-image Texas action; that the two actions could be consolidated; and that the Texas action was further along in resolving the dispute.

Second, the Federal Circuit concluded that it “see[s] no basis to disturb the district court’s transfer ruling under” 28 U.S.C. § 1404(a) because Amperex did not raise applicable transfer factors as an issue until its reply brief.

The Case is No. 22-105.

Attorneys: David Spencer Bloch (Greenberg Traurig, LLP) for Amperex Technology Ltd. Hilary L. Preston (Vinson & Elkins LLP) for Maxell, Ltd.

Companies: Amperex Technology Ltd.; Maxell, Ltd.

Cases: Patent FedCirNews GCNNews