United States Court of Appeals
for the Federal Circuit
__________________________
SPREAD SPECTRUM SCREENING LLC,
Plaintiff-Appellant,
v.
EASTMAN KODAK COMPANY, CONTINENTAL
WEB PRESS, INC., GRAPHIC PARTNERS, INC.,
JOHNS-BYRNE COMPANY, AND GENESIS PRESS,
INC
Defendants-Appellees.
__________________________
2011-1019
__________________________
Appeal from the United States District Court for the
Northern District of Illinois in Case No. 10-CV-1101,
Judge Robert W. Gettleman.
_________________________
Decided: September 26, 2011
_________________________
CHAD ENNIS, F&B LLP, of Austin, Texas, argued for
the plaintiff-appellant. With him on the brief was ADAM
V. FLOYD. Of counsel was JOSEPH D. GRAY.
R. SCOTT FELDMANN, Crowell & Moring, LLP, of Ir-
vine, California, argued for the defendants-appellees.
With him on the brief were BRIAN M. KOIDE, of Washing-
SPREAD SPECTRUM v. EASTMAN KODAK 2
ton, DC, and SCOTT L. BITTMAN, of New York, New York.
Of counsel was JEFFREY D. SANOK, of Washington, DC.
__________________________
Before RADER, Chief Judge, LOURIE and O’MALLEY,
Circuit Judges.
O’MALLEY, Circuit Judge.
In this patent case, Spread Spectrum Screening LLC
(“S3”) filed suit in the Northern District of Illinois against
Eastman Kodak Company (“Kodak”) and four of Kodak’s
customers – Continental Web Press, Inc., Graphic Part-
ners, Inc., Genesis Press, Inc., and Johns-Byrne Company
(collectively, “the Kodak Customers”) – alleging infringe-
ment of U.S. Patent No. 5,689,623 (“the ’623 Patent”). On
September 1, 2010, the district court granted Kodak’s
motion to: (1) sever the claims against it from those
against the other defendants; (2) stay the action against
the Kodak Customers in Illinois; and (3) transfer the case
against Kodak to the Western District of New York. S3
appeals only from the portion of the order granting Ko-
dak’s motion to stay the case against the Kodak Custom-
ers pending the outcome of its action against Kodak in
New York. Spread Spectrum Screening, LLC v. Eastman
Kodak Co., No. 10 C 1101, 2010 U.S. Dist. LEXIS 90549
(N.D. Ill. Sept. 1, 2010) (“District Court Opinion”). Be-
cause this appeal is not from a final judgment within the
meaning of 28 U.S.C. § 1295(a)(1), and does not otherwise
qualify as an appealable order, we dismiss for lack of
jurisdiction.
BACKGROUND
A. Factual Background
1. The ’623 Patent
3 SPREAD SPECTRUM v. EASTMAN KODAK
The ’623 Patent – entitled “Spread Spectrum Digital
Screening” – was invented by an individual named Adam
Pinard and is currently assigned to S3, a patent holding
company. The patent, which issued on November 18,
1997, discloses a type of screening mask that can be used
in commercial printing software and includes claims
drawn to a “spread spectrum digital screening mask,”
methods and systems for using the mask, and binary
reproductions of a continuous tone image that have cer-
tain claimed characteristics.
The technology involved relates to digital “half-
toning,” which S3 describes as “a process used in the
commercial printing industry to convert a continuous tone
image, such as a photograph, into a half-tone image
consisting of a pattern of minute dots that, when viewed
at a suitable distance, appears to recreate the continuous
tone image.” Appellant’s Br. 14. Newspapers, for exam-
ple, are printed in half-tone.
The ’623 Patent contains four sets of claims:
Claims 1-12, which claim a digital screen-
ing mask;
Claims 13-16, which claim methods of us-
ing the digital screening mask;
Claim 17, which claims a system that uses
the digital screening mask; and
Claims 18-19, which claim binary repro-
ductions having certain characteristics.
According to S3, the screening masks described in the
’623 Patent result in “visually-pleasing half-tone images
that [are] less susceptible to dot gain and dot loss and
thus more commercially viable than the prior art.” Appel-
lant’s Br. 17.
SPREAD SPECTRUM v. EASTMAN KODAK 4
2. Kodak’s Staccato Software
Kodak manufactures, uses, and licenses the allegedly
infringing products under the brand name Staccato. The
Kodak Customers are licensed to use the Staccato soft-
ware products. According to Kodak, it has licensed 1,621
copies of the software in the United Sates, and the Kodak
Customers represent only nine (9) licenses. Appellees’ Br.
