Sawgrass Technologies v. Texas Original Graphics

• Court: Court of Appeals for the Federal Circuit
• Decided: March 2, 2007
• Docket: 2006-1190
• Status: Unpublished

Opinion

Note: This disposition is nonprecedential.

United States Court of Appeals for the Federal Circuit

06-1190

SAWGRASS TECHNOLOGIES, INC.,

Plaintiff-Appellant,

v.

TEXAS ORIGINAL GRAPHICS, INC. and WILLIAM D. WELLBORN,

Defendants-Appellees

G. Trenholm Walker, Pratt-Thomas, Epting & Walker, P.A., of Charleston, South Carolina, argued for plaintiff-appellant. With him on the brief was Amanda R. Maybank. Of counsel on the brief was B.C. Killough, Barnwell Whaley Patterson & Helms, of Charleston, South Carolina.

W. Scott Hastings, Cash Klemchuk Powers Taylor LLP, of Dallas, Texas, argued for defendants-appellees. With him on the brief was Darin M. Klemchuk, Locke Liddell & Sapp LLP, of Dallas, Texas.

Appealed from: United States District Court for the District of South Carolina

Judge Terry L. Wooten NOTE: This disposition is nonprecedential.

Defendants-Appellees.

___________________________

DECIDED: March 2, 2007 ___________________________

Before RADER, Circuit Judge, ARCHER, Senior Circuit Judge, and PROST, Circuit Judge.

RADER, Circuit Judge.

The United States District Court for the District of South Carolina (the South

Carolina court) transferred Sawgrass Technologies, Inc.’s (Sawgrass’s) suit against

Texas Original Graphics, Inc. and William D. Wellborn (collectively TOG), No. 2:05-CV-

01696 (D. SC. filed June 9, 2005) to the Northern District of Texas (the Texas Court).

Lacking jurisdiction to rule on this transfer at this stage of the proceedings, this court

dismisses the appeal.

I

In September 2004, Sawgrass, assignee of United States Patent No. 5,488,907

(the '907 patent), notified TOG of its potential infringement of the '907 patent. On June 9, 2005, after fruitless settlement negotiations, TOG filed a declaratory judgment action

against Sawgrass in the United States District Court for the Northern District of Texas

(the Texas case). Six days later, Sawgrass filed suit against TOG alleging infringement

of '907 Patent in the United States District Court for the District of South Carolina (the

South Carolina case). On December 9, 2005, the South Carolina Court granted the

TOGs' motion to transfer venue based on the first to file rule.

Sawgrass is a South Carolina corporation with headquarters, research and

development operations, and manufacturing operations in that state. Sawgrass holds

several patents covering printing with sublimation inks. The '907 patent claims methods

of printing with sublimation inks using ink jet printers. The ‘907 claims, however, do not

cover sublimation inks themselves.

TOG is Texas corporation whose only place of business lies in Texas. TOG has

sold sublimation ink and toners. Since 1989, TOG has sold sublimation ink for use in

ink jet printers.] William D. Wellborn, a citizen of Texas, is the President of TOG. The

record indicates Mr. Wellborn met with Sawgrass' representatives in 1991 and

discussed the success TOG and its customers had using sublimation ink with ink jet

printers.

In May 2001, approximately 10 years after Sawgrass' discussions with TOG

regarding sublimation ink, Sawgrass sent its first "cease and desist" letter to TOG,

threatening to sue for infringement of its patents. . Sawgrass sent a second "cease and

desist" letter in September 2004 to TOG's customers. The parties entered into

settlement negotiations. In March 2005 at a trade show in Las Vegas, Sawgrass

representatives again charged TOG with infringement.

06-1190 2 On June 1, 2005, Sawgrass' lawyer sent a letter demanding that TOG accept

settlement terms by June 20, 2005. The proposed settlement agreement required TOG

to stop selling sublimation ink, unless purchased exclusively from Sawgrass. In

previous communications, TOG had already rejected those terms. Therefore, on June

9, 2005, TOG filed the Texas case. Sawgrass responded on June 15, 2005 by filing the

South Carolina case. On August 19, 2005, TOG filed a motion in the South Carolina

case entitled "Motion To Dismiss Complaint Pursuant To The First to-File Rule, Or

Alternatively, Motion To Transfer Venue Pursuant To 28 U.S.C. § 1404(a)." On

December 9, 2005, the South Carolina District Court granted TOG's motion.

II

"Title 28 U.S.C. § 1291 provides for appeal to the courts of appeals only from

final decisions of the district courts of the United States. For purposes of § 1291, a final

judgment is generally regarded as a decision by the district court that ends the litigation

on the merits and leaves nothing for the court to do but execute the judgment." Lauro

Lines S.R.L. v. Chasser, 490 U.S. 495, 497 (1989) (internal citations omitted). Because

finality presents an issue of Federal Circuit jurisdiction, this court applies its own law.

H.R. Technologies, Inc. v. Astechnologies, Inc., 275 F.3d 1378, 1382 (Fed. Cir. 2002).

The grant of a motion to dismiss with or without prejudice is a final order. Id. 1383-84.

