MEMORANDUM DECISION AND ORDER
GEORGE B. DANIELS, United States District Judge.
Plaintiff NovaSparks SA ("NovaSparks") brings this action against Defendants EnyxFPGA, Inc. ("EnyxFPGA") and Enyx SA ("Enyx") alleging that Defendants used confidential information they misappropriated from Plaintiff to develop a
Defendants' motion is GRANTED as to the dismissal of Plaintiffs patent ownership and trade secret misappropriation claims, but DENIED as to the stay of Plaintiff's patent inventorship claim.
I. FACTUAL BACKGROUND
Plaintiff is a French corporation involved in the design and marketing of financial data processing systems. (Compl. ¶¶ 4, 11.) Plaintiff has designed and developed a "feed-handling" system that processes financial data streams, such as stock exchange orders. (Id. ¶ 3.) The system includes software and an electronic board that uses Field-Programmable Gate Array ("FPGA") integrated circuits, which are designed to treat financial data with the "lowest latency possible." (Id.) The system also processes real-time market data functions in hardware, and provides processing that is faster than what is available with traditional software-based solutions. (Id. ¶ 14.) Plaintiff has been marketing its system to stock exchanges, banks, and other financial institutions since 2010. (Id. ¶ 15.)
In 2009, Edward Kodde began working as an intern for Plaintiff, which was then known as HPC Platform SA ("HPC Plat-form"). (Id. ¶ 4.) During his time as an intern and, later, as an employee, Kodde worked on the source code for Plaintiff's HPC Platform at Battyani's direction. (Id. ¶ 19.)
In connection with his work as an intern, Kodde signed an HPC Platform Non-Disclosure and IP Assignment Agreement (the "Intern Agreement"), which assigns to Plaintiff:
(Intern Agmt. § 3.1,
The Intern Agreement also contains a confidentiality clause, which obligated Kodde to, among other things, "keep HPC Platform's Confidential Information secret and confidential and not disclose it in any way to any third party" and to "not use the Confidential Information in any way which is detrimental to the Project or HPC Platform."
On October 27, 2009, Kodde signed an HPC Platform Non-Disclosure Agreement in connection with his employment contract with Plaintiff (the "Employee NDA"). The Employee NDA contained a confidentiality clause imposing obligations identical to those in the Intern Agreement, and stated that such obligations "expire[d] 24 months after the termination of the contract of employment." (Dec), of Michael E. Anderson dated May 23, 2018 ("Anderson Decl."), Ex. 2 ("Employee NDA") §§ 2.1.1, 2.1.3, 3.3; see also Compl. ¶ 58.
In 2011, Kodde left NovaSparks and, together with several other former employees, formed Enyx. (Compl. ¶ 20.) Enyx's bylaws indicate that its purpose is the "design, manufacture, marketing, and maintenance or evolution of technical and software solutions, low-latency data processing and hardware ... applied to financial data flows and the provision of ... related services or products." (Id.) Plaintiff alleges that, "in violation of his confidentiality obligations to NovaSparks, and knowing that they were the property of NovaSparks, Mr. Kodde disclosed NovaSparks' trade secrets to Enyx." (Id. ¶ 47; see also id. ¶ 59.) Plaintiff further alleges that Enyx knew or should have known that the information Kodde disclosed was obtained in violation of Kodde's confidentiality obligations. (Id. ¶ 48.)
On December 13, 2012, with the permission of the President of the Paris Tribunal de Grande Instance, Plaintiff carried out an "infringement seizure" on Enyx SA's premises.
