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Jds Uniphase Corporation v. Finisar Corporation

March 5, 2012

JDS UNIPHASE CORPORATION, PLAINTIFF/PETITIONER,
v.
FINISAR CORPORATION, DEFENDANT/RESPONDENT.



The opinion of the court was delivered by: Ambrose, Senior District Judge

OPINION and ORDER OF COURT

Plaintiff, JDS Uniphase Corporation ("JDSU"), has filed a Motion for Vacatur of Arbitration Award and Injunctive Relief. (ECF No. 4). Defendant, Finisar Corporation, has filed a Motion to Dismiss Complaint Petitioning Vacatur of Arbitration Award pursuant to Rule 12(b)(1) and 12(b)(6), or in the alternative for abstention. (ECF No. 40). Both Motions are fully briefed and ripe for review. After careful consideration of the same and based on the reasoning set forth below, I find that I lack subject matter jurisdiction. Therefore, Finisar's Motion to Dismiss (ECF No. 40) is granted and Plaintiff's Motion for Vacatur and Injunctive Relief (ECF No. 4) is denied.

I. Background

The present case stems from patent infringement litigation that was initiated in this court on March 14, 2007: Emcore Corporation and JDS Uniphase Corporation v. Optium, Civil Action No. 7-326 (W.D. Pa. 2009)(Ambrose, J.) ("Federal Action in Pennsylvania").

In July, 2008, Finisar sued JDSU in the Northern District of California to enforce the terms of a Covenant Not to Sue ("CNS"). The action was dismissed for lack of jurisdiction. Finisar then refilled the claims in state courts of California ("state court action in California").

In August 2008, Optium became a wholly-owned subsidiary of Finisar.

On July 15, 2009, Finisar completed a sale of its Network Tools business to JDSU which included the execution of a CNS. A dispute ensued over whether the parties stipulated to dismiss the ongoing Federal Action in Pennsylvania. As a result, Optium filed a motion for leave to file an amended answer to add release as an affirmative defense in the Federal Action in Pennsylvania. Optium also sought to file a second summary judgment motion based on the same defense. On August 19, 2009, this court denied Optium's motions and the Federal Action in Pennsylvania proceeded to trial.

It simply defies belief that the parties represented by counsel intended to settle a patent infringement lawsuit, with trial imminent, without mentioning it in the course of settlement negotiation or in the settlement document itself. Thus, I find that it would be futile to allow amendment of the Answer because the Settlement Agreement does not release Optium from the instant matter. (Civil Action 7-326, ECF No. 135).

On November 13, 2009, a verdict was returned in favor of Emcore in the amount of $2,774,364 and in favor of JDSU in the amount of $622,440 in the Federal Action in Pennsylvania. On February 12, 2010, Optium filed a Notice of Appeal. During the appeal, Optium argued that this court applied the wrong standard and abused its discretion in denying Optium's motions described above. The Federal Circuit Court of Appeals affirmed this court's judgment on January 26, 2011.

Back in the state court action in California, JDSU challenged the jurisdiction of the arbitrator based on the Federal Action in Pennsylvania. The Arbitrator dismissed the challenge and rendered a decision in the action finding that based on the CNS, JDSU had released Optium in the Federal Action in Pennsylvania and that continued prosecution of the same constituted a breach of the CNS. On August 31, 2011, the Arbitrator awarded $6,756,427.05 to Finisar, plus $3,215,944.38 in attorneys' fees and expenses incurred by Finisar in defending the Federal Action in Pennsylvania (from July 15, 2009, on) and $517,275.86 in prejudgment interest.

On September 14, 2011, Finisar petitioned the Superior Court for the City and County of San Francisco to confirm the arbitration award. On October 20, 2011, the Superior Court for the City and County of San Francisco confirmed the award.

On September, 20, 2011, JDSU filed a Complaint in this court seeking to vacate the Arbitrator's award. (ECF No. 1).

II. Legal Discussion

A. Finisar's Motion to Dismiss -- Lack of Jurisdiction ...


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