MEMORANDUM OPINION BY
Pursuant to Code § 17.1-413, this opinion is not designated for publication.
JUDGE JAMES W. HALEY, JR.
The trial court terminated the parental rights of Jermaine Ridgley ("Ridgley") to his child, J.V., pursuant to Code § 16.1-283(C)(2) and Code § 16.1-283(E)(i). He maintains he should receive a new parental rights hearing because (1) he was denied effective assistance of counsel and (2) the written evidence supportive of termination was not properly before the trial court.
Code § 16.1-283(C)(2) reads in part: "The parent . . . without good cause, [has] been unwilling or unable within a reasonable period of time . . . from the date the child was placed in foster care to remedy substantially the conditions which led to or required continuation of the child's foster care placement. . . ."
Code § 16.1-283(E)(i) reads in part: "The residual parental rights of a parent . . . may be terminated by the court if the court finds . . . (i) the residual parental rights of the parent regarding a sibling . . . have previously been involuntarily terminated. . . ."
We conclude that (1) assuming without deciding this Court is a proper forum to address a question of ineffective assistance on direct appeal, we cannot do so where, as here, a transcript of the proceedings was not made part of the record before us, and (2) the evidence for termination, pursuant to both Code § 16.1-283(C)(2) and § 16.1-283(E)(i), was properly considered by the trial court and is sufficient for termination under either statute.
I. Factual Background
We review the evidence on appeal in the light most favorable to the party prevailing below — in this case the Fairfax County Department of Family Services (hereinafter "DFS") — and grant to that party the benefit of all reasonable inferences deducible therefrom. See,e.g., Stanley v. Fairfax Cnty. Dep't of Soc. Servs., 10 Va. App. 596, 606, 395 S.E.2d 199, 204 (1990).
On October 8, 2008, J.V. was born to Jacqueline Velez, who was hospitalized for mental illness, and Ridgley, who was incarcerated for credit card theft. Two days later, the Fairfax County Juvenile Domestic Relations District Court ("JDR court") entered an emergency removal order that transferred legal custody of J.V. to the DFS. The JDR court also allowed DFS to perform evaluations and assessments to determine the appropriate foster care goal for J.V. On December 3, 2008, the JDR court held a hearing on the merits, found J.V. was an abused or neglected child, and continued DFS's legal and physical custody of J.V.
On February 9, 2009, the JDR court approved a foster care plan submitted by DFS, with a goal of returning J.V. home or placing him with relatives. On June 16, 2009, the circuit court affirmed the JDR court's termination of Ridgley's residual parental rights to J.V.'s sister, A.V., based on his failure to "remedy substantially the conditions which led" to A.V.'s foster care placement. In the same month, for the same reason, DFS petitioned for termination of Ridgley's residual parental rights to J.V. At the time, Ridgley remained incarcerated for identity theft and petit larceny, and was facing an additional charge for auto theft in Prince George's County, Maryland. Ridgley's release from incarceration remained unclear at the time of the hearing because the auto theft charge had not yet been resolved. Further, as a result of his continuous incarceration, Ridgley had "never had visitation" with J.V.
Meanwhile, J.V. had been living in the same two-parent foster home, together with his sister, since he was two days old. He had never lived with either of his biological parents, and had "adjusted very well to his placement." While Ridgley pleaded for continuation of his parental rights, he failed to complete any treatment recommendations made as a result of his mental health, alcohol and drugs, parental child, and psychological assessments. In a letter to the court, Ridgley expressed his determination to lead a better life after release and his desire for parental rights, but acknowledged that "the foster parents are doing a terrific job raising the biological parents [sic] kids and I thank them for that." The JDR court terminated Ridgley's residual parental rights to J.V., citing Code § 16.1-283(C) and (E)(i). Ridgley appealed. The circuit court held a hearing on October 22, 2009 and on the same date, entered an order affirming the termination.
The JDR court also terminated Velez's residual parental rights to J.V., a decision Velez did not appeal.
Ridgley's trial counsel filed a notice of appeal on November 20, 2009. On December 18, 2009, the circuit court entered an order that found Ridgley indigent, ordered a trial transcript, and appointed new counsel on appeal. At that point, only three days remained to file either the transcript, or a motion for an extension of time to file a trial transcript.
On March 25, 2010, appellate counsel filed a motion, which was granted by our Court, for an extension of time to file both the appendix and the opening brief. However, she did not file for an extension of time to file the trial transcripts until April 6, 2010, more than 60 days after entry of final judgment in the circuit court. In light of Rules 5A:8(a) and 5A:3(b), we denied her motion. See also Jordan v. Price, 3 Va. App. 672, 673, 353 S.E.2d 168, 168 (1987) ("We hold that the transcript must be timely filed, or leave extending the filing date must be granted before the deadline occurs, and not after. Orders extending the time for filing must be prospective and not retrospective.").
Amendments to our Rules of Court became effective July 1, 2010. The amendment to 5A:8(a) extended the deadline for filing a motion to extend the time for filing a transcript to 90 days after the entry of final judgment. Ridgley's April 6 filing of such a motion clearly exceeds even the new, more accommodating, deadline.
Rule 5A:8(a) provides that the transcript becomes part of the record "when it is filed in the office of the clerk of the trial court within 60 days after entry of the final judgment. Upon a written motion filed within 60 days after entry of the final judgment, a judge of the Court of Appeals may extend this time for good cause shown."
"Except as provided in subsection (a) of this Rule, the times prescribed in these rules for filing papers, except transcripts (Rule 5A:8(a)), may be extended by a judge of the court in which the papers are to be filed on motion for good cause shown and to obtain the ends of justice." (Emphasis added).
On appeal, he claims prior counsel provided ineffective assistance and the trial court improperly considered evidence. Thus, he concludes, he should be given a new trial.
II. Ineffective Counsel (A)
Ridgley argues that trial counsel rendered ineffective assistance based on, among other things, his failure to challenge the admission of certain documentary evidence, failure to present favorable evidence, and failure to timely file the trial transcript for appeal. Appellate counsel concedes on brief that this objection was not preserved. Appellant's Br. at 1.
(B)
This Court has never reversed or remanded a circuit court's termination of parental rights based on ineffective assistance of court-appointed counsel. However, in Wright v. Alexandria Div. of Soc. Servs., 16 Va. App. 821, 826, 433 S.E.2d 500, 503 (1993), we suggested we might do so where there is a "colorable claim of ineffective assistance of counsel." But, as in this case, there was not enough information in the record to determine that the parent was, in fact, denied effective assistance of counsel.
Notwithstanding that Boronica Wright has standing to raise her mother's constitutional right to effective assistance of counsel, she has not provided this Court with evidence or any basis on which we can determine that the mother did not receive effective assistance of counsel. The essence of Boronica Wright's claim is that the mother's attorney presented only one witness, the mother, and failed to develop other evidence to rebut DSS's evidence of parental unfitness. However, Boronica Wright made no assertion that evidence existed in favor of the mother that could have been developed. Indeed, Boronica Wright, who had the same right and opportunity through her guardian
ad litem to present such evidence at trial, did not do so. Boronica Wright did not question during trial whether her mother was being effectively represented, nor did she contend that evidence was available that could or should have been presented on her mother's behalf. The mother has not questioned or raised the issue whether her counsel effectively represented her. Nothing in the record indicates that the mother's counsel failed to present favorable evidence that was available to his client. Without at least a colorable claim of ineffective assistance of counsel, no basis exists to remand the case to the trial court for the purpose of possibly submitting evidence of the mother's parental fitness.
Id. at 825-26,
433 S.E.2d at 503.
As in Wright, we cannot find a colorable claim of ineffective assistance of counsel in the record. This is in part because the trial transcript, which was not timely filed, is imperative to assessing trial counsel's representation. See Jenkins v. Winchester Dep't of Soc. Servs., 12 Va. App. 1178, 1185, 409 S.E.2d 16, 20 (1991) ("The burden is upon the appellant to provide us with a record which substantiates the claim of error." (citation omitted). Further, we cannot hold, in light of the Supreme Court's recent decision inWintergreen Partners, Inc. v. McGuireWoods LLP, 280 Va. 374, 698 S.E.2d 913 (2010), that Ridgley was ipso facto denied effective assistance based on counsel's failure to timely file the transcript on appeal.
