McDermott Will & Emery
The US Court of Appeals, First Circuit, vacated a pre-injunction. The court explained that the district judge should have immediately issued a statutory stop of the proceeding pursuant to 28 U.S.C. SS 1659(a), because a case pending at the International Trade Commission also involved the same parties and issues. Vicor Corp. v. FII USA Inc., Case No. 24-1620 (1st Cir. Mar. 6, 2025) (Gelpi, Thompson, Rikelman, JJ. Vicor filed a SS337 complaint against Foxconn with the Commission asserting power converter modules patents, while simultaneously suing Foxconn in a Texas District Court for patent infringement. According to SS 1659 a federal district judge must stay proceedings between the parties in a civil case if the complaint filed by the party is the same as the one in the Commission action. Foxconn was able to secure a stay in Texas litigation under SS1659.
Foxconn subsequently initiated arbitration in China with the China International Economic and Trade Arbitration Commission, claiming Vicor had agreed that such arbitration was required by the terms of their order. The Commission’s administrative law judge denied Foxconn’s request to terminate the SS 337 case, finding that Foxconn had waived that defense by failing to timely raise an arbitration defense.[as those]Vicor then sued Foxconn in a Massachusetts district court, disputing any arbitration agreement. The district court issued a TRO and then a preliminary injunction to block the CIETAC arbitral proceedings. Foxconn requested a SS1659 stay in the Massachusetts litigation and sought to vacate TRO. The district court allowed a stay, but rejected the motion to revoke the TRO. The court cited the All Writs Act which states that federal courts can “issue all writs appropriate or necessary in aid of their respective authorities” as a justification for injunctive relief. Foxconn appealed.
The First Circuit found that SS 1659 was applicable in the Massachusetts litigation, and that the plain text of the statute required an immediate stay at Foxconn’s demand without granting Vicor a preliminarily injunction. The primary issue before the First Circuit was whether Vicor’s claims against Foxconn at the Commission involved the same issues as those in the Massachusetts litigation.
Reviewing the text of SS 1659, the First Circuit determined that Vicor’s district court claims in the Massachusetts litigation encompassed the same issues as those raised in the SS 337 proceeding. Vicor filed a lawsuit in Massachusetts under the Federal Arbitration Act, seeking to enjoin CIETAC arbitration. It also sought relief under Declaratory judgment Act for a ruling stating that Vicor wasn’t bound by the arbitration clauses of the purchase order agreement with Foxconn. Vicor’s claim that it did not agree to the terms of the purchase order was central to both proceedings. The First Circuit determined that Foxconn needed an immediate stay under SS1659 because this issue was common in both the SS337 proceedings and the Massachusetts litigation. Vicor argued the Massachusetts litigation was not identical to the SS337 investigation or Texas litigation because it did not involve the exact same patent infringement allegations. Vicor also argued SS 1659 is inherently ambiguous, because SS 337 proceedings include elements (such the existence of a local industry) that district-court patent infringement claims don’t. Foxconn countered by arguing that SS 1659 plain text recitations of “the same matters” do not require a complete overlap, but a substantial identification of issues between the proceedings. The First Circuit agreed with Foxconn, interpreting SS 1659’s language as clear and unambiguous.
Vicor further argued that ambiguity required examination of the legislative history. The First Circuit, despite finding the statute to be clear, reviewed the legislative history and confirmed that the purpose of SS 1659 was to prevent duplicate litigation at both the Commission and district courts. The First Circuit also disagreed that the district court granted the preliminary injunction because the All Writs Act can’t override specific congressional enactments.
