Perfectvision Mfg., Inc. v. PPC Broadband, Inc.

• Decision Date: 10 June 2013
• Docket Number: No. 4:12CV00623 JLH.,4:12CV00623 JLH.
• Parties: PERFECTVISION MANUFACTURING, INC., Plaintiff v. PPC BROADBAND, INC., d/b/a PPC, Defendant.
• Court: U.S. District Court — Eastern District of Arkansas

951 F.Supp.2d 1083

PERFECTVISION MANUFACTURING, INC., Plaintiff

v.PPC BROADBAND, INC., d/b/a PPC, Defendant.

No. 4:12CV00623 JLH.

United States District Court,

E.D. Arkansas,

Western Division.

June 10, 2013.

Charles D. Davidson, David Louis Gershner, Davidson Law Firm, Ltd., Little Rock, AR, John R. Horvack, Jr., Carmody & Torrance LLP, New Haven, CT, for Plaintiff.

Douglas J. Nash, Hiscock & Barclay LLP, Syracuse, NY, Alex T. Gray, John Keeling Baker, Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., Little Rock, AR, for Defendant.

OPINION AND ORDER

J. LEON HOLMES, District Judge.

PerfectVision Manufacturing, Inc., brings this declaratory judgment action seeking a judicial determination that a product that it manufactures does not infringe upon patents owned by PPC Broadband, Inc., d/b/a PPC. PPC has offered PerfectVision a covenant not to sue, which PPC contends means that there is no case or controversy between the parties and thus that the Court lacks subject matter jurisdiction under the Declaratory Judgment Act, 28 U.S.C. §§ 2201, 2202. On that basis, PPC has moved to dismiss the complaint. Also pending are motions by PerfectVision to amend its complaint, a motion in the alternative by PPC to transfer the action to the Northern District of New York, and a motion by PerfectVision to enjoin PPC from proceeding with a separately filed action in the Northern District of New York. For reasons explained below, PPC's motions to dismiss and to transfer are denied, PerfectVision's motion to amend is granted, and PerfectVision's motion to enjoin is denied.

I.

PerfectVision designs, manufactures, and sells coaxial cables and connectors, as well as other products. According to PerfectVision's complaint, on September 27, 2012, Robert Chastain, PerfectVision's CEO, and John Mezzalingua, PPC's CEO, had a telephone conversation in which PPC inquired about the possibility of PerfectVision distributing a PPC continuity connector.¹ Chastain told Mezzalingua that PerfectVision had its own continuity connector, marketed and sold as the PV6SL SignaLoc connector. PPC asserted that the SignaLoc connector infringed PPC's continuity patents, and PPC assured PerfectVision that PPC would pursue legal remedies against PerfectVision. The complaint alleges that PPC said that PerfectVision “would lose” regardless of whether the connector infringed PPC's patents, and PPC said that it intended to incorporate PerfectVision's continuity solution into one of PPC's pending patent applications and claim it as a PPC invention.

On October 4, 2012, PerfectVision brought this declaratory judgment action seeking a judicial determination that PerfectVision's SignaLoc connector does not infringe any of PPC's continuity patents. In the original complaint, PerfectVision sought a declaratory judgment regarding six of PPC's patents: United States Patent Numbers 8,192,237; 7,845,976; 7,950,958; 8,075,338; 8,157,589; and 8,167,646. On October 9, 2012, Douglas Nash, counsel for PPC, emailed PerfectVision's counsel and asked for proof that the SignaLoc connector existed and was being marketed and sold when the complaint was filed. In response, Chastain sent Mezzalingua a letter with a two-page flyer that included illustrations of PerfectVision's SignaLoc connector, as well as a sample of the SignaLoc connector.

On October 26, 2012, Nash sent a letter on behalf of PPC to PerfectVision that included the following covenant not to sue:

Assuming that the illustrations in the flyer accurately depict every version of the actual SignaLoc connectors and that the sample provided is representative of every version of the SignaLoc connectors, we can resolve this case now without wasting unnecessary resources and without requiring intervention from the Court.

Specifically, PPC can provide Perfect Vision a “Super Sack” representation. That is, PPC will release and covenant not to sue PerfectVision for infringement of U.S. Patent Nos. 8,192,237,7,845,976, 7,950,958, 8,167,646, 8,075,338, and 8,157,589 (“patents-in-suit”) based on PerfectVision's manufacture, importation, use, sale and/or offer of the SignaLoc connectors as depicted in the illustrations and represented in the product sample. This would not be a license to practice the patents-in-suit, and PPC would explicitly reserve the right to later assert the patents-in-suit against PerfectVision should the design of the SignaLoc connectors change in a material way, or should PerfectVision in the future offer some other product that PPC believes infringes one or more of the patents-in-suit.