In Wintergreen Partners, the Supreme Court affirmed summary judgment for the defendant law firm in a legal malpractice case. The defendant law firm had earlier defended the plaintiff, a ski resort, which lost a negligence action brought by an injured skier. On behalf of Wintergreen, McGuireWoods appealed the $8.3 million judgment, but failed to ensure the trial transcripts were timely filed. Thus, the Supreme Court dismissed the ski resort's appeal.Id. at 376, 698 S.E.2d at 914. After the dismissal of its appeal, the ski resort initiated a legal malpractice action against the defendant law firm, but the circuit court granted summary judgment in favor of McGuireWoods.Id. at 376, 698 S.E.2d at 915.
On appeal from summary judgment, the ski resort argued that "had a timely trial transcript been filed in its appeal, it would have been entitled, as a matter of law, to a reversal of the judgment against it because of the jury's inconsistent verdict in finding Wintergreen liable but exonerating its employees."Id. at 378, 698 S.E.2d at 915. A valid legal malpractice involving an appeal requires proof that the judgment would have been reversed had the appeal been properly filed. Id. Since the theories of liability submitted to the jury in the underlying negligence action allowed for inconsistent verdicts, the Supreme Court concluded the ski resort could not show that reversal would have been required, and thus, affirmed summary judgment for the law firm. Id. at 380, 698 S.E.2d at 916.
Similarly, on this record, Ridgley cannot establish that had the transcripts been timely filed, this Court would have found a colorable claim of ineffective assistance under Wright. Accordingly, ineffective assistance cannot be a viable ground for reversal in this case.
III. Consideration of Evidence Pursuant to Code § 16.1-283(E)(i) (A) Ridgley also claims the trial court improperly considered documentary evidence that was submitted to the court, but not admitted into evidence. Among the improperly considered evidence, Ridgley contends, was a prior court order terminating his parental rights to A.V., J.V.'s sibling. We disagree.
(B)
Pursuant to Code § 16.1-296, "an appeal from the juvenile court must be heard de novo by the circuit court." Fairfax Cnty Dep't of Family Servs. v. D.N., 29 Va. App. 400, 406, 512 S.E.2d 830, 832 (1999) (citation omitted). "Such an appeal transfers the entire record to the circuit court for retrial as though the case had been originally brought there." Mahoney v. Mahoney, 34 Va. App. 63, 66, 537 S.E.2d 626, 628 (2000) ( en banc) (first emphasis added). See also Addison v. Salyer, 185 Va. 644, 650, 40 S.E.2d 260, 263 (1946); Austin v. Commonwealth, 42 Va. App. 33, 37, 590 S.E.2d 68, 70-71 (2003);Alexander v. Flowers, 51 Va. App. 404, 416, 658 S.E.2d 355, 360 (2008). In short, the records of the juvenile court become the records of the circuit court. Further, the circuit court "must consider all relevant evidence, even if such evidence had not been considered by the juvenile court." D.N., 29 Va. App. at 406, 512 S.E.2d at 832-33 (emphasis added).
"The records of any judicial proceeding . . . of any court of this Commonwealth shall be received as prima facie evidence provided that such records are authenticated and certified" to be a true record. Code § 8.01-389. The `"underlying rationale which justifies admitting facts contained in official records . . . [is that] the nature and source of the evidence enhance the prospect of its trustworthiness.'" Owens v. Commonwealth, 10 Va. App. 309, 311, 391 S.E.2d 605, 607 (1990) (quotingIngram v. Commonwealth, 1 Va. App. 335, 338, 338 S.E.2d 657, 658-59 (1986)).
(C)
Ridgley argues that the trial court abused its discretion in considering the "evidence of termination of parental rights to this child's sibling," which was proved with a June 16, 2009 order of the Circuit Court of Fairfax County that terminated Ridgley's parental rights to A.V., J.V.'s sibling. See J.A. 42-46.
Consistent with the foregoing principles, the trial court did not improperly consider documentary evidence because all such evidence was made part of the record by operation of the law, not, as appellant contends, through the action or inaction of the County Attorney. See Code § 16.1-296; Mahoney, 34 Va. App. at 66, 537 S.E.2d at 628 (stating an appeal from JDR court to circuit court necessarily transfers the "entire record"). Ridgley does not contest the authenticity of the order, nor could he. It was certified by the Clerk of the Circuit Court of Fairfax County to be a true record and, thus, created prima facie evidence that Ridgley's parental rights to A.V., J.V.'s sibling, were terminated. No evidence in the record, or any assertion by Ridgley's counsel on brief or in oral argument on appeal, was offered to rebut that prima facie evidence. Accordingly, the June 16, 2009 order was properly considered by the trial court as a basis for termination pursuant to Code § 16.1-283(E)(i).
While we do not have a transcript to consider, the trial court had the benefit of considering Ridgley's own testimony when it decided to terminate Ridgley's residual parental rights. As appellate counsel writes on brief: "The trial court terminated the father's rights based on entirely proffered evidence on behalf of The Department of Family Services and the testimony of the father." Appellant's Br. at 5 (emphasis added).
IV. Substantiality of Evidence Under Code § 16.1-283(C)(2)
A circuit court's judgment when based on evidence heard ore tenus "will not be disturbed on appeal unless plainly wrong or without evidence to support it." Roanoke City Dep't of Soc. Servs. v. Heide, 35 Va. App. 328, 336, 544 S.E.2d 890, 894 (2001); Lowe v. Dep't of Pub. Welfare, 231 Va. 277, 282, 343 S.E.2d 70, 73 (1986). On review, the Court of Appeals will presume that the trial judge "`thoroughly weighed all the evidence, considered the statutory requirements, and made its determination based on the child's best interests.'" Logan v. Fairfax Cnty. Dep't of Human Dev., 13 Va. App. 123, 128, 409 S.E.2d 460, 463 (1991) (quotingFarley v. Farley, 9 Va. App. 326, 329, 387 S.E.2d 794, 796 (1990)). In reaching its determination, in "`matters of a child's welfare, trial courts are vested with broad discretion in making the decisions necessary to guard and to foster a child's best interests.'"Id. at 128, 409 S.E.2d at 463 (quoting Farley, 9 Va. App. at 328, 387 S.E.2d at 795).
Pursuant to Code § 16.1-296, JDR appeals are "heard de novo by the circuit court." D.N., 29 Va. App. at 406, 512 S.E.2d at 832 (citation omitted). Thus, the circuit court has the entire JDR court record to consider when deciding whether to affirm a termination of parental rights.See Mahoney, 34 Va. App. at 66, 537 S.E.2d at 628. On this record, we find the trial court did not err in finding the evidence sufficient to terminate Ridgley's parental rights. According to the foster care plan presented to the circuit court, Ridgley's eventual release date remained uncertain more than a year after J.V. was taken into DFS's custody. Ridgley's long incarceration prevented him from caring after his son. See Code § 16.1-283(C) (authorizing termination of parental rights, where the parent "ha[s] been unwilling or unable, within a reasonable period of time not to exceed twelve months from the date the child was placed in foster care . . ."). While the twelve-month time period does not prevent a court from considering a parent's post-petition efforts in deciding whether termination is in the best interests of the child, see Akers v. Fauquier Cnty. Dep't of Soc. Servs., 44 Va. App. 247, 258, 604 S.E.2d 737, 742 (2004), the twelve-month limit "was designed to prevent an indeterminate state of foster care `drift' and to encourage timeliness by the courts and social services in addressing the circumstances that resulted in the foster care placement." L.G. v. Amherst Cnty. Dep't of Soc. Servs., 41 Va. App. 51, 56, 581 S.E.2d 886, 889 (2003). DFS's original request for an emergency removal order to take J.V. into foster care was granted because J.V. was without parental care or guardianship. At the time of the circuit court termination hearing, more than a year later, the court still did not know when Ridgley would be released from jail. "It is clearly not in the best interests of a child to spend a lengthy period of time waiting to find out when, or even if, a parent will be capable of resuming his responsibilities." Kaywood v. Halifax Cnty. Dep't of Soc. Servs., 10 Va. App. 535, 540, 394 S.E.2d 492, 495 (1990).