5.
Although the Kodak Customers are licensed to use the
Staccato software, they are not involved in making it.
According to S3, the Kodak Customers “use Kodak’s
digital screening masks and systems to generate half-
toned images” which are “typically etched onto a printing
plate. The plate is then installed in a printing press,
which applies ink onto the plate and then rolls it onto a
media, thereby transferring the image onto the media.”
Appellant’s Br. 18. S3 alleges that the Kodak Customers
manufacture and sell their own binary reproductions “in
the form of half-toned image reproductions.” Id.
B. Procedural History
On February 18, 2010, S3 filed suit against Kodak
and the Kodak Customers in the Northern District of
Illinois alleging infringement of the ’623 Patent. S3 also
named a Kodak competitor, Heidelberg U.S.A., Inc., and
its customer, Hafner Printing Co., Inc., as defendants –
both of which were later dismissed from the litigation. 1
In the complaint, S3 alleges that Kodak: (1) makes, uses,
and sells software that directly infringes claims 1-9, 11,
and 13-18 of the ’623 Patent; and (2) actively induces its
customers to infringe claims 1-9, 11, and 13-18 of the ’623
1 S3 entered into a settlement agreement with Hei-
delberg and Hafner. Pursuant to the parties’ request, on
September 29, 2010, the district court entered an order of
dismissal with respect to those defendants.
5 SPREAD SPECTRUM v. EASTMAN KODAK
Patent. With respect to the Kodak Customers, S3 alleges
that they infringe the ’623 Patent by: (1) using Kodak’s
infringing products; and (2) manufacturing binary repro-
ductions that independently infringe claim 18 of the ’623
Patent. Specifically, S3 alleges, the Kodak Customers
directly infringe “at least claims 1-9, 11, and 13-18 of the
’623 Patent by making, using, selling, and/or offering for
sale infringing products and/or methods.” Joint Appendix
(“J.A.”) 68 at ¶ 67.
Kodak and three of its Customers (Genesis, Johns-
Byrne, and Graphic Partners) counterclaimed seeking
declaratory judgment that the ’623 Patent is invalid and
not infringed. In addition, one of Kodak’s Customers,
Johns-Byrne, filed a cross-claim against Kodak for in-
demnification. In the cross-claim, Johns-Byrne alleged
that it uses the Staccato product “in only one type of job,
printing a white base on plastic” and that this use
“amounts to perhaps 1% or 2% of Johns-Byrne’s business,
and can be accomplished with other software.” J.A. 258 at
¶ 3. 2
On April 29, 2010, Kodak filed a motion to: (1) sever
the case against it from the other defendants; (2) transfer
the case against it to the Western District of New York;
and (3) stay the case against the Kodak Customers in the
Northern District of Illinois. The Kodak Customers joined
in Kodak’s motion.
On September 1, 2010, the district court granted Ko-
dak’s motion in full. Specifically, the court: (1) severed
2 At oral argument, counsel for Kodak indicated
that the cross-claim has been settled and that Kodak:
(1) “do[es] not have any outstanding disputes with the
customers”; and (2) “is defending them all in the Western
District of New York.” Oral Argument at 18:52, available
at http://www.cafc.uscourts.gov/oral-argument-
recordings/2011-1019/all.
SPREAD SPECTRUM v. EASTMAN KODAK 6
S3’s claims against Kodak from the claims against its
competitor, Heidelberg, on grounds that the actions did
not arise from a common transaction or occurrence;
(2) severed S3’s claims against Kodak from its claims
against the Kodak Customers; (3) stayed the case against
the Kodak Customers pending resolution of S3’s case
against Kodak; and (4) transferred the case against
Kodak to the Western District of New York pursuant to
28 U.S.C. § 1404(a), concluding that it is a more conven-
ient forum and that the interest of justice favored the
transfer. 3 S3 appeals only from the portion of the district
court’s order granting the stay.
With respect to the motion to stay, the district court
found that the Kodak Customers were “merely periph-
eral” to the action against Kodak, would “add nothing to
plaintiff’s infringement action against Kodak,” and were
named as defendants solely to establish venue in the
Northern District of Illinois. Accordingly, the court
stayed S3’s action against the Kodak Customers pending
the resolution of the case against Kodak in New York. In
reaching this conclusion, the court noted that, “if the
3 Pursuant to the district court’s transfer order,
S3’s action against Kodak was transferred to Judge David
Larimer in the Western District of New York. On Janu-
ary 10, 2011, Kodak filed a motion to stay proceedings
pending resolution of its request for reexamination to the
PTO. In Kodak’s reply in support of the motion, it indi-
cated that the PTO granted its reexamination request.
