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PhotoThera, Inc. v. Oron

December 4, 2007

PHOTOTHERA, INC., A DELAWARE CORPORATION, PLAINTIFF,
v.
AMIR ORON, M.D., AN INDIVIDUAL; URI ORON, PH.D., AN INDIVIDUAL,, DEFENDANT.



The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge

ORDER: (1) GRANTING PREJUDICE; (2) DENYING AS MOOT DEFENDANT URI ORON'S MOTION TO STAY UNDER THE INTERNATIONAL ABSTENTION DOCTRINE; 3) DENYING AS MOOT DEFENDANT AMIR ORON'S MOTION TO DISMISS DEFENDANT URI ORON'S MOTION TO DISMISS WITHOUT FOR LACK OF PERSONAL JURISDICTION

Presently before the Court are Defendant Uri Oron's Motion to Dismiss [Doc. No. 17], Defendant Uri Oron's Motion to Stay Under the International Abstention Doctrine [Doc. No. 18], Plaintiff's Consolidated Opposition [Doc. No. 30], and Defendant Uri Oron's Reply [Doc. No. [35]. Also before the Court are Defendant Amir Oron's Motion to Dismiss for Lack of Personal Jurisdiction [Doc. No. 16], Plaintiff's Opposition [Doc. No. 31], and Defendant Amir Oron's Reply [Doc. No. 37.] For the following reasons, this Court: (1) GRANTS Defendant Uri Oron's Motion to Dismiss without prejudice; (2) DENIES AS MOOT Defendant Uri Oron's Motion to Stay under the International Abstention Doctrine; and (3) DENIES AS MOOT Defendant Amir Oron's Motion to Dismiss for Lack of Personal Jurisdiction.

BACKGROUND

Plaintiff PhotoThera is a San Diego company. [Pl.'s Opp to Def. Oron's Motion to Dismiss at 4.] Defendant Amir Oron ("Amir") is a doctor and the son of Defendant Uri Oron ("Uri"). [Id.] Both are citizens of Israel and currently live there. [Id. at 4-5.] In 1998, Amir filed a patent application for "Ischemia Laser Treatment" that is the subject of this dispute. [Id.] Uri worked for PhotoThera from August 2002 to June 2007.

On October 1, 2002, Uri entered into two written agreements involving Amir's pending patent. [Id. at 6.] The first was a patent assignment agreement assigning the patent rights from Amir to Uri. [Id.] The second was a license agreement exclusively licensing the patent rights from Uri to PhotoThera. [Id.] The agreements were written in English and prepared in San Diego by PhotoThera's outside counsel. [Id.] There is a dispute as to whether Uri was acting as PhotoThera's agent when he entered into these agreements. [Id.]

On March 1, 2007, Amir filed a lawsuit in Israel, alleging, among other things, that Uri promised Amir that he would receive royalty payments from PhotoThera in exchange of for the assignment and that PhotoThera had authorized Uri to make such a promise as its agent. [Id. at 10.] In that lawsuit, Amir seeks a declaration that his Assignment to Uri is void or otherwise unenforceable because PhotoThera has stated it will not pay him any royalties. [Id.]

PhotoThera denied making such promises in the Israeli lawsuit and now seeks a declaratory judgment from this Court that determines: (1) the validity and enforceability of the patent assignment; (2) the validity and enforceability of the license agreement; and (3) PhotoThera's obligation to pay Amir and/or Uri's rights to receive any royalty or other additional consideration related to the patent assignment and license. [FAC ¶¶ 34-38.] PhotoThera also asserts two other monetary claims: (1) Uri breached his contract with PhotoThera by disclosing confidential information, and (2) Amir intentionally interfered with PhotoThera's contractual relationship with Uri. [FAC ¶¶ 39-47.] PhotoThera asserted these same monetary claims as counterclaims in the Israeli lawsuit. [Def.'s Opp. at 5-6.]