In any event, where a circuit court terminates parental rights under multiple statutory bases, as here, evidence sufficient for one basis renders a challenge to others moot. See Butler v. Culpeper Cnty. Dep't of Soc. Servs., 48 Va. App. 537, 548-49, 633 S.E.2d 196, 201-02 (2006);Fields v. Dinwiddie Cnty. Dep't of Soc. Servs., 46 Va. App. 1, 8, 614 S.E.2d 656, 659 (2005).
Affirmed.
< class="paragraph"> Although no New Mexico state court has more thoroughly discussed the enforcement of a forum selection clause, the District of New Mexico and United States Court of Appeals for the Tenth Circuit have more fully discussed the general rules regarding enforcement of forum selection clauses. "The difference between a mandatory and permissive forum selection clause is that `[m]andatory forum selection clauses contain clear language showing that jurisdiction is appropriate only in the designated forum.'"
American Soda, LLP v. U.S. Filter Wastewater Group, Inc.,
428 F.3d 921, 926 (10th Cir. 2005) (citing
Excell, Inc. v. Sterling Boiler Mech., Inc.,
106 F.3d 318, 321 (10th Cir. 1997)).
See Knight Oil Tools, Inc. v. Unit Petroleum Co., No. CIV 05-0669 JB/ACT,
2005 WL 2313715, at *5 (D.N.M. Aug. 31, 2005) (Browning, J.). "In contrast, permissive forum selection clauses authorize jurisdiction in a designated forum, but do not prohibit litigation elsewhere."
American Soda, LLP v. U.S. Filter Wastewater Group, Inc.,
428 F.3d at 926-27 (citation omitted).
See Knight Oil Tools, Inc. v. Unit Petroleum Co.,
2005 WL 2313715, at *5. In
K V Scientific Co. v. BMW, the Tenth Circuit adopted the majority rule for enforcing forum selection clauses.
See
314 F.3d at 500. When venue is specified, such as when the parties designate a particular county or tribunal, and the designation is accompanied by mandatory or obligatory language, a forum selection clause will be enforced as mandatory.
See K V Scientific Co. v. BMW,
314 F.3d at 499.
No New Mexico court or Tenth Circuit court has addressed whether a forum selection clause applies to actions where the contract containing the forum selection clause is raised only as a defense. Other courts, however, have addressed this issue.
Several courts have stated that, when the forum selection clause governs only a dispute arising out of the contract containing the forum selection clause and the contract is relevant only as a defense, the form selection clause is inapplicable. InPhillips v. Audio Active Ltd., 494 F.3d 378 (2d Cir. 2007), the forum selection clause provided that "any legal proceedings that may arise out of [the agreement] are to be brought in England." 494 F.3d at 386. The plaintiff denied "that the contract ha[d] any role or relevance whatever with respect to his copyright claims." Phillips v. Audio Active Ltd., 494 F.3d at 391 (citation omitted). The United States Court of Appeals for the Second Circuit found that, "[b]ecause the recording contract is only relevant as a defense in this suit, we cannot say that [the plaintiff's] copyright claims originate from, and therefore `arise out of,' the contract." Phillips v. Audio Active Ltd., 494 F.3d at 391. The Second Circuit therefore held that the contract did not evince an intent that the plaintiff's federal copyright claims had to be heard in England. See Phillips v. Audio Active Ltd., 494 F.3d at 391. In Corcovado Music Corp. v. Hollis Music, Inc., 981 F.2d 679 (2d Cir. 1993), Corcovado brought suit against the defendants for copyright infringement, and the defendants moved to dismiss the complaint based on a number of contracts with a third party, alleging that the contracts required interpretation by a Brazilian court and that the contracts conveyed renewal rights. See Corcovado Music Corp. v. Hollis Music, Inc., 981 F.2d at 681. In addition, the defendants argued that Corcovado was bound by the forum selection clause in the contracts. See Corcovado Music Corp. v. Hollis Music, Inc., 981 F.2d at 681. The Second Circuit stated that the "contracts are relevant only as a defense[;] [t]he Complaint asserts no rights whatsoever arising out of those contracts, and they form no part of plaintiff Corcovado's case." Corcovado Music Corp. v. Hollis Music, Inc., 981 F.2d at 682. The Second Circuit therefore found the district court erred when it dismissed Corcovado's actions with instructions to pursue it in Brazil. See Corcovado Music Corp. v. Hollis Music, Inc., 981 F.2d at 683.
Other courts have found that a forum selection clause governing any dispute relating to or arising in relation to the agreement encompasses a dispute in which the agreement is raised as a defense. See Schering Corp. v. First Databank, Inc., 479 F. Supp. 2d 468, 470-71 (D.N.J. 2007) (discussing a forum selection clause that provided that, "[i]n the event of any dispute concerning this Agreement or the Licensed Products, suit may be brought . . . in the U.S. District Court of the Northern District of California" and finding that the action related to the agreement because the defendant's defenses were based on the agreement). In John Wyeth Bro. Ltd. v. CIGNA Intern. Corp., 119 F.3d 1070 (3d Cir. 1997), the United States Court of Appeals for the Third Circuit found that the language of the forum selection clause stating that "the English Courts shall have exclusive jurisdiction in relation to any dispute arising under or out of or in relation to this Agreement" encompassed a dispute in which the agreement containing the clause was raised as a defense. John Wyeth Bro. Ltd. v. CIGNA Intern. Corp., 119 F.3d 1073, 1076. The Third Circuit noted that the phrase arising in relation to is broader than the phrase arising under. See John Wyeth Bro. Ltd. v. CIGNA Intern. Corp., 119 F.3d at 1074.
The answer to the question whether a "defense" based on a contract that contains a forum selection clause implicates that clause depends on the language of the clause. Here, as we have noted, the clause is broadly worded, extending to any dispute "arising . . . in relation to." This language easily encompasses a dispute in which the 1990 Agreement is raised as a defense.
Corcovado is distinguishable because it contains no analysis of a forum selection clause with comparable language.
John Wyeth Bro. Ltd. v. CIGNA Intern. Corp., 119 F.3d at 1076.
ANALYSIS
The Court will enter a preliminary injunction ordering Leviton to dismiss its patent-infringement claims against the Plaintiffs in the ITC action and in the action in the District Court for the Northern District of California. The Plaintiffs have shown a reasonable likelihood of success on the merits, because the CSA granted the Plaintiffs an implied license to the `124 and `151 patents, and because the forum selection clause in the CSA requires the parties to litigate the dispute in the District of New Mexico. The Plaintiffs will suffer irreparable harm absent injunctive relief, because they will be deprived of their bargained-for forum and will suffer inconvenience of litigating on two fronts, causing financial hardship and disruption of their business. The balance of hardships favors the Plaintiffs, because, absent injunctive relief, the Plaintiffs will suffer irreparable harm, while injunctive relief will not materially harm Leviton, as the District Court can, for the most part, grant Leviton the same relief it could obtain in the ITC action. The public interest favors granting the injunction, because the public policy supports enforcing the forum selection clause, and because an injunction will not have a deleterious effect on the ITC action. Because the Court will grant a preliminary injunction, ordering Leviton to dismiss its patent-infringement claims in the ITC action and the action in the Northern District of California, the Court need not grant the Plaintiffs' request for a TRO requiring Leviton to consent to the Plaintiffs' request for a stay of the ITC action.
I. THE PLAINTIFFS HAVE SHOWN A REASONABLE LIKELIHOOD OF SUCCESS ON THE MERITS.
The Plaintiffs have shown a reasonable likelihood of success on the merits. The CSA appears to grant the Plaintiffs an implied license to the `124 and `151 patents. Moreover, the forum selection clause appears to require that the parties litigate the dispute in the District Court for the District of New Mexico.
A. THE CSA APPEARS TO GRANT THE PLAINTIFFS AN IMPLIED LICENSE TO LEVITON'S `124 AND `151 PATENTS.
The Plaintiffs contend that Leviton's covenant not to sue, in section 2.2 of the CSA constitutes a patent license to the `558 and `766 patent, as it authorized the Plaintiffs to make, use, offer for sale, sell, and import the licensed products. See Memorandum at 18. The Plaintiffs assert that the express license includes an implied license to "any new patents necessary to practice" the licensed products, including the `124 and `151 patents, and that Leviton is legally estopped from derogating from that license. Memorandum at 18.
"[O]ne who possesses [an express license of rights from a patent owner] cannot be made liable for patent infringement." 9 R. Moy, Moy's Walker on Patents § 19:34 (4th ed.).
