Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-06603/USCOURTS-cand-4_06-cv-06603-0/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1114 Trademark Infringement

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SONY COMPUTER ENTERTAINMENT AMERICA

INC.,

Plaintiff,

 v.

AMERICA MEDICAL RESPONSE, INC.,

Defendant. /

No. C06-06603-CW

ORDER DENYING

DEFENDANT'S MOTION TO

DISMISS, STAY OR 

TRANSFER

Defendant America Medical Response, Inc. (AMR) moves to

dismiss or stay this action, or in the alternative, to transfer it

to the Eastern District of Texas. Plaintiff Sony Computer

Entertainment America Inc. (SCEA) opposes the motion. The matter

was heard on March 2, 2007. Having considered all of the papers

filed by the parties and oral argument on the motions, the Court

DENIES the motions.

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United States District Court

For the Northern District of California

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BACKGROUND

Defendant learned in April, 2006 that Plaintiff was using

Defendant's federally registered AMR trademark on ambulances

appearing in Plaintiff's driving video game. Defendant sent a

letter dated April 21, 2006 (the April letter) to Plaintiff's

registered agent in California, in which it demanded that Plaintiff

remove the AMR trademarks from the video game and cease use of all

AMR trademarks. Herp Decl., Ex. A (April 21, 2006 letter from

Defendant's attorney Brian C. Clifford to Plaintiff's agent for

service of process). Defendant stated in the letter that if

Defendant's attorney did not receive a positive response from

Plaintiff by May 11, 2006, Defendant's attorney would take all

steps necessary to protect Defendant's goodwill. Id. On June 19,

2006, having not received a response from Plaintiff, Defendant's

attorney faxed to Plaintiff's attorney a copy of the April letter. 

The parties attempted to resolve the dispute from June to October,

2006, but were unable to do so. Herp Decl. ¶¶ 3-7. 

 In a letter dated October 6, 2006, Plaintiff proposed to

resolve all disputes between the parties by paying $10,000 to

Defendant. Murphy Decl., Ex. B (October 6, 2006 letter from

Plaintiff's attorney Daniel J. Herp to Clifford). In a letter

dated October 11, 2006 (the October letter), Defendant declined the

offer to settle and invited Plaintiff to make another offer so that

the matter could be resolved. Murphy Decl., Ex. A (October 11,

2006 letter from Clifford to Herp). Enclosed with the letter was a

draft complaint. The letter explained that Defendant would not

file the complaint for at least ten days, but if Plaintiff did not

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United States District Court

For the Northern District of California

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cease all uses of the AMR marks, the complaint might be filed

without further notice. Id. After this the parties had no further

contact with each other regarding settlement.

Plaintiff filed the present declaratory relief complaint in

this Court on Tuesday, October 24, 2006, one business day after the

October 21 deadline and informed Defendant that it had done so. 

Three days later, on October 27, 2006, Defendant filed a trademark

infringement suit in the Eastern District of Texas (the Texas

case).

The parties do not dispute that the suits in the Northern

District of California and the Eastern District of Texas involve

the same parties and the same issues. Defendant moves to dismiss

or stay this action, arguing that the Court should disregard the

first-to-file rule. Defendant alternatively moves to transfer the

action to the Eastern District of Texas pursuant to 28 U.S.C.

§ 1404(a).

DISCUSSION

Defendant argues that the first-to-file rule should be ignored

because Plaintiff's suit was anticipatory and that the Court should

defer to Defendant's choice of forum. Defendant further argues

that the Declaratory Judgment Act is not intended to give an

infringer the right to choose the forum for the litigation of an

intellectual property owner's rights. Defendant also argues that

the balance of convenience and the interests of justice favor the

Eastern District of Texas.

Plaintiff counters that Defendant fails to show the

anticipatory filing exception to the first-to-file rule (1) because

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Defendant's communications did not show that the filing of a suit

by Defendant was imminent and (2) the anticipatory filing exception

to the first-to-file rule should not be applied broadly. Plaintiff

also argues that the balance of convenience favors proceeding in

the Northern District of California.

