Motion for Preliminary Injunction in Intuitive Surgical Sarl v. Philips Medical Systems Nederland B.V.| Trellis.Law

On May 06, 2024 a Motion-Secondary was filed involving a dispute between Intuitive Surgical Sarl, and Philips Medical Systems Nederland B.V., for Commercial - Business Entity in the District Court of New York County.

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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
x
:
INTUITIVE SURGICAL SÀRL, Index No. 652305/2024
:
:
Plaintiff,
:
Mot. Seq. No. 001
:
-against-
:
:
PHILIPS MEDICAL SYSTEMS NEDERLAND B.V.,
:
:
Defendant.
:
x

PLAINTIFF’S MEMORANDUM OF LAW IN SUPPORT OF
MOTION FOR PRELIMINARY INJUNCTION

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TABLE OF CONTENTS
PRELIMINARY STATEMENT...................................................................................................... 1

BACKGROUND ............................................................................................................................ 2

ARGUMENT .................................................................................................................................. 4

I. THIS COURT SHOULD ISSUE AN INJUNCTION TO PREVENT PHILIPS FROM
PROSECUTING ANY CLAIM THAT ARISES FROM OR IS CONNECTED TO THE
AGREEMENTS IN ANY FORUM OTHER THAN THIS ONE......................................... 4

A. There is a High Likelihood of Success Because the Exclusive Forum Clause Requires
that the Claims Asserted in the Dutch Proceedings Be Litigated in New York ............... 5

B. Intuitive Will Suffer Immediate Irreparable Harm If Philips Is Freed to Litigate in An
Improper Forum ............................................................................................................... 7

C. The Balance of Equities Favors Preliminary Injunctive Relief........................................ 8

II. PHILIPS MAY BE SERVED BY MAIL .............................................................................. 9

CONCLUSION ............................................................................................................................. 10

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TABLE OF AUTHORITIES
Page(s)

Cases

79 Madison LLC v. Ebrahimzadeh,
203 A.D.3d 589 (1st Dep’t 2022) ..............................................................................................6

Babcock & Wilcox Co. v. Control Components, Inc.,
614 N.Y.S.2d 678 (Sup. Ct. N.Y. Cnty. 1993) ......................................................................6, 8

Caesar’s Bahamas Inv. Corp. v. Baha Mar Joint Venture Holdings Ltd.,
Index. No. 0600740/2008, 2008 WL 4360436 (Sup. Ct. N.Y. Cnty. Sept. 12,
2008) ..........................................................................................................................................6

GE Oil & Gas Inc. v. Turbine Generation Servs., LLC,
51 Misc. 3d 1226(A), 41 N.Y.S.3d 449 (Sup. Ct. N.Y. Cnty. 2016) .....................................6, 8

Indosuez Int’l Fin., B.V. v. Nat’l Reserve Bank,
304 A.D.2d 429 (1st Dep’t 2003) .................................................................................... passim

Miller v. Cont’l Ins. Co.,
40 N.Y.2d 675 (1976) ................................................................................................................8

Mutual Benefits Offshore Fund v. Zelster,
140 A.D.3d 444 (1st Dep’t 2016) ..............................................................................................9

Nobu Next Door, LLC v. Fine Arts Hous., Inc.,
4 N.Y.3d 839 (2005) ..................................................................................................................4

Personal Sportswear v. Silverstein,
91 A.D.2d 507 (1st Dep’t 1982) ................................................................................................6

Personal Sportswear v. Silverstein,
Index No. 24851/81, 1982 WL 11247 (Sup Ct, Mar. 24, 1982), aff’d,
91 A.D.2d 507 (1st Dep’t 1982) ................................................................................................8

Tate & Lyle Ingredients Am., Inc. v. Whitefox Techs. USA, Inc.,
98 A.D.3d 401 (1st Dep’t 2018) ................................................................................................5

Triple Z Postal Servs. Inc. v. United Parcel Serv., Inc.,
13 Misc. 3d 1241(A), 831 N.Y.S.2d 357 (Sup. Ct. N.Y. Cnty. Nov. 24, 2006) ........................5