Leviton contends that the Plaintiffs cannot demonstrate a likelihood of success on the merits, because "it is clear from the CSA that the Plaintiffs were not granted any rights to the `124 and `151 patents." Response at 9. Leviton contends that the manifest intent of the parties in entering into the CSA was to grant the Plaintiffs a restricted covenant not to sue on the `558 and `766 patents with respect to a limited set of products, and not to grant "any rights with respect to future related (or unrelated) patents." Response at 10. Leviton contends that legal estoppel does not apply in this matter, because it has not derogated any right granted to the Plaintiffs, as the Plaintiffs were never promised freedom from suit for patents related to the `558 and `766 products. See Response at 18. Leviton contends that the Plaintiffs have not met their burden of establishing the existence of an implied license as an affirmative defense, because they have made only a "bare assertion that the products identified in the ITC complaint fall within the scope of this narrow class of products," and do not provide a factual basis for the assertion or identify whether there are other products that would fall within the scope of the ITC investigation. Response at 20-21. Leviton also contends that, even if the Plaintiffs have an implied license to some claims of the `124 and `151 patents, that implied license extends only to the claims that dominate the claims of the `558 and `766 patents, and because not all of the claims of the `124 and `151 patents dominate, Leviton is free to assert the narrower claims against the Plaintiffs at the ITC. See Response at 21.
"The essence of legal estoppel that can be found in the estoppel of the implied license doctrine involves the fact that the licensor (or assignor) has licensed (or assigned) a definable property right for valuable consideration, and then has attempted to derogate or detract from that right." AMP Inc. v. United States, 389 F.2d at 452. "The grantor is estopped from taking back in any extent that for which he has already received consideration." AMP Inc. v. United States, 389 F.2d at 452. A legal estoppel case turns "on the manifest intention of the parties' agreement." AMP Inc. v. United States, 389 F.2d at 452.
It appears that the best construction of Leviton's covenant not to sue in the CSA is that it constitutes a patent license to the `558 and `766 patents. Section 2.1 of the CSA states:
Leviton . . . hereby covenants not to sue (1) Defendants, their officers, directors, shareholders, members, employees, subsidiaries, or affiliates for alleged infringement of the `558 and/or `766 actions; and (2) Defendants, their officers, directors, shareholders, members, employees, subsidiaries, or affiliates for alleged infringement of the `558 patent and/or the `766 patent with respect to an anticipated future new GFCI product that Defendant Dongzheng has indicated its intent to market in the U.S. in the future,. . . .
CSA § 2.1. On "numerous occasions," the Federal Circuit has "explained that a non-exclusive patent license is equivalent to a covenant not to sue." TransCore, LP v. Elect. Transaction Consultants Corp., 563 F.3d at 1275. In Spindelfabrik Suessen-Schurr, Stahlecker Grill GmbH v. Schubert Salzer Maschinenfabrik Aktiengesellschaft, 829 F.2d 1075 (Fed. Cir. 1987), the Federal Circuit explained:
As a threshold matter, a patent license agreement is in essence nothing more than a promise by the licensor not to sue the licensee. Even if couched in terms of "[l]icensee is given the right to make, use, or sell X," the agreement cannot convey that absolute right because not even the patentee of X is given that right. His right is merely one to exclude others from making, using or selling X,
35 U.S.C. § 154. Indeed, the patentee of X and his licensee, when making, using, or selling X, can be subject to suit under other patents. In any event, patent license agreements can be written to convey different scopes of promises not to sue, e.g., a promise not to sue under a specific patent or, more broadly, a promise not to sue under any patent the licensor now has or may acquire in the future.
829 F.2d at 1081 (internal citation omitted). The Court therefore finds that it is likely that the Plaintiffs will be able to establish that Leviton's covenant not to sue, in section 2.1 of the CSA constitutes a patent license for the `558 and `766 patents.
See U.S. Phillips Corp. v. International Trade Com'n, 424 F.3d 1179, 1189 (Fed. Circ. 2005) ("A nonexclusive patent license is simply a promise not to sue for infringement.").
The Court does not believe that Jacobs v. Nintendo of America, Inc. requires it to find that the covenant not to sue in the CSA is insufficient to create an implied license to the `124 and `151 patents. In Jacobs v. Nintendo of America, Inc., Jacobs entered into a settlement and licensing agreement with Analog, which terminated his patent infringement suit against Analog. See 370 F.3d at 1098. Jacobs later sued Nintendo for infringing the same patent. See 370 F.3d at 1098. Nintendo moved for summary judgment of non-infringement, alleging "that it was entitled to practice the `958 patent by virtue of the settlement agreement between Jacobs and Analog," who supplied a part for one of Nintendo's products. See 370 F.3d at 1099. The settlement agreement granted two important rights: (i) a peace — the right to not be sued for infringement of the `958 patent; and (ii) a prosperity — the right to sell micromachined accelerometers for use in certain products. 370 F.3d at 1099. Jacobs urged the Federal Circuit to interpret paragraph 3 — the prosperity — as a bare license — a right to not be sued for making, using, or selling accelerometers for use in certain products. See 370 F.3d at 1101. The Federal Circuit, however, found that this interpretation of paragraph 3 would render the paragraph redundant, as paragraph 5 — the peace — already ensured freedom from suit. See 370 F.3d at 1101. The Federal Circuit stated
If all that Jacobs intended to do through the settlement agreement was to free Analog of its liability for infringement, paragraph 5 of the agreement (the covenant not to sue) would have been fully sufficient to serve that purpose. Paragraph 3, however, goes much further by granting Analog an affirmative right to engage in the manufacture and sale of accelerometers to be used in tilt-sensitive control boxes.
That grant comes without restriction of any kind.
370 F.3d at 1101. Jacob sought to explain the license granted in paragraph 3 by characterizing it as giving Analog the right to make and sell infringing products on its own, or, alternatively, ensuring Analog would be free to sell accelerometers for use in infringing products, "but not protecting Analog's customers from suit for making and selling [products]."
370 F.3d at 1101. The Federal Court found that these explanations were not plausible, as Jacobs knew Analog was not in the business of making game controllers, "so there is no reason to believe Analog would have bargained for that right."
370 F.3d at 1101.
Furthermore, as the district court noted, it is unlikely that Analog would have contracted for the right to manufacture and sell a product knowing that its customers would be unable to use the product that it sold them for the bargained-for purpose. Thus, we agree with the district court that the Jacobs-Analog settlement agreement grants to Analog's customers an implied sublicense to use Analog's accelerometers to make, use, and sell tilt-sensitive control boxes that infringe the 958 patent without interference by Jacobs.
370 F.3d at 1101-02. The Court is not convinced that
Jacobs v. Nintendo of America, Inc. dictates that a covenant not to sue, contained in a settlement agreement, cannot grant an implied license. In
Jacobs v. Nintendo of America, Inc., the Federal Circuit was "differentiating between settlement terms for the express purpose of determining the contracting parties' intent in the context of an implied license analysis."
TransCore, LP v. Elec. Transaction Consultants Corp., 563 F.3d at 1275. As Leviton stated in the hearing and in its briefing, "with respect to an implied license, the decision is made on case-by-case basis[,]" Tr. at 18:12-18 (Shatzer), by considering the "manifest intent [] of the parties' agreement[,]" Response at 16. Because the purpose of an implied license is to stop the licensor from derogating or detracting from the right that he or she has licensed,
see AMP Inc. v. United States, 389 F.2d at 452, the courts must determine what rights were licensed. The Federal Circuit in
Jacobs v. Nintendo of Am., Inc. found that it was unlikely that Analog would have
contracted for the right to sell a product knowing its customers would not be able to use the product it sold them and therefore held that an implied license arose from an license provision in the settlement agreement. The Federal Circuit made this finding in the context of determining the parties' intent as to what rights were licensed as reflected in the settlement agreement. The Court therefore believes that a covenant not to sue can grant an implied license, assuming it is consistent with the parties' intent as reflected in the settlement agreement.
See TransCore, LP v. Elec. Transaction Consultants Corp., 563 F.3d at 1278-79 (finding that an implied license arose from a covenant not to sue for infringement of certain patents when a implied license to practice the later-issued patent was necessary to practice the patents licensed in the settlement agreement).