I. First-To-File Rule

"There is a generally recognized doctrine of federal comity

which permits a district court to decline jurisdiction over an

action when a complaint involving the same parties and issues has

already been filed in another district." Pacesetter Systems, Inc.

v. Medtronic, Inc., 678 F.2d 93, 94-5 (9th Cir. 1982). This

doctrine, known as the first-to-file rule, "gives priority, for

purposes of choosing among possible venues when parallel litigation

has been instituted in separate courts, to the party who first

establishes jurisdiction." Northwest Airlines, Inc. v. American

Airlines, Inc., 989 F. 2d 1002, 1006 (8th Cir. 1993). The rule was

developed to “serve[ ] the purpose of promoting efficiency well and

should not be disregarded lightly.” Church of Scientology of

California v. United States Dep’t of Army, 611 F.2d 738, 750 (9th

Cir. 1979). 

In applying the first-to-file rule, a court looks to three

threshold factors: "(1) the chronology of the two

actions; (2) the similarity of the parties, and (3) the

similarity of the issues." Z-Line Designs, Inc. v. Bell'O Int'l

LLC, 218 F.R.D. 663, 665 (N.D. Cal. 2003). If the first-to-file

rule does apply to a suit, the court in which the second suit was

filed may transfer, stay or dismiss the proceeding in order to

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allow the court in which the first suit was filed to decide whether

to try the case. Alltrade Inc. v. Uniweld Products, Inc., 946 F.2d

622, 625 (9th Cir. 1991). However, "circumstances in which an

exception to the first-to-file rule will typically be made include

bad faith, anticipatory suit and forum shopping." Id. at 628

(internal citations omitted). 

"A suit is anticipatory when the plaintiff filed upon receipt

of specific, concrete indications that a suit by defendant was

imminent." Z-Line Designs, Inc., 218 F.R.D. at 665. "Such

anticipatory suits are disfavored because they are examples of

forum shopping." Id. Furthermore, the Declaratory Judgment Act,

28 U.S.C. § 2201, is not to be invoked to deprive a plaintiff of

its choice of forum and timing. Id.

An exception to the first-to-file rule also exists if "the

balance of convenience weighs in favor of the later-filed action." 

Ward v. Follett Corp., 158 F.R.D. 645, 648 (N.D. Cal. 1994). This

is analogous to "the convenience of the parties and witnesses"

under a transfer of venue motion, 28 U.S.C. § 1404(a). Med-Tec

Iowa, Inc. v. Nomos Corp., 76 F. Supp. 2d 962 (W.D. Iowa 1999);

800-Flowers, Inc. v. Intercontinental Florist, 860 F. Supp. 128,

133 (S.D. N.Y. 1994). The court with the first-filed action should

normally weigh the balance of convenience. Alltrade Inc., 946 F.2d

at 628.

A. Anticipatory Filing Exception

Defendant argues that because its October letter provided

Plaintiff with specific, concrete indications that a suit was

imminent, Plaintiff's filing was anticipatory.

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To the contrary, Defendant's October letter did not establish

that the suit was imminent. In the October letter, Defendant

stated that the enclosed complaint "may be filed" after October 21. 

Murphy Decl., Ex. A (October 11, 2006, letter from Clifford to

Herp). As of October 24, Defendant had not filed suit. 

Defendant's equivocal language does not establish that a lawsuit

was imminent, especially when Defendant did not file suit after its

deadline. Cf., e.g., Inherent.com v. Martindale-Hubbell, 420 F.

Supp. 2d 1093, 1100 (N.D. Cal. 2006) (a suit was anticipatory when

filed before the end of five days when Martindale-Hubbell made the

statement that "a lawsuit will be filed" in five days).

Furthermore, because Defendant's deadline in the April letter

passed with no action by Defendant, Plaintiff could not be certain

whether Defendant's threat of suit in the October letter was idle,

real, or a negotiating tactic.

Defendant, citing Xoxide, Inc. v. Ford Motor Co., 448 F. Supp.

2d 1188, 1193 (C.D. Cal. 2006), argues that where "a declaratory

judgment action has been triggered by a cease and desist letter

that both seeks settlement and notifies the party of the

possibility of litigation upon collapse of negotiations, equity

militates in favor of allowing the second-filed action to proceed

to judgment rather than the first" (citation and internal

quotations omitted). However, after the October 21 deadline in the

October letter passed, negotiations had collapsed, and Defendant

still had not filed a suit.

