Judge Oetken Holds That Forum-Selection Clause in License Agreement Does Not Trump First-to-File Rule Altogether

On September 16, 2016, District Judge J. Paul Oetken (S.D.N.Y.) denied plaintiff Comcast Corp.’s (“Comcast”) motion for a preliminary injunction seeking to enjoin defendant Rovi Corp. (“Rovi”) from continuing to litigate its patent infringement actions against Comcast in the Eastern District of Texas (“EDTX”) and the International Trade Commission (“ITC”).

In April 2016, Rovi filed against Comcast two complaints for patent infringement in the EDTX, and one complaint under Section 337 of the Tariff Act in the ITC. In May 2016, Comcast filed this action against Rovi for declaratory judgment of noninfringement of the same fifteen patents at issue in the EDTX and ITC actions.

Comcast’s motion for a preliminary injunction was based on forum-selection clauses in two separate license agreements between Comcast and Rovi. Comcast argued that these clauses mandate that the EDTX and ITC actions be litigated in New York. Rovi sought to dismiss, stay, or transfer the action to the EDTX based on its position that the law directs the Court to defer resolution of substantially similar matters to the first-filed forum, in this instance, the EDTX. 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.

The parties agreed that the declaration judgement action filed by Comcast in the Southern District of New York (“SDNY”) raises substantially the same issues as the patent infringement action filed by Rovi in the EDTX, but they disagreed as to whether the SDNY or the EDTX should be the first to interpret the forum-selection clause. Comcast argued that the forum-selection clause trumps the first-to-file rule, relying on General Protecht Group, Inc. v. Leviton Mfg. Co., 651 F.3d 1355 (Fed. Cir. 2001), wherein the Federal Circuit ruled that the district court identified in the forum-selection clause did not abuse its discretion in enjoining litigation of the dispute in another forum. Rovi argued the converse position, relying on Futurewei Techs., Inc. v. Acacia Research Corp., 737 F.3d 704 (Fed. Cir. 2013), wherein the Federal Circuit adhered to the first-to-file rule notwithstanding the possibility that a forum-selection clause in a license agreement might justify an eventual transfer.

The Court concluded that General Protecht, at most, permits it to enter a preliminary injunction when a forum-selection clause likely governs an action brought in another forum, but does not compel that determination. The Court instead followed the Federal Circuit’s guidance in Futurewei Techs.—that the first-filed forum should interpret a forum-selection clause.

Case: Comcast Corp. v. Rovi Corp., No. 1:16-cv-03852-JPO, Dkt. No. 75, 2016 BL 305290 (S.D.N.Y. Sept. 16, 2016).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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