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Imation Corp. v. Koninklijke Philips Electronics N.V.: US District Court : CIVIL | APPELLATE PROCEDURE - Rule 54(b) certification of finality & no just reason for delay

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Imation Corporation, a Civil No. 07-3668 (DWF/AJB)
Delaware corporation,
Plaintiff,
v. MEMORANDUM OPINION
Koninklijke Philips Electronics N.V., a foreign
corporation; U.S. Philips Corporation, a
New York corporation; and Philips Electronics
North America Corporation, a Delaware corporation,
Defendants;
and
Koninklijke Philips Electronics N.V., a foreign
corporation; U.S. Philips Corporation, a
New York corporation; and Philips Electronics
North America Corporation, a Delaware corporation,
Counterclaim and Third-Party-Claim
Plaintiffs,
v.
Imation Corp.,
Counterclaim Defendant;
and
Moser Baer India Limited; Global Data
Media FZ-LLC; MBI International
FZ-LLC; MBI International Services
Private Limited; MBI India Marketing
Private Limited; Glyphics Media Inc.;
and Memorex International Products, Inc.,
Third-Party Defendants.
2
_______________________________________________________________________
B. Todd Jones, Esq., Richard M. Martinez, Esq., Jennifer L. McKenna, Esq., Ronald J.
Schutz, Esq., Allen A. Slaughter, Jr., Esq., and Amy N. Softich, Esq., Robins Kaplan
Miller & Ciresi LLP, counsel for Imation Corp., Glyphics Media Inc., Global Data Media
FZ-LLC, MBI India Marketing Private Limited, MBI International FZ-LLC, MBI
International Services Private Ltd., and Memorex International, Inc.
Garrard Beeney, Esq., Adam R. Brebner, Esq., Marc De Leeuw, Esq., and Jessica Klein,
Esq., Sullivan & Cromwell LLP; and Laura L. Myers, Esq., Kurt J. Niederluecke, Esq.,
and Darren B. Schwiebert, Esq., Fredrikson & Byron, PA, counsel for Koninklijke
Philips Electronics N.V., U.S. Philips Corporation, and Philips Electronics North
America Corporation.
Sonya R. Braunschweig, Esq., Alan L. Kildow, Esq., DLA Piper US LLP; and Jeffrey G.
Randall, Esq., Albert L. Hogan, III, Esq., and Chuck Ebertin, Esq., Skadden, Arps, Slate,
Meagher & Flom; and Jennifer B. Benowitz, Esq., and Justin H. Perl, Esq., Maslon
Edelman Borman & Brand, LLP, counsel for Moser Baer India Limited.
________________________________________________________________________
INTRODUCTION
This matter was before the Court on Imation Corp.s Motion for Certification
Under Rule 54(b) and Moser Baer India Limiteds Motion for Certification Under
Rule 54(b) as to this Courts Memorandum Opinion and Order dated November 26, 2008
(Doc. No. 204). In an Order dated January 21, 2008, the Court granted both motions.
Below is a Memorandum Opinion explaining the Courts reasons for doing so.
BACKGROUND
Imation sued Philips for declaratory judgment, seeking an interpretation of its
rights under a 1995 Patent Cross-License Agreement for Optical and Magneto-Optical
Information Storage and Retrieval Technology (the CLA) that it was party to along
with Philips. Imation sought, in part, a declaration that its subsidiaries (in particular
Memorex Products, Inc. (Memorex) and GDM Data Media FZ-LLC (GDM)) are
3
properly operating under the CLA. Philips filed counterclaims against Imation and
third-party claims against Moser Baer, GDM, Memorex, and several other entities,
seeking declaratory relief and damages for patent infringement and tortious interference.
On November 26, 2008, the Court issued an Order (the November 26 Order)
granting Philips Motion for Judgment on the Pleadings. In the November 26 Order, the
Court found that GDM and Memorex are not validly licensed under the CLA. The Court
dismissed Counts Three and Four of Imations Complaint and found in favor of Philips
on the First Cause of Action of Philips Amended Answer to Complaint, Counterclaims
and Third-Party Complaint.