On August 26, 2011, the New York court granted Kodak’s
motion to stay pending reexamination. Spread Spectrum
Screening LLC v. Eastman Kodak Co., No. 10-CV-6523L,
2011 U.S. Dist. LEXIS 95660 (W.D.N.Y. Aug. 26, 2011).
The court noted, however, that S3 is “permitted to apply
for the issuance of letters rogatory authorizing depositions
of two witnesses who are Canadian citizens.” Id. at *4.
The propriety of the New York stay is not before this
court.
7 SPREAD SPECTRUM v. EASTMAN KODAK
action against Kodak proceeds and Kodak’s Staccato
product is found to have infringed the ’623 patent, and
each of Kodak’s Customers are found to have used Stac-
cato in their processes, they will also have infringed the
’623 patent.” District Court Opinion, 2010 U.S. Dist.
LEXIS 90549, at *9. The court found that, because the
customers “merely use” the Kodak product, “they have
nothing substantive to offer during plaintiff’s action
against Kodak and likely do not even understand how the
product software actually works and will not be helpful to
determine whether Kodak’s Staccato product infringes the
’623 patent.” Id.
S3 timely appealed to this court asserting jurisdiction
under both 28 U.S.C. §§ 1292 and 1295.
STANDARD OF REVIEW
On matters relating to this court’s jurisdiction, we ap-
ply Federal Circuit law, “not that of the regional circuit
from which the case arose.” Nystrom v. Trex Co., Inc., 339
F.3d 1347, 1349-50 (Fed. Cir. 2003). Whether the court
has jurisdiction over an appeal from a district court
decision is a question of law the court reviews “in the first
instance.” Pause Tech. LLC v. TiVo, Inc., 401 F.3d 1290,
1292 (Fed. Cir. 2005) (citing Nystrom, 339 F.3d at 1349-
50)).
DISCUSSION
S3 argues that the stay order is a final appealable or-
der and that the district court abused its discretion in
granting the stay because its decision was based on “an
incorrect finding that the Printer Defendants were mere
customers of Kodak and peripheral to the litigation.”
Appellant’s Br. 13. S3 asserts that there are three inde-
pendent bases for jurisdiction in this court. First, S3
contends that the stay is appealable as a final order under
SPREAD SPECTRUM v. EASTMAN KODAK 8
§ 1295. Second, it argues that jurisdiction is proper under
the customer suit exception to the first-to-file rule dis-
cussed in Kahn v. General Motors Corp., 889 F.2d 1078
(Fed. Cir. 1989). Finally, S3 argues that the stay is
appealable under § 1292 because the district court effec-
tively “issued an injunction barring S3 from proceeding
against the Printer Defendants.” Appellant’s Br. 9.
In response, Kodak argues that this court should dis-
miss the case for lack of jurisdiction because: (1) the stay
was not a final judgment under 28 U.S.C. § 1295, and
none of the exceptions to the finality requirement applies;
(2) the customer suit exception articulated in Kahn does
not apply; and (3) the stay did not involve an injunction
and thus is not appealable under 28 U.S.C. § 1292(a)(1).
In the alternative, Kodak argues that, if the court finds
jurisdiction, it should affirm on grounds that the district
court acted within its discretion in granting the stay.
For the reasons set forth below, we find Kodak’s pri-
mary arguments well-taken. Because the stay was not a
final appealable order, we lack jurisdiction over S3’s
appeal.
A. The Stay is Not a Final Judgment Under 28
U.S.C. § 1295.
Under the “final judgment rule,” parties may only ap-
peal a “final decision of a district court.” 28 U.S.C.
§ 1295(a)(1). A “final decision” is “one which ends the
litigation on the merits and leaves nothing for the court to
do but execute the judgment.” Catlin v. United States,
324 U.S. 229, 233 (1945) (noting that the policy “is one
against piecemeal litigation”).
Here, the district court stayed S3’s case against the
Kodak Customers pending resolution of its case against
Kodak. Because the stay does not dispose of S3’s claims
9 SPREAD SPECTRUM v. EASTMAN KODAK
against the Kodak Customers or the pending counter-
claims, and therefore was not a final judgment, the court
lacks jurisdiction under § 1295. S3 argues, however, that
the district court’s order is final because: (1) it put S3
effectively “out of federal court”; and (2) under the Su-
preme Court’s decision in Gillespie v. United States Steel
Corp., 379 U.S. 148 (1964), it was “practically final.” We
disagree.
