Computer Assocs., 775 F. Supp. at 560-61, 571-73. With respect to Plaintiff's second claim, Judge Pratt found that Defendant's OSCAR 3.5 program was not substantially similar to a portion of SCHEDULER called ADAPTER and, therefore, did not infringe Plaintiff's copyrights. Id. at 561-62, 573. Finally, Judge Pratt concluded that Plaintiff's state law trade secret misappropriation claim had been preempted by the federal Copyright Act. Id. at 563-64.
On December 17, 1992, the Second Circuit affirmed the district court's findings and judgment as to Plaintiff's copyright claims but vacated its holding that Plaintiff's state law trade secret claim was preempted by federal copyright law. Therefore, the circuit court remanded the case to the district court for consideration of the trade secret claim. Computer Assocs., 982 F.2d 693, 712-15, 719-21. On August 20, 1993, Judge Pratt ruled that under Texas law, Plaintiff's trade secret claim was barred by the two year statute of limitations. Computer Assocs. Int'l Inc. v. Altai, Inc., 832 F. Supp. 50, 54 (E.D.N.Y. 1993), aff'd, 61 F.3d 6 (1995). Plaintiff appealed that ruling and the Second Circuit certified the question of Texas law to the Supreme Court of that state. Computer Assocs. Int'l Inc. v. Altai, Inc., 22 F.3d 32, 37 (2d Cir. 1994). On April 3, 1996, following the decision of the Supreme Court of Texas on March 14, 1996, the Second Circuit issued a mandate affirming the decision of Judge Pratt that dismissed Plaintiff's remaining trade secret claim.
Computer Assocs. Int'l, Inc. v. Altai, Inc., 1996 U.S. App. LEXIS 6363, No. 93-7957, 1996 WL 154622, at *1 (2d Cir. Apr. 3, 1996).
II. Plaintiff's French Action
In 1990, Plaintiff and L'Agence Pour La Protection Des Programmes ("L'Agence")
filed an action in the Tribunal de Commerce in Bobigny, France (the "Commercial Court")
against Defendant and la Societe FASTER, S.A.R.L. ("FASTER"), a French company owned by a Dutch concern, which was distributing computer software containing OSCAR 3.5. (Pl.'s Mem. at 7; Def.'s Mem. at 5.) The gravamen of the French action is that the defendants violated Plaintiff's rights under French copyright law
by virtue of Defendant's unauthorized importation, and FASTER's unauthorized distribution, of OSCAR 3.5 in France. (Pl.'s Feb. 15, 1990 Commercial Ct. Compl. at 4-5; Pl.'s Mem. at 14.)
By Ruling entered January 20, 1995, the Commercial Court found that Defendant's OSCAR 3.5 program does not infringe upon Plaintiff's ADAPTER program under French copyright law. (Jan. 20, 1995 Ruling of the Commercial Ct. at 17-22.) On August 25, 1995, Plaintiff appealed the decision of the Commercial Court to the Paris Court of Appeals. (Def.'s Second Supplemental Mem. at 2.) On April 11, 1995, Defendant amended its motion to enjoin Plaintiff from continuing to maintain its appeal of the Commercial Court's decision. (Def.'s Apr. 10, 1995 Mem. at 1-5.) According to the present record, the Paris Court of Appeals has not yet taken any action with respect to that appeal. (Def.'s Second Supplemental Mem. at 2.)
III. The Instant Motion
By the instant motion, Defendant seeks to enjoin Plaintiff from continuing to proceed with its French action. First, Defendant maintains that Plaintiff's French action is barred under the doctrine of res judicata. (Def.'s Mem. at 12-17, 21.) Alternatively, Defendant contends that Plaintiff is collaterally estopped from pursuing its French claims. In response, Plaintiff argues that, as an initial matter, Defendant has failed to satisfy certain threshold requirements for a foreign antisuit injunction. (Pl.'s Mem. at 11.) In addition, Plaintiff asserts that neither res judicata nor collateral estoppel precludes Plaintiff's French action. (See id. at 17-25.) For the reasons set forth below, the Court finds that Plaintiff's French action is not barred by the doctrine of res judicata. Moreover, the Court finds that collateral estoppel does not bar Plaintiff's French claims. Finally, the Court finds that Defendant has failed to meet the threshold requirements for a foreign antisuit injunction.