W. & So. Life Ins. Co. v. U.S. Bank N.A.,
209 A.D.3d 6 (1st Dep’t 2022) ..................................................................................................7

Wormser Corp. v. L’Oréal USA, Inc.,
205 A.D.3d 496 (1st Dep’t 2022) ..............................................................................................6

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Other Authorities

CPLR 6301...................................................................................................................................1, 4

Hague Conference on Private International Law, Netherlands, Central Authority
and practical information,
https://www.hcch.net/en/states/authorities/details3/?aid=37 (last visited May
2, 2024) ......................................................................................................................................9

iii

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Plaintiff Intuitive Surgical Sàrl (“Intuitive”) respectfully submits this Memorandum of Law

in Support of its Motion for a Preliminary Injunction pursuant to CPLR 6301.

PRELIMINARY STATEMENT

Through this motion, Intuitive seeks a preliminary anti-suit injunction to enforce an

exclusive New York choice of forum clause that Defendant Philips Medical Systems Nederland

B.V. (“Philips” and together with Intuitive, the “Parties”) and its subsidiary, Philips Holding USA

Inc. (“Philips USA”), are flagrantly violating. Philips has asserted claims against Intuitive in a

summary proceeding filed in the Netherlands, notwithstanding the fact that it agreed to a clear,

unambiguous, mandatory, and exclusive choice of forum clause providing that those claims can

only be brought in the courts of the State of New York. Redacted

Declaration of Hilde van der Baan (“van der Baan Decl.”) Ex. A ¶ 8.4.

Due to the way that Philips has styled the proceedings in the Netherlands, a hearing will be

held in the Netherlands on May 13, 2024, which, absent an injunction here, will be Intuitive’s only

chance to defend itself against the summary relief Philips seeks. Intuitive will have to mount that

defense without any of the many rights it would have if the case were litigated in New York (as it

should be), including the right to take discovery. Thus, without the injunctive relief sought in this

motion, Intuitive will be robbed of its contractual right to litigate the Parties’ disputes in this Court,

as well as all the procedural safeguards afforded by this Court that are completely lacking in the

Dutch court.

As such, this Court should enjoin Philips from continuing to litigate in the Netherlands or

anywhere else outside New York, either in its own capacity or by proxy through its affiliate.

Without an injunction, Intuitive will face the risk of inconsistent judgments, and will be forced to

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spend considerable time and resources defending itself against claims in the Netherlands that

should never have been filed there. As noted above, this includes the prospect that, on May 13,

2024, Intuitive will have to argue its New York law-based substantive defenses in the Netherlands

proceedings, without the benefit of any discovery. Neither law, contract, nor equity countenances

such an unfair result, and this Court should prevent Philips from railroading Intuitive through

litigation filed abroad in breach of the Parties’ agreed choice of forum.

BACKGROUND

On March 22, 2019, the Parties, on behalf of themselves and their affiliates, executed a

Master Agreement, Joint Development Agreement, and Supply Agreement (together, the

“Agreements”). Emergency Affirmation of Bradley S. Pensyl (“Pensyl Aff.”) Ex. C (“Compl.”) ¶

9. The Agreements relate to the development and supply of products using Fiber Optic RealShape

(“FORS”) technology. Id. FORS technology allows for real-time location, shape, temperature

and orientation measurement of medical devices inside the body using light instead of X-ray during

surgeries. Id.

Pursuant to the Agreements, Philips has developed and supplied Intuitive with a fiber

optical component for use in Intuitive devices. Compl. ¶ 10. Initially, the fiber appeared to work

fine. After Intuitive conducted further testing on the fiber’s life cycle, however, Intuitive

discovered that a sensory feature of the fiber degraded over time. Id. ¶ 11. Intuitive spent more

than a year on root cause analyses, testing, and potential solutions evaluations in order to try to

make Philips’ sensors viable, but has been unable to do so. Id. Intuitive has therefore resorted to

self-supplying the sensors it needs, as permitted by the Supply Agreement. Id. This, among other

things, has resulted in a dispute among the Parties.