1. S3 is Not “Out of Federal Court”
Generally, a stay is not considered a final appealable
order. A stay order is appealable, however, if it puts the
plaintiff “effectively out of court.” Moses H. Cone Mem’l
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 10 (1983). In
Moses Cone, the Supreme Court held that an order stay-
ing litigation in federal court pending resolution of a case
in state court that would have res judicata effect on the
federal action put the plaintiff “effectively out of court.”
Id. (noting that the stay order “amounts to a dismissal of
the suit”).
This court similarly has held that a stay may be an
appealable order “when it effectively puts the parties out
of the district court, either permanently because it termi-
nates the action as a practical matter, or, as some courts
have held, for a protracted or indefinite period.” Gould v.
Control Laser Corp., 705 F.2d 1340, 1341 (Fed. Cir. 1983)
(citation omitted). In Gould, the district court granted a
stay pending reexamination. Id. On appeal, we found
that the stay was “not for such a protracted or indefinite
period as to render its issuance an abuse of discretion”
and that it did not terminate the action but “merely
shifted to the PTO an issue (patent claim validity) in-
volved in the dispute before the district court.” Id. at
1341-42. In reaching this conclusion, we distinguished
Moses Cone on grounds that a stay pending reexamina-
SPREAD SPECTRUM v. EASTMAN KODAK 10
tion normally does “not foreclose review on the merits by
a federal court.” Id. at 1342 (“District court and PTO
decisions on the merits are both reviewable by this
court.”). We have, however, recognized a narrow excep-
tion where such a stay “effectively disposes of the district
court action.” Slip Track Sys., Inc. v. Metal Lite, Inc., 159
F.3d 1337, 1340 (Fed. Cir. 1998). In Slip Track, we found
that, under the facts of that case, a stay pending the
outcome of PTO reexamination proceedings was appeal-
able because it was possible that the appellants would be
unable to raise the issue of priority of invention in any
forum. Id. (noting that, during reexamination, Slip Track
could not swear behind a patent claiming the same inven-
tion and that “the district court will have no occasion to
consider the issue of priority of invention following the
resolution of the PTO proceeding”).
Here, S3 argues that, by granting the stay, the dis-
trict court “effectively dismissed the case against the
Printer Defendants.” According to S3, the stay “is indefi-
nite because it will remain in limbo for an indeterminable
and substantial period of years.” Appellant’s Reply 15. In
support of this argument, S3 points to the fact that:
(1) the median time to trial in the Western District of
New York is almost five years; and (2) Kodak moved to
stay the New York case pending reexamination, possibly
delaying its day in court even further. Indeed, as noted,
the New York court recently granted Kodak’s motion to
stay pending reexamination (“the New York stay”). Given
this potentially lengthy period of time, S3 submits that
the district court’s order puts it “effectively out of court
with respect to the Printer Defendants.” Appellant’s Br.
9.
In response, Kodak argues that S3’s reliance on the
“out of court” line of cases is misguided because those
cases “only apply where a stay surrenders federal court
11 SPREAD SPECTRUM v. EASTMAN KODAK
jurisdiction to a state court or administrative body.”
Appellees’ Br. 15. We agree. See Slip Track, 159 F.3d at
1340 (“[F]ederal courts have often found jurisdiction to
review stays in favor of state court suits when the state
court judgment would have a fully preclusive effect on the
federal action or moot the federal action entirely. Stays in
favor of administrative proceedings are similarly reviewed
on an ‘effectively out of court’ standard.”) (internal cita-
tions omitted). Here, the stay does not have the effect of
surrendering the federal action to state court or to an
administrative body. Instead, S3 has the ability to pursue
its case against Kodak in federal court in New York. And,
importantly, the stay is not indefinite – the proceedings
against the Kodak Customers in Illinois will resume (to
the extent necessary) after the action against Kodak in
New York is resolved. 4 Although the propriety of the
recently granted New York stay is not before this court on
appeal, it is not indefinite and does not render S3 out of
federal court. See Gould, 705 F.2d at 1341-42 (noting that
“stays to enable reexamination do not foreclose review on
the merits by a federal court”). Indeed, it contemplates
that discovery will proceed when the reexamination is
complete and allows preparations for foreign discovery to
4 At oral argument, counsel for Kodak indicated
that “Kodak represented to the court that it has taken
responsibility for any infringement arising out of the use
of the Staccato software by its customer defendants.”