On January 9, 2013, Plaintiff and Enyx entered into a Settlement Agreement regarding Plaintiffs claims that Enyx had misappropriated Plaintiff's materials. (Id. ¶ 24.) The Settlement Agreement states, among other things, that "[a]s consideration for the commitments made by Enyx in article 1.1," which required Enyx to make settlement payments, "NovaSparks waives the right to any legal action against Enyx ... that may be based on the facts or material found or the documents seized during the infringement seizure." (Settlement Agmt. art. 1 § 1.2.) The Settlement Agreement also states that "[i]n the future, Enyx undertakes not to file patent applications for a technology that was owned by NovaSparks (that it developed itself or was acquired from a third party) before March 2011 or that obviously follows from it." (Id. art. 2.) Additionally, the Settlement Agreement contains a choiceof-law and forum selection clause, which states that "[t]his [S]ettlement [A]greement is subject to French law" and that "the parties agree to submit any disputes related to the fulfillment and/or interpretation of this [S]ettlement [A]greement to the competent jurisdiction of the Paris Appeals Court." (Id. art. 8.)
On October 1, 2013, Enyx filed the European Patent Applications, which named Kodde as the sole inventor. (Compl. ¶ 25.) Enyx subsequently filed the United States Patent Applications, which claimed priority to the European Patent Applications. (Id. ¶ 26.) A patent was issued on one of the U.S. Patent Applications on January 1, 2017. (Id.) The other U.S. Patent Applications and the European Patent Applications remain pending. (Id. ¶¶ 25-26.)
Plaintiff alleges that the "subject matter disclosed or claimed in" all of the patent applications was "developed by NovaSparks employees, including Mr. Kodde, prior to March 2011." (Id. ¶ 27.) Plaintiff explains that "each invention claimed in the U.S. Patent Applications was conceived... by Mr. Battyani, who instructed Mr.
Plaintiff further alleges that, by filing the European and U.S. Patent Applications, Enyx violated the Settlement Agreement and disclosed Plaintiff's trade secrets. (Id. ¶ 25-26, 51.) Plaintiff also alleges that Enyx has used and continues to use Plaintiff's trade secrets in products provided to clients in New York and New Jersey. (Id. ¶ 30.)
Defendants move to dismiss Plaintiff's patent ownership and trade secrets claims based on the forum selection clause in the Settlement Agreement.
II. LEGAL STANDARDS FOR ENFORCEMENT OF FORUM SELECTION CLAUSES8
When the parties have agreed to a valid forum-selection clause, a district court should ordinarily transfer the case to the forum specified in that clause." Donnay USA Ltd. v. Donnay hit'l S.A., 705 F. App'x 21, 23 (2d Cir. 2017) (quoting Att. Marine Constr. Co., Inc. v. U.S. Dist. Court for Western Dist. of Texas, 571 U.S. 49, 62, 134 S.Ct. 568, 187 L.Ed.2d 487). In determining whether to dismiss a claim based on a forum selection clause, the Second Circuit employs the "four-factor inquiry" set forth in Phillips v. Audio Active Ltd., 494 F.3d 378 (2d Cir. 2007), under which a forum selection clause is "presumptively enforceable" if three factors are met: (1) "[the clause] was `reasonably communicated to the party resisting enforcement; (2) it is `mandatory'; and (3) the claims and parties involved in the suit are subject to the forum selection clause.'"
III. PLAINTIFF'S PATENT OWNERSHIP AND TRADE SECRET MISAPPROPRIATION CLAIMS ARE DISMISSED
A. The Forum Selection Clause is Mandatory
"Whether a forum selection clause is mandatory depends on its language." Salis v. Am. Exp. Lines, 331 F. App'x 811, 813 (2d Cir. 2009) (citation omitted). As the Second Circuit noted in John Boutari & Son, Wine & Spirits v. Attiki Importers and Distributors, Inc., "[t]he general rule in cases containing forum selection clauses is that `[w]hen only jurisdiction is specified the clause will generally not be enforced without some further language indicating the parties intent to make jurisdiction exclusive.'" 22 F.3d 51, 53 (2d Cir. 1994). In Boutari, the court found a provision stating "[a]ny dispute arising between the parties ... shall come within the jurisdiction of the ... Greek courts, specifically of the Thessaloniki Courts" was permissive, rather than mandatory, because it "conferr[ed] jurisdiction" on the Greek courts without "excluding jurisdiction elsewhere." 22 F.3d at 53. By contrast, in Phillips, the court found a clause stating that "legal proceedings that may arise out of [the parties' agreement] are to be brought in England," was mandatory because "[t]he parties' use of the phrase `are to be brought' establishe[d] England as an obligatory venue." 494 F.3d at 386.