"A district court can transfer venue under either 28 U.S.C. § 1404(a) or 28 U.S.C

§ 1406(a). Section 1404(a) allows a court where venue is proper to transfer a case to a

more convenient forum. Section 1406(a) allows a court to either dismiss or transfer a

case when venue is improper." HolyAnne Corp. v. TFT, Inc., 199 F.3d 1304, 1307 (Fed.

Cir. 1999). This court follows the general rule favoring the forum of the first-filed case

06-1190 3 unless judicial economy or other principles of justice and efficiency dictate otherwise.

Electronics for Imaging, Inc. v. Coyle, 394 F.3d 1341, 1347 (Fed. Cir. 2005). Further,

the considerations affecting transfer to or dismissal in favor of another forum do not

change simply because the first-filed action is a declaratory action. Id. at 48.

A transfer order, however, is interlocutory and not ordinarily subject to immediate

appeal. A transfer order becomes ripe for appeal incident to a final judgment, or

incident to a partial judgment under Fed. R. Civ. P. 54(b), or incident to a certified

question under 28 U.S.C. § 1292(b) (2006). F.D.I.C. v. Maco Bancorp, Inc., 125 F.3d

1446, 1447 (Fed. Cir. 1997). Section 1292(d)(4)(A), on the other hand, grants this court

exclusive jurisdiction to hear some otherwise interlocutory transfer orders. 28 U.S.C. §

1292(d)(4)(A) (2006). Appeals under section 1292(d)(4)(A), however, only cover

transfers to cure a lack of jurisdiction. 28 U.S.C. § 1631 (2006).

A. Dismissal or Transfer

As an initial matter, this court must decide if the South Carolina District Court’s

December 9, 2005 order dismissed the case or simply transferred venue. The ultimate

sentence of the December 9, 2005 order states, "defendants' motion to dismiss

Complaint pursuant to the first-to-file rule is hereby granted and this case is transferred

to the Northern District of Texas." Under HollyAnne, if the South Carolina court

dismissed the case, it lost jurisdiction at that time and could not therefore transfer it.

In HollyAnne, the district court first determined that it did not have personal

jurisdiction. 199 F.3d at 1306. The district court then dismissed the case and only later

ordered its transfer. Id. at 1307. This court held: "[O]nce [the district court] had decided

06-1190 4 that it lacked personal jurisdiction and had dismissed the complaint, [it] could not

properly transfer the case to the Northern District of California." Id.

In this case, the South Carolina court transferred the case before determining

whether it had personal jurisdiction. Indeed, the South Carolina court did not make a

determination of personal jurisdiction:

Moreover, because the case is being transferred pursuant to the Court's inherent authority under the first-to-file rule, it is unnecessary to address the separate questions raised in defendants' additional motion as to whether this Court may exercise personal jurisdiction over the defendants; or whether the case should be dismissed for lack of venue.

December 9, 2005 order at 8. Further, the December 9, 2005 order explicitly

transferred the case:

Although defendants have asked that the instant case be dismissed pursuant to the first to- file rule, the "first-to-file" rule proposes that when an action involving the same parties and issues has already been filed in a different federal district, the court may either transfer, stay, or dismiss the second suit. Accordingly, this Court finds it appropriate to transfer this case to the Northern District of Texas where the first-filed case is pending.

December 9, 2005 order at 6 (internal citations omitted). And,

Based on the facts and circumstances in this case, transfer is appropriate. Instead of dismissing Sawgrass' complaint, as requested by defendants, the most practical solution is to transfer this case to the Northern District of Texas where the two nearly identical law suits may be consolidated and adjudicated together. Accordingly, an order of transfer will enter.

December 9, 2005 order at 8.

This court acknowledges that the ultimate sentence of the December 9, 2005

order refers to dismissal as well as transfer. This sentence, however, merely repeated

the title of TOG's motion and in this case lacks any dispositive weight on this court's

interpretation of the December 9, 2005 order. After review of this order in its entirety,

this court upholds the South Carolina court’s transfer of the case to Texas.

06-1190 5 B. Jurisdiction for Appeal

In determining jurisdiction over this order to transfer, this court notes that the

record lacks a final judgment, a certification of a partial final judgment under Fed. R.

Civ. P. 54(b), or a certification under 28 U.S.C. § 1292(b). Thus, none of these

exceptions to the finality rule apply. Under U.S.C. 28 § 1292(d)(4)(A), the December 9,

2005 order simply transfers venue without any need or action to cure jurisdiction. Thus,

section 1292(d)(4)(A) does not apply either. Without any basis for invoking these

exceptions to the finality rule, the December 9, 2005 motion is interlocutory and lacks

any jurisdictional basis for an immediate appeal.

III

The South Carolina court transferred the South Carolina case to Texas. This

court recognizes Sawgrass makes an argument that the South Carolina court did not

properly balance equitable factors, such as the convenience of the witnesses and

documents, that weigh against transfer. However, because this court lacks jurisdiction

over this appeal, this argument is not properly before us now and we must decline to

rule on them in the present appeal.

Accordingly,

IT IS ORDERED THAT: The appeal is dismissed.

06-1190 6