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Judge Netburn Grants Preliminary Anti-Suit Injunction "Zipping Up" Suit Pending in Japan

On May 8, 2018, United States Magistrate Judge Sarah Netburn (S.D.N.Y.) granted plaintiffs AU New Haven, LLC's ("AU") and Trelleborg Coated Systems US, Inc.'s ("Trelleborg") motion for a preliminary anti-suit injunction concerning an action pending in Japan.

AU is the owner by assignment of U.S. and Japanese patents directed to a water-resistant zipper.  Prior to the patents being assigned to AU, the inventors of the patents granted YKK Corp. ("YKK") an exclusive license (under an exclusive license agreement, hereinafter "ELA") to practice the invention in certain markets.

Plaintiffs filed this case in 2015, alleging that YKK infringed the U.S. patent and breached the ELA by selling patented zippers in excluded markets. Two years later, YKK filed an action in Japan, seeking a declaratory judgment that it did not infringe the Japanese patent, which would then be used to inform the U.S. court that YKK had, due to non-infringement, not breached the ELA in Japan.

The court noted that "principles of comity counsel that injunctions restraining foreign litigation be used sparingly and granted only with care and great restraint." The court then held that the two threshold requirements for an injunction—that the parties be the same in both matters and that resolution of the U.S. action be dispositive of the foreign action to be enjoined—were met. Specifically, the court found that although YKK had filed the Japanese action against Trelleborg (not AU), AU's interests were sufficiently aligned with Trelleborg's to be the "same parties," and that because the court must determine whether YKK practiced the Japanese patent in violation of the ELA, this action would be dispositive of the Japanese action.

Upon finding the two threshold requirements met, the court then found that four of the five discretionary factors set out in China Trade & Dev. Corp. v. M.V. Choon Yong, 837 F.2d 33, 35 (2d Cir. 1987) weigh in favor of an injunction. Specifically the court found that the Japanese action: (1) would frustrate public policy disfavoring forum shopping given that the parties had agreed to resolve all disputes arising out of the ELA in New York courts; (2) is vexatious; (3) appears to be a last-ditch effort to circumvent this court's decision making process, distract plaintiffs in this case, and obtain a more favorable result; and (4) may result in inconvenience, expense, inconsistency, and a race to judgment.

Finally, the court found the traditional test for a preliminary injunction to be satisfied, i.e., that plaintiffs had showed irreparable harm, a likelihood of success on the merits, and sufficiently serious questions going to the merits to make them a fair ground for litigation, and a balance of hardships tipping decidedly in plaintiffs' favor.

Case:  AU New Haven, LLC et al. v. YKK Corp., et al., No. 15-CV-3411 (GHW)(SN), Dkt. No. 356 (S.D.N.Y. May 8, 2018).