Case 1:16-cv-02690-AT Document 98 Filed 07/01/16 Page 1 of 9
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TYLER DIVISION
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`SIPCO, LLC, and IP CO, LLC (d/b/a
`INTUS IQ),
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`Plaintiffs,
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`v.
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`EMERSON ELECTRIC CO.,
`EMERSON PROCESS MANAGEMENT
`LLLP, FISHER-ROSEMOUNT
`SYSTEMS, INC., ROSEMOUNT INC.,
`BP p.l.c., BP AMERICA, INC., and BP
`AMERICA PRODUCTION COMPANY,
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`
`Defendants.
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`§
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`§ CIVIL ACTION NO. 6:15-cv-907
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` JURY TRIAL DEMANDED
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`MEMORANDUM OPINION AND ORDER
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`Before the Court is Defendant Emerson Electric Co., Fisher-Rosemount Systems, Inc.
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`and Rosemount Inc.’s Motion to Dismiss or Transfer This Action (“the Motion”). Doc. No. 10.
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`For the reasons set forth below, the Motion is GRANTED-IN-PART.
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`BACKGROUND
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`The Texas Action
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`Plaintiffs SIPCO, LLC and IP CO, LLC (collectively, “SIPCO”) filed this infringement
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`action against Emerson Electric Co., Fisher-Rosemount Systems, Inc., and Rosemount Inc.
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`(“Emerson”) on October 16, 2015 (“the Texas action”). The Original Complaint alleged
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`infringement of ten patents: U.S. Patent Nos. 7,697,492 (“the ʼ492 patent”), 6,437,692 (“the ʼ692
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`patent”), 6,914,893 (“the ʼ893 patent”), 7,468,661 (“the ʼ661 patent”), 8,754,780 (“the ʼ780
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`patent”), 8,908,842 (“the ʼ842 patent”), 6,249,516 (“the ʼ516 patent”), 8,000,314 (“the ʼ314
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`patent”), 8,233,471 (“the ʼ471 patent”), and 8,625,496 (“the ʼ496 patent”). See Doc. No. 1. On
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`1
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`Case 1:16-cv-02690-AT Document 98 Filed 07/01/16 Page 2 of 9
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`December 30, 2015, SIPCO amended its complaint to include defendants BP America, Inc., BP
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`America Production Company, and BP p.l.c. (collectively, “BP defendants”). Doc. No. 19 at 1-2.
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`The Amended Complaint also alleged infringement of one additional patent: U.S. Patent No.
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`8,013,732 (“the ʼ732 patent”). Id. at 8.
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`History
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`On January 31, 2007, SIPCO wrote to Emerson asking Emerson to review its products in
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`light of the ʼ062 and ʼ511 patents, as well as two other patents in the same family. Doc. No. 10 at
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`3. Emerson responded on February 16, 2007, and asked SIPCO to identify the products and
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`claims of the patents at issue. SIPCO did not respond until February 27, 2013, when it wrote
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`Emerson again about the same two patent families. Id. SIPCO identified one claim from eight
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`patents as being relevant to Emerson’s Smart Wireless products. Id.
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`The Georgia Action
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`On July 31, 2013, Emerson filed a declaratory judgment action against SIPCO asserting
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`invalidity and non-infringement of each of the eight patent claims. Id. Emerson ultimately
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`dismissed that action without prejudice and filed another declaratory judgment action on January
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`30, 2015 (“the Georgia action”). Id.; Emerson Electric Co., et al. v. SIPCO LLC, et al., Case No.
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`1:15-cv-319-AT. The Georgia action only asserts one patent from each of the two patent
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`families: U.S. Patent No. 6,044,062 (“the ʼ062 patent “)from the IP CO LLC patent family, and
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`U.S. Patent No. 7,103,511 (“the ʼ511 patent”) from the SIPCO LLC patent family. Doc. No. 10
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`at 3.
