Judge Boyle, on September 16, 2010, entered a stay in Excentus Corp. v. The Kroger Co. Excentus filed its lawsuit in the Northern District against Kroger (asserting infringement of three patents relating to fuel rewards) two hours and six minutes after Kroger sued Excentus in the Southern District of Ohio (seeking a declaratory judgment with respect to the same three patents, as well as additional Excentus patents). Apparently, the lawsuits followed a break down in licensing discussions between the parties.
Judge Boyle stayed the Northern District lawsuit pursuant to the Fifth Circuit’s “first-to-file” rule, which holds that “when two related cases are pending in two district courts, the court with the later-filed action can refuse to hear the case if the issues raised by both cases ‘substantially overlap.’” Judge Boyle noted that “[o]nce the court in the later-filed action finds the issues involved are likely to substantially overlap, it is up to the first-filed court to resolve the question of whether both cases should proceed.”
Judge Boyle found that there was substantial overlap between the two actions, despite Excentus amending its complaint to add causes of action for misappropriation and theft of trade secrets, common law misappropriation, and imposition of a constructive trust. Judge Boyle further found that the “first-to-file” rule applies even where the two suits were filed only hours apart. And, while Judge Boyle noted that the Fifth Circuit has recognized that the filing of an action for declaratory judgment in direct anticipation of being sued often negates the “first-to-file” rule, this was not a case where Kroger filed the Ohio suit for an “improper or abusive” reason. Accordingly, Judge Boyle held that the Northern District case would be stayed until the Ohio court determined which action should proceed.
Excentus is represented in this matter by Brett Govett and Karl Dial, both of Fulbright & Jaworski LLP. Mark Howland, Lon Outland, and Mark Ziegelbein, all of Jones Day, represent Kroger.