Defendant argues that the purpose of the anticipatory filing

exception is "to eliminate the race to the courthouse door in an

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attempt to preempt a later suit in another forum," Guthy-Renker

Fitness LLC v. Icon Health & Fitness, 179 F.R.D. 264, 271 (C.D.

Cal. 1998), and that the Court should not allow Plaintiff's race to

the courthouse to supercede its choice of forum as the true

plaintiff in this case. Although Plaintiff filed the present

action one business day after Defendant's deadline passed,

Defendant could have filed its action in the forum of its choice

before Plaintiff filed a suit, but did not do so. Even if there

was a race to the courthouse door, Plaintiff did not have specific,

concrete indications that a suit by Defendant was imminent, the

condition necessary for an anticipatory filing exception to the

first-to-file rule. 

The anticipatory filing exception to the first-to-file rule

also encourages settlement negotiations and other attempts to

resolve lawsuits prior to litigation. Xoxide, Inc., 448 F. Supp.

2d at 1193. Defendant argues that the anticipatory filing

exception should apply here because it would have encouraged

Plaintiff to negotiate further. However, the parties had been

trying to negotiate a settlement for four months. Therefore,

settlement negotiations were not deterred by the filing of the

lawsuit. 

Considering the above analysis, the Court finds that 

Plaintiff did not have specific, concrete indications that suit by

Defendant was imminent from the October letter. After the October

21 deadline passed without Defendant filing suit, Plaintiff filed a

declaratory relief complaint pursuant to the Declaratory Judgment

Act, 28 U.S.C. § 2201. The Court concludes that the present suit

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is not anticipatory and the anticipatory filing exception to the

first-to-file rule does not apply.

B. Convenience Exception

As the court with the first-filed action, this Court can

consider the balance of convenience exception to the first-to-file

rule. Alltrade Inc., 946 F.2d at 628. The balance of convenience

exception to the first-to-file rule includes consideration of the

same convenience factors considered under a 28 U.S.C. § 1404(a)

transfer of venue motion, which both parties address. 

Defendant states that witnesses and information are located in

Texas. Defendant is headquartered in Colorado and, even though it

does not reside in Texas, it states that Texas is more convenient

for it than California. Cahn Dec., Ex. B. However, Plaintiff's

headquarters are located in the Northern District of California,

making this forum convenient for it. Murphy Decl., Ex. C (Outline

of Principal Operations for Sony Computer Entertainment America,

Inc.). Plaintiff also notes that Defendant's West Region

headquarters are located here and witnesses for each party are in

California. Cahn Dec., Ex. B. 

On the whole, the balance of convenience does not weigh in

favor of the Eastern District of Texas. The Court finds

insufficient circumstances to justify an exception to the first-tofile rule based on convenience.

II. Declaratory Judgment Act

Defendant further argues that the Declaratory Judgment Act, 28

U.S.C. § 2201, is not intended to give an infringer the right to

choose the forum for litigation of an intellectual property owner's

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rights. 

The Declaratory Judgment Act permits a federal court to

“declare the rights and other legal relations” of parties to “a

case of actual controversy." 28 U.S.C. § 2201; see Wickland Oil

Terminals v. Asarco, Inc., 792 F.2d 887, 893 (9th Cir. 1986). The

“actual controversy” requirement of the Declaratory Judgment Act is

the same as the “case or controversy” requirement of Article III of

the United States Constitution. American States Ins. Co. v.

Kearns, 15 F.3d 142, 143 (9th Cir. 1993).

Under the Declaratory Judgment Act, a two-part test is used to

determine whether a declaratory judgment is appropriate. Principal

Life Ins. Co. v. Robinson, 394 F.3d 665, 669 (9th Cir. 2005). 

First, the court must determine if an actual case or controversy

exists within the court's jurisdiction. Id. Second, if so, the

court must decide whether to exercise its jurisdiction. Id.

The Ninth Circuit has stated that trademark disputes have

sufficiently ripened into an actual controversy under the

Declaratory Judgment Act when "'the plaintiff has a real and

reasonable apprehension that he will be subject to liability.'” 

