Viture Inc. v. Matrixed Reality Technology Co., Ltd.

Background

Viture Inc. (US), referred to as Viture US, sells extended-reality glasses. XREAL previously sued Eden Future HK Limited and Beijing Xingzhe Wuijang Technology Co. Ltd., referred to as Viture Beijing, in the Eastern District of Texas for allegedly infringing U.S. Patent No. 11,988,839. That action accused the Viture Pro, Viture Luma Pro, and Viture Luma Ultra products.

Viture US then filed this California action seeking a declaration that it did not infringe the same patent with those products. The opinion states that Viture US and Viture Beijing are within the same corporate ownership structure, share overlapping key personnel, sell the same relevant products, and have a shared interest in construction of the patent. Their United States sales channels, however, do not overlap, and Viture Beijing does not maintain United States operations according to the opinion.

Motion and legal standard

XREAL moved to dismiss, transfer, or stay the California case under the first-to-file rule. That rule allows a federal court to transfer, stay, or dismiss a later-filed action when a similar complaint was filed earlier in another federal court. The court considers the timing of the lawsuits, the similarity of the parties, and the similarity of the issues.

Court’s analysis

The court found substantial similarity between the parties. It reasoned that Viture US and Viture Beijing are in the same corporate ownership structure and share a common interest in the patent’s construction. The court held that exact identity of the parties was unnecessary.

The court also found substantially similar issues. Both actions concern the same patent and accused products. Viture US argued that its own sales were not at issue in the Texas action, but it did not argue that its products were technologically different from Viture Beijing’s products in a way that would require a separate infringement analysis.

Viture US argued that fairness considerations favored an exception to the first-to-file rule, including its contention that XREAL engaged in forum shopping and that the Texas court could not exercise personal jurisdiction over Viture US. The court did not decide those issues. It held that the court where the first-filed action is pending should decide whether an exception applies, particularly because a motion to transfer was already pending there.

Disposition

The court concluded that the first-to-file rule applied and that it should stay, rather than dismiss or transfer, the California case. It reasoned that dismissal could leave Viture US without a forum for its requested declaration if it could not obtain that relief in Texas without consenting to that court’s jurisdiction. The court stated that the stay could be lifted and the actions consolidated if the Texas court transferred the first-filed action.

The court granted XREAL’s motion to stay the case and directed the parties to file a joint status report after specified action by the Texas court. The Clerk was directed to administratively close the case file. The supplied opinion text is truncated in the conclusion, so it does not fully display the deadline for the status report if the Texas court denies the transfer motion. The court did not decide whether the products infringe the patent or whether Viture US is entitled to a declaration of non-infringement.