UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

DOCUWARE CORP., et al., CV 21-7618 DSF (RAOx) Plaintiffs, Order to Show Cause Why Case v. Should Not be Stayed Pending Resolution of Claims Filed in the COURTRONIC INC., Southern District of Texas Defendant.

On September 23, 2021, Plaintiffs DocuWare Corporation and DocuWare GmbH (collectively, DocuWare) brought suit against Defendant Courtronic, Inc. for Federal Unfair Competition and False Designation under the Lanham Act,

, et seq. and violations of California’s Unfair Competition Law,

, et seq. Dkt. 1 (Compl.). In the Civil Cover Sheet filed with its Complaint, DocuWare informed the Court of a related case pending in the Southern District of Texas, Case No. 4:21-cv-01085, that “[a]rise[s] from the same or a closely related transaction, happening, or event. See Dkt. 2 at 3. DocuWare is a cloud-based document management company that developed the Transcript Assembly Program (TAP), which “is a resource for courts that automates the creation of an appellate record and securely transmits it, along with the court reporter’s transcript, to the appellate or supreme court for each appeal that is filed.” Dkt. 24-5 (Roberts Decl.) ¶¶ 4, 6. Courtronic is “a corporation duly formed and existing under the laws of Texas” that was incorporated “exclusively for the subject matter made the basis of the instant lawsuit.” Dkt. 26 (Opp’n) at 7. Corrado Giovanella is the President of Courtronic.

. In 2013, DocuWare acquired Westbrook Technologies, LLC, including its assets and employees. Roberts Decl. ¶ 7. Giovanella was an employee at Westbrook prior to its acquisition and remained a DocuWare employee until he was terminated on January 28, 2021.

. At DocuWare, Giovanella “was the account manager for the California Courts, was familiar with TAP, and encouraged DocuWare to further develop the TAP software.”

. In March 2020, DocuWare considered selling the TAP to Giovanella based on his “knowledge of the product and the customer [the California Courts], and his expressed interest in the TAP program.”

. From March 2020 to Giovanella’s termination on January 28, 2021, DocuWare “engaged in good faith negotiations with Giovanella to (1) sell the TAP product; (2) assign the California Courts contract; and (3) execute a reseller agreement for normal DocuWare cloud services.”

. While DocuWare and Courtronic “exchanged several redlines of a draft Bill of Sale and Assumption Agreement,” the parties “never finalized a deal for the sale of TAP.”

. On March 9, 2021, Courtronic filed suit against DocuWare in Harris County, Texas, Case No. 2021-13560, alleging breach of contract, promissory estoppel, fraud, and tortious interference with an existing contract.

; Opp’n at 18. The case was removed to the Southern District of Texas. Roberts Decl. ¶ 24. During the course of discovery in the Texas action, DocuWare learned that Courtronic “is currently operating a website that extensively discusses the TAP product and identifies TAP as a product of Courtronic.”

. DocuWare’s subsequent suit against Courtronic is currently pending before this Court. DocuWare has moved for a preliminary injunction prohibiting Courtronic from advertising, displaying, promoting, distributing, or offering the TAP for sale on the grounds that Courtronic does not have “any rights to use, display, promote, sell or distribute [the TAP].” Dkt. 24 (Mot.) at 6, 11; see also

(alleging the TAP “is a product solely owned and solely distributed by DocuWare” and “Courtronic is not now and never has been the rightful owner of TAP.”). Courtronic opposed the Motion in part because of the pending Texas action to determine “whether Courtronic is the rightful owner of TAP.” Opp’n at 13, 15; see also

(“[O]wnership of and right to market TAP is currently being litigated in the Southern District of Texas.”). Given that ownership of the TAP is currently being litigated in the Southern District of Texas, the parties are ordered to show cause in writing by November 22, 2021 why the Court should not stay the case pending resolution of the claims brought in the Southern District of Texas. See Leyva v. Certified Grocers of Cal. Ltd.,

, 863-64 (9th Cir. 1979) (A court may, “with propriety, find it is efficient for its own docket and the fairest course for the parties to enter a stay of an action before it, pending resolution of independent proceedings which bear upon the case.”). Each party’s brief should not exceed eight pages. IT IS SO ORDERED.

Date: November 4, 2021 h\JoNo - bs ie AX. A Dale S. Fischer United States District Judge