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`APPLICABLE LAW
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`The Supreme Court has repeatedly observed that under the doctrine of comity, when
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`cases involving substantially overlapping issues are pending before two federal district courts,
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`Case 1:16-cv-02690-AT Document 98 Filed 07/01/16 Page 3 of 9
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`there is a strong preference to avoid duplicative litigation. In re Google Inc., 588 Fed. Appx. 988,
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`990 (Fed. Cir. 2014); Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 817
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`(1976); Kerotest Mfg. Co. v. C–O–Two Fire Equip. Co., 342 U.S. 180, 183 (1952). “The ‘first-
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`to-file’ rule is a generally recognized doctrine of federal comity which permits a district court to
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`decline jurisdiction over an action when a complaint involving the same parties and issues has
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`already been filed in another district.” Texas Instruments Inc. v. Micron Semiconductor, Inc., 815
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`F. Supp. 994, 997 (E.D. Tex. 1993). As a general rule, a first-filed declaratory judgment suit will
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`be entitled to precedence over a later-filed patent infringement action. Genentech, Inc. v. Eli Lilly
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`& Co., 998 F.2d 931, 937 (Fed.Cir.1993), abrogated on other grounds by Wilton v. Seven Falls
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`Co., 515 U.S. 277, 115 S. Ct. 2137, 132 L.Ed.2d 214 (1995) (the “first to file” rule “favors the
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`forum of the first-filed action, whether or not it is a declaratory judgment action.”)
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`In determining whether to apply the first-to-file rule, a court must resolve two questions:
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`1) are the two pending actions so duplicative or involve substantially similar issues that one court
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`should decide the subject matter of both actions; and 2) which of the two courts should take the
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`case? Third Dimension Semiconductor, Inc. v. Fairchild Semiconductor Int'l, Inc., 2008 WL
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`4179234 at *1 (E.D. Tex. Sept. 4, 2008). Under the first to file rule, when two related cases are
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`pending in two district courts, the court in the later-filed action may refuse to hear the action
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`before it if the issues raised in the two cases “substantially overlap.” Cadle Co. v. Whataburger
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`of Alice, Inc., 174 F.3d 599, 603 (5th Cir. 1999).
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`To find substantial overlap, “all that need be present is that the two actions involve
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`closely related questions or common subject matter, or that the core issues substantially overlap.
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`The cases need not be identical to be duplicative.” Id. The Court considers factors such as
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`whether the core issues are the same and whether the proof in both cases would be identical.
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`3
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`Jumpsport, Inc. v. Springfree L.P., et al., Case No. 6:13-cv-929, Doc. No. 84 at 4 (E.D. Tex.
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`Nov. 17, 2014); Int’l Fid. Ins. Co. v. Sweet Little Mexico Corp., 665 F.3d 671, 678 (5th Cir.
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`2011). “In patent cases, courts determining whether cases were substantially similar have
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`examined whether they involved the same parties, the same technology, the same inventors,
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`overlapping remedies, the same witnesses, or overlapping issues in claim construction.” Hydro-
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`Quebec v. A 123 Systems, Inc., et al., No. 3:11-cv-1217-B, Doc. No. 59 at 7 (N.D. Tex. March,
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`16, 2012); See, e.g., E-Z-EM, Inc. v. Mallinckrodt, Inc., 2010 WL 1378820, at *2 (E.D. Tex. Feb.
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`26, 2010). Once the likelihood of substantial overlap is determined, the second-filed court must
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`transfer the action to the first-filed court who determines the ultimate disposition. Cadle, 174
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`F.3d at 603; Mann Mfg., Inc. v. Hortex, Inc., 439 F.2d 403, 408 (5th Cir. 1971).
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`ANALYSIS
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`There is some dispute as to whether Fifth Circuit or Federal Circuit law applies when
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`deciding whether a case should be dismissed or transferred under the first-to-file rule. Robert
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`Bosch Healthcare Systems, Inc. v. Cardiocom, LLC and Abbott Diabetes Care, Inc., et al., Case
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`No. 2:13-cv-349, Doc. No. 51 at 1 (E.D. Tex. March 10, 2014); Hydro-Quebec, Case No. 3:11-
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`cv-1217-B, Doc. No. 59 at 5 n. 5; E-Z-EM, 2010 WL 1378820, at *2. In Micron, the Federal
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`Circuit noted that when a declaratory judgment action and an infringement action are filed
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`“almost simultaneously” the considerations that the first-filed court may rely upon in declining to
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`hear the case under the first-to-file rule essentially mirror the § 1404(a) convenience transfer
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`factors. Micron Technology, Inc. v. Mosaid Technologies, Inc., 518 F.3d 897, 904 (Fed. Cir.