Against that backdrop, the Court will address each of Defendant's arguments in the order presented.
I. Res Judicata
The doctrine of res judicata provides that "a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action." Burgos v. Hopkins, 14 F.3d 787, 789 (2d Cir. 1994) (quoting Allen v. McCurry, 449 U.S. 90, 94, 66 L. Ed. 2d 308, 101 S. Ct. 411 (1980)). Res judicata, however, will not apply where "the initial forum did not have the power to award the full measure of relief sought in the later litigation." 14 F.3d at 790 (quoting Davidson v. Capuano, 792 F.2d 275, 278 (2d Cir. 1986)) (further citation omitted).
The general rule [against relitigation of a claim] is largely predicated on the assumption that the jurisdiction in which the first judgment was rendered was one which put no formal barriers in the way of a litigant's presenting to a court in one action the entire claim including any theories of recovery or demands for relief that might have been available to him under applicable law. When such formal barriers in fact existed and were operative against a plaintiff in the first action, it is unfair to preclude him from a second action in which he can present those phases of the claim which he was disabled from presenting in the first.
Id. (quoting Restatement (Second) of Judgments § 26(1)(c) cmt. c (1982)). Furthermore, "while a previous judgment may preclude litigation of claims that arose 'prior to its entry, it cannot be given the effect of extinguishing claims which did not even then exist and which could not possibly have been sued upon in the previous case.'" Prime Management Co. v. Steinegger, 904 F.2d 811, 816 (2d Cir. 1990) (quoting Lawlor v. National Screen Serv. Corp., 349 U.S. 322, 328, 99 L. Ed. 1122, 75 S. Ct. 865 (1955)).
Here, Plaintiff asserts that there existed several formal barriers which precluded it from presenting its entire claim in the United States (the "U.S.") action. The Court agrees.
First, the Court notes that Defendant has failed to establish that a U.S. court could have exercised subject matter jurisdiction over Plaintiff's claims that are the subject of the French suit. The action before the Commercial Court is based upon alleged infringement of Plaintiff's rights under French copyright law arising out of the unauthorized distribution of OSCAR 3.5 in France by FASTER, a French entity, as well as the unauthorized importation into France of OSCAR 3.5 by Defendant. (Pl.'s Mem. at 14.) It is well settled that "copyright laws generally do not have extraterritorial application." Update Art, Inc. v. Modiin Publishing, Ltd., 843 F.2d 67, 73 (2d Cir. 1988). Accordingly, "where copyright infringement occurs both inside and outside the United States, the district court has jurisdiction, but only over the U.S. infringement." GB Mktg. USA Inc. v. Gerolsteiner Brunnen, 782 F. Supp. 763, 772 (W.D.N.Y. 1991).
In the instant case, however, Defendant attempts to rely upon an exception to the general rule, which authorizes a U.S. court to exercise jurisdiction over copyright infringement occurring outside of the U.S. "when the type of infringement permits further reproduction abroad - such as the unauthorized manufacture of copyrighted material in the United States." Update Art, 843 F.2d at 73. In other words, for the exception to apply, Defendant must identify an infringing act by Defendant that occurred in the United States which led to further infringement abroad. See id.; De Bardossy v. Puski, 763 F. Supp. 1239, 1243 (S.D.N.Y. 1991). The present record does not reveal the existence of any infringing act committed by Defendant in the U.S. with respect to OSCAR 3.5, the subject of Plaintiff's French action. To that end, Defendant suggests that if OSCAR 3.5 had been found to infringe upon Plaintiff's copyright, Plaintiff could have recovered damages from Defendant in the U.S. action with respect to the foreign sales of OSCAR 3.5. (Def.'s Reply Mem. at 9-10.) Defendant supports this proposition by reference to Plaintiff's Second Amended Complaint, wherein Plaintiff "sought an accounting 'for any and all profits derived by Altai for the distribution of its . . . programs . . . ,' as well as 'actual damages' in an amount to be determined at trial." (Id. at 10 (quoting with emphasis Pl.'s Second Am. Compl. at 23.)) Such an allegation, however, is clearly insufficient to make the requisite showing.
