FCX Solar, LLC v. FTC Solar, Inc.
| Decision Date | 25 October 2021 |
| Docket Number | 6:21-cv-548-ADA |
| Parties | FCX SOLAR, LLC, Plaintiff, v. FTC SOLAR, INC., Defendant. |
| Court | U.S. District Court — Western District of Texas |
Came on for consideration this date is Defendant FTC Solar Inc.'s Motion to Transfer (the “Motion”) filed July 22, 2021. ECF No. 13. Plaintiff FCX Solar, LLC (“FCX”) filed a response on August 5, 2021, ECF No. 21, to which Defendant FTC Solar, Inc. (“FTC”) replied on August 12, 2021, ECF No. 23. After careful consideration of the Motion, the Parties' briefs, and the applicable law, the Court GRANTS Defendant FTC Solar, Inc.'s Motion to Transfer.
FTC is a provider of solar tracker systems that is headquartered in Austin, Texas. First Amended Complaint (“FAC”), ECF No. 18 ¶¶ 2, 7. FCX is an engineering consultancy that has developed and designed solar structures for FTC and others. See id. ¶ 1. A solar tracker system “allows a photovoltaic cell to track the movement of the sun through the sky over the course of a day, increasing efficiency and output of a solar array.” Id. ¶ 2. Environmental factors, however, such as wind or snow can twist a row of photovoltaic modules from its intended tilt angle, decreasing the amount of energy it produces. ECF No. 1-1 at 1:29-39. FCX has claimed inventions, including the patent-in-suit, that relate to a damper device that “resist[s] movement of the [photovoltaic] modules relative to the base . . . [to] mitigate dynamic wind loading or other vibrational loads.” Id. at 2:56-60.
On May 13, 2019, FCX and FTC entered into a license agreement, ECF No. 13-3 (the “License Agreement”), that granted FTC a royalty-bearing license to make, sell, and use “Products” that incorporate inventions claimed in certain of FCX's patents and patent applications. Specifically, the License Agreement allowed FTC “to make and have made Products . . . to sell, offer for sale, export or import Products that are incorporated into Solar Trackers . . . and [] use the Products that are incorporated into Solar Trackers and to authorize Affiliates to use such therefore.” ECF No. 13-3 at Section 2.1. “Product, ” is defined as “any product . . . [that] would (without the license granted hereunder) infringe directly, indirectly by inducement of infringement, or indirectly by contributory infringement, at least one issued Valid Claim or any pending Patent claim that would be hypothetically infringed ....” Id. at Section 1.8. A “Valid Claim” is defined as “an issued and unexpired Patent that has not been abandoned, revoked, or held unenforceable or invalid” or “a claim in any pending application for a Patent that was filed in good faith and has not been cancelled, withdrawn, abandoned, or finally disallowed ....” Id. at Section 1.13. “Solar Tracker” is defined as a tracker “incorporating the Product that uses a single-axis for orienting Solar Panels.” Id. at Section 1.12.
Section 1.5 of the License Agreement defines “Patent(s)” as:
the patent applications set forth on Exhibit A [US Patent Application Serial No. 16/274, 557], as well as any patents or other registrations issuing therefrom and any continuation, divisional, reissue, renewal, or extension, in whole or in part, of any such applications or registration and any international counterparts.
Id. at Section 1.5.
In the License Agreement, the parties agreed that New York law would govern disputes between the parties and consented to “the exclusive jurisdiction and venue of a competent court sitting in the state of New York, for the adjudication of all matters arising from the subject matter of this Agreement.” Id. at Section 11.5. By its terms, the License Agreement applies to U.S. Patent Application Serial No. 16/274, 557 (the “'557 Application”), its “continuation[s], ” and other patents within the same family. Id. at Section 1.5. The patent asserted in this Action, U.S. Patent No. 10, 903, 782 (the “'782 Patent”) is a continuation of the '557 Application. ECF No. 1-1.
