Eastman Kodak Co. v. Asia Optical Co.
| Decision Date | 23 July 2015 |
| Docket Number | No. 11cv6036 (DLC).,11cv6036 (DLC). |
| Citation | 118 F.Supp.3d 581 |
| Parties | EASTMAN KODAK COMPANY, Plaintiff, v. ASIA OPTICAL CO., INC., Defendant. |
| Court | U.S. District Court — Southern District of New York |
Robert J. Gunther, Michael J. Summersgill, Jordan L. Hirsch, Wilmer Cutler Pickering Hale & Dorr LLP, New York, NY, for Plaintiff.
Christopher Kao, Perkins Coie LLP, Palo Alto, CA, for Defendant.
The plaintiff Eastman Kodak Company ("Kodak") won a judgment in this Court against the defendant Asia Optical Co., Inc. ("AO") in 2012. In 2014, AO brought suit against Kodak in China to obtain reimbursement of money it paid to Kodak pursuant to that judgment. Kodak now seeks an anti-suit injunction against AO to halt the Chinese lawsuit. For the following reasons, Kodak's motion is granted.
The factual background of this case is laid out in several Opinions of this Court, including in the March 16, 2012 Opinion granting partial summary judgment in Kodak's favor, Eastman Kodak Co. v. Asia Optical Co., Inc., 11cv6036 (DLC), 2012 WL 917393 (S.D.N.Y. Mar. 16, 2012) ("March 2012 Opinion"), and the June 13, 2012 Opinion dismissing the third-party complaint against Fujifilm ("Fuji"). Eastman Kodak Co. v. Asia Optical Co., Inc., 11cv6036 (DLC), 2012 WL 2148198 (S.D.N.Y. June 13, 2012) ("June 2012 Opinion"). Familiarity with the March and June 2012 Opinions is assumed.
Kodak owns many patents associated with digital camera technology. It licenses its patents to digital camera manufacturers, including companies like AO that assemble cameras for sale under other companies' brand names. In April 2009, Kodak and AO entered into a patent licensing agreement ("PLA") whereby Kodak licensed its full set of digital camera patents to AO in exchange for royalty payments. A written modification ("Side Letter") executed contemporaneously with the PLA described the circumstances under which AO may not be required to pay royalties.
AO sold some of cameras it manufactured to Fuji and contends that Fuji and not AO is responsible for paying Kodak the patent licensing fees associated with those cameras. This dispute has spawned litigation in New York State court, this Court, Japan, and now China. A description of this litigation follows.
AO sued Fuji twice in New York State court, alleging that Fuji owed a duty to indemnify AO for any royalties it owed Kodak. On October 2, 2009, AO brought suit against Fuji and three of Fuji's American subsidiaries in New York State Supreme Court, Westchester County, but discontinued the action on March 1, 2010. On February 10, 2010, AO filed a second lawsuit against Fuji in New York State Supreme Court, this time in New York County.
Fuji's motion to dismiss the second New York State action for lack of personal jurisdiction was granted at a hearing held on June 3, 2011, and by written order on June 7, 2011. Following the dismissal, AO made an application for jurisdictional discovery. This application was denied on July 8, 2011. AO did not appeal the decisions to dismiss the action or to deny jurisdictional discovery.
Kodak commenced this federal action against AO on August 26, 2011, seeking royalty payments pursuant to the PLA. In the March 2012 Opinion, this Court granted partial summary judgment for Kodak and held inter alia that the Side Letter only exempts AO from royalty payments it owes to Kodak when its contract assembly work is performed for a Kodak "licensee," and that Fuji was not a Kodak licensee.1 AO was therefore responsible for paying royalties for the digital cameras it manufactured for Fuji. In determining that AO was responsible for paying royalties to Kodak, this Court rejected several AO arguments, including that all "pure contract assembly" work is exempt from the PLA's royalty requirements even if it is not done for a Kodak licensee.
AO filed a third-party complaint in this lawsuit against Fuji on December 7, 2011, asserting that Fuji had agreed to indemnify AO for the royalties owed to Kodak under the PLA. The third-party complaint was virtually identical to AO's New York State complaints. Fuji's motion to dismiss the third-party complaint was granted in the June 2012 Opinion. That Opinion held that AO was collaterally estopped from relitigating the existence of personal jurisdiction over Fuji. Eastman Kodak, 2012 WL 2148198, at *3–6.
With these decisions, all that remained to be litigated was the amount of damages.