Because "[t]he essence of legal estoppel . . . found in . . . the implied license doctrine involves the fact that the licensor (or assignor) has licensed (or assigned) a definable property right for valuable consideration, and then has attempted to derogate or detract from that right[,]" AMP Inc. v. United States, 389 F.2d at 452, the Court must first determine what property right Leviton licensed to the Plaintiffs. The CSA states
Leviton . . . hereby covenants not to sue (1) Defendants . . . for alleged infringement of the `558 and/or `766 patents based on the Dongzheng products currently accused of infringement . . .; and (2) Defendants . . . for alleged infringement of the `558 and/or the `766 patent with respect to an anticipated future new GFCI product that Defendant Dongzheng has indicated its intent to market in the U.S. in the future. . . .
CSA § 2.1. Through this covenant not to sue, Leviton granted the Plaintiffs licenses to the `558 and `766 patents for the licensed products.
Leviton contends that the language in the CSA makes it clear that Leviton did not grant the Plaintiffs the right to be free from future actions for infringement, including patent infringement actions related to the `766 and `558 patents. See Response at 13. Section 4.1 of the CSA states:
The parties will jointly request that the Court vacate its `766 Order in . . . the Court's
Memorandum Opinion and Order dated March 5, 2007, by submitting a joint motion and proposed form of Order to the Court. . . . However, Leviton agrees not to challenge any proposed claim construction of a `766 patent claim that is reflected in the `766 Markman Order, which any of the Defendants, their officers, directors, shareholders, members, employees, subsidiaries, affiliates (or their customers) may propose in connection with any claim of infringement of a `766 patent claim. Defendants and their officers, directors, shareholders, members, employees, subsidiaries, affiliates (or their customers) are not precluded from proposing said claim construction in any action or proceeding asserting infringement of any patent related to the `766 patent, although Leviton may challenge such proposed claim construction. Leviton and defendants agree that neither the fact of the Court's decision to vacate or not vacate its `766 Markman Order, nor the fact that the parties requested that the Court vacate its `766 Markman Order, can be used by a party to this Agreement to support or challenge a proposed construction of a claim related to the `766 patent.
CSA § 4.1. Section 2.1 of the CSA provides that "[t]hese covenants not to sue . . . still apply to the Dongzheng Products even if Leviton asserts a claim of infringement of the `766 or `558 patents against Defendants, their officers, directors, shareholders, members, employees, subsidiaries, or affiliates for manufacturing, using, importing, selling or offering to sellother products." CSA § 2.1 (emphasis added). Section 2.2 states:
Nothing in this Settlement Agreement shall otherwise be construed as limiting the right of any customer to challenge the validity of the `558 or `766 patents if Leviton asserts, whether through court or administrative filings or through authorized correspondence sufficient to give rise to declaratory judgment jurisdiction, that such customer infringes on one or both patents, and the covenant not to sue customers as defined above still applies to Dongzheng Products even if Leviton asserts that a customer infringes the `766 or `558 patents by importing, selling or offering to sell
other products.
CSA § 2.2 (emphasis added). Section 4.1 in the CSA is not discussing anticipated future patent infringement litigation on the licensed products for patents related to the `766 patent. The plain language of section 4.1, taken in the context of the CSA,see H-B-S Partnership v. Aircoa Hospitality Servs., Inc., 137 N.M. 626, 633, 114 P.3d 306, 313 (Ct. App. 2005) ("We consider the plain language of the relevant provisions, giving meaning and significance to each word or phrase within the context of the entire contract"), indicates that this section relates to the other products referenced in section 2.1 and 2.2. Sections 2.1 and 2.2 discuss the possibility that Leviton may assert claims of patent infringement of the `766 or `558 patents with regard to other products, and not with regard to the licensed products. The language in the CSA indicates that the parties reserved their rights — such as the Plaintiffs' right to raise arguments regarding the construction of claims in the `766 patent and Leviton's right to challenge the proposed claim construction — so that they could raise these rights if Leviton sued the Plaintiffs for other products — such as products produced at a later time that do not constitute the anticipated new product mentioned in the section 2.1 of the CSA, not the licensed products, under the `766 or `558 patents. The language in the CSA does not indicate that the parties were contemplating more litigation on the licensed products under the `766 patent or patents related to the `766 patent; instead, it indicates that they were contemplating litigation on the `766 patent or related patents for other products. For example, the parties might have contemplated litigation on products that might infringe the `766 patent but were not yet manufactured and did not constitute the anticipated new product mentioned in section 2.1 of the CSA. Or, the parties might have contemplated litigation on other existing products, not at issue in the litigation in the District of New Mexico, if, after additional research, Leviton believed that these other existing products infringed the `766 patent. This language therefore does not indicate that the parties did not intend an implied license to the `124 and `151 patents for the licensed products.
Although the language of the covenant not to sue in the CSA is limited to the licensed products, this limitation does not mean that the CSA cannot grant an implied license. In TransCore, LP v. Electronic Transaction Consultants Corp., the covenant not to sue, in the settlement agreement stated:
In exchange for the payment set forth in paragraph 1, TCI hereby agrees and covenants not to bring any demand, claim, lawsuit, or action against Mark IV for future infringement of any of United States Patent Nos. 5,805,082; 5,289,183; 5,406,275; 5,144,553; 5,086,389; 5,751,973; 5,347,274; 5,351,187; 5,253,162; and 4,303,904, or any foreign counterparts of the aforesaid United States Patents, for the entire remainder of the terms of the respective United States Patents and their foreign counterparts. This Covenant Not To Sue shall not apply to any other patents issued as of the effective date of this Agreement or to be issued in the future.
389 F.2d at 450. The Federal Circuit found that the settlement agreement granted an implied license to a later-issued patent.
See TransCore, LP v. Elec. Transaction Consultants Corp., 563 F.3d at 1279. The Federal Circuit stated:
The language of the TransCore-Mark IV settlement agreement, which states that "[t]his Covenant Not To Sue shall not apply to any other patents . . . to be issued in the future," is not to the contrary. This language may protect TransCore against broad claims that future patents generally are impliedly licensed, but it does not permit TransCore to derogate from the rights it has expressly granted and thus does not preclude a finding of estoppel.
TransCore, LP v. Elec. Transaction Consultants Corp., 563 F.3d at 1279. Similarly, the best construction of the language limiting the covenant not to sue to the licensed products appears to allow Leviton to bring patent infringement suits for the `558 and `766 patents based on other products, but this limitation does not allow Leviton to derogate from the rights it granted to the Plaintiffs, and therefore "does not preclude a finding of [legal] estoppel."
TransCore, LP v. Elec. Transaction Consultants Corp., 563 F.3d at 1279.
Under TransCore, LP v. Electronic Transaction Consultants Corp., the CSA granted an implied license to the `124 and `151 patents, if the plaintiffs must practice the `124 and `151 patents to obtain the benefit of their bargain to practice the `766 and `558 patents. In TransCore, LP v. Electronic Transaction Consultants Corp., the Federal Circuit addressed whether TransCore's rights to the `946 patent — which had not yet issued at the time of the settlement agreement and was thus not identified in the settlement agreement — "were exhausted by Mark IV's authorized sales under an implied license to practice that patent by virtue of legal estoppel." TransCore, LP v. Elec. Transaction Consultants Corp., 563 F.3d at 1278. The Federal Circuit stated that when
a person sells a patent which employs an invention which infringes a prior patent, the person selling is estopped from bringing an action against his grantee for that infringement, even though the earlier patent is acquired after the sale of the later patent. The same principle applies to the grant of a patent right by license as well as assignment.
TransCore, LP v. Elec. Transaction Consultants Corp., 563 F.3d at 1278. The Federal Circuit saw no reason to limit this form of legal estoppel to only prior or earlier patents.
See TransCore, LP v. Elec. Transaction Consultants Corp., 563 F.3d at 1279. The Federal Circuit stated:
TransCore's later issued `946 patent was broader than, and necessary to practice, at least the `082 patent that was included in the TransCore-Mark IV settlement agreement. Indeed, during discovery TransCore adopted its `082 patent infringement contentions as its contentions related to the `946 patent. Absent argument to the contrary, the district court properly concluded that in order for Mark IV to obtain the benefit of its bargain with TransCore, it must be permitted to practice the `946 patent to the same extent it may practice the `183, `275 and `082 patents. TransCore is, therefore, legally estopped from asserting the `946 patent against Mark IV in derogation of the authorizations granted to Mark IV under the `183, `275 and `082 patents. And Mark IV is, in turn, an implied licensee of the `946 patent.