On April 21, 2021, FCX filed an action against FTC in the United States District Court for the Southern District of New York (“SDNY”), alleging breach of the License Agreement, fraud, and unjust enrichment. See FCX Solar, LLC v. FTC Solar, Inc., 1:21-cv-03556-RA, ECF No. 1 (S.D.N.Y. Apr. 21, 2021) (the “New York Action”). FCX amended its initial complaint on July 16, 2021. See FCX Solar, LLC v. FTC Solar, Inc., 1:21-cv-03556-RA, ECF No. 16 (S.D.N.Y. July 16, 2021) (the “New York Complaint”). FCX's breach of contract claim in that suit is premised on FTC's alleged failure to pay royalties for its alleged use of products “covered by [the] claims” in the License Agreement. ECF No. 13-5 ¶ 84. Between May 2019 and June 2020, FTC paid Plaintiff more than $1.4 million in royalties on the sale of solar trackers that incorporated Products. ECF No. 13-5 ¶ 10. But since July 2020, FTC has failed to pay royalties under the License Agreement. Id. ¶ 11. FTC now contends that its prior payments to Plaintiff under the License Agreement were made in error, and that its solar trackers were never subject to the License Agreement.
FCX affirmed in the New York Complaint that it was bound by the License Agreement forum selection clause, affirmatively alleging that FTC was “subject to personal jurisdiction in the State of New York by consent” through the License Agreement and that “[v]enue is proper in” the Southern District of New York under the License Agreement. Id. ¶¶ 20-21. Section 10.5(d) of the License Agreement provides that Section 11 would “survive any termination or expiration ....” ECF No. 13-3 at Section 10.5(d).
On April 30, 2021, after FCX initiated the SDNY action, FTC provided FCX with 30 days' written notice that it was exercising its right to terminate the License Agreement in accordance with Section 10.3. ECF No. 18 ¶ 21; ECF No. 13-3 at Section 10.3. According to FCX, it initiated this action “six minutes after the License Agreement terminated, at 11:06 p.m. Central time on May 29 (May 30, 12:10 a.m. Eastern time).” ECF No. 21 at 3. The FAC recites that FCX is only seeking damages arising after FTC's termination of the License Agreement. See ECF No. 18 ¶¶ 68, 77, 85.
On July 22, 2021, FTC filed this Motion, seeking to transfer this action under 28 U.S.C. 1404(a) to New York pursuant to the forum-selection clause in the License Agreement and/or the first-filed rule. ECF No. 13.
When determining whether to transfer a case to another district court pursuant to a forumselection clause (“FSC”), a court must first determine whether the FSC is mandatory or permissive. Weber v. PACT XPP Tech., AG, 811 F.3d 758, 770-71 (5th Cir. 2016) (citing Phillips v. Audio Active Ltd., 494 F.3d 378, 384-86 (2d Cir. 2007)). Once a court makes this determination, it must then decide whether the FSC applies to the present case. Id. This involves two separate inquiries: (1) whether the contract is valid and the FSC is enforceable; and (2) whether the present case falls within the scope of the FSC. See id. at 770 (); see also Mendoza v. Microsoft, Inc., 1 F.Supp.3d 533, 542 (W.D. Tex. 2014) ().
The enforceability of an FSC is decided pursuant to federal law. See Haynsworth v. The Corp., 121 F.3d 956, 962 (5th Cir. 1997). Under federal law, FSCs are presumptively valid and should be enforced unless shown to be unreasonable under the circumstances. Id. at 963; see also Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991) (enforcing FSC printed on a form passenger ticket); M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1.
An FSC may be considered unreasonable if:
Barnett v. DynCorp Int'l, L.L.C., 831 F.3d 296, 301 (5th Cir. 2016) (internal citations omitted) (emphasis added). The burden of proving unreasonableness is a heavy one. Plesha v. Ferguson, 2009 U.S. Dist. LEXIS 132362, 2009 WL 8729579, at *2 (W.D. Tex. Aug. 19, 2009) (citing Bremen, 407 U.S. at 12-13, 15, 18). As the party opposing the FSC, FCX has the burden of showing that the clause should not be enforced. See Atl. Marine Constr. Co. v. United States Dist. Court, 571 U.S. 49, 63 (2013); see also Jackson v. Payday Financial, LLC, 764 F.3d 765, 776 (7th Cir. 2014); Haynsworth, 121 F.3d at 962-63.
In patent cases, motions to transfer under 28 U.S.C. 1404(a) are governed by the law of the regional circuit. In re TS Tech USA Corp., 551 F.3d 1315, 1319 (Fed. Cir. 2008). Title 28 U.S.C. 1404(a) provides that, “[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where...
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