Tillotson Corp. v. Shijiazhaung Hongray Plastic Products, Ltd.

244 F.R.D. 683, 2007 U.S. Dist. LEXIS 31464, 2007 WL 1247121
CourtDistrict Court, N.D. Georgia
DecidedApril 30, 2007
DocketCivil Action No. 4:05-CV-0118-RLV
StatusPublished
Cited by2 cases

This text of 244 F.R.D. 683 (Tillotson Corp. v. Shijiazhaung Hongray Plastic Products, Ltd.) is published on Counsel Stack Legal Research, covering District Court, N.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tillotson Corp. v. Shijiazhaung Hongray Plastic Products, Ltd., 244 F.R.D. 683, 2007 U.S. Dist. LEXIS 31464, 2007 WL 1247121 (N.D. Ga. 2007).

Opinion

ORDER

VINING, Senior District Judge.

This is an action for patent infringement. Pending before the court are Island Dental Co. and Darby Group Co.’s (“the defendants”) Motion for Stay [Doc. No. 203], Motion to Exclude Plaintiffs First Supplemental Infringement Contentions [Doc. No. 205], and Motion to Compel [Doc. No. 207]. Also pending is a Motion for Leave to File Third Amended Complaint [Doc. No. 215] by the plaintiff, Tillotson Corporation, as well as a Motion for Joinder in the Defendants’ Motion for Stay [Doc. No. 210] by third-party defendant Ansell Healthcare Products, LLC.

MOTION TO STAY

Currently, there is a related action pending in the United States District Court for the District of Delaware (“the Delaware action”). That suit, filed subsequent to this case (“the Georgia action”), is a declaratory judgment claim filed by one of the third-party defendants in this matter, Ansell Healthcare Products (“Ansell”), against the plaintiff, Tillotson. The Delaware action and the Georgia action are based on the same patent, U.S. Patent No. Re 35,616 (“the '616 patent”). The Delaware action concerns just one type of allegedly infringing glove, whereas the Georgia action concerns not only the same glove at issue in the Delaware action but also other types of gloves from different manufacturers. The defendants move to stay this case pending resolution of the Delaware action. At issue is whether this court should stay the first-filed Georgia action in favor of the later-filed Delaware action.

Nearly a year after Tillotson filed this suit against Island Dental and Darby (as well as other co-defendants who have since settled with the plaintiff) for patent infringement, the defendants filed an action for indemnity against five third-party defendants, one of which was Ansell. Approximately one month after being sued as a third-party defendant in this case, Ansell filed the Delaware action seeking an injunction against Tillotson and a declaratory judgment that the '616 patent is invalid and that Ansell’s product in the Georgia action has not infringed the patent.

Faced with litigating its own claims of patent infringement against the defendants in this Georgia action as well as the declaratory judgment suit by Ansell in the Delaware action, Tillotson moved the Delaware court to transfer that case to this court. However, the Delaware court denied Tillotson’s motion, leaving the action between Ansell and Tillotson pending in that forum while the previously-filed infringement action between the defendants and Tillotson remained in this court. At that point, the defendants filed their motion to stay this case until the Delaware action is resolved and Ansell’s liability with respect to the '616 patent is determined. Thus, the issue in the pending motion is whether this court should stay the Georgia action even though it was filed before the Delaware action.

The defendants assert that it is appropriate to stay this case pursuant to the “customer suit exception” to the “first-filed rule.” The “first-filed rule” is a general rule that gives a preference to the first-filed suit when there are similar cases filed in one or more courts. Genentech, Inc. v. Eli Lilly & Co., 998 F.2d 931, 937-38 (Fed.Cir.1993). Accordingly, as the first-filed case, the Georgia action should have priority. However, the “customer suit exception” to that general rule may be applied to give preference to the second suit when it is an action against the allegedly infringing product’s manufacturer and the first suit is merely an action against that manufacturer’s customer. Kahn v. General Motors Corp., 889 F.2d 1078, 1081 (Fed. Cir.1989). The defendants argue that because they were merely the customer who purchased and then re-sold Ansell’s allegedly infringing gloves, the “customer suit exception” should apply and the first-filed Georgia action against them should be stayed. However, determining whether to apply the exception is not mechanical; “[t]here must ... be sound reason that would make it unjust or inefficient to continue the first-filed action.” Genentech, 998 F.2d at 938. Consequently, [687]*687this court uses its discretion to determine the most judicious disposition of this case within a framework of broad equitable principles. Am. Household Prods., Inc. v. Evans Mfg., Inc., 139 F.Supp.2d 1235, 1240 (N.D.Ala. 2001).

The primary rationale behind the “customer suit exception” is the presumed greater interest of a manufacturer in defending infringement claims based on its products. Katz v. Lear Siegler, Inc., 909 F.2d 1459, 1464 (Fed.Cir.1990). This rationale arises out of the assumption that even if a manufacturer is not sued directly, it would nevertheless have to protect its customers from any liability as a result of one of its products. Id. Accordingly, the “customer suit exception” creates the rare occasion to forego the general preference for the first-filed case when the manufacturer’s interest in adjudicating an infringement claim is greater than its customer’s interest. Yet, determining whether the Delaware action fits squarely within the purpose of the “customer suit exception” requires much more than simply labeling the two parties as either a “manufacturer” or “customer,” and giving preference to the manufacturer suit.

The plaintiff asserts that the “customer suit exception” should not apply because An-sell is actually a “supplier,” and not a “manufacturer,” of the type of glove at issue in both the Georgia and Delaware actions. For its part, Ansell asserts that although it does not manufacture the gloves, the “customer suit exception” nevertheless applies equally to suppliers as well as manufacturers. In support, Ansell cites Corning Glass Works v. United States, 220 Ct.Cl. 605, 204 U.S.P.Q. 436 (1979), and Rhode Gear U.S.A. v. Frank’s Spoke N. Wheel, Inc., 225 U.S.P.Q. 1256, 1259 (D.Mass. Feb.14, 1985), for the proposition that the “customer suit exception” shifts the priority as between two actions to a later-filed suit even when it involves a supplier because that supplier is in the same position as a manufacturer and has the same greater interest in adjudicating the infringement claim.

However, the cases cited by Ansell, and other eases, make clear that the label of “supplier” is not automatically interchangeable with that of “manufacturer.” Instead, a later-filed action can be given preference only when a court determines that it involves a party who has a greater interest than the “customer” in the first-filed action, much like the greater interest of a “manufacturer.” See Katz, 909 F.2d at 1464. Thus, it is necessary to determine whether Ansell’s interest in the later-filed action, regardless of whether it is a supplier, rises to the level of a manufacturer in accordance with the rationale for the “customer suit exception.”

In Corning Glass Works, the plaintiff filed related patent infringement actions: first, it filed a suit in the Court of Claims against the government for purchasing and using certain optical devices developed by Corning, and second it filed a suit in the United States District Court for the District of Virginia against International Telephone and Telegraph (“ITT”) for manufacturing those optical devices.

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Cite This Page — Counsel Stack

Bluebook (online)
244 F.R.D. 683, 2007 U.S. Dist. LEXIS 31464, 2007 WL 1247121, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tillotson-corp-v-shijiazhaung-hongray-plastic-products-ltd-gand-2007.