Moreover, the Court agrees with Plaintiff that the case law supports the view that a U.S. court may very well have declined to exercise jurisdiction over the issue of Plaintiff's French copyright. Accordingly, the Court cannot conclude that should Plaintiff have chosen to assert issues of French copyright law in the U.S. action, it would have been permitted to do so.
Second, the Court is not convinced that a U.S. court could have exercised personal jurisdiction over FASTER, a French company that distributed Defendant's software in France and which was a defendant in the French action. Defendant's contention that "there is no reason to assume" that FASTER would not have submitted to the jurisdiction of the U.S. courts because it had done so in the past is not persuasive. (Def.'s Reply Mem. at 5.)
Moreover, although Defendant is correct in stating that FASTER need not have been a party in the U.S. action for res judicata to apply, rather only that Faster be in privity with a party in the U.S. action, namely Defendant, the Court is not persuaded that this is in fact the case. (Id. at 3); see also Greenberg v. Board of Governors of Fed. Reserve Sys., 968 F.2d 164, 168 (2d Cir. 1992). For two parties to be in privity, the interests involved in the prior litigation must have been virtually identical to those in the later litigation such that the precluded party's interests have been represented in the first action. Chase Manhattan Bank, N.A. v. Celotex Corp., 56 F.3d 343, 345 (2d Cir. 1995). "The key seems to be that [the] interests [of the non-party] have been adequately represented by others who have litigated the matter and lost . . . ." Id. (quoting Allan D. Vestal, Res Judicata/Preclusion V-125-26 (1969)). Here, this is not the case as the second suit, the French action, is based on different acts of infringement, namely, the alleged infringement of Plaintiff's rights under French copyright law arising out of the unauthorized distribution of OSCAR 3.5 in France by FASTER, as well as the unauthorized importation into France of OSCAR 3.5 by Defendant. Thus, FASTER's interests could not have been adequately represented in the U.S. action as these issues were not raised therein.
Moreover, Plaintiff should not be penalized for failing to assert these claims in the U.S. action as the acts of infringement that form the basis of Plaintiff's French action occurred after the commencement of Plaintiff's U.S. action. (Pl.'s Mem. at 20); see also Prime Management Co. v. Steinegger, 904 F.2d 811, 816 (2d Cir. 1990) (finding res judicata cannot bar second suit based on conduct that "had not occurred when the first suit was brought").
Even assuming arguendo the absence of any jurisdictional barriers over Plaintiff's claims, the Court still finds that res judicata would not bar Plaintiff's French suit. Under res judicata, "preclusion is limited to the transaction at issue in the first action. Litigation over other transactions, though involving the same parties and similar facts and legal issues, is not precluded." Greenberg, 968 F.2d at 168. In that vein, the fact that both copyright infringement claims at issue may have "involved essentially the same course of wrongful conduct," i.e., unauthorized copying of Plaintiff's computer program, "is not decisive." Lawlor, 349 U.S. at 327.
Moreover, Plaintiff notes a number of differences in the two actions. (Pl.'s Mem. at 21.) First, the acts giving rise to each action are different, as the infringement in Plaintiff's French action arose out of separate acts committed in France. (Id.) Next, FASTER, a major party in the French action, was not involved in the U.S. action and, accordingly, Defendant's relationship with FASTER was never explored therein. (See id.) Finally, the U.S. action did not concern itself with French copyright law, the essence of the French suit. (See id.)
Finding that Plaintiff's claims in the Commercial Court are not barred under the doctrine of res judicata, the Court now turns its attention to the standards for collateral estoppel.
II. Collateral Estoppel
The doctrine of collateral estoppel
bars a party from relitigating in a second proceeding an issue of fact or law that was litigated and actually decided in a prior proceeding, if that party had a full and fair opportunity to litigate the issue in the prior proceeding and the decision of the issue was necessary to support a valid and final judgment on the merits.