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Section 12.9 of the Master Agreement (the “Exclusive Forum Clause”) provides as follows

(emphasis added):

This Master Agreement and the JDA [Joint Development Agreement] and
Supply Agreement contemplated in Sections 2 and 3 shall be governed by
and construed in accordance with the laws of the State of New York, United
States of America. Any dispute between the Parties arising out of or in
connection with this Master Agreement, or with the JDA or Supply
Agreement contemplated in Sections 2 and 3, (including any question
regarding its existence, validity or termination) that cannot be resolved in
accordance with the provisions of section 12.8 shall be submitted to the
competent courts of the State of New York, without prejudice to the right
of either Party to seek injunctive relief before any court in any place where
any unauthorized use its rights occurs or threatens to occur.

Pensyl Aff. Ex. A, Master Agreement § 12.9. By its plain and unambiguous terms, the Exclusive

Forum Clause requires litigation of any claims arising out of or connected to any of the Agreements

to be litigated in a New York court. As the Exclusive Forum Clause makes clear, it also applies to

claims arising from or connected to the Supply Agreement.

Philips is a sophisticated multinational company, Compl. ¶ 13, and surely understood the

meaning of the Exclusive Forum Clause when it signed the Agreements. But after disputes about

the Agreements arose between the Parties, and after the Parties completed the pre-dispute

negotiations required by Section 12.8 of the Master Agreement, Philips deliberately chose to

violate the Exclusive Forum Clause and, on information and belief, caused its affiliate Philips USA

to do so too. Compl. ¶ 13.

Specifically, on March 15, 2024, Philips and its affiliate Philips USA filed summary

proceedings against Intuitive in the Netherlands (the “Dutch Proceedings”), id. ¶ 14, instead of in

the courts of the State of New York, as required by the Agreements. Apparently, Philips holds the

cynical belief that it will receive some sort of home field advantage from the justice system in the

Netherlands.

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In the Dutch Proceedings, Philips seeks an injunction directing Intuitive to pay money

pursuant to the Supply Agreement. van der Baan Decl. ¶ 3, Ex. A, Prayer for Relief ¶ 1. Philips

also seeks a penalty payment order against Intuitive based on Intuitive’s alleged breach of the

Supply Agreement. Id.

Intuitive was purportedly served with a writ of summons in the Dutch Proceedings last

Thursday, April 25, 2024. While the validity of this service is disputed, id. ¶ 4, absent an

injunction, Intuitive will have no choice but to appear and present a substantive defense—most of

which will be based on New York law—in the Dutch Proceedings on May 13, 2024. Id. ¶ 5. This

will effectively be Intuitive’s only chance to defend itself in the Dutch Proceedings. Id. ¶¶ 5–7.

For the reasons that follow, a preliminary injunction is needed to remedy Philips’ violation of the

Agreements’ Exclusive Forum Clause, and a temporary restraining order should issue in the

interim to maintain the status quo while the Court considers this motion.

ARGUMENT

I. THIS COURT SHOULD ISSUE AN INJUNCTION TO PREVENT PHILIPS FROM
PROSECUTING ANY CLAIM THAT ARISES FROM OR IS CONNECTED TO
THE AGREEMENTS IN ANY FORUM OTHER THAN THIS ONE

CPLR 6301 entitles a plaintiff to preliminary injunctive relief when (i) there is a likelihood

that it will succeed on its claim; (ii) it will suffer irreparable harm in the absence of an injunction;

and (iii) the balance of equities favors an injunction. See CPLR 6301; Nobu Next Door, LLC v.

Fine Arts Hous., Inc., 4 N.Y.3d 839, 840 (2005). Intuitive readily satisfies each of these elements

here. As the First Department has made clear, where, as here, a party seeks to evade a clear and

unambiguous exclusive choice of forum clause mandating litigation in New York, granting an anti-

suit injunction to stop that party from litigating elsewhere is entirely appropriate and “consonant

with [First Department] policy of enforcing choice of law and forum selection clauses.” Indosuez

Int’l Fin., B.V. v. Nat’l Reserve Bank, 304 A.D.2d 429, 430 (1st Dep’t 2003) (citations omitted).

