Second-Filed Litigation Stayed Pending Venue Ruling in First-Filed Litigation

Indianapolis, Indiana – Nexans, Inc. of New Holland, Pennsylvania sued Belden, Inc. of Richmond, Indiana in the District of Delaware. At issue were allegations of infringement of Patent Nos. 6,074,503, Making enhanced data cable with cross-twist cabled core profile; Nexans-Logo.gif7,135,641, Data cable with cross-twist cabled core profile; 7,977,575, High performance data cable; 5,796,046, Communication cable having a striated cable jacket; and 7,663,061, High performance data cable, which have been issued by the U.S. Patent Office. Two days after Nexans’ complaint was filed, Belden sued Nexans regarding the same patent infringement claims in the Southern District of Indiana. The Indiana court has stayed the litigation filed by Belden pending a ruling by the Delaware court.

On November 19, 2012, Nexans filed a complaint for declaratory action in the District of
Belden-logo.jpgDelaware against Belden seeking a declaration of non-infringement and invalidity of U.S. Patent Nos. 6,074,503 (the “‘503 Patent”), 7,135,641 (the “‘641 Patent”), and 7,977,575 (the “‘575 Patent”), as well as a judgment that Belden has infringed U.S. Patent No. 5,796,046 (the “‘046 Patent”).

On November 21, 2012, Belden sued Nexans in Indiana, alleging infringement of the ‘503, ‘575, and ‘064 Patents. It also alleged infringement of U.S. Patent No. 7,663,061 (the “‘061 Patent”). On December 3, 2012, Nexans filed an amended complaint in the Delaware action, seeking an additional declaratory judgment of non-infringement and invalidity of Belden’s ‘061 Patent.

In this opinion, Magistrate Judge Mark J. Dinsmore ruled on Nexans’ motion to stay the patent infringement lawsuit filed by Belden in Indiana. Nexans argued that a stay should be issued until the Delaware Court, as the first-filed court, had decided the issue of venue.

Judge Dinsmore first discussed the analysis appropriate to a determination of whether to stay litigation. Specifically, the following factors must be considered in deciding whether to stay an action: (i) whether a stay will unduly prejudice or tactically disadvantage the non-moving party, (ii) whether a stay will simplify the issues in question and streamline the trial, and (iii) whether a stay will reduce the burden of litigation on the parties and on the court.

In the case of duplicative patent actions, the general rule is that the first-filed action is preferred, even if it is declaratory, unless consideration of judicial and litigant economy, and the just and effective disposition of disputes, requires otherwise. Belden argued that two circumstances warranted departing from the general first-filed rule: 1) the convenience factors under 28 U.S.C. ยง 1404, which it argued would favor proceeding in Indiana, and 2) that Nexans’ suit in Delaware constituted forum shopping, which would allow the Indiana court to bypass the first-filed rule.

The court was not persuaded by this reasoning. Instead, it noted that, while the Seventh Circuit has approved of second-filed courts doing this analysis, and proceeding when it is in the interests of justice to do so, the Federal Circuit’s rulings control this issue in patent infringement cases. In turn, the Federal Circuit has expressly declined to apply the departure test to patent infringement cases, and has held that it prefers the first-filed rule.

The court next addressed the issue of whether the second-filed court may decide the applicability of the first-filed rule. It observed that the Federal Circuit has not yet expressly addressed whether the second-filed court may decide the applicability of the first-filed rule. While commenting that district courts have come to differing conclusions on the issue, the court was most convinced by the reasoning in those cases that have reserved the application of the first-filed rule for the first-filed court.

In concluding, the court found that it “would be at odds with the promotion of judicial and litigant economy for the court to proceed with the analysis of the exceptions to the first-filed rule.” It held that 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” and stayed the Indiana litigation, pending a ruling on venue from the Delaware court.

Practice Tip: The present action was stayed pending the Delaware court’s resolution of the pending motions to enjoin and dismiss. The parties in this case have been instructed to notify the Indiana court of the Delaware district court’s rulings on these motions as soon as they are issued.

This complaint was filed by Holiday Banta and Adam Arceneaux of Ice Miller LLP. The case was assigned to District Judge Sarah Evans Barker and Magistrate Judge Mark J. Dinsmore in Southern District of Indiana and assigned Case No. 1:12-cv-01722-SEB-MJD.

Belden-v-Nexans-Order-Motion-to-Stay.pdf

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