Imation and Moser Baer separately requested that the Court certify the
November 26 Order as a final judgment under Rule 54(b). Rule 54(b) provides:
When an action presents more than one claim for reliefwhether as a
claim, counterclaim, crossclaim, or third-party claimor when multiple
parties are involved, the court may direct entry of a final judgment as to one
or more, but fewer than all, claims or parties only if the court expressly
determines that there is no just reason for delay. Otherwise, any order or
other decision, however designated, that adjudicates fewer than all the
claims or the rights and liabilities of fewer than all the parties does not end
the action as to any of the claims or parties and may be revised at any time
before the entry of a judgment adjudicating all the claims and all the
parties rights and liabilities.
Fed. R. Civ. P. 54(b). In deciding whether to certify a judgment under Rule 54(b), the
Court must determine that the judgment is final and whether there is any just reason for
delay. Curtiss-Wright Corp. v. General Elec. Co., 446 U.S. 1, 7 (1980).
The November 26 Order resolved three claims in the present action: Counts Three
and Four of the Complaint and the First Cause of Action of Philips Amended Answer to
Complaint, Counterclaims and Third-Party Complaint. Count Three of Imations
4
Complaint sought a declaration that GDM was licensed as a subsidiary under the CLA;
Count Four of Imations Complaint sought a declaration that Memorex was licensed as a
subsidiary under the CLA; and Count One of Philips counterclaims and third-party
complaint sought a declaration that GDM and Memorex were not licensed under the
CLA. Specifically, in the November 26 Order, the Court found that GDM and Memorex
are not properly licensed under the CLA.
There is no dispute that the Courts November 26 Order represents a final
judgment on the claims and counterclaim relating to whether GDM and Memorex are
licensed under the CLA. The Court therefore addresses whether there is any just reason
for delay. See, e.g., Curtiss-Wright Corp., 446 U.S. at 8. This determination is left to
the sound judicial discretion of the district court. Id. In making this determination, the
Court must take into account judicial administrative interests as well as the equities
involved. Id. Among other things, courts consider whether the claims under review
[are] separable from the others remaining to be adjudicated and whether the nature of the
claims already determined was such that no appellate court would have to decide the
same issues more than once even if there were subsequent appeals. Id.
The Court concludes that an immediate appeal of the November 26 Order will
further judicial administrative interests and promote efficiency. First, the claims
adjudicated in the November 26 Order are separable from the remaining claims. All
three claims adjudicated in the November 26 Order involved the interpretation of the
CLA; specifically, the Court determined that Imation subsidiaries formed or acquired
after March 1, 2000, are not licensed under the CLA. The Courts November 26 Order
5
involved an issue of contract interpretation that was purely legal in nature and did not
involve extrinsic evidence or any factual determinations with respect to the parties
intent. The remaining claims in the present action do not involve any of the same legal
issues of contract interpretation. Instead, the remaining claims are mainly patent claims
that involve issues of infringement, patent invalidity, and patent enforceability.1 There
will be minimal or no overlap between the three claims addressed in the November 26
Order and the remaining claims. In the November 26 Order, the Court did not analyze
issues relevant to the patent claims, such as the patents themselves, the accused products,
or any alleged damage. It follows that there is a very low risk of duplicative appeals.2
Further, the November 26 Order adjudicated a central question in this litigation
and eliminated a principal defense to Philips counter-claims. The issues of contract
interpretation will affect the course of the patent infringement litigation. The finality
offered by appellate review will, at a minimum, define or substantially narrow the issues
left to be resolved and possibly facilitate settlement. Appellate resolution of the
November 26 Order will also help define, and possibly confine, issues for discovery,
dispositive motions, and trial.
1 There are additional non-patent claims remaining in this action. These claims,
however, are distinct and separable from the claims adjudicated in the November 26
Order, which involved the interpretation of the interplay between the CLAs grant of
license rights and the CLAs expiration clause. None of the unadjudicated claims involve
the same issue of contract interpretation.