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`2008). Thus, the Federal Circuit held that, on the specific facts of the Micron case, the trial court
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`should use the § 1404(a) transfer analysis to determine whether to transfer the case. Id. at 904.
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`The Micron Court specifically noted that the convenience transfer factors are applicable when
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`the first-filed court is deciding whether to keep the case or decline to hear it in favor of a later-
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`filed case in another forum. Id. The Court also noted that the convenience factors are applicable
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`“on the facts of this case, where the two actions [are] filed almost simultaneously.” Id. Thus, the
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`Micron Court created a guideline for a first-filed court to follow when the two actions were filed
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`almost simultaneously. Id. The Micron decision does not change the initial inquiry of the second-
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`filed court, when the motion to transfer or dismiss is filed in that forum.
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`The Federal Circuit has not stated that Federal Circuit law applies to the analysis of the
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`first-to-file rule when the question to transfer or dismiss is presented to the second-filed court.
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`The Federal Circuit has stated that the ultimate resolution of the second-filed case is governed by
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`Federal Circuit law1. However, this ultimate resolution of whether the second-filed action should
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`proceed is a question that is not posed to the second-filed court, but rather will be posed to the
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`first-filed court if substantial overlap is found and the case transferred to the first-filed court.
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`Thus, the Federal Circuit has made clear that once the decision is in the hands of the first-filed
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`court, Federal Circuit law will apply. But that decision is not before this court today. Where, as
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`here, the question is whether the second-filed court should transfer to case to the first-filed court
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`under the first-to-file rule, virtually every court in this circuit has applied Fifth Circuit law2.
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`1 Genentech, Inc. v. Eli Lilly & Co., 998 F.2d 931, 937 (Fed. Cir. 1993)(“question of whether a properly brought
`declaratory action to determine patent rights should yield to a later-filed suit for patent infringement raises the issue
`of national uniformity in patent cases, and invokes the special obligation of the Federal Circuit to avoid creating
`opportunities for dispositive differences among the regional circuits.”); Futurewei Technologies, Inc. v. Acacia
`Research Corporation, 737 F.3d 704, 708 (Fed. Cir. 2013)(“[r]esolution of whether the second-filed action should
`proceed presents a question sufficiently tied to patent law that the question is governed by this circuit's law”); Elecs.
`for Imaging, Inc. v. Coyle, 394 F.3d 1341, 1345–46 (Fed. Cir. 2005)(same).
`2 See Datamize, Inc. v. Fidelity Brokerage Servs. LLC, 2004 WL 1683171 (E.D. Tex. Sept. 5, 2003)(applying Fifth
`Circuit law); Jumpsport, Inc. v. Springfree L.P., et al., Case No. 6:13-cv-929, Doc. No. 84 (E.D. Tex. Nov. 17,
`2014)(post-Micron case applying Fifth Circuit law); Monster Moto, LLC v. APT Group, Inc., et al., Case No. 3:14-
`cv-2625-N, Doc. No. 17 (N.D. Tex. Oct. 21, 2014)(same); Victaulic Company v. Romar Supply, Inc., Case. No.
`3:13-cv-2760-K, Doc. No. 36 (N.D. Tex. Nov. 14, 2013)(same); Hydro-Quebec v, A 123 Systems, Inc., et al., Case
`No. 3:11-cv-1217-B, Doc. No. 59 (N.D. Tex. March, 16, 2012)(same); Vertical Computer Systems, Case No. 2:10-
`cv-490, Doc. No. 41 (E.D. Tex. May 20, 2011)(same); E-Z-EM, Case. No. 2:09-cv-127, Doc. No. 33 (E.D. Tex. Feb.
`26, 2010)(same); Yeti Coolers, LLC v. Beavertail Products, LLC, 2015 WL 4759297 (W.D. Tex. Aug. 12, 2015)
`(same); But see Sanofi, 614 F. Supp. 2d 772.
