In re: Supercell Oy
United States Court of Appeals for the Federal Circuit
Case No. 2020-113
Filed March 17, 2020

In a case that highlights the sometimes important race to the courtroom and nuances of local procedure, the Federal Circuit shot down Supercell’s timing arguments related to routine filing procedures in view of an agreement between the parties to the lawsuit. In In re: Supercell Oy, No. 2020-113 (Fed. Cir. 2020), the United States Court of Appeals for the Federal Circuit issued an opinion regarding a contractual dispute between Supercell and GREE, Inc. Supercell and GREE have been engaged in numerous patent litigations. Supercell and GREE had entered into a settlement agreement to ongoing litigation between the parties. The terms of the settlement agreement included a so-called standstill provision, according to which, both parties agreed not to commence patent litigation until February 28, 2019. The agreement also included a governing law and forum selection clause, which stated that California law governs any action for breach of the settlement, and that the venue for breach or enforcement of the settlement agreement is the Northern District of California.

Shortly after midnight Central time on February 28, 2019, GREE filed three complaints against Supercell alleging patent infringement in the Eastern District of Texas. In response, Supercell sued GREE in the Northern District of California, alleging that GREE breached the terms of the settlement agreement by bringing the three Texas complaints prior to the expiration of the settlement agreement. Supercell sought declaratory judgments of noninfringement, and moved for a temporary restraining order in California to prevent GREE from pursuing the Texas actions. Supercell also moved the United States District Court for the Eastern District of Texas court to transfer the Texas actions to the Northern District of California, arguing that GREE’s alleged breach of the settlement agreement should be remedied by transferring the Texas actions.

The California and Texas courts each denied Supercell’s motions, with the Eastern District of Texas basing its rulings not to transfer the Texas actions on the “first-to-file” rule, which generally favors the first-filed actions when multiple lawsuits involving the same claims are filed in different jurisdictions and on an analysis of the settlement agreement’s forum selection clause. Supercell petitioned the Court of Appeals for the Federal Circuit for a writ of mandamus to transfer the Texas actions to the Northern District of California.

In its petition to the CAFC, Supercell challenged the district court’s analysis, but did not dispute that GREE filed its suits before Supercell. Instead, Supercell argued that the district court erred in analyzing when the suits were filed. First, Supercell argued that GREE’s suits were commenced at the time GREE logged into the filing system, at which time the standstill provision would have still been in effect, rather than the time GREE uploaded the suits, the time that the district court considered the suits to have been filed. Second, Supercell argued that the district court erred by applying Central time to determine when GREE filed its suits rather than Pacific time. If the district court had applied Pacific time, the filings by GREE would have occurred during the standstill provision.

In its decision, the CAFC disagreed with Supercell on both arguments. The CAFC looked to the Eastern District of Texas local rules in determining what time GREE’s suits were filed. The Eastern District’s local rules state that “a document filed electronically is deemed filed at the ‘entered on’ date and time stated on the Notice of Electronic Filing.” Each of the Notices of Electronic Filing for the three complaints stated that they were “entered” on February 28. Based on the entered on dates stating February 28, the CAFC found no abuse of discretion in the Eastern District of Texas court’s determination of when the Texas actions were filed. In response to Supercell’s arguments that the Eastern District of Texas court was required to apply Pacific time, the CAFC noted that the settlement agreement was silent as to what time zone should apply to the standstill provision. In the absence of such a time zone contractual provision, the CAFC failed to find an abuse of discretion in the Eastern District’s analysis, and noted that Supercell failed to present any California authority that would require the Eastern District of Texas court to apply Pacific time. Supercell also argued that the forum selection clause barred GREE’s Texas patent infringement actions. The CAFC also rejected this argument, and agreed with the reasoning of the Eastern District of Texas court that the forum selection clause “applies only to actions for breach or enforcement of the Settlement Agreement, not all disputes between the parties or even all disputes relating to the Settlement Agreement.”

This decision highlights some issues that should be taken into account when drafting timing requirements in agreements between parties. This is particularly relevant when an action must either be performed before a particular time or is barred from being performed until after a specified time. According to the CAFC, a choice of law provision in an agreement does not imply a time zone requirement to any dates or times indicated in the agreement in the absence of any authority indicating that a particular time zone controls agreements in a particular jurisdiction. To avoid any potential pitfalls, agreements may explicitly indicate what time zone applies to such timing requirements. Further, parties should be aware that a forum selection cause for breach or enforcement of a settlement agreement is binding on actions relating to enforcement or breach of the settlement agreement, not necessarily all disputes relating to the settlement agreement.

Special thanks to our colleagues Pat Richey and Kerry Creeron for preparing this write-up.