TransCore, LP v. Elec. Transaction Consultants Corp., 563 F.3d at 1279. Leviton's suits for infringement of the `124 and `151 patents involve the products licensed under the CSA. It is unlikely that the Plaintiffs would enter into the CSA, and obtain the right to practice the licensed products under the `558 and `766 patents, knowing that Leviton would then sue them for patent infringement on the `124 and `151 patents based on the same licensed products.
Cf. Jacobs v. Nintendo of Am., Inc., 370 F.3d at 1101 ("[I]t is unlikely that Analog would have contracted for the right to manufacture and sell a product knowing that its customers would be unable to use the product that it sold them for the bargained for purpose."). As in
TransCore, LP v. Electronic Transaction Consultants Corp., where the later-issued patent was broader than, and necessary to
practice, the earlier issued patents that were licensed in the settlement agreement, in this case, the best construction appears to be that an implied license to the `124 and `151 patents for the licensed products is necessary to practice the license to the `558 and `766 for the licensed products. For the Plaintiffs to obtain the benefit of their bargain to practice the `766 and `558 patents for the licensed products, the best construction suggests that the Plaintiffs must be allowed to practice the `124 and `151 patents for the licensed products. The Court thus finds that the Plaintiffs will likely be able to prove that they have an implied license to the `124 and `151 patents.
See TransCore, LP v. Elec. Transaction Consultants Corp., 563 F.3d at 1279 ("[F]or Mark IV to obtain the benefit of its bargain with TransCore, it must be permitted to practice the `946 patent. . . . Mark IV is [thus] . . . an implied licensee of the `946 patent.").
Cf. Amp Inc. v. United States, 389 F.2d at 453 ("There is ample authority for the rule that where [a patent] owner . . . grants to a licensee the right to use a patented machine, the grant carries with it, by necessary implication, a license under any other patent of the licensor which would be infringed by operation under the grant." (citing
Frederick B. Stevens, Inc. v. Steel Tubes, Inc., 114 F.2d 815 (6th Cir. 1940)).
Leviton contends that the Plaintiffs have failed to carry their burden to show that the products that they are currently selling are within the scope of the CSA, because they have made only a conclusory allegation that the products are the licensed products referenced in the CSA, and because Leviton is entitled to — and is currently seeking — discovery whether other products should fall within the scope of the ITC investigation. See Response at 21. The Court believes that the case on which Leviton relies,Carborundum Co. v. Molten Metal Equipment Innovations, Inc., 72 F.3d 872 (Fed. Cir. 1995), does not compel the finding that the Plaintiffs have failed to carry their burden. In Carborundum Co. v. Molten Metal Equipment Innovations, Inc., the Federal Circuit addressed a district court's decision to grant judgment as a matter of law on an implied license defense. See 72 F.3d at 877. The Federal Circuit stated that the party asserting an implied license as an affirmative defense has the burden of establishing the existence of the implied license. See 72 F.3d at 878. The Plaintiffs contend that the products that Leviton alleges infringe the `124 and `151 patents are the licensed products referenced in the CSA. In support of this assertion, the Plaintiffs submitted Song's Declaration. In support of the Plaintiffs' assertion that they have an implied license to the `124 and `151 patents for these products, the Plaintiffs submitted the CSA. Leviton does not contest the Plaintiffs' characterization of their claims. The Court believes that the Plaintiffs have sufficiently carried their burden of proof, through their submission of Song's Declaration and the CSA, for a preliminary injunction. The Court notes that if Leviton wishes to conduct discovery whether other products allegedly infringe its patents, it may conduct such discovery in this forum.
Leviton further contends that, even if the Plaintiffs have an implied license to some of the claims in the `124 and `151 patents, the implied license extends only to those claims that dominate the claims of the `558 and `766 patents, and Leviton is free to assert the narrower claims against the Plaintiffs at the ITC. See Response at 21. In TransCore, LP v. Electronic Transaction Consultants Corp., the Federal Circuit stated:
On summary judgment, ETC asserted, and TransCore did not dispute,
that TransCore's later-issued `946 patent was broader than, and necessary to practice, at least the `082 patent that was included in the TransCore-Mark IV settlement agreement. Indeed, during discovery TransCore adopted its `082 patent infringement contentions as its contentions related to the `946 patent. Absent argument to the contrary, the district court properly concluded that in order for Mark IV to obtain the benefit of its bargain with TransCore, it must be permitted to practice the `946 patent to the same extent it may practice the `183, `275 and `082 patents.
TransCore, LP v. Elec. Transaction Consultants Corp., 563 F.3d at 1279 (emphasis added). Leviton does not address whether the `124 and `151 patents are broader than, and necessary to practice, the `558 and `766 patents. Instead, Leviton contends that several claims in the `124 and `151 patents
are narrower than the claims of the `558 and `766 patents. The Court does not believe that this fact means that the `124 and `151 patents are not necessary to practice the `558 and `766 patents. If the Court found that the Plaintiffs' implied license was limited to the claims of the `124 and `151 patents that dominate the `558 and `766 patents, the Plaintiffs' implied license would inadequately reflect the benefit of the bargain that they obtained in the CSA. Leviton's construction would allow Leviton to derogate from its grant of a license to the `558 patent and the `766 patent by making several claims in the `124 and `151 patents narrower.
B. THE FORUM SELECTION CLAUSE IN THE CSA REQUIRES THAT THE PARTIES LITIGATE THE DISPUTE IN THIS COURT.
The Plaintiffs contend that the forum section clause in the CSA is mandatory, because it states that any disputes between the parties "relating to or arising out of" the CSA "shall be prosecuted exclusively" in the District of New Mexico. CSA § 11.2 (emphasis added). The Plaintiffs further contend that Leviton's patent infringement claims regarding the licensed products are within the scope of the forum selection clause, because Leviton's asserted claims regarding the `124 and `151 patents are related to the `558 and `766 patents identified in the CSA. See Memorandum at 23. The Plaintiffs also contend that they raise many of the same defenses that they raised in the prior litigation in the District of New Mexico, and that they rely on the CSA — specifically, the implied licenses contained in the CSA — as a defense to Leviton's new claims. See Memorandum at 22. Furthermore, the Plaintiffs allege that the phrase "relating to" is broad; therefore, without regard to whether Leviton's claims are directly arising out of the CSA, they relate to the CSA. See Memorandum at 24. The Plaintiffs conclude that Leviton should litigate its new claims of patent infringement exclusively in the District Court for the District of New Mexico and that injunctive relief is the appropriate remedy to prevent Leviton from breaching the forum selection clause. See Memorandum at 25.
Leviton contends that the ITC claims do not relate to or arise out of the CSA, because the claims involve patents that were not licensed under the CSA. See Response at 23. Leviton thus contends that section 11.2 of the CSA does not apply. See Response at 23. Leviton also contends that it should not be deprived of an opportunity to litigate its causes of action at the ITC, merely because the Plaintiffs might be able to "conjure an affirmative defense implicating the [Settlement] Agreement." Response at 24-25.
1. The Forum Selection Clause in the CSA is Mandatory.
The difference between a mandatory and permissive forum selection clause is that `[m]andatory forum selection clauses contain clear language showing that jurisdiction is appropriate only in the designated forum.'" Am. Soda, LLP v. U.S. Filter Wastewater Group, Inc., 428 F.3d at 926 (citing Excell, Inc. v. Sterling Boiler Mech., Inc., 106 F.3d at 321). "In contrast, permissive forum selection clauses authorize jurisdiction in a designated forum, but do not prohibit litigation elsewhere." Am. Soda, LLP v. U.S. Filter Wastewater Group, Inc., 428 F.3d at 926-27 (citation omitted). The general rule on enforcement of forum selection clauses is that, "when venue is specified in a forum selection clause with mandatory or obligatory language, the clause will be enforced." Mueller v. Sample, 135 N.M. at 752, 93 P.3d at 773 (citing K V Scientific Co. v. BMW, 314 F.3d at 499.