Here, the Settlement Agreement provides, "the Parties agree to submit any disputes related to the fulfillment and/or interpretation of this settlement agreement to the competent jurisdiction of the Paris Appeals Court." (Settlement Agmt. art. 8.) NovaSparks argues that this clause is similar to the one at issue in Boutari. (Resp. at 8.) However, in Boutari, the parties recognized that their disputes would "come within" the Greek courts' jurisdiction or, in other words, that "the [Greek courts] have jurisdiction" over their claims. 22 F.3d at 53 (emphasis added). Here, by contrast, the parties "agree[d] to submit any disputes related to the fulfillment and/or interpretation of this [S]ettlement [A]greement to the Paris Appeals Court."
Plaintiff argues that, regardless of whether the forum selection clause is mandatory,
Plaintiff asserts that "ownership of the U.S. patent is not covered under the Settlement Agreement." (Resp. at 10.) However, the facts as alleged in Plaintiffs complaint make clear that ownership of the U.S. Patent is "related to" the fulfillment of Enyx's obligations under the Settlement Agreement. Plaintiff alleges that the terms of Battyani's and Kodde's employment agreements with Plaintiff obligated them to assign ownership of all inventions made during their employment to Plaintiff. Plaintiff further alleges that it is the rightful owner of the inventions described in the U.S. Patent Applications because those inventions were developed by Battyani and Kodde while they were employed at NovaSparks. Thus, Plaintiff's patent ownership claim alleges, in essence, that Enyx violated its obligations under the Settlement Agreement by filing the U.S. Patent Applications claiming ownership of "a technology that was owned by NovaSparks (that it developed itself or was acquired from a third party) before March 2011 or that obviously follows from it." (Settlement Agmt. art. 2.)
Although Plaintiff claims that its trade secret claims "encompass[ ] actions independent of the obligations in the Settlement Agreement," the forum selection clause is not limited to claims for breaches of the Settlement Agreement. (Resp. at 11.) Rather, it covers all claims "related to the fulfillment and/or interpretation of that agreement. (Settlement Agmt. art. 8.) The Settlement Agreement provided that "[i]n the future, Enyx undertakes not to file patent applications for a technology that was owned by NovaSparks ... before 2011 or that obviously follow from it." (Id. art. 2.) Plaintiffs complaint expressly alleges that "[i]n violation of the [S]ettlement [A]greement, Enyx filed three European Patent Applications" and "[i]n violation of the [S]ettlement [A]greement, Enyx filed three U.S. Patent Applications." (Compl. ¶¶ 25-26.) Each of Plaintiffs trade secret claims further alleges that "[b]y filing the European Patent Applications and the U.S. Patent Applications, Enyx compromised the value of NovaSparks' trade secrets." (Id. ¶¶ 51, 63.) Thus, Plaintiff's trade secret claims are plainly "related to" Enyx's fulfillment of its obligations under the Settlement Agreement. (Settlement Agmt. art. 8.) Plaintiff contends that, in addition to the filing of the patent applications, its trade secret claims also concern Enyx's sale of products to customers in the United States, and that these alleged "improper actions took place after the Settlement Agreement and thus could not be the subject of a release contained in the Settlement Agreement." (Resp. at 11.) But the
IV. LEGAL STANDARDS FOR A STAY
In addition to moving to dismiss Plaintiffs patent ownership and trade secret claims, Defendants also move to stay Plaintiffs patent inventorship claim pending the outcome of the France Action. (Reply at 10.) Courts have the "inherent power to dismiss or stay an action in deference to a parallel foreign action." Eskofot A/S v. E.I. Du Pont De Nemours & Co., 872 F.Supp. 81, 89 (S.D.N.Y. 1995) (citing Caspian Inv., Ltd. v. Vicom Holdings, Ltd., 770 F.Supp. 880, 884 (S.D.N.Y. 1991)). In general, "[s]uits are parallel when substantially the same parties are contemporaneously litigating substantially the same issue in another forum." Niagara Mohawk Power Corp. v. Hudson River-Black River Regulating Dist., 673 F.3d 84, 100 (2d Cir. 2012). However, "the mere existence of parallel foreign proceedings does not negate the district courts' `virtually unflagging obligation ... to exercise the jurisdiction given them.'" Leopard Marine & Trading, Ltd. v. Easy St. Ltd., 896 F.3d 174, 190 (2d Cir. 2018) (citation omitted) (omission in original).