Oral Argument at 19:25. When asked what it means to
“take responsibility” for the Kodak Customers, counsel
explained that Kodak “would pay damages, defense costs.”
Id. at 19:37. Counsel for Kodak further agreed that, if
Kodak loses on validity and infringement on claims 1-17
in the New York action, it will not seek to relitigate those
claims in Illinois. Id. at 21:35. Finally, counsel explained
that claim 18, which was asserted against Kodak as well
as the Kodak Customers, may also be resolved in the New
York action. Id. at 22:04.
SPREAD SPECTRUM v. EASTMAN KODAK 12
begin. Accordingly, the New York court’s decision to
impose a discretionary stay pending reexamination does
not alter this court’s analysis with respect to S3’s ability
to pursue its claims in federal court.
To the extent S3 argues that the stay is indefinite due
to the pace of litigation in the Western District of New
York, such delay inherent in the federal court system is
not the type of “protracted or indefinite” delay contem-
plated in Gould. As noted above, Gould was concerned
with effectively foreclosing federal court jurisdiction, not
with a change in the location of that jurisdiction or with
orders relating to the priority of issues to be litigated in
federal court on judicial efficiency grounds. Here, S3’s
case against Kodak was immediately transferred to
another district court, not to a state court or administra-
tive body. And, unlike the situation in Slip Track, where
the stay meant that the appellant would never have its
day in court with respect to priority issues, here, S3 has
not shown that any issue will go unresolved by a federal
court due to the stay. 5 See Slip Track, 159 F.3d at 1340.
Accordingly, S3 is not cast “out of federal court.”
2. The Stay is Not Final Under Gillespie.
S3 next relies upon a 1964 Supreme Court decision –
Gillespie v. United States Steel Corporation, 379 U.S. 148
(1964) – for the proposition that the stay should be con-
sidered final. In Gillespie, the Court noted that, “a deci-
5 Although S3 argues that the length of the stay is
prejudicial, it neglects to explain how the delay would
unduly prejudice its position in this case. During oral
argument, counsel for S3 identified “evidentiary preju-
dice” as the primary harm from the stay, but conceded
that the parties have an ongoing obligation to preserve
evidence and that “monetary damages will still be avail-
able” to compensate S3 for any infringement. Oral Argu-
ment at 9:37.
13 SPREAD SPECTRUM v. EASTMAN KODAK
sion ‘final’ within the meaning of § 1291 does not neces-
sarily mean the last order possible to be made in a case.”
379 U.S. at 152 (citation omitted). On the unique facts
presented in Gillespie, which involved a wrongful death
claim under the Jones Act, the Ohio wrongful death
statute, and general maritime law, the Court found that
immediate appellate review of an interlocutory order was
permissible because the effect of the trial court’s ruling,
which struck certain claims from the complaint, was
“fundamental to the further conduct of the case.” Id. at
154. The Court noted that, “in deciding the question of
finality the most important competing considerations are
‘the inconvenience and costs of piecemeal review on the
one hand and the danger of denying justice by delay on
the other.’” Id. at 152-53 (citation omitted).
In a subsequent decision, the Supreme Court “se-
verely limited Gillespie as a basis for accepting an appeal
from an interlocutory decision.” Copelands’ Enters., Inc.
v. CNV, Inc., 887 F.2d 1065, 1068 (Fed. Cir. 1989) (citing
Coopers & Lybrand v. Livesay, 437 U.S. 463, 477 n.30
(1978)). In Coopers & Lybrand, the Supreme Court
indicated that its decision in Gillespie:
upheld an exercise of appellate jurisdiction of
what it considered a marginally final order that
disposed of an unsettled issue of national signifi-
cance because review of that issue unquestionably
“implemented the same policy Congress sought to
promote in § 1292(b),” and the arguable finality
issue had not been presented to this Court until
argument on the merits, thereby ensuring that
none of the policies of judicial economy served by
the finality requirement would be achieved were
the case sent back with the important issue unde-
cided.
SPREAD SPECTRUM v. EASTMAN KODAK 14
Coopers & Lybrand, 437 U.S. at 477 n.30 (quoting Gilles-
pie, 379 U.S. at 154). The Court further noted that, “[i]f
Gillespie were extended beyond the unique facts of that
case, § 1291 would be stripped of all significance.” Id.