2 Because the Courts November 26 Order was based on a purely legal question,
further fact discovery or future proceedings before this Court will not alter the record
relevant to the claims adjudicated in the November 26 Order.
6
The Court also concludes that the balance of the equities supports certification.
Imation asserts that the November 26 Order will impact the daily operation of Imation,
GDM, and Memorex. In particular, Imation asserts that the November 26 Order may
confuse purchasers or potential purchasers of optical media about the status of GDM and
Memorex as licensees. In addition, Imation asserts that the November 26 Order may
affect foreign proceedings in India and the Netherlands between the parties that also
involve the CLA, patents-in-suit, and accused products. Moser Baer also asserts that it
could suffer substantial economic harm without an immediate appeal because of the
likelihood of confusion in the marketplace regarding GDMs status. Moser Baer asserts
that without an immediate appeal, significant questions as to how to conduct its
operations in relation to GDM and its subsidiaries will remain and this uncertainty might
lead customers of GDM and its subsidiaries to find other sources of optical storage
media. Moser Baer also argues that without certification, Philips would be able to use the
November 26 Order as a sword in foreign actions.
Philips, on the other hand, contends that Imations and Moser Baers claimed
potential harm, absent certification, is speculative and overstated. For example, Philips
asserts that Moser Baer has a provision built into its agreement with GDM that requires
GDM to assign its customers back to Moser Baer upon termination of the agreement. In
addition, Philips asserts that Imations and Moser Baers concerns about what might
occur in foreign litigation is speculative and not grounds for certification.
After considering the equities in light of the status of the case, including not only
the potential harm to Imation, GDM, Memorex, and Moser Baer with respect to
7
uncertainty in their daily operations but also the absence of significant prejudice, in the
Courts view, to Philips, the Court concludes that the balance of the equities weighs in
favor of certification and immediate appeal. The Court is of the view that this decision
will serve judicial administrative interests, promote efficiency, and serve the overall
interests of justice. This is particularly true considering the Courts intention to move
this case forward by giving it calendar priority and by managing the case so that all
pretrial issues are resolved and the case is trial ready once the appeal has been decided.
The Court has made no assumptions about when precisely the appeal will be decided,
although the Court does expect the parties to self-expedite the matter consistent with the
Courts January 21, 2009 Order.
Imation and Moser Baer also move for a stay of enforcement of the final judgment
under Fed. R. Civ. P. 62(h). Rule 62(h) provides:
A court may stay the enforcement of a final judgment entered under
Rule 54(b) until it enters a later judgment or judgments, and may prescribe
terms necessary to secure the benefit of the stayed judgment for the party in
whose favor it was entered.
Fed. R. Civ. P. 62(h). Imation asserts that a stay is appropriate because the Courts
November 26 Order has potentially significant ramifications for Imations business
operations and for the related judicial proceedings in India and the Netherlands. Imation
further asserts that a stay will diminish the potential prejudicial impact that may occur if
Philips seeks to leverage the November 26 Order by telling purchasers that GDM and
Memorex are not licensed under the CLA. Similarly, Moser Baer argues that a stay is
appropriate because it will preclude Philips from seeking to enforce the Courts judgment
8
in a manner that is detrimental to Moser Baer and possibly inconsistent with a final
appellate ruling on the status of GDM.
Philips, on the other hand, asserts that there is no merit to Imations and Moser
Baers request for a stay. Specifically, Philips contends that the request is inherently
nonsensical because the November 26 Order provides declaratory relief, not monetary or
injunctive relief. Philips maintains that what Imation and Moser Baer truly seek is an
order enjoining Philips from informing market participants or other tribunals or
authorities of the Courts ruling.
The Court concludes that the circumstances before it, including consideration of
the interests of justice, do not require or otherwise warrant a stay.
Dated: February 2, 2009 s/Donovan W. Frank
DONOVAN W. FRANK
Judge of United States District Court
 

 
 
 

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