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`When a motion to dismiss or transfer is filed with the second-filed court, the Fifth Circuit
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`has held that the second-filed court must make a determination as to likelihood of substantial
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`overlap and, if this threshold is met, the second-filed court must then transfer the action to the
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`first-filed court to determine the ultimate disposition of the case. Cadle, 174 F.3d at 603.
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`Because the Georgia action was filed over eight and a half months before the Texas action, the
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`Texas action is the second-filed action. Thus, this Court must determine if there is a likelihood of
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`substantial overlap between the two actions. Id.
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`Substantial Similarity
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`The threshold issue is whether there is a likelihood of substantial overlap between the two
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`suits. The Georgia action involves two patents: the ʼ511 Patent, part of the SIPCO LLC patent
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`family, and the ʼ062 Patent, part of the IP CO LLC patent family. Doc. No. 10 at 2-3. The
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`patents-in-suit in the Texas action can all be traced to one of the two patent families at issue in
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`the Georgia action3. Doc. No. 10 at 2. Merely stating that the patents in the second-filed case are
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`in the same patent family as the patents in the first-filed case is not sufficient to demonstrate
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`substantial similarity under the first-to-file rule. See Document Generation Corp. v. Allscripts,
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`LLC, 2009 WL 2824741, at *2 (E.D. Tex. Aug, 27, 2009). However, the similarities between
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`these two actions go beyond the patents’ familial relationships. The same parties are involved in
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`both actions4. The accused products are the same as well. Doc. No. 10 at 6; Doc. No. 36 at 6.
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`3 The patents in the Texas action that belong to the SIPCO LLC patent family are: the ʼ492 patent, the ʼ692 patent,
`the ʼ893 patent, the ʼ661 patent, the ʼ780 patent, the ʼ842 patent, and the ʼ732 patent. The patents in the Texas action
`that belong to the IP CO LLC patent family are: the ʼ516 patent, the ʼ314 patent, the ʼ471 patent, and the ʼ496
`patent.
`4 SIPCO’s Sur-Reply in opposition to the Motion devotes one paragraph to the argument that the addition of the BP
`defendants to the Texas action provides support for its position that the two cases are not substantially similar. Doc.
`No. 42 at 6. SIPCO added the BP defendants to the Texas action after this Motion was filed and before filing its
`Response in opposition. However, SIPCO did not argue that the addition of the BP defendants had any significance
`on the substantial similarity argument until its Sur-Reply. SIPCO has limited its infringement allegations against BP
`to the purchase and use of Emerson Smart Wireless products, which are already accused of infringement in the
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`SIPCO argues that the features of the accused products differ between the Texas action
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`and the Georgia action. Doc. No. 42 at 5. Specifically, SIPCO argues that in the Georgia action,
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`a “network of the accused wireless devices can either be standalone or connected externally to a
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`wide area network (‘WAN[’])” whereas, in the Texas action, “a network of the accused wireless
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`devices has features that go beyond that and can be connected to any type of network.” Id. There
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`may be additional features present in the accused products in one action that are not present in
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`the other action, but that does not preclude a finding of substantial overlap when the general
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`technology is the same. Amberwave Systems Corp. v. Intel Corp., 2005 WL 2861476, at *2 (E.D.
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`Tex. Nov. 1, 2005) (finding substantial overlap even when the “patents address different
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`scientific aspects” of the same technology). The patents in both actions are directed to the same
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`technology, routing of data within a wireless network. Doc. No. 10 at 7. All four asserted patents
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`in the IP CO LLC family share the same title with the ʼ062 patent: “Wireless Network System
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`and Method for Providing the Same.” Id. at 2; See ʼ062 Patent. The asserted patents in the Texas
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`action that are part of the SIPCO LLC family share a common inventor with the ʼ511 patent. See
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`E-Z-EM, Case. No, 2:09-cv-127, Doc. No. 33 at 3 (finding common inventorship as a factor in
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`determining substantial overlap). The asserted patents in the IP CO family share a common
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`inventor with the ʼ062 patent. Many of the same claim elements are present in the patents-in-suit
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`in both the Texas and Georgia actions.