This court similarly has found that the “exception to
the finality created by Gillespie is to be very rarely used
beyond the unique facts of that case.” Fairchild Republic
Co. v. United States, 810 F.2d 1123, 1126 (Fed. Cir. 1987).
Because both the Supreme Court and this court have
declined to extend Gillespie beyond its unique facts, we
will not do so here.
B. The Court Does Not Have Jurisdiction
Under the Customer Suit Exception.
S3 next argues that interlocutory review is warranted
because the district court’s stay order resulted from “an
erroneous application of the policy favoring manufacturer
suits over those against customers.” Appellant’s Br. 3
(citing Kahn v. Gen. Motors Corp., 889 F.2d 1078 (Fed.
Cir. 1989)). In Kahn, we recognized a customer-suit
exception “to the general rule that favors the forum of the
first-filed action.” Tegic Commc’ns Corp. v. Bd. of Regents
of Univ. of Tex. Sys., 458 F.3d 1335, 1343 (Fed. Cir. 2006).
The exception provides that, in certain patent cases,
“litigation against or brought by the manufacturer of
infringing goods takes precedence over a suit by the
patent owner against customers of the manufacturer.”
Katz v. Lear Siegler, Inc., 909 F.2d 1459, 1464 (Fed. Cir.
1990) (citation omitted).
The customer suit exception “is based on the manu-
facturer’s presumed greater interest in defending its
actions against charges of patent infringement; and to
guard against possibility of abuse.” Kahn, 889 F.2d at
1081 (citation omitted); see also Katz, 909 F.2d at 1464
(noting that “the manufacturer is the true defendant in
15 SPREAD SPECTRUM v. EASTMAN KODAK
the customer suit” and that it “must protect its customers,
either as a matter of contract, or good business, in order
to avoid the damaging impact of an adverse ruling against
its products”) (citation omitted). As this court has noted
previously, “the guiding principles in the customer suit
exception cases are efficiency and judicial economy.”
Tegic, 458 F.3d at 1343. Generally speaking, courts apply
the customer suit exception to stay earlier-filed litigation
against a customer while a later-filed case involving the
manufacturer proceeds in another forum.
S3 argues that jurisdiction is proper based on lan-
guage in Kahn which states that, “[d]ecrees staying an
action based on an erroneously applied customer suit
exception to the rules disfavoring stays have, without
more, uniformly received interlocutory review.” Kahn,
889 F.2d at 1080. According to S3, because the district
court’s stay order was based on an erroneous determina-
tion that the Kodak Customers were “merely peripheral,”
this court has jurisdiction on appeal.
In response, Kodak argues that Kahn is not control-
ling because it: (1) found interlocutory review only under
the specific facts of that case; and (2) was limited to
application of Second Circuit law. For the reasons articu-
lated below, we find that the customer suit exception,
which is a narrow exception to the first-to-file doctrine,
does not create jurisdiction over this appeal.
First, the procedural posture in Kahn differed from
that presented here. In Kahn, this court indicated that
the customer suit exception applies “where the first suit is
filed against a customer who is simply a reseller of the
accused goods, while the second suit is a declaratory
judgment action brought by the manufacturer of the
accused goods.” Kahn, 889 F.2d at 1081 (citing William
Gluckin & Co., Inc. v. Int’l Playtex Corp., 407 F.2d 177,
SPREAD SPECTRUM v. EASTMAN KODAK 16
178 (2d Cir. 1969)). In that case, a patent holder sued
General Motors (“GM”) in the Southern District of New
York for infringement of a patent covering AM stereo
receivers. Id. at 1078. Motorola, the manufacturer of
integrated circuit boards used in the receivers, subse-
quently filed a declaratory judgment action in Illinois,
seeking judgment that Kahn’s patent was invalid, unen-
forceable, and not infringed. Id. GM moved to stay the
New York case pending the outcome of the Illinois action.
The district court granted the stay on grounds that the
New York case was “merely a ‘customer suit’ . . . [and]
that all issues would be settled in the litigation with
Motorola in Illinois, as to all potential and actual infring-
ers.” Id. at 1079.
On appeal, this court found that the customer suit ex-
ception did not apply because the second-filed action
would not completely resolve the issues between the
parties. Id. at 1082. The court noted that, “in those cases
in which a customer suit exception has been held to favor
the forum of the second-filed action, the second action
would resolve all charges against the customers in the
stayed suit, including liability for damages.” Id. at 1081.