Chesebrough-Pond's v. Faberge, 666 F.2d 393, 396 (9th Cir. 1982)

(quoting Societe de Conditionnement en Aluminium v. Hunter

Engineering Co., 655 F.2d 938, 944 (9th Cir. 1981)). In

determining "if the threat perceived by the plaintiff is real and

reasonable," the court focuses "upon the position and perceptions

of the plaintiff" and "[t]he acts of the defendant [are] . . .

examined in view of their likely impact on competition and the

risks imposed upon the plaintiff." Id. If the plaintiff is

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engaged in the ongoing use of the allegedly infringing trademark,

the showing of apprehension "need not be substantial." Societe de

Conditionnement en Aluminium, 655 F.2d at 944. 

In Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 495

(1942), the Supreme Court identified several factors for the

district court to consider when determining whether to exercise

jurisdiction over a declaratory judgment action, and the Ninth

Circuit has affirmed that “the Brillhart factors remain the

philosophical touchstone for the district court.” Government

Employees Ins. Co. v. Dizol, 133 F.3d 1202, 1225 (9th Cir. 1998). 

"The district court should avoid needless determination of State

law issues; it should discourage litigants from filing declaratory

actions as a means of forum shopping; and it should avoid

duplicative litigation." Id. (internal citations omitted). The

Ninth Circuit has also “suggested other considerations” in addition

to the Brillhart factors that may assist in deciding whether to

exercise jurisdiction, including:

[W]hether the declaratory action will settle all aspects

of the controversy; whether the declaratory action will

serve a useful purpose in clarifying the legal relations

at issue; whether the declaratory action is being sought

merely for the purposes of procedural fencing or to obtain

a "res judicata" advantage; or whether the use of a

declaratory action will result in entanglement between the

federal and State court systems. 

Id.

Under the Ninth Circuit test to determine whether a

declaratory judgment is appropriate, the Court must first determine

if an actual case or controversy exists within this jurisdiction. 

Here, Defendant accused Plaintiff of using Defendant's trademark. 

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Defendant threatened legal action against Plaintiff. Plaintiff

perceived the possibility a future suit. A suit against Plaintiff

would be a risk to future sales of Plaintiff's video game with the

allegedly infringing trademark. Furthermore, Plaintiff is

allegedly engaged in the ongoing use of the allegedly infringing

trademark. Thus, the dispute has sufficiently ripened in that

Plaintiff had a real and reasonable apprehension that it would be

subject to liability. Chesebrough-Pond's, 666 F.2d at 396. 

The Court considers the Brillhart and the Government Employees

Ins. Co. factors in determining whether to exercise its

jurisdiction over this declaratory judgment action. The factors

that weigh in favor of the Court's exercising its jurisdiction are:

there are no state law issues in the present case, only federal

trademark issues; there would be no entanglement between the

federal and state court systems because trademark issues fall under

federal jurisdiction; the present declaratory judgment action would

avoid duplicative litigation because the present action has

proceeded further than the Texas action. Also, except for monetary

damages, this declaratory action would "settle all aspects of the

controversy" and "serve a useful purpose in clarifying the legal

relations at issue." 

One factor weighs against the Court exercising its

jurisdiction. The present declaratory judgment action can be

viewed as an instance of forum shopping. However, as discussed

above, even if Plaintiff filed the present action only one business

day after Defendant's deadline passed, Defendant had the

opportunity to file an action in its choice of forum. Furthermore,

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a party's choice of forum is entitled to less weight if it is not

the party's home state. C.f. Los Angeles Mem’l Coliseum Comm’n v.

Nat’l Football League, 89 F.R.D. 497, 499 (C.D. Cal. 1981) (citing

Pacific Car & Foundry Co. v. Pence, 403 F.2d 949, 954 (9th Cir.

1968)).

Defendant argues that the Court should follow the holding in

Tempco Elec. Heater Corp. v. Omega Eng'g, 819 F.2d 746 (7th Cir.

