Foreign Party Cannot Hide Behind Hague Convention To Avoid Service

Order Re Service and Motion to Dismiss Re Service, Xilinx, Inc., v. Godo Kaisha IP Bridge 1, Case No. 3:17-cv-00509-JD (Judge James Donato)

It is not uncommon for parties to race to file competing patent suits in their preferred districts once negotiations break down and litigation appears necessary. In some cases, recognizing that federal courts generally give priority to cases which are the "first filed" and procedurally further along, a party may attempt to delay service of an opposing party's complaint. That was the apparent strategy of Japan-based Godo Kaisha IP Bridge 1 ("IPB") in its patent dispute with San Jose-based Xilinx, Inc. ("Xilinx"). But as IPB discovered, delay tactics do not always work.

Here, after the parties were unable to resolve their dispute, IPB filed a two-patent infringement suit in the Eastern District of Texas on January 31, 2017, and Xilinx filed a non-infringement declaratory judgment action on twelve different patents the following day in the Northern District of California. (According to Xilinx in its pending Motion to Dismiss or Transfer in the Texas case, Civil Action No. 2:17-cv-00100, IPB violated a Forbearance Agreement by filing suit a day early.) Even though IPB sued Xilinx in the U.S., it refused to accept service of Xilinx's action at its principal address in Tokyo. And after being contacted to accept service on his client's behalf, IPB's U.S. trial counsel replied, "I suppose you never heard of the 'first to file' rule. We will serve Xilinx directly, and you can do the same with IPB. We will be well into the ED Tex case by the time your case is served." Based on this and other correspondence regarding service, Judge Donato concluded that "IPB's counsel declined to accept service in an apparent fit of pique, and the record of events after that indicates that IPB has been unduly difficult to serve in a manner reflecting the uncooperative spirit manifested in [its attorney's] words."[1]

Following the refusal of IPB's U.S.-based counsel to accept service, Xilinx filed a motion for an order of service under Federal Rule 4(f)(3), which permits service in a foreign country "by other means not prohibited by international agreement, as the court orders." IPB responded that it has a "right" to force service through strict compliance with the Hague Convention, and that Xilinx was required to attempt service through the Hague Convention before resorting to other means.

Judge Donato disagreed. He held that...