The CSA states that "[a]ny disputes between the Parties relating to or arising out of this [CSA] shall be prosecuted exclusively in the United States District Court for the District of New Mexico. The Parties consent to the venue and jurisdiction of such court for this purpose." CSA § 11.2. This forum selection clause is mandatory. The specified venue — the District Court for the District of New Mexico — is accompanied by mandatory language — specifically "shall" and "exclusively." CSA § 11.2.
2. The Forum Selection Clause Covers Leviton's Infringement Claims Against the Plaintiffs.
Leviton's patent infringement claims in the ITC proceeding and the proceeding in the District Court for the Northern District of California are related to the CSA, because the claims involve patents that were impliedly licensed in the CSA and products that were licensed in the CSA. Even if Leviton's patent infringement claims in the ITC proceeding and in the proceeding in the District Court for the Northern District of California do not relate to the CSA, the exclusive venue provision covers Leviton's patent infringement claims.
Several courts have stated that, when the forum selection clause governs only disputes arising out of the contract containing the forum selection clause and the contract is relevant only as a defense, the forum selection clause is inapplicable. See Corcovado Music Corp. v. Hollis Music, Inc., 981 F.2d at 682 (finding that the forum selection clause requiring the parties to resolve any disputes in Brazil has no effect when the contract containing the clause is "relevant only as a defense[;] [t]he Complaint asserts no rights whatsoever arising out of those contracts, and they form no part of plaintiff Corcovado's case"). In Phillips v. Audio Active Ltd., the forum selection clause provided that "any legal proceedings that may arise out of [the agreement] are to be brought in England." 494 F.3d at 386. The Second Circuit stated the plaintiff denied "that the contract ha[d] any role or relevant whatever with respect to his copyright claims." 494 F.3d at 391 (citation omitted). The Second Circuit found that, "[b]ecause the recording contract is only relevant as a defense in this suit, we cannot say that [the plaintiff's copyright claims originate from, and therefore `arise out of,' the contract." 494 F.3d at 391.
Other courts have found that a forum selection clause governing any dispute relating to or arising in relation to the agreement encompasses a dispute in which the agreement is raised as a defense. See Schering Corp. v. First Databank, Inc., 479 F. Supp. 2d at 470-71 (discussing a forum selection clause which provided that, "[i]n the event of any dispute concerning this Agreement or the Licensed Products, suit may be brought . . . in the U.S. District Court of the Northern District of California," and finding that the action related to the agreement because the defendant's defenses were based on the agreement). In John Wyeth Bro. Ltd. v. CIGNA Intern. Corp. the Third Circuit found that the language of the forum selection clause stating that "the English Courts shall have exclusive jurisdiction in relation to any dispute arising under or out of or in relation to this Agreement" encompassed a dispute in which the agreement containing the clause was raised as a defense. 119 F.3d 1073, 1076. The Third Circuit noted that the phrase arising in relation to is broader than arising under.See 119 F.3d at 1074. The Third Circuit stated:
The answer to the question whether a "defense" based on a contract that contains a forum selection clause implicates that clause depends on the language of the clause. Here, as we have noted, the clause is broadly worded, extending to any dispute "arising . . . in relation to." This language easily encompasses a dispute in which the 1990 Agreement is raised as a defense.
Corcovado is distinguishable because it contains no analysis of a forum selection clause with comparable language.
John Wyeth Bro. Ltd. v. CIGNA Intern. Corp., 119 F.3d at 1076
The forum selection clause in this CSA states that the disputes "relating to" or "arising out of" the CSA shall be litigated in the District Court for the District of New Mexico. CSA § 11.2. This case is analogous to John Wyeth Bro. Ltd. v. CIGNA Intern. Corp., where the Third Circuit addressed an agreement containing a forum selection clause governing disputes "in relation to th[e] Agreement" and found that the language "easily encompass[ed] a dispute in which the . . . Agreement [was] raised as a defense."John Wyeth Bro. Ltd. v. CIGNA Intern. Corp., 119 F.3d at 1073, 1076. An implied license is a defense to patent infringement. See Carborundum Co. v. Molten Metal Equipment Innovations, Inc., 72 F.3d at 878. The Plaintiffs argue that the CSA granted them an implied license to the `124 and `151 patents. Because the language relating to is broad, the Court finds that the best construction is that the forum selection clause encompasses a dispute in which the CSA is raised as a defense. The Court therefore is likely to find that the forum selection clause in the CSA encompasses this dispute.
3. Injunctive Relief is the Appropriate Remedy for Leviton's Breach of the Forum Selection Clause in the CSA.
The Court finds that the entry of a preliminary injunction enjoining Leviton to dismiss the suits it brought in the ITC and in the District Court for the Northern District of California is the appropriate remedy to prevent Leviton from breaching the forum selection clause in the CSA. See Texas Instruments Inc. v. Tessera, Inc., 231 F.3d at 1332 (stating that "[a]ny potential injunction would simply implement the governing law clause," and it would not and could not enjoin the ITC action."). Indeed, Leviton did not dispute that, if injunctive relief was warranted, the requested injunctive relief was appropriate. See Ciena Corp. v. Nortel Networks Inc., 2005 WL 1189881, at *12 (concluding that "the preliminary injunction factors favor preliminarily enjoining Ciena's participation in the ITC action. . . ."). The Court need not enjoin the ITC proceeding or another court.
II. THE PLAINTIFFS WILL LIKELY BE IRREPARABLY HARMED UNLESS THE COURT GRANTS THE REQUESTED INJUNCTIVE RELIEF.
The Plaintiffs allege that, absent the requested injunctive relief, they will suffer the irreparable harm of being deprived of their bargained-for forum. See Memorandum at 25. The Plaintiffs also contend that they will be forced to litigate on two fronts, causing them to suffer the irreparable harms of inconvenience, disruption of business, and financial hardship.See id. at 26.
Leviton contends that the Plaintiffs' claim of irreparable harm is belied by their delay of nearly two months before seeking a TRO and a preliminary injunction. See Response at 25. Leviton also contends that the Plaintiffs cannot successfully assert that they will be irreparably harmed by litigating on two fronts, because, even if the Court finds there is an implied license, the license cannot extend to the narrower claims of the `124 and `151 patents; therefore, litigation at the ITC should continue as to the narrower claims even if the preliminary injunction is granted.See Response at 25. Leviton also contends that the Plaintiffs brought the litigation on two fronts on themselves by filing this action. See Response at 26.
The Court believes that the amount of time that the Plaintiffs waited before seeking a TRO and preliminary injunction does not — without more — belie their allegations of irreparable harm. Leviton initiated its ITC proceeding on September 3, 2010, and contemporaneously filed its action in the Norther District of California. Leviton contends that the Plaintiffs retained counsel by October 13, 2010, yet did not inform Leviton of their intention to raise an implied license as a defense until October 26, 2010 and did not file their motion for a TRO and preliminary injunction until November 2, 2010. See Response at 25. The Court is unwilling to find that this delay — without more — belies the Plaintiffs' claims of irreparable harm.
If the Court does not issue injunctive relief, and the Plaintiffs' construction of the forum selection clause prevails, as the Court believes it will, the Plaintiffs will suffer irreparable harm. In the CSA, the parties agreed that "[a]ny disputes between the Parties relating to or arising out of this [CSA] shall be prosecuted exclusively in the United States District Court for the District of New Mexico." CSA § 11.2. The Court has determined that the best construction of the forum selection clause is that this dispute relates to the CSA. The Plaintiffs therefore will likely suffer the irreparable harm of the deprivation of their bargained-for forum if the Court does not issue injunctive relief. See Ciena Corp. v. Nortel Networks Inc., 2005 WL 1189881, at *7 (finding that the party seeking injunctive relief would be irreparably harmed if the ITC action proceeded, because it would "be deprived of its bargained-for forum — an Article III judge's court and jury in the United States District Court for the Eastern District of Texas").