1987), a trademark infringement case. Tempco Elec. Heater Corp.

stands for the proposition that where a declaratory judgment action

is filed in anticipation of an infringement action, the

infringement action should be heard first because the courts should

not encourage a race to the courthouse. However, Tempco Elec.

Heater Corp. is a Seventh Circuit case and is not binding authority

on the Court.

Defendant also cites two district court cases in the Ninth

Circuit that followed Tempco Elec. Heater Corp. See Xoxide, Inc.,

448 F. Supp. 2d at 1193 (a trademark case in which the court

dismissed the first-filed declaratory judgment suit); see also

First Fishery Development Service, Inc. v. Lane Labs USA, 1997 WL

579165 (S.D. Cal. 1997) (a case involving false statements about

defendant's products published in a trade magazine in which the

court dismissed the first-filed suit). These cases are not binding

authority on the Court, either. 

 Based on the above analysis, the Court concludes that the

present suit is a proper use of the Declaratory Judgment Act, 28

U.S.C. § 2201, to resolve the trademark infringement claims raised

by Defendant.

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III. Motion To Stay

In the event the Court decides not to dismiss the present

action, Defendant moves to stay the proceedings until the Texas

action is resolved. However, as discussed above, it is appropriate

for the present action to proceed under the first-to-file rule and

the Declaratory Judgement Act. Therefore, Defendant's motion to

stay is denied.

IV. Transfer Of Venue

Defendant argues that the case should be transferred to the

Eastern District of Texas pursuant to 28 U.S.C. § 1404(a) because

of convenience of the parties and witnesses and the interests of

justice. 

Title 28 U.S.C. § 1404(a) provides, “For the convenience of

the parties and witnesses, in the interest of justice, a district

court may transfer any civil action to any other district or

division where it might have been brought.” A district court has

broad discretion to adjudicate motions for transfer on a case-bycase basis, considering factors of convenience and fairness. 

Stewart Org. Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988); Sparling

v. Hoffman Constr. Co., 864 F.2d 635, 639 (9th Cir. 1988).

The movant bears the burden of justifying the transfer by a strong

showing of inconvenience. Decker Coal Co. v. Commonwealth Edison

Co., 805 F.2d 834, 843 (9th Cir. 1986). The motion may be denied

if the increased convenience to one party is offset by the added

inconvenience to the other party. Id.

When adjudicating a motion to transfer venue under 28 U.S.C.

§ 1404(a), a district court must balance a of number case-specific

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factors, including the plaintiff’s initial choice of forum,

convenience of the parties and witnesses, and the interest of

justice. Steward Org., 487 U.S. at 29; Decker Coal Co., 805 F.2d

at 842-43; Los Angeles Mem’l Coliseum Comm’n, 89 F.R.D. at 499. As

a general rule, the plaintiff’s choice of forum is given

significant weight and will not be disturbed unless other factors

weigh substantially in favor of transfer. See 28 U.S.C. § 1404(a). 

This is especially true when the forum chosen by the plaintiff is

its domicile. Los Angeles Mem’l Coliseum Comm’n, 89 F.R.D. at 499

(citing Pacific Car & Foundry Co., 403 F.2d at 954). 

A case may be transferred for convenience only to a venue in

which it could have originally been brought. 28 U.S.C. § 1404(a). 

In the present case, the parties do not dispute that venue is

proper in the Eastern District of Texas. 

 Based on Plaintiff's real and reasonable apprehension that it

would be subject to liability, it properly filed the present

declaratory judgment suit in this district, where it resides. 

Therefore, Plaintiff's choice of forum weighs heavily in favor of

not transferring this case to the Eastern District of Texas. As

discussed above, Defendant had not met its burden of showing that

the convenience of the parties and witnesses weighs in favor of the

Eastern District of Texas. While Defendant's choice of forum is

the Eastern District of Texas, it does not reside there so its

preference is weighed less heavily.

CONCLUSION

For the foregoing reasons, the Court does not find an

exception to the first-to-file rule. Thus, the Court will not

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dismiss or stay the present action. Furthermore, the Court will

not transfer the present action. Defendant's motion to dismiss or

stay, or alternatively to transfer the action, is DENIED.

IT IS SO ORDERED.

Dated: 3/13/07 

CLAUDIA WILKEN

United States District Judge

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