The court also noted that GM had “not agreed to be bound
by the Illinois decision or any injunction against Mo-
torola.” Id. at 1082. Accordingly, we found that the
district court abused its discretion in granting the stay.
Id. at 1083. In a subsequent decision, however, we clari-
fied that the manufacturer’s case need only have the
potential to resolve the “major issues” concerning the
claims against the customer – not every issue – in order to
justify a stay of the customer suits. Katz, 909 F.2d at
1464.
As occurred in Kahn and Katz, the customer suit ex-
ception typically arises when the first-filed case is an
infringement action against a customer and the manufac-
17 SPREAD SPECTRUM v. EASTMAN KODAK
turer subsequently files a declaratory judgment action
against the patent holder in a different forum. That is not
what happened here. Instead, this case developed as
follows: (1) S3 filed its patent infringement suit in Illinois
against both Kodak and the Kodak Customers; (2) Kodak
filed an answer and counterclaim for declaratory judg-
ment of invalidity and noninfringement; and (3) Kodak
sought and obtained severance of the case against it and
transfer to its home forum: the Western District of New
York. Because Kodak did not file a separate declaratory
judgment action against S3, we are not presented with a
traditional first-to-file scenario, and the underlying policy
considerations associated with a “race to the courthouse,”
such as deterring forum shopping, are not implicated.
Notably, in deciding to stay the case against the Kodak
Customers, the district court did not apply the customer
suit exception, and instead relied on Seventh Circuit case
law in finding the Kodak Customers “merely peripheral”
to the litigation against Kodak. See District Court Opin-
ion, 2010 U.S. Dist. LEXIS 90549, at *8 (“This court has
held that such joinder of ‘peripheral’ defendants to pre-
vent the transfer of an action to a more appropriate venue
is improper.”). Given this posture, it is unclear that the
customer suit exception to the first-to-file doctrine is even
at issue.
Assuming the customer suit exception could apply on
this record, moreover, the pertinent language in Kahn is
not as expansive as S3 claims. Although Kahn contains
broad language suggesting that a stay order “based on an
erroneously applied customer suit exception” always
receives interlocutory review, it does not specifically
identify the statute under which such jurisdiction would
arise. And, although S3 argues that this language repre-
sents Kahn’s “jurisdictional holding,” there is no indica-
tion that the language should be read so broadly. When
SPREAD SPECTRUM v. EASTMAN KODAK 18
read in its entirety, the decision in Kahn focuses exclu-
sively on cases dealing with injunctive relief, which are
appealable under § 1292(a)(1), and does not create an
alternate route for appellate jurisdiction.
For example, the court in Kahn cites to the Second
Circuit’s decision in Gluckin, where the district court
granted an injunction preventing the first-filed customer
suit from going forward while the second-filed manufac-
turer’s declaratory action proceeded in another jurisdic-
tion. Kahn, 889 F.2d at 1080 (citing Gluckin, 407 F.2d at
177-78). 6 Kahn also relies on the Second Circuit’s deci-
sion in Volvo North America Corp. v. Men’s International
Professional Tennis Council, 839 F.2d 69, 73 (2d Cir.
1988), which held that an order dismissing certain counts
in a complaint “had the practical effect of denying injunc-
tive relief as to th[ose] counts, and delaying litigation of
[the] counts until conclusion of potentially lengthy litiga-
tion on other matters would cause irreparable harm.”
Kahn, 889 F.2d at 1079 (citing Volvo, 839 F.2d at 73).
Applying Volvo, the court in Kahn found that “the stay of
prosecution of Kahn’s commercial tort claims until resolu-
tion of the Illinois action has the effect of denial of injunc-
6 In a footnote, the court in Kahn indicated that,
“[i]n matters of jurisdictional consequence this court takes
guidance from interpretations of the regional circuit in
which the cause arose.” 889 F.2d at 1080 n.3. As noted
previously, however, we have since clarified that, “[o]n
matters relating to this court’s jurisdiction, we apply
Federal Circuit law, not that of the regional circuit from
which the case arose.” Pause Tech., 401 F.3d at 1292; see
also Woodard v. Sage Prods., Inc., 818 F.2d 841, 844 (Fed.
Cir. 1987) (en banc) (noting that deference to regional
circuit law “is inappropriate on issues of our own appel-
late jurisdiction” and that “our decision to follow another
circuit’s interpretation of a common jurisdictional statute
results from the persuasiveness of its analysis, not any
binding effect”).
