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British Telecommunications PLC v. Fortinet Inc.

United States District Court, D. Delaware

December 5, 2019

BRITISH TELECOMMUNICATIONS PLC and BT AMERICAS, INC., Plaintiffs,
v.
FORTINET INC, Defendant.

          Philip A. Rovner, Jonathan A. Choa (Potter, Anderson & Corroon LLP), Wilmington, Delaware; James H. Shalek, Baldassare Vinti, Nolan M. Goldberg, Fabio E. Tarud (Proskauer Rose LLP), New York, New York. Counsel for Plaintiffs

          Jack B. Blumenfeld, Brian P. Egan (Morris, Nichols, Arsht & Tunnell LLP), Wilmington, Delaware; John (Jay) Neukom, James Y. Pak (Skadden, Arps, Slate, Meagher & Flom LLP), Palo Alto, California. Counsel for Defendant. Counsel for Defendant

          MEMORANDUM OPINION

          COLM F. CONNOLLY, UNITED STATES DISTRICT JUDGE.

         Plaintiffs British Telecommunications pic (British Telecom) and BT Americas, Inc. are part of a global conglomerate that offers telecommunications products and services. D.I. 1 ¶¶ 14-18. Defendant Fortinet, Inc. designs, fabricates, and sells network security products and services. Plaintiffs have asserted patent infringement claims against Fortinet based on five patents issued by the United States Patent and Trademark Office. Fortinet moved to dismiss all of Plaintiffs claims pursuant to Federal Rule of Civil Procedure 12(b)(1) and the doctrine of forum non conveniens. D.I. 9 at 1. Fortinet argued that Plaintiffs and Fortinet "are parties to a written contract that contains a mandatory, exclusive forum-selection clause that forbids either side from asserting claims anywhere but the courts of England." Id.

         A Magistrate Judge issued a Report and Recommendation, recommending that I deny Fortinet's motion. D.I. 32. Fortinet has filed objections to the Report and Recommendation. D.I. 26. Plaintiffs have filed a response to the objections. D.I. 38. Because Fortinet's motion is a dispositive motion, I exercise de novo review of the Magistrate Judge's findings and recommendation. See Fed. R. Civ. P. 72(b)(3). Although I do not agree with all the Magistrate Judge's stated reasons for her recommendation, I agree with and will adopt her recommendation that I deny Fortinet's motion.

         I. BACKGROUND

         The Complaint alleges infringement of five patents: U.S. Patent Nos. 7, 370, 358; 7, 693, 971; 7, 774, 845; 7, 159, 237 (the #237 patent); and 7, 895, 641 (the #641 patent). D.I. 1 ¶ 1. The patents relate generally to computer or network security. Each of the Complaint's five counts allege infringement of a different patent. BT Americas, which owns the #237 and #641 patents, is the plaintiff in Counts I and II. British Telecom, which owns the three remaining patents, is the plaintiff in Counts III, IV, and V.[1] The Complaint alleges infringement dating back to at least 2014 and continuing infringement by Fortinet.

         In April 2016, British Telecom and Fortinet executed a "Frame Agreement" that set forth, among other things, the terms by which British Telecom could purchase and resell Fortinet's computer hardware and software products. D.I. 11-1 §§ 1.7, 1.8, 1.8.1, 1.13, 2.2, 2.3. Under § 2.5 of the Agreement, British Telecom "agree[d] and acknowledge[d] that Fortinet... shall retain all intellectual property rights ... [and] patent rights" in Fortinet's products and that British Telecom "shall have no intellectual property right" in Fortinet's products. In § 17.13 of the Agreement, British Telecom and Fortinet agreed that "[n]othing contained in this [Frame Agreement] shall be construed as conferring by implication or otherwise upon either party any license or other right except the licenses, rights and uses expressly granted hereunder to the party hereto[.]"

         The Frame Agreement's governing law and forum-selection clauses are the asserted bases for Fortinet's pending motion. Pursuant to § 17.4 of the Agreement, British Telecom and Fortinet agreed that "any claims or disputes arising out of contractual and/or non-contractual obligations relating to or in connection with the [Frame Agreement]... shall be governed by and construed in accordance with the laws of England." D.I. 11, Ex. 1 at 11. Section 17.4 also requires the parties to "submit to the exclusive jurisdiction of the English courts in relation to contractual and/or non-contractual obligations." Id.

         II. LEGAL STANDARDS

         "Under the federal doctrine of forum non conveniens, 'when an alternative forum has jurisdiction to hear [a] case, and when trial in the chosen forum would 'establish ... oppressiveness and vexation to a defendant... out of all proportion to plaintiffs convenience,' or when the 'chosen forum [is] inappropriate because of considerations affecting the court's own administrative and legal problems,' the court may, in the exercise of its sound discretion, dismiss the case," even if jurisdiction and proper venue are established." Am. Dredging Co. v. Miller, 510 U.S. 443, 447-48 (1994) (quoting Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241 (1981), in turn quoting Koster v. (Am.) Lumbermens Mut. Cas. Co., 330 U.S. 518, 524 (1947)). The doctrine traces its roots to the practice of courts at common law to "occasionally decline, in the interest of justice, to exercise jurisdiction, where the suit... c[ould] be more appropriately conducted in a foreign tribunal." Canada Malting Co. v. Patterson Steamships, Ltd., 285 U.S. 413, 422 (1932). In federal courts today, the doctrine applies only in cases where the alternative forum is in a foreign country or "perhaps in rare instances where a state or territorial court serves litigational convenience best." Sinochem Int'l, Co. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 430 (2007) (citations omitted).

         The doctrine presupposes the existence of an alternative forum that has jurisdiction over the parties and the claims. See Am. Dredging, 510 U.S. at 447 ("Under the federal doctrine of forum non conveniens, when an alternative forum has jurisdiction to hear [a] case, ... the court may, in the exercise of its sound discretion, dismiss the case.") (brackets in the original) (internal quotation marks and citations omitted) (emphasis added)); Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 507 (1947) ("In all cases in which the doctrine of forum non conveniens comes into play, it presupposes at least two forums in which the defendant is amenable to process; the doctrine furnishes criteria for choice between them."). Thus, "[a]t the outset of any forum non conveniens inquiry, the court must determine whether there exists an alternative forum." Piper, 454 U.S. at 254 n.22.

         In most cases, "this requirement will be satisfied when the defendant is 'amenable to process' in the other jurisdiction." Id. at 254 (citing Gulf Oil, 330 U.S. at 506-07). But

in rare circumstances ... where the remedy offered by the other forum is clearly unsatisfactory, the other forum may not be an adequate alternative, and the initial requirement may not be satisfied. Thus, for example, dismissal would not be appropriate where the alternative ...

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