A damages trial was scheduled to begin on July 23, 2012, but the parties stipulated to a damages amount on July 12. Accordingly, on July 18, 2012, judgment was entered in favor of Kodak against AO in the amount of $33,726,531 ("Final Judgment"). AO appealed from the Final Judgment on the ground that the PLA and Side Letter are ambiguous, and extrinsic evidence would show that this Court's interpretation of PLA § 5.6 was contrary to the parties' intentions. On May 23, 2013, the Court of Appeals for the Second Circuit affirmed the Final Judgment.
AO delayed paying the Final Judgment. AO contended it was unable to pay the Final Judgment but resisted post-judgment requests aimed at discovering its financial status. Following motion practice and conferences with the Court, and facing imposition of contempt sanctions, AO agreed to pay the Final Judgment with interest in four equal installments. A November 12, 2013 Order memorialized the payment schedule and revised the amount owed to account for interest and royalties that had accrued following the entry of the Final Judgment ("November 2013 Order"). The November 2013 Order set the total amount to be paid as $37,472,411. It required AO to pay Kodak by December 31, 2013, March 31, 2014, June 30, 2014, and September 30, 2014.
On December 22, 2014, the parties informed the Court by letter than all payments had been made pursuant to the November 2013 Order, and requested that the matter be closed. This case was closed on January 12, 2015.
After entry of the Final Judgment, AO brought an arbitration action against Fuji in Japan, seeking indemnification for the amount AO owed to Kodak in the Final Judgment. The Japanese arbitration panel denied AO's claims on February 28, 2014. On March 11, 2015, the Tokyo District Court denied AO's appeal. An appeal before the Tokyo High Court is pending.
AO asserts in its memorandum of law in the instant motion that Fuji took the position in the Japanese arbitration proceeding that it had no duty to indemnify AO because a 2013 patent licensing agreement it entered with Kodak, and the fees paid to Kodak pursuant to that agreement, "covered" the digital cameras made by AO for Fuji. AO explains that it has not presented any documents from Fuji or its arbitration with Fuji to support this assertion because the arbitration documents have been designated as confidential.
It is undisputed that on February 1, 2013, Kodak and Fuji entered into a patent licensing agreement. Kodak submitted a copy of that agreement in support of its current motion for an injunction. It is filed under seal, although a complete copy has been provided to AO's outside counsel, and certain language critical to the current dispute between Kodak and AO has been provided to AO's in-house counsel.2 AO acknowledges that Kodak's interpretation of the terms of the agreement between Kodak and Fuji is inconsistent with what AO describes as Fuji's position in the Japanese arbitration.
On July 28, 2014, AO and Sintai Optical (Shenzhen) Co., Ltd. ("Sintai") began a lawsuit against Kodak in China, but did not immediately serve Kodak.3 The complaint's single claim against Kodak is premised on Kodak's alleged breach of the PLA, specifically Section 5.6 of the PLA,4 and it seeks reimbursement from Kodak in the amount of $12,368,103.5 It contends that AO learned that Fuji and Kodak had entered into a patent licensing agreement, which paid royalties to Kodak for the same digital cameras that were the subject of the federal litigation, and that it would be unjust for Kodak to receive royalty payments from both AO and Fuji for the manufacture and sale of the same cameras.6 The complaint names Fuji as a "third-party," but seeks no damages from Fuji.
AO served the Chinese complaint on Kodak on January 16, 2015, which was four days after this federal action was closed pursuant to a joint request from the parties. On March 3, 2015, Kodak requested that the instant action be reopened. The case was reopened on March 6.
Kodak filed its motion seeking an anti-suit injunction on March 24. In support of its motion, it has provided copies of its agreement with Fuji, AO's Chinese complaint, and an email exchange between Kodak and AO in May and June 2014.7 AO did not submit any exhibits with its opposition to this motion. The motion was fully submitted on April 17.
A district court has the power to enjoin a party before it from pursuing litigation in a foreign jurisdiction. Paramedics Electromedicina Comercial, Ltda v. GE Med. Sys. Info. Techs., Inc., 369 F.3d 645, 652 (2d Cir.2004). While concurrent actions are ordinarily permitted, an anti-suit injunction may be appropriate when used to protect the jurisdiction and judgment of the enjoining court. Id. at 654–55.
But, "principles of comity counsel that injunctions restraining foreign litigation be used sparingly and granted only with care and great restraint." Id. at 652 (citation omitted). Applying a test identified in China Trade & Dev. Corp. v. M.V. Choong Yong, 837 F.2d 33 (2d Cir.1987), this Circuit has consistently held that an anti-suit injunction may only be granted where two threshold requirements are met: first, the parties must be the same in both proceedings, and second, resolution of the case before the enjoining court must be dispositive of the action to be enjoined. See, e.g., Paramedics,...
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