The Plaintiffs will also likely suffer irreparable harm, because, without injunctive relief, they might also be forced to litigate on several fronts. Leviton filed a patent infringement action with the ITC and in the District Court for the Northern District of California. The Plaintiffs then filed this motion in the Court, requesting injunctive relief. Although the action in the District Court for the Northern District of California has been stayed pending the outcome of the 2010 ITC action, and thus "does not present an immediate danger of causing irreparable harm to Movants while it remains stayed," Memorandum at 15, the ITC action is still pending. The Court does not believe that it is material that the Plaintiffs brought litigating on two fronts on themselves. The Plaintiffs instituted this litigation, in part, because they believe the ITC is not the proper forum. Had Leviton filed a patent infringement case in the District Court for the District of New Mexico, the Plaintiffs would not currently be litigating on two fronts. Litigation on two fronts causes "inconvenience, disruption of . . . business, loss of good will, and financial . . . hardship[, which result from the] duplicative actions." Ciena Corp. v. Nortel Networks Inc., 2005 WL 1189881, at *7. The Court therefore finds that the litigation on two fronts will cause irreparable harm to the Plaintiffs. See Texas Instruments, Inc. v. Tessera, Inc., 231 F.3d at 1332 ("Tessera breached . . . the license agreement by bringing an action against TI at the ITC. . . . Thus, TI may have been prejudiced by Tessera's breach, for TI . . . [was] obliged to defend a second action . . . Tessera is [effectively] attempting to compel TI to fight infringement battles on two fronts."); Texas Instruments, Inc. v. Tessera, Inc., No. C-00-2114 CW, slip. op. at 6 (N.D. Cal. Mar. 6, 2001) ("[L]itigating simultaneously in California and the ITC will cause financial and business hardship to TI. Even if its attorneys' fees and costs are eventually recoverable in damages, the inconvenience and disruption to its business is irreparable."). The Court finds that, absent injunctive relief, the Plaintiffs will likely suffer the irreparable harms of deprivation of their bargained-for forum, and the inconvenience and hardship of litigating on two fronts.
III. THE BALANCE OF HARDSHIPS FAVORS THE PLAINTIFFS, BECAUSE THEY WILL LIKELY SUFFER IRREPARABLE HARM ABSENT INJUNCTIVE RELIEF, WHILE INJUNCTIVE RELIEF IS UNLIKELY TO MATERIALLY HARM LEVITON.
The Plaintiffs contend that the balance of hardships strongly favors them, because the Court's failure to enter the requested injunctive relief would cause them irreparable harm, while the requested injunctive relief would not prejudice or work material hardship to Leviton, because, for all practical purposes, the Court can grant Leviton any relief it would have obtained in the ITC or in California. See Memorandum at 27. The Plaintiffs further contend that, even if Leviton believes it would be entitled to relief not available before the Court, Leviton is a "sophisticated litigant that knowingly bargained that relief away when it agreed that th[e] Court would serve as the exclusive forum for future disputes arising out of or relating to the CSA." Memorandum at 27.
Leviton responds that the balance of hardships weighs in Leviton's favor, because the ITC action affords Leviton a forum for quickly addressing its claims and obtaining the relief it seeks — "barring the importation of infringing goods admittedly manufactured in China." Response at 26. Leviton contends that the Plaintiffs' only hardship is litigating at the ITC, which is not a substantial hardship, because the discovery obtained at the ITC can be used in a later district court proceeding. See Response at 26.
The balance of the hardships favors the Plaintiffs. The hardship to the Plaintiffs absent injunctive relief is not limited to litigation at the ITC. As the Court previously found, the Plaintiffs will likely suffer irreparable harm absent injunctive relief, because they will be deprived of their bargained-for forum, and they will suffer the hardships of litigating on two fronts. Entry of injunctive relief will not work a material hardship on Leviton, however. For all practical purposes, a party can obtain the same relief in a district court as it could obtain in the ITC, see Ciena Corp. v. Nortel Networks Inc., 2005 WL 1189881, at * 8 ("This injunction will not work a material hardship to Ciena, as for all practical purposes, this Court can grant Ciena any relief it could have obtained in the ITC."), with the exception of the automatic Customs Service enforcement of an exclusion order that the ITC issues, see Texas Instruments Inc. v. Tessera, Inc., 231 F.3d at 1230 ("[A] patentee must . . . request [] the U.S. Customs Service to enforce [a] district court judgment [respecting infringing imports] by seizing the . . . goods. In the ITC, the patentee may not seek money damages, but the ITC automatically enforces its judgment by directing the U.S. Customs Service to seize any infringing imports." (internal citation omitted)). See Freres v. Yucheng Lujian Biological Co., Ltd., No. 06-cv-04928, 2009 WL 3135175, at *1-2 (D.N.J. 2009) ("[I]f a plaintiff seeks relief in a district court, he must additionally [ask] the U.S. Customs Service . . . to enforce the . . . judgment by seizing the offending goods. . . . In contrast, if a patentee files an action directly with the ITC . . . the ITC automatically enforces its judgment." (internal quotation marks and citations omitted)). The Court can grant, for all practical purposes the same relief the ITC could grant, and the best construction of the CSA suggests that Leviton agreed that disputes arising from or relating to the CSA would be brought in the District Court for the District of New Mexico. See CSA § 11.2. The Court therefore finds that entry of injunctive relief is unlikely to materially harm Leviton. The Court finds that the balance of hardships weighs in the Plaintiffs' favor, because they likely will suffer irreparable harm absent injunctive relief, while injunctive relief is unlikely to materially harm Leviton.
IV. PUBLIC POLICY AND THE PUBLIC INTEREST FAVOR ENTRY OF INJUNCTIVE RELIEF.
The Plaintiffs contend that public policy favors enforcing the forum selection clause. See Memorandum at 28. Leviton contends that the forum selection clause does not govern the dispute, and that "[i]t is not in the public interest to hinder an investigation that, while instigated by Leviton, was launched and is being conducted by a federal agency." Response at 26-27.
Contractual forum selection clauses "are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be `unreasonable' under the circumstances." M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972). Public policy therefore favors the enforcement of forum selection clauses. The Court does not believe that it is in the public interest to contravene the public policy favoring enforcement of forum selection clauses when its issuance of an injunction will not have a negative effect on the ITC action. In the ITC action, Leviton alleged that the Plaintiffs and other entities infringed its `124 and `151 patents. It also alleged that other entities infringed its `809 patent. The ITC action, that alleges other entities infringed Leviton's `124, `151, and `809 patents will continue. The Plaintiffs do not ask the Court to enjoin the ITC action. In Texas Instruments Inc. v. Tessera, Inc., the Federal Circuit discussed the district court's decision to deny Texas Instrument's request for a preliminary injunction, in part, because to do so would interfere with the ITC's statutory mandate to investigate complaints and would adversely impact the ITC's ability to perform its statutory duties. See 231 F.3d at 1332. The Federal Circuit stated: "[Texas Instrument]'s preliminary injunction motion will not and cannot enjoin the ITC action. . . . Any potential injunction would simply implement the governing law clause and any litigation between Tessera and [Texas Instruments] will occur in a California district court." 231 F.3d at 1332. Injunctive relief would solely enjoin Leviton to dismiss its patent infringement claims against the Plaintiffs. The remainder of Leviton's action in the ITC action would continue, and the ITC could continue its investigation of these allegations. The Court therefore does not believe that its issuance of injunctive relief would hinder the ITC action. Because the Court's issuance of injunctive relief will not hinder the ITC action, and because public policy favors enforcement of forum selection clauses, the Court finds that the public interest weighs in favor of granting injunctive relief.
Section 1337 of Title 19 of the United States Code states: "The Commission shall investigate any alleged violation of this section on complaint under oath or upon its initiative. Upon commencing any such investigation, the Commission shall publish notice thereof in the Federal Register. The Commission shall conclude any such investigation and make its determination under this section at the earliest practicable time after the date of publication of notice of such investigation." 19 U.S.C. § 1337(b)(1) (emphasis added).
IT IS ORDERED that the Plaintiffs' Motion for Temporary Restraining Order and Preliminary Injunction, filed November 2, 2010 (Doc. 5), is granted in part. The Court will grant the Plaintiffs' request for a preliminary injunction enjoining Leviton to take all actions necessary to secure dismissal of all claims of patent infringement asserted against the Plaintiffs in the International Trade Commission action and the action in the United States District Court for the Northern District of California. Because the Court's grant of this injunction renders the Plaintiffs' other requested relief unnecessary, the Court will deny the Plaintiffs' request for a temporary restraining order compelling Leviton to consent to the Plaintiffs' motion to stay the ITC action or, if Leviton's objection to the motion to stay has already been lodged, to withdraw that objection.