ANALYSIS

A. The Court Denies Defendant's Motion to Stay Under the International Abstention Doctrine as Moot

The international abstention doctrine allows a court to stay or dismiss an action where parallel proceedings are pending in the court of a foreign nation. Supermicro Computer Inc. v. Digitechnic, 145 F. Supp. 2d 1147, 1149 (N.D. Cal. 2001) (citing Schwarzer et al., Federal Civil Procedure Before Trial, P 2:1326.4 (2000)). Abstention is rooted in concerns of international comity, judicial efficiency and fairness to litigants. Id. In short, the doctrine permits a court to abstain from hearing an action if there is a first-filed foreign proceeding elsewhere. Id. The Seventh and Eleventh Circuits expressly adopted the doctrine and the Ninth Circuit has indicated that the analysis should be guided by the principles set by the Supreme Court in Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976) (the "Colorado River doctrine"). See Neuchatel Swiss Gen. Ins. Co. v. Lufthansa Airlines, 925 F.2d 1193 (9th Cir. 1991) (vacating the district court's stay of an action in deference to parallel proceedings in Geneva, Switzerland pursuant to the Colorado River doctrine); Turner Entertainment Co. v. Degeto Film GmbH, 25 F.3d 1512, 1523 (11th Cir. 1994); Finova Capital Corp. v. Ryan Helicopters, U.S.A. Inc., 180 F.3d 896, 900-901 (7th Cir. 1999).

While the facts of this case appear to fit neatly within the doctrine, it is unnecessary for this Court to utilize that doctrine at this stage in the proceedings. Instead, Defendant Uri's motion can be resolved by dismissing all of Plaintiff's claims on other grounds. Therefore the Court DENIES Defendant Uri's motion to stay under the international abstention doctrine as moot.

B. The Court Dismisses Plaintiff's Declaratory Relief Claim

1. Legal Standard

Under the Declaratory Judgment Act, 28 U.S.C. § 2201, et. seq., a district court may decline to exercise jurisdiction over a declaratory action, even though subject matter jurisdiction is otherwise proper. See 28 U.S.C. § 2201(a) (2007); Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 494 (1942). A district court is authorized, in the sound exercise of its discretion, to stay or to dismiss an action seeking a declaratory judgment before trial or after all arguments have drawn to a close. Wilton v. Seven Falls Co., 515 U.S. 277, 288 (1995); Supermicro, 145 F. Supp. 2d at 1152. In enacting the Declaratory Judgment Act, "Congress . . . created an opportunity, rather than a duty, [for a district court] to grant a new form of relief to qualifying litigants." Id.*fn1

The Act enlarged the range of remedies available in federal court, but did not extend federal jurisdiction. 28 U.S.C. § 2201; Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671 (1950). Thus, as a threshold requirement, an actual "case or controversy" must always exist so the court does not render an impermissible advisory opinion. See Flast v. Cohen, 392 U.S. 83, 95-96 (1968); Coalition for a Healthy Cal. v. F.C.C., 87 F.3d 383, 386 (9th Cir. 1986).

The complaint in a declaratory relief action must allege facts sufficient to establish an actual controversy. Int'l Harvester Co. v. Deere & Co., 623 F.2d 1207, 1210 (7th Cir. 1980). The disagreement must not be nebulous or contingent, but must have taken on a fixed and final shape so that a court can see what legal issues it is deciding and what effects its decision will have on the adversaries. Pub. Serv. Com. v. Wycoff Co., 344 U.S. 237, 244 (1952); United States v. Arnold, 678 F. Supp. 1463, 1465-66 (S.D. Cal. 1988) (Brewster, J.) The controversy must be real, substantial, and capable of specific relief through a decree of conclusive character. Display Research Labs. v. Telegen Corp., 133 F. Supp. 2d 1170, 1174 (N.D. Cal. 2001), citing Aetna Life Ins. Co. v. Haworth, 300 U.S. 277, 240-41 (1937).

A court can decline jurisdiction if it appears that the suit was filed for an improper tactical purpose. Gribin v. Hammer Galleries, Div. of Hammer Holdings, Inc., 793 F. Supp. 233, 236 (C.D. Cal. 1992). For instance, courts have recognized that declaratory relief actions are inappropriate when filed merely to improve a bargaining position in ongoing negotiations. EMC Corp. v. Norand Corp., 89 F.3d 807, 809 (Fed. Cir. 1996), overruled in part on other grounds, MedImmune, Inc. v. Genentech, Inc., 127 S.Ct. 764 (2007). Further, using the Act to anticipate an affirmative defense is not ordinarily proper, and numerous courts have refused to grant declaratory relief to a party who has come to court only to assert an anticipatory defense. Hanes Corp. v. Millard, 531 F.2d 585, 592-93 (D.C. Cir. 1976); See Gribin, 793 F. Supp. at 235 (citing cases).

The Ninth Circuit has provided various factors for courts to consider when deciding to issue a declaratory judgment.

The touchstone factors are that a district court should avoid needless determination of state law issues; it should discourage litigants from filing declaratory actions as a means of forum shopping; and it should avoid duplicative litigation. Those factors are not exclusive. Other factors that should be considered, depending on the circumstances, include whether the declaratory action will settle all aspects of the controversy or whether the use of a declaratory action will result in entanglement between the federal and state court systems. In ...


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