Current Lighting Solutions, LLC v. Signify Holding BV et al. (D. Mass. 23-cv-11398).

Current Lighting filed a declaratory judgment action in the District of Massachusetts against Signify, seeking a declaration of non-infringement of eighteen Signify patents.  Signify responded by filing a complaint in the District of Delaware and an ITC complaint asserting nine Signify patents, seven of which were identified in the Massachusetts complaint.  Signify then moved to dismiss the Massachusetts complaint.

Judge O’Toole agreed with Signify and declined to exercise jurisdiction over the declaratory judgment claim and dismissed the case.  Signify had notified Current in June 2018 that it believed Current was infringing several of Signify’s LED lighting patents and sought to have Current take a license.  Current denied infringement and asserted its own patents.  This led to five years of negotiations, during which the parties believed they were making progress towards a resolution and agreed to forestall litigation.  A cross-licensing proposal was made by Signify on May 15, 2023, and the parties scheduled a meeting for June 5, 2023 to discuss the proposal.  Current sought to push the meeting to June 22, due in part to the installation of a new CEO, and Signify agreed.

Less than 30 minutes before the meeting was to start, Current notified Signify that it was cancelling the meeting and that it had already filed the declaratory judgment action.  It informed Signify that it would hold off on serving to allow Signify a last opportunity to make a “more realistic licensing offer.”

The Court noted that it has broad discretion under the Declaratory Judgment Act to refuse to entertain a declaratory judgment case.  One consideration with this regard is the status of settlement negotiations, which would make the need for judicial relief less compelling than a case where there was no real prospect of non-judicial resolution.  Judge O’Toole agreed with Signify that the dispute as of the filing of the Massachusetts complaint appeared to be moving towards settlement, and that Current acted in bad faith by delaying and then cancelling the June meeting to lull Signify into a false sense of security while preparing the DJ complaint, which was filed for the purpose of settlement leverage.  He noted that the filing of a DJ action to interfere with good-faith, ongoing negotiations provides a basis for declining to exercise jurisdiction, as did the use of a DJ complaint as negotiation leverage.  He further noted that courts possess discretion to depart from the “first-to-file” rule in similar circumstances.  Accordingly Judge O’Toole dismissed the case without prejudice.