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Standard Microsystems Corp. v. Tex. Instruments, Inc. - 916 F.2d 58 (2d Cir. 1990)

Rule:

The Supreme Court has construed the Anti-Injunction Act, 28 U.S.C.S. § 2283, to forbid a federal court from enjoining a party from prosecuting a state court action unless one of the three exceptions stated in the statute obtains. The three excepted circumstances are (i) the express provisions of another act of Congress authorizing such an order; (ii) necessity in aid of the federal court's jurisdiction and (iii) the need to protect or effectuate the federal court's judgments.

Facts:

On October 1, 1976, Standard Microsystems Corp. ("SMC"), the plaintiff-appellee, and Texas Instruments, Inc., ("TI"), the defendant-appellant, entered into patent cross-licensing agreement. The Agreement granted to each party the right to make royalty-free use of semiconductor technology owned by the other. It apparently also contained provisions requiring the parties to keep the agreement confidential, and prohibiting the assignment of rights under the Agreement. TI has licensed certain Japanese and Korean companies to exploit TI's "Kilby patents," which were part of the cross-licensed technology. SMC then proposed to transfer its rights under the Agreement to make royalty-free use of the same TI technology. It proposed to offer these rights to Japanese and Korean entities. TI apparently advised SMC that it would consider such a sale, and disclosure by SMC in preparation for such a sale, as a violation of the Agreement. On January 19, 1990, SMC filed an action against TI in the Eastern District of New York. The complaint alleged violations of federal antitrust and securities statutes and breach of contract, and further seeks declaratory relief that SMC's actions do not breach its Agreement. Simultaneously with the filing of the suit, SMC obtained a temporary restraining order, restraining TI from terminating the patent cross-licensing agreement. Consequently, TI has initiated an action in state court. The district court enjoined TI from prosecuting its action in state court. On appeal, TI contended that the district court's order violated the Anti-Injunction Act, 28 U.S.C.S. § 2283

Issue:

Did the district court’s order enjoining TI from prosecuting its action in state court violate the Anti-Injunction Act?

Answer:

Yes.

Conclusion:

The United States Court of Appeals held that the order enjoining TI from further prosecuting its action in the state was issued in violation of the Anti-Injunction Act. The Court held that the existence of the state court action did not in any way impair the jurisdiction of the federal court or its ability to render justice. According to the Court, at the time of TI’s commencement of the state action, there was no application before the federal court to bar it from doing so.

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