19 SPREAD SPECTRUM v. EASTMAN KODAK
tive relief as to these claims, and leaves him without a
remedy.” Id. Specifically, the court found that interlocu-
tory review of the stay order was warranted in large part
because “Kahn state[d] that by the time the Illinois action
is over his business will be dead,” and thus the stay could
have “serious, perhaps irreparable consequence[s].” Id. at
1079-80. The decision in Kahn is, thus, a narrow one with
limited application.
The record before us does not fit within the rule of
Kahn. As noted, Kahn was primarily concerned with
injunctive relief, which is not at issue here. S3 did not
seek a preliminary injunction, and there is no evidence
that it will suffer irreparable harm stemming from the
stay since it is not competing with Kodak and has pointed
to no loss of business that could not be accounted for with
money damages. And, unlike in Kahn, S3 is not being
deprived of its ability to pursue claims in federal court –
S3 will be able to pursue its central claims in New York
after the stay pending reexamination is lifted. Accord-
ingly, the customer suit exception does not justify our
exercise of jurisdiction in this action.
C. Because the Stay Did Not Involve an In-
junction, There is No Jurisdiction Under
28 U.S.C. § 1292(a)(1).
Finally, S3 argues that this court has jurisdiction un-
der 28 U.S.C. § 1292(a)(1), which provides that interlocu-
tory orders “granting, continuing, modifying, refusing or
dissolving injunctions” are appealable. According to S3, it
should be permitted to appeal the stay order because it “is
effectively an injunction barring S3 from pursuing its case
against the Printer Defendants.” Appellant’s Br. 10. In
making this argument, S3 relies on Katz for the proposi-
tion that “a grant of an injunction against continuing suit
in another forum is appealable as of right” under § 1292.
SPREAD SPECTRUM v. EASTMAN KODAK 20
Id. at 9 (quoting Katz, 909 F.2d at 1461). It argues that
“the stay order has the practical effect of barring S3 from
filing suit against any printer that happens to use Ko-
dak’s software or hardware in any forum – even though
they independently infringe the patent-in-suit by manu-
facturing and selling their own infringing products.” Id.
at 10. As such, S3 submits, it has been effectively en-
joined from suing any printers in any forum. We are not
persuaded by S3’s arguments.
As Kodak correctly notes, “[w]hile it is true that the
stay temporarily suspends the case against the Kodak
Customers during the case against Kodak, the same can
be said about every stay that is issued by any court.”
Appellees’ Br. 25. If every stay qualified as an injunction,
all stays would be immediately appealable under
§ 1292(a)(1). Moreover, the Supreme Court has made
clear that “a litigant must show more than that the order
has the practical effect of [granting or] refusing an injunc-
tion” for an interlocutory order to be immediately appeal-
able. Carson v. American Brands, Inc., 450 U.S. 79, 84
(1980). And, as Kodak points out, this case is distin-
guishable from the facts presented in Katz. In Katz, a
Massachusetts federal court issued an injunction prevent-
ing the plaintiff “from prosecuting two pending actions in
the Western District of New York.” 909 F.2d at 1461. 7 In
7 With respect to one of the New York actions, we
reversed the district court’s order granting injunctive
relief on grounds that “[t]here is no good reason to unduly
delay the resolution of major issues that will not be re-
solved in the Massachusetts action.” Katz, 909 F.2d at
1464. With respect to the other suit (“the Batavia ac-
tion”), we affirmed the district court’s decision enjoining
the case pending resolution of the Massachusetts action.
Id. The court found that, “[a]lthough there may be addi-
tional issues involving the defendants in the Batavia
action, their prosecution will be advanced if Mr. Katz is
21 SPREAD SPECTRUM v. EASTMAN KODAK
contrast, here, the district court stayed its own case and
did not affirmatively prohibit litigation in any other court.
Because the district court’s order did not involve an
injunction, we do not have jurisdiction under § 1292(a)(1).
CONCLUSION
For the foregoing reasons, and because we find that
S3’s remaining arguments are without merit, we conclude
that this court lacks jurisdiction over this appeal. Accord-
ingly, S3’s appeal is dismissed for lack of jurisdiction.
DISMISSED
successful on the major premises being litigated in Mas-
sachusetts, and may well be mooted if he is unsuccessful.”
Id. Accordingly, the court affirmed the district court’s
order enjoining the Batavia action pending resolution of
the Massachusetts suit. Here too, there is no dispute over
the fact that resolution of the New York action will
greatly narrow, if not entirely moot, the matters to be
resolved in the case against the Kodak Customers in
Illinois.