Inre: Foundations Worldwide, Inc.

Case: 13-159 Document: 18 Page: 1 Filed: 11/21/2013
NOTE: This order is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
IN RE FOUNDATIONS WORLDWIDE, INC.,
AND JOSEPH A. LAWLOR,
Petitioners.
______________________
2013-159
______________________
On Petition for Writ of Mandamus to the United
States District Court for the Central District of California
in No. 13-CV-1683, Judge R. Gary Klausner.
______________________
ON PETITION
______________________
Before NEWMAN, PROST, and REYNA, Circuit Judges.
REYNA, Circuit Judge.
ORDER
Petitioners Foundations Worldwide, Inc. and Joseph
A. Lawlor (“Foundations”) seek a writ of mandamus to
direct the United States District Court for the Central
District of California to vacate its June 18, 2013 order and
dismiss or transfer the case to the United States District
Court for the Northern District of Ohio. Oliver & Tate
Enterprises, Inc. d/b/a Coverplay (“Coverplay”) oppose the
petition.
Case: 13-159 Document: 18 Page: 2 Filed: 11/21/2013
2 IN RE FOUNDATIONS WORLDWIDE, INC.
I.
Coverplay, a California corporation, and Foundations,
an Ohio corporation, are both in the business of child care
products. In December 2009, the parties met to discuss
the possibility of Foundations purchasing Coverplay or
licensing its products. In anticipation of that meeting, the
parties entered into an agreement to exchange confiden-
tial information.
Following that meeting, Coverplay became suspicious
that Foundations was unlawfully using confidential
information obtained during those negotiations to infringe
Coverplay’s patents and hinder its business. In February
2013, Coverplay sent Foundations a cease-and-desist
letter, noting that if Foundations did not respond by
March 4, 2013 Coverplay would sue for patent infringe-
ment and a number of California state law claims.
At Foundations’ request, Coverplay temporarily re-
frained from filing suit, but set a firm deadline to respond
by March 8, 2013. On March 8th, Coverplay called to
inform Foundations’ legal counsel that on March 7th it
filed a declaratory judgment action against Coverplay in
the Northern District of Ohio. Within hours of that phone
call, Coverplay filed this suit in the Central District of
California naming Foundations and its president, Joseph
Lawlor, as defendants.
Foundations moved to transfer the case to the North-
ern District of Ohio where its action had been filed or,
alternatively, dismiss for, inter alia, lack of personal
jurisdiction and improper venue. On June 18, 2013, the
Central District of California denied that motion, noting
that both parties’ arguments for convenience and justice
were “equally forceful,” and that the court had personal
jurisdiction over Lawlor in light of purposeful actions he
directed at Coverplay in California relating to the alleged
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IN RE FOUNDATIONS WORLDWIDE, INC. 3
violation of the non-disclosure agreement and misconduct
in response to a rejection of a proposed license agreement.
On August 12, 2103, the Northern District of Ohio
dismissed Foundations’ declaratory judgment action.
II.
This court has authority to grant mandamus relief in
a patent infringement action, 28 U.S.C. § 1651, but in
seeking such relief, petitioners bear a heavy burden.
They must show: (1) a clear and indisputable legal right
to relief; (2) that there are no adequate alternative legal
channels through which petitioners may obtain that
relief; and (3) that the grant of mandamus is appropriate
under the circumstances. See Cheney v. U.S. Dist. Court,
542 U.S. 367, 380–81 (2004).
Relying on the first-to-file rule, petitioners argue that
the Central District of California erred in not dismissing
or transferring the case to the Northern District of Ohio.
That rule permits a district court to decline jurisdiction or
transfer an action when a complaint involving the same
parties and issues has already been filed in another
district. See generally Genentech, Inc. v. Eli Lilly & Co.,
998 F.2d 931, 937 (Fed. Cir. 1993).
While the first-filed case is generally preferred, courts
often made exceptions to this rule when it would be
unjust or inconvenient to defer to the first action. Id. at
937; see also Apple Inc. v. Psystar Corp., 658 F.3d 1150,
1161 (9th Cir. 2011). One such consideration is when the
first action was an anticipatory suit. See Elecs. For
Imaging, Inc. v. Coyle, 394 F.3d 1341, 1347-48 (Fed. Cir.
2005); Alltrade, Inc. v. Uniweld Prod., Inc., 946 F.2d 622,
628 (9th Cir. 1991).
We discern no clear abuse of discretion in the district
court’s conclusion that the first-to-file rule was inapplica-
ble to this case. As the district court explained, Coverplay
“made multiple concrete indications of its intentions to
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4 IN RE FOUNDATIONS WORLDWIDE, INC.
file suit prior to . . . [petitioners] filing their suit,” and
“while [petitioners] were claiming to pursue a non-legal
resolution, they were preparing an anticipatory filing.”
The Northern District of Ohio notably reached the same
conclusion, and dismissed the first-filed case because of
petitioners’ “inequitable conduct leading up to an antici-
patory suit[.]” In light of these circumstances and other
facts that suggest the Central District of California is a
suitable forum for this case, we cannot say that the dis-
trict court clearly erred in not applying the first-to-file
rule.
We also reject petitioners’ contention that the Central
District of California otherwise unlawfully refused to
transfer the action to the Northern District of Ohio. The
“[w]eighing of the factors for and against transfer involves
subtle considerations and is best left to the discretion of
the trial judge.” Commodity Futures Trading Comm’n v.
Savage, 611 F.2d 270, 279 (9th Cir. 1979). On “rare
instances,” an appellate court can override the trial
court’s decision not to transfer if it would be clearly more
convenient or fair to grant a transfer motion. Id. But
this is not such a case. The district court reasonably
concluded that both parties’ arguments for convenience
and justice were “equally forceful” in light of the fact that
parties and anticipated witnesses reside in both Ohio and
California.
Finally, petitioners contend that the Central District
of California erred in finding personal jurisdiction over
Lawlor. Based on the papers submitted, petitioners have
not shown that a clear and indisputable right to relief or
that Lawlor cannot obtain meaningful relief after an
appeal from final judgment.
Accordingly,
IT IS ORDERED THAT:
The petition is denied.
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IN RE FOUNDATIONS WORLDWIDE, INC. 5
FOR THE COURT
/s/ Daniel E. O’Toole
Daniel E. O’Toole
Clerk of Court
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