"The task of a district court evaluating a request for dismissal based on a parallel foreign proceeding is not to articulate a justification for the exercise of jurisdiction, but rather to determine whether exceptional circumstances exist that justify the surrender of that jurisdiction." Royal & Sun All. Ins. Co. of Canada v. Century Int'l Arms, Inc., 466 F.3d 88, 93 (2d Cir. 2006). This determination "does not rest on a mechanical checklist, but on a careful balancing of the important factors... as they apply in a given case, with the balance heavily weighted in favor of the exercise of jurisdiction." Id. at 94 (quoting Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 16, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)). Factors that courts may consider include "the order in which the actions were filed, the adequacy of the alternate forum, the potential prejudice to either party, the convenience of the parties, the connection between the litigation and the United States, and the connection between the litigation and the foreign jurisdiction."
V. A STAY IS NOT WARRANTED
The France Action and this action are parallel, because the parties and issues in both actions are substantially similar. Plaintiff and Enyx SA are parties to both actions. (Mem. at 19.) Although Enyx FPGA is not a party in the France Action, it is a wholly owned subsidiary of Enyx SA that supports sales of Enyx SA's products in the United States. (Mem. at 19; see also Resp. at 1; Tarazi, 958 F.Supp.2d at 434 ("[P]arties are `similar' for the purposes of international comity when one party is a subsidiary of the other or one party has a substantial ownership interest in the other.")). And, as Plaintiff concedes, "there is no question that there are ... common issues of fact" in both actions. (Resp. at 11.) Both actions concern Enyx's filing of patent applications based on information that Enyx allegedly misappropriated from Plaintiff. (See id. at 1.) The same technology that formed the basis for the European Patent Applications also formed the basis for the United States Patent Applications. (See Compl. ¶¶ 26-27.)
But the "similarity of the parties and issues presented and the burden of litigating in two fora simultaneously ... are commonly present when a parallel foreign proceeding is ongoing." Kitam Innovations Inc. v. Chaudaria, 698 F.Supp.2d 386, 391 (S.D.N.Y. 2010) (citation omitted). "[C]ircumstances that routinely exist in connection with parallel litigation cannot reasonably be considered exceptional circumstances," and Enyx has not identified any other factors that implicate the "exceptional circumstances" necessary to justify the grant of a stay. Royal & Sun, 466 F.3d at 95.
Enyx notes that the France Action was filed four days before this action. (Mem. at 20.) While the order of filing is relevant, consideration of this factor "does not turn exclusively on the sequence in which the cases were filed, `but rather [involves a comparison] of how much progress has been made in the two actions.'" Kitaru Innovations Inc. v. Chandaria, 698 F.Supp.2d 386, 391 (S.D.N.Y. 2010) (citation omitted). Although the France Action was filed four days before this action, Enyx acknowledges that the France Action "has not progressed significantly." (Mem. at 20; see also Resp. at 13 n.3) (noting that the France Action "has not advanced relative to [this] action"). Thus, this factor is neutral. See Kitaru, 698 F.Supp.2d at 391 (finding third factor neutral when "there is no evidence that the [foreign] Action ... has progressed significantly").