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For the following reasons, this Court should follow Indosuez and issue a preliminary injunction

barring Philips’ pursuit of the Dutch Proceedings and foreclosing Philips from asserting any such

claims in any other court but this one.

A. There is a High Likelihood of Success Because the Exclusive Forum Clause
Requires that the Claims Asserted in the Dutch Proceedings Be Litigated in
New York

There is a high likelihood that Intuitive will be able to demonstrate that the Exclusive

Forum Clause barred Philips from filing the Dutch Proceedings. The Master Agreement provides

that:

Any dispute between the Parties arising out of or in connection with this
Master Agreement, or with the JDA or Supply Agreement contemplated in
Sections 2 and 3, (including any question regarding its existence, validity or
termination) that cannot be resolved in accordance with the provisions of section
12.8 shall be submitted to the competent courts of the State of New York,
without prejudice to the right of either Party to seek injunctive relief before any
court in any place where any unauthorized use its rights occurs or threatens to occur.

Master Agreement § 12.9 (emphasis added). Forum selection clauses that are drafted this broadly

capture all manner of claims that arise from parties’ contractual relationship. See Triple Z Postal

Servs. Inc. v. United Parcel Serv., Inc., 13 Misc. 3d 1241(A), 831 N.Y.S.2d 357, at *7 (Sup. Ct.

N.Y. Cnty. Nov. 24, 2006) (Fried, J.) (collecting cases).

The Exclusive Forum Clause plainly applies to the claims asserted in the Dutch

Proceedings. 1 In the Dutch Proceedings, Philips relies almost entirely on the Agreements in

1
While Philips USA is not a signatory to the Agreements, it seeks to enforce them in the
Dutch Proceedings, presumably based on its status as an affiliate of Philips. It is therefore bound
by the Exclusive Forum Clause. See Tate & Lyle Ingredients Am., Inc. v. Whitefox Techs. USA,
Inc., 98 A.D.3d 401, 402 (1st Dep’t 2018) (forum selection clause may be enforced against “a
nonsignatory defendant that has a sufficiently close relationship with the signatory and the dispute
to which the forum selection clause applies”) (citations omitted) (emphasis in original). And in
any event, it is controlled by and acting in concert with Philips, Compl. ¶ 16, so Philips can cause
Philips USA to comply with any injunctive relief issued in this case.

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Redacted

support of its claims; seeks damages under the Supply Agreement through an injunction;

van der Baan Decl., Ex. A ¶ 8.4. Redacted the claims in the Dutch

Proceedings plainly “arise from” the Agreements. Intuitive has therefore “demonstrated a

likelihood of success on the merits of [its] action, by showing that [Philips’] choice of [the

Netherlands] as a forum is in contravention to an exclusive forum selection clause which should

be enforced.” Babcock & Wilcox Co. v. Control Components, Inc., 614 N.Y.S.2d 678, 684 (Sup.

Ct. N.Y. Cnty. 1993) (Mazzarelli, J.) (granting anti-suit injunction to enforce forum selection

clause). New York courts routinely grant anti-suit injunctive relief in these circumstances. 2

There is also a high likelihood that Intuitive will succeed on its damages claim in this case.

In the First Department, “damages may be obtained for breach of a forum selection clause, and an

award of such damages does not contravene the American Rule that deems attorneys’ fees a mere

incident of litigation.” Indosuez, 304 A.D.2d at 431 (citations omitted); see also Wormser Corp.

v. L’Oréal USA, Inc., 205 A.D.3d 496, 497 (1st Dep’t 2022) (reversing order dismissing case

asserting damages claim for breach of forum selection clause). The fees and costs Intuitive has

incurred to defend itself against the improperly-filed Dutch Proceedings will therefore be

recoverable in this case, and an injunction is appropriate to avoid allowing those costs to mount.

Cf. Indosuez, 304 A.D.2d at 431 (affirming grant of anti-suit injunction and allowing plaintiff to

pursue damages claim based on defendant’s breach of forum selection clause).