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`The Texas action and the Georgia action substantially overlap. Both actions involve the
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`same parties, patents from the same patent families with similar claim elements and drawings,
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`the same type of technology, and the same accused products. Although there are differences,
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`there is a likelihood of substantial similarity. Once it has been determined that the two actions
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`Texas and Georgia action. Doc. No. 71 at 2. Thus, the late addition of additional defendants, while maintaining the
`same infringement theories against the same products, is not enough to preclude a finding of substantial similarity.
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`Case 1:16-cv-02690-AT Document 98 Filed 07/01/16 Page 8 of 9
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`might substantially overlap, the court with the second-filed action transfers the case to the court
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`where the first-filed action is pending. Jumpsport, Case No. 6:13-cv-929, Doc. No. 84 at 4
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`(citing Cadle, 174 F.3d at 605-06 (“Once the likelihood of substantial overlap between the two
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`suits has been demonstrated, it is no longer up to the second-filed court to resolve the question of
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`whether both should be allowed to proceed”)). Accordingly, the Texas action should be
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`transferred to the first-filed court, the Northern District of Georgia, to determine the resolution of
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`the second-filed case.
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`Exceptions to the First-to-File Rule
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`SIPCO argues that Emerson is not entitled to invoke the first-to-file rule because
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`Emerson withdrew its earlier-filed complaint in Georgia and re-filed only as to two patents. Doc.
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`No. 24 at 2-3. SIPCO concludes that this was a “clear statement” by Emerson that it did not
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`intend to litigate any other SIPCO patents in the Northern District of Georgia. Id. Emerson
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`responds that just because it decided to “streamline” the process by narrowing its complaint from
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`eight patents to two patents—one representative of each patent family—does not mean that it
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`abandoned any claims as to all other SIPCO patents. Doc. No. 36 at 3.
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` The general rule favors the first-filed action, however exceptions “are not rare[] and are
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`made when justice or expediency requires.” Genentech, 998 F.2d at 937. In this case, SIPCO has
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`not demonstrated that justice requires a departure from the first-to-file rule. Emerson dismissed
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`the first Georgia case without prejudice. Doc. No. 10 at 3. Absent another prohibition, Emerson
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`would have been free to re-file as to any of the dismissed patents since the dismissal was without
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`prejudice. SIPCO has not brought forth any evidence that this dismissal was Emerson’s
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`declaration that it never intended to litigate those patents, or any other SIPCO patent, in Georgia.
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`SIPCO argues that a finding for Emerson effectively allows “Emerson to chain SIPCO to the
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`Case 1:16-cv-02690-AT Document 98 Filed 07/01/16 Page 9 of 9
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`NDGA for every patent in its portfolio—even those patents…that have different claimed subject
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`matter and devices.” Doc. No. 24 at 7. This is untrue. To invoke the first-to-file rule, there must
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`be substantial similarity. SIPCO’s claim that every patent in its portfolio must now be litigated in
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`the Northern District of Georgia is only true if every patent in SIPCO’s portfolio is substantially
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`similar to the patents currently at issue in the Georgia court. If that is true, then the patents
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`should properly be litigated in one forum. Patents regarding different subject matter and devices
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`would likely not have a substantial overlap and thus the first-to-file rule would not apply. Thus,
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`SIPCO has not articulated an equitable reason for departing from the first-to-file rule.
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`CONCLUSION
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`For the above reasons, the Court GRANTS-IN-PART Emerson’s Motion to Dismiss or
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`Transfer This Action (Doc. No. 10). Emerson’s Motion to Dismiss is DENIED. Emerson’s
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`Motion to Transfer is GRANTED. The Court ORDERS the case transferred to the United States
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`District Court for the Northern District of Georgia.
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`Additionally, Emerson’s Motion to Stay This Action Pending Dismissal or Transfer
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`(Doc. No. 13) and Emerson’s Unopposed Motion for Oral Hearing (Doc. No. 85) are both
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`DENIED AS MOOT.
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`9
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`So ORDERED and SIGNED this 1st day of July, 2016.
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