A Blog About Intellectual Property Litigation and the District of Delaware

Entries for tag: Customer Suit Exception

Writing this blog, I sometimes feel like an especially jaded film critic. Having seen so much, I can no longer get a thrill from from a well-constructed plot and competent acting. I can only be excited by Croatian claymation about murderous cetaceans, or a silent black and white documentary about a cat who eats figs.

It lacks a certain je ne sais quoi in color . . .
It lacks a certain je ne sais quoi in color . . . Tijana Drndarski, Unsplash

All this is that I love a novel theory, and by Jove I've got one for you today.

In Samsung Elecs. Co., Ltd. v. Technical Consumer Prods., Inc., C.A. No. 23-186-JNR (D. Del. May 2, 2024), Samsung sued both the overseas manufacturer and seller of allegedly infringing products in one action. The seller moved to sever and stay the claims against it under the "customer suit" exception, arguing that the manufacturer was the "true defendant," while its role was "merely peripheral."

This was a bit odd, because the customer suit exception normally applies to cases where the actions are proceeding in different venues:

[C]ustomer-suit exception cases “typically arise” in the context of forum-shopping, “when related patent infringement actions are pending in different jurisdictions[.]” Basically, courts have concluded that the normal first-filed priority will give way when a suit against the re-seller was the first one filed. . . .Though courts have applied the exception when the manufacturer and re-seller are defendants in the same suit, they still do so with principles of forum selection in mind. For example, the customer-suit exception would apply if it would mean staying the case as to the re-seller to then transfer the case to a different and more appropriate venue for the lawsuit against the manufacturer.

Id. at 2-3 (internal citations omitted).

Judge Ranjan denied the motion, finding that the customer-suit exception did not provide a "general exception to a lawsuit against a manufacturer and re-seller":

The circumstances of this case don’t concern dueling lawsuits or forum selection issues, as there are no separate competing lawsuits, and no Defendant has contested venue or jurisdiction or would seek transfer to a different venue. Moreover, HGC and TCP are represented by the same counsel, so the inefficiencies created by forcing a “true defendant” and an unrelated “peripheral defendant,” such as one among many customers of the “true defendant,” to litigate together are absent here. In short, HGC hasn’t proffered a reason for the Court to grant its motion that furthers the spirit of the customer-suit exception.

Id. at 3.

Well it was a nice try anyway. The whole opinion is worth a read and goes into greater depth on the efficiencies that might be gained or lost by severance in similar situations.

Ant Rozetsky, Unsplash

It's fairly common for a patentee to bring suit simultaneously against both a customer who is using or reselling an infringing product and the manufacturer who produced the product.

Sometimes the customer is the real target, and sometimes it's the manufacturer. Either way, some courts have recognized a "customer suit exception" that suggests that, under some circumstances, suits against a manufacturer should take precedence over a suit against a customer.

As courts sometimes point out, the customer suit "exception" began as an exception to the first filed rule in patent cases. But courts can also apply the principle more broadly, including to motions to stay.

For example, last week Judge Williams addressed a motion to stay …