2
See 79 Madison LLC v. Ebrahimzadeh, 203 A.D.3d 589, 591 (1st Dep’t 2022) (affirming
grant of anti-suit injunction to enforce forum selection clause); Indosuez, 304 A.D.2d at 430
(same); Personal Sportswear v. Silverstein, 91 A.D.2d 507, 507–08 (1st Dep’t 1982) (same); GE
Oil & Gas Inc. v. Turbine Generation Servs., LLC, 51 Misc. 3d 1226(A), 41 N.Y.S.3d 449, at *3
(Sup. Ct. N.Y. Cnty. 2016) (granting preliminary anti-suit injunction in aid of forum selection
clause); Caesar’s Bahamas Inv. Corp. v. Baha Mar Joint Venture Holdings Ltd., Index. No.
0600740/2008, 2008 WL 4360436 (Sup. Ct. N.Y. Cnty. Sept. 12, 2008) (same).

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Finally, courts considering whether to issue an anti-suit injunction may also consider

whether there is evidence of bad faith by the party that commenced an action in contravention of

an exclusive forum selection clause. See id. Philips’ actions here are the precise type of bad faith

conduct that the First Department had in mind in Indosuez. Redacted

van der Baan Decl., Ex. A ¶ 8.4. Philips feigns a need for injunctive relief in the Dutch

Proceedings, but even a cursory review of Philips’ pleading in that matter reveals that it is just a

damages case against Intuitive for alleged breach of the Supply Agreement, and it is therefore

plainly captured by the Exclusive Forum Clause. Master Agreement § 12.9. 3

B. Intuitive Will Suffer Immediate Irreparable Harm If Philips Is Freed to
Litigate in An Improper Forum

If Intuitive is forced to litigate and defend itself in the Dutch Proceedings instead of the

contractually designated forum of New York, it will suffer irreparable harm. Intuitive will be

forced to present a substantive defense in the Dutch Proceedings imminently in what may be its

only opportunity to do so, instead of being able to litigate in New York, as it intends and is

contractually entitled to do. van der Baan Decl. ¶ 6; Pensyl Aff. ¶ 7. Intuitive will also lose the

rights it bargained for by choosing a New York forum, including the broad discovery rights that

3
In the Dutch Proceedings, Philips claims that it is seeking an “injunction” for the payment
of money. The position asserted by Philips is not a valid reason for it to invoke the Exclusive
Forum Clause’s allowance for proceedings outside New York involving injunctions against
“unauthorized use [of a party’s] rights.” See Master Agreement § 12.9. That language obviously
refers to injunctions against the use of a party’s intellectual property rights, which are a key focus
of the Agreements. It cannot allow for a damages case disguised as a request for injunctive relief
to be filed outside New York. Otherwise, the Exclusive Forum Clause could always be avoided
by the kind of window dressing Philips has deployed here, and it would have no meaning, in
violation of very basic principles of contract interpretation. See W. & So. Life Ins. Co. v. U.S. Bank
N.A., 209 A.D.3d 6, 13 (1st Dep’t 2022) (“courts must construe contracts in a manner which gives
effect to each and every part, so as not to render any provision meaningless or without force or
effect”) (quotations and citation omitted).

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will be available to it in this Court. van der Baan Decl. ¶ 6. In addition, once Intuitive amends its

Complaint in this case to assert claims in this forum—the proper forum—that mirror those in the

Dutch Proceedings, the risk of inconsistent judgments will arise to the extent not already present.

Pensyl Aff. ¶ 8. That risk includes the risk of inconsistent outcomes on the availability of penalty

payments, which are sought in the Dutch Proceedings, van der Baan Decl. Ex. A, Prayer for Relief

¶ 1, but barred by the Agreements, see Master Agreement § 11.1.

Philips’ “clear violation of the parties’ forum selection clause,” the “risk of inconsistent

judgments,” and the “waste of resources” inherent in allowing for Philips to continue pursuing the

Dutch Proceedings are all present here. GE Oil & Gas Inc., 51 Misc. 3d 1226(A), 41 N.Y.S.3d

449, at *5. The threat of irreparable harm to Intuitive exists as a result. See id.; see also Personal

Sportswear v. Silverstein, Index No. 24851/81, 1982 WL 11247, at *2 (Sup Ct, Mar. 24, 1982),

aff’d, 91 A.D.2d 507 (1st Dep’t 1982) (irreparable harm if party forced to defend suit outside of

contractually designated forum of New York); Babcock & Wilcox Co., 614 N.Y.S.2d at 683–84

(irreparable harm if party forced to engage in duplicative litigation and incur unnecessary

expense). And Philips will suffer no harm in the event of an injunction.

