Eastman Kodak Co. v. Asia Optical, Co., No. 11-cv-6036 (S.D.N.Y. July 23, 2015) [click for opinion]
On August 26, 2011, Plaintiff Eastman Kodak Company (“Kodak”) filed suit in a U.S. district court against Asia Optical, Co. (“AO”) seeking royalty payments pursuant to a Patent Licensing Agreement (“PLA”). AO had sold some cameras to Fujifilm (“Fuji”) and argued that Fuji, not AO, owed Kodak the patent licensing fees. In March 2012, the court granted partial summary judgment in favor of Kodak, finding that, under the PLA, AO would only be exempt from paying royalties if Fuji were a Kodak licensee—which Fuji was not. Therefore, AO was responsible for paying the royalties to Kodak. On July 18, 2012, a final judgment was entered in favor of Kodak, and on May 23, 2013, the Second Circuit affirmed the final judgment.
On July 28, 2014, AO filed a lawsuit against Kodak in China, alleging that Kodak had already received royalty payments from Fuji, and that it would be unjust for Kodak to receive royalty payments from both AO and Fuji for the manufacture and sale of the same cameras. Kodak sought an anti-suit injunction from the district court.
Recognizing that a district court has the power to enjoin a party from pursuing litigation in a foreign jurisdiction when necessary to protect the jurisdiction and judgment of the enjoining court, the court applied the Second Circuit’s test in China Trade. Under China Trade, two threshold requirements must be met: (1) the parties must be the same in both proceedings; and (2) resolution of the case before the enjoining court must be dispositive of the action to be enjoined.
Both requirements were present. The court first found that the parties were the same in both proceedings, rejecting AO’s arguments that the presence of Fuji as a third party in the Chinese litigation precluded this conclusion. The court then found that the judgment entered in the U.S. lawsuit was dispositive of the claim being pursued in the Chinese litigation; both actions were premised on patent royalty payments due to Kodak under the PLA for the same set of cameras AO sold to Fuji. The court noted that, to the extent AO believed a subsequently executed agreement between Kodak and Fuji undermined the judgment, AO could move to vacate the judgment in New York.
Finding the threshold requirements met, the court then considered five additional factors: (1) the threat to the enjoining court’s jurisdiction posed by the foreign action; (2) the potential frustration of strong public policies in the enjoining forum; (3) the vexatiousness of the foreign litigation; (4) the possibility of delay, inconvenience, expense, inconsistency, or a race to judgment; and (5) other equitable considerations. The court found these additional factors weighed in favor of granting the injunction, viewing the Chinese lawsuit as an attempt to undermine the judgment entered by the court.
The court noted that public policy disfavors forum shopping and increasing litigation expenses when a matter has already been resolved; it granted the anti-suit injunction.
Robyn Lym of the New York office contributed to this summary.