Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_10-cv-00048/USCOURTS-cand-3_10-cv-00048-13/pdf.json

Parties Involved:
Fortinet, Inc.
Plaintiff
Trend Micro Incorporated
Defendant

Document Text:

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

FORTINET, INC.,

Plaintiff,

 v.

TREND MICRO INCORPORATED, et al.,

Defendants

 /

No. C-10-0048 MMC

ORDER STAYING ACTION; DENYING

WITHOUT PREJUDICE DEFENDANTS’

MOTION TO DISMISS; DIRECTIONS TO

PARTIES; VACATING MAY 14, 2010

HEARING

Before the Court is the “Motion to Dismiss Complaint Pursuant to Fed. R. Civ. P.

12(b)(1),” filed March 2, 2010, by defendants Trend Micro Inc., a California corporation,

Trend Micro Inc., a Japanese corporation, and Trend Micro Inc., a Taiwanese corporation

(collectively, “Trend Micro”). Plaintiff Fortinet, Inc. (“Fortinet”) has filed opposition, to which

Trend Micro has replied.

By order filed April 7, 2010, the Court notified the parties that “it would appear

appropriate for this Court to decline to exercise any jurisdiction it would have over the

instant action” for the reason that claims asserted herein have been asserted in an earlierfiled action pending in the Superior Court of the State of California, in and for the County of

Santa Clara, specifically, Trend Micro Inc. v. Fortinet, Inc., Civil Case No. 1-09-CV-149262. 

Because the issue of whether the Court should decline to exercise jurisdiction was not

addressed in Trend Micro’s motion, the Court afforded the parties the opportunity to

Case 3:10-cv-00048-MMC Document 81 Filed 05/12/10 Page 1 of 3
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

address that matter. Thereafter, each party filed supplemental briefing.

Having read and considered the papers filed in support of and in opposition to the

motion, as well as the parties’ supplemental submissions, the Court finds the motion is

suitable for decision on the parties’ respective written submissions, VACATES the hearing

scheduled for May 14, 2010, and rules as follows.

For the reasons stated in the Court’s April 7, 2010 order, the Court will decline to

exercise jurisdiction over the instant action at this time. As noted in said order, issues

presented herein, specifically, (1) whether U.S. Patent No. 5,623,600 is invalid and

unenforceable and (2) whether U.S. Patent No. 5,889,943 is invalid and unenforceable,

have been raised in the earlier-filed state court action and are pending before that court. 

See Wilton v. Seven Falls Co., 515 U.S. 277, 282 (1995) (holding “district courts possess

discretion in determining whether and when to entertain an action under the Declaratory

Judgment Act, even when the suit otherwise satisfies subject matter jurisdictional

prerequisites”); see, e.g., Geni-Chlor Int’l, Inc. v. Multisonics Development Corp., 580 F.2d

981, 982-83, 985 (9th Cir. 1978) (holding, where federal action sought declaration of patent

invalidity, district court erred in denying motion to stay, in light of earlier-filed state court

proceeding to confirm arbitrator’s award of royalties; stating “declaratory judgment

procedure [should not] be used as a device to snatch from the state courts a dispute

concerning obligations under a contract”).

Fortinet argues that in the event the Court finds it appropriate to decline to exercise 

jurisdiction, the Court should stay, rather than dismiss, the action. In support thereof,

Fortinet points out that Fortinet additionally seeks herein declaratory relief as to an issue

not presented in the state court proceeding, in particular, a declaration that its products do

not infringe the claims of the above-referenced patents

As a number of courts have recognized, “a stay rather than a dismissal is the

preferred mode of abstention where the possibility of a return to the federal court remains.” 

See, e.g., Capitol Indemnity Corp. v. Haverfield, 218 F.3d 872, 875 n.2 (8th Cir. 2000)

(citing cases); United Artists Theatre Circuit, Inc. v. Federal Communications Comm’n, 147

Case 3:10-cv-00048-MMC Document 81 Filed 05/12/10 Page 2 of 3
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

F. Supp. 2d 965, 978 n.9 (D. Ariz. 2000) (observing that “[i]n the event the state court

action does not resolve the controversy before the federal court, lifting the stay puts the

parties back in the same position they were in before the decision to abstain”); see also Fox

v. Maulding, 16 F.3d 1079, 1083 (10th Cir. 1994) (holding in context of abstention under

“Colorado River doctrine,” the “better practice is to stay the federal action pending the

outcome of the state proceedings”; observing, “[i]n the event the state court proceedings do

not resolve all the federal claims, a stay preserves an available federal forum in which to

litigate the remaining claims, without the plaintiff having to file a new federal action”). Here,

there exists at least a possibility that at the conclusion of the state court proceedings, the

parties will return to this Court, irrespective of whether the state court finds the subject

patents invalid or unenforceable. Consequently, the Court finds it appropriate to stay the

instant action until the proceedings in the state court action have concluded.

In light of the stay, the Court will deny Trend Micro’s motion to dismiss, without

prejudice to Trend Micro’s renoticing the motion in the event further proceedings are

necessary in this action after such stay is lifted.

CONCLUSION

For the reasons stated above:

1. The instant action is hereby STAYED pending the conclusion of Trend Micro Inc.

v. Fortinet, Inc., Civil Case No. 1-09-CV-149262.

2. The parties are DIRECTED to file a joint status report no later than May 13, 2011,

and every six months thereafter, to inform the Court of the status of the state court

proceeding.

3. Trend Micro’s motion to dismiss is hereby DENIED without prejudice.

IT IS SO ORDERED.

Dated: May 12, 2010 

MAXINE M. CHESNEY

United States District Judge

Case 3:10-cv-00048-MMC Document 81 Filed 05/12/10 Page 3 of 3