C. The Balance of Equities Favors Preliminary Injunctive Relief

The public and private equities unquestionably favor enforcement of New York choice of

law and forum selection clauses through an injunction. See Indosuez, 304 A.D.2d at 431. New

York courts have long held that the public has an interest in ensuring that parties are held to their

contractual obligations and not allowed to escape them. See Miller v. Cont’l Ins. Co., 40 N.Y.2d

675, 679 (1976) (“[T]he usual and most important function of courts of justice is rather to maintain

and enforce contracts, than to enable parties thereto to escape from their obligation on the pretext

of public policy.”). The equities also favor injunction where, as here, a party files foreign litigation

in bad faith. See supra Point I.A. The whole point of a mandatory and exclusive forum selection

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clause, like the one at issue, is for the parties to have certainty as to where disputes will be litigated

and to avoid a race to the courthouse. The Dutch Proceedings were filed in a transparent effort to

evade the New York forum that Philips itself selected for disputes, in search of some home field

advantage. Equity should step in to block Philips’ improper litigation tactics. See Indosuez, 304

A.D.2d at 431 (anti-suit injunction “was appropriate in light of the clear evidence of defendant’s

harassing and bad faith foreign litigation”).

Philips, by contrast, will suffer no harm if an injunction issues here, as an injunction will

not require it to do anything other than what it has already agreed to do: litigate claims arising

from the Agreements in a New York court. In addition, as a procedural matter, Philips will be able

to refile the Dutch Proceedings in the event the Court declines to grant the preliminary injunctive

relief sought by Intuitive here, van der Baan Decl. ¶ 9, though such a filing would continue to be

wholly inappropriate even in those circumstances. In short, there is no equity on Philips’ side.

II. PHILIPS MAY BE SERVED BY MAIL

Philips is a Netherlands company. Compl. ¶ 7. Article 10(a) of the Hague Convention on

the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters allows

for service by mail unless the destination state objects to such service. See Mutual Benefits

Offshore Fund v. Zelster, 140 A.D.3d 444, 445 (1st Dep’t 2016). The Netherlands does not object

to service on its residents and companies by mail pursuant to Article 10(a). See Hague Conference

on Private International Law, Netherlands, Central Authority and practical information,

https://www.hcch.net/en/states/authorities/details3/?aid=37 (last visited May 5, 2024) (noting that

the Netherlands has “no opposition” to Article 10(a)). Service by mail on Philips of the order to

show cause requested by this motion is therefore appropriate and sufficient. Even though it is not

required, Intuitive has also proposed additional service by email on Philips’ outside counsel of

record in the Dutch Proceedings.

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CONCLUSION

For the foregoing reasons, Intuitive’s motion should be granted in its entirety, along with

such other and further relief as the Court may consider appropriate.

Dated: May 6, 2024
New York, New York
/s/ Bradley S. Pensyl
ALLEN OVERY SHEARMAN STERLING US LLP
Bradley S. Pensyl
bradley.pensyl@aoshearman.com
Justin L. Ormand
justin.ormand@aoshearman.com
1221 Avenue of the Americas
New York, New York 10020
Telephone: (212) 610-6300

Attorneys for Plaintiff Intuitive Surgery Sàrl

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SECTION 202.8-B CERTIFICATION

Counsel for Plaintiff, pursuant to Section 202.8-b of the Uniform Civil Rules for the

Supreme Court and the County Court, certifies that this brief contains approximately 3,270 words,

excluding the parts exempted by Section 202.8-b(b), and therefore complies with the word count

limit in Section 202.8-b(a).

Attorneys for Plaintiff Intuitive Surgery Sàrl

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Motion-Secondary: Intuitive Surgical Sarl v. Philips Medical Systems Nederland B.V.

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