Based on the limited information Mr. Chastain provided, we understand that (i) no portion of the “Constant Contact C–Clamp” is electrically conductive, (ii) other than the nut, the post, and the compression ring, the connectors do not contain any other component that is electrically conductive, and (iii) other than the circular opening at the end of the post, there are no post openings or engagement fingers on the end of the post that makes contact with the port when the connector is fully tightened onto the port. In the absence of feedback from you to the contrary, we will assume that our understanding is correct.

Document # 13–2 at 6–7. On November 2, 2012, PerfectVision's lawyer responded with a letter stating:

First, to avoid contentious legal letter writing, I will not comment in detail on your interpretation of the Super Sack decision, its current viability in view of subsequent Federal Circuit decisions and, particularly, the Supreme Court's decision in MedImunne, and your applicationof it here. For certainty and clarity, please simply know we disagree with your letter on our fronts.

Nevertheless, we do appreciate your and your client's willingness to try to resolve the parties' dispute in an efficient manner. As you know, the parties were able to amicably resolve a comparable dispute as evidenced by a Confidential Settlement Agreement effective as of September 12, 2011. We believe Article III of that Agreement, particularly Paragraphs 1–3, set out an appropriate and acceptable means for the parties to resolve this dispute.

Please let us know if PPC is willing to entertain an agreement that contains comparable terms to resolve this matter. If so, I will provide you a more specific proposal for your client's consideration.

Document # 13–2 at 8.

On November 9, 2012, PPC filed a motion to dismiss this action pursuant to Federal Rule of Civil Procedure 12(b)(1), arguing that its covenant not to sue divested this Court of subject matter jurisdiction over the declaratory judgment action. PerfectVision opposed the motion and asked this Court to stay proceedings in this action until the U.S. Supreme Court handed down its ruling in Already, LLC v. Nike, Inc. On December 6, 2012, PerfectVision filed a motion for leave to file an amended complaint, “due to the discovery of four additional patents which have issued to PPC and a fifth which has been allowed and for which required fees have been paid to allow it to issue within a short time. These additional patents held by PPC are directly on point with the subject matter of this case.” Document # 20 at 1. The four additional patents issued to PPC were United States Patent Numbers 8,313,353; 8,313,345; 8,323,053; and 8,323,060. All four patents were either issued on November 20, 2012, or December 4, 2012. The fifth patent that had not yet been issued is the so-called “Ehret Patent” and was at that time United States Patent Application Number 13/075,406. PPC opposed PerfectVision's motion for leave to file an amended complaint.

On December 17, 2012, this Court stayed this action “pending a decision by the United States Supreme Court in Already, LLC v. Nike, Inc.” and stated that the parties could file supplemental briefs simultaneously within twenty-one days after the Supreme Court issued its opinion in Already. The Supreme Court issued its opinion in Already on January 9, 2013. See Already, LLC v. Nike, Inc., ––– U.S. ––––, 133 S.Ct. 721, 184 L.Ed.2d 553 (2013). On January 30, both parties submitted supplemental briefs. On February 4, at 11:01 p.m. Central Standard Time (February 5 at 12:01 a.m. Eastern Standard Time), PerfectVision filed a second motion for leave to file an amended complaint. PerfectVision filed this motion because the Ehret Patent issued on February 5, 2013, becoming United States Patent Number 8,366,481. Also on February 5, PPC filed a complaint against PerfectVision in the U.S. District Court for the Northern District of New York, alleging that PerfectVision's SignaLoc connector infringes the Ehret Patent. In that complaint, PPC also asserts claims against PerfectVision for negligent misrepresentation, unfair competition, and statutory violations for unfair and deceptive business practices. See Document # 30–13; PPC Broadband, Inc. v. PerfectVision Mfg., Inc., No. 5:13–CV–0134 (Document # 1). And yet again on February 5, PPC filed a complaint against PCX International, Inc., claiming that PCX's coaxial cable connectors infringed the Ehret Patent. See Document # 30–14; PPC Broadband, Inc. v. PCT Int'l, Inc., No. 5:13–CV–0135 (Document # 1).

PPC opposed PerfectVision's second motion for leave to file an amended complaint and, as an alternative to its motion to dismiss this action, moved to transfer this action to the Northern District of New York. PerfectVision opposed PPC's motion to transfer this action and also moved to enjoin the action in the Northern District of New York.

II.

A. Motion to Dismiss for Lack of Subject Matter Jurisdiction

“A ‘case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it.’ ” Nike, Inc. v. Already, LLC, 663 F.3d 89, 94 (2d Cir.2011) (quoting Makarova v. United States, 201 F.3d 110, 113 (2d Cir.2000)). Article III of the U.S. Constitution grants the federal courts authority to adjudicate certain “Cases” and ...