The adequacy of the alternate forum militates against a stay. As Enyx concedes, "the French court cannot order a change of inventorship of a U.S. patent," which is the remedy that Plaintiff seeks. (Reply at 9.)
The potential for prejudice also militates against a stay. Plaintiff alleges that it and Enyx have been in "competing discussions with North American customers," (Compl. ¶ 21), and argues that "[c]ustomers of NovaSparks may question the freedom to operate NovaSparks products in the face of the[ ] patents" in Enyx's name.
The convenience of the parties does not weigh in favor of a stay. Enyx argues that a stay will "avoid duplicative discovery and briefing in multiple forums." (Mem. at 22.) Enyx also notes that many of the documents and witnesses at issue are located in France. (Id. at 23.) However, Plaintiff asserts that, regardless of what discovery is conducted in the France Action, additional discovery will need to be conducted in this action, because "France does not allow for depositions and U.S. style discovery." (Resp. at 12.) "Although it can be expensive and time consuming for parties to have to litigate similar conduct in different forums, th[is] Court does not find this factor gives rise to exceptional circumstances." Schenker AG. v. Societe Air France, No. 14 Civ. 4711 (BMC), 2016 WL 1465353, at *3 (E.D.N.Y. Apr. 14, 2016); see also Tarazi, 958 F.Supp.2d at 438 (finding the "inconvenience and expense associated with parallel proceedings does not ... justify[ ] deference to a parallel foreign litigation").
Enyx also argues that the grant of a stay will "narrow the issues to be addressed by this [C]ourt" and "avoid the possibility of inconsistent determinations." (Mem. at 22.) In particular, Enyx argues that at least one of Plaintiffs claims—the patent ownership claim—could be resolved by French courts, (Mem. at 22 n.11; Reply at 8), and that the "French court's determination" on "the issue of who invented the technology disclosed in the [patent] applications ... will at least be `instructive on the ultimate resolution' of this action." (Reply at 9 (quoting Tarazi, 958 F.Supp.2d at 438).) But "[i]f the [French] [A]ction becomes final, [Enyx] will be free to present its res judicata arguments" on the relevant issues to this Court. Klonis v. Nat'l Bank of Greece, S.A., 487 F.Supp.2d 351, 356 (S.D.N.Y. 2006).
Finally, although this action has considerable connections to France, the patent application on which Plaintiffs inventorship claim is based was filed in the United States. (Resp. at 7; see also Compl. ¶ 26.) Because this action has connections to the United States that are more than merely "tenuous," Thornton Tomasetti, Inc. v. Anguillan Dev. Corp., No. 14 Civ. 7040 (JPO), 2015 WL 7078656, at *5 (S.D.N.Y. Nov. 13, 2015), the fact that this action also has foreign connections is not an "exceptional circumstance" that justifies the grant of a stay. See Leopard Marine & Trading, Ltd. v. Easy St., Ltd., No. 15 Civ. 3064 (JSR), 2015 WL 4940109, at *3 (S.D.N.Y. Aug. 6, 2015), affd, 896 F.3d 174 (2d Cir. 2018) (rejecting argument that "the United States has no connection to this litigation" and finding foreign connections did not weigh in favor of stay); see also Global Tech Indus. Grp., Inc. v. Go Fun Grp. Holdings, Ltd., No. 17 Civ. 3727 (AJP), 2017 WL 5036665, at *4 (S.D.N.Y. Nov. 2, 2017) ("[C]ommercial litigation involving foreign parties and concerning foreign corporations and/or their assets is not unusual in this District, or in federal courts generally."). Because, for the reasons explained above, the other factors that Enyx identifies also fail to implicate
VI. CONCLUSION
Defendants' motion, (ECF No. 29), is GRANTED as to the dismissal of Plaintiffs patent ownership and trade secret misappropriation claims, but DENIED as to the stay of Plaintiffs patent inventorship claim. The Clerk of Court is directed to close the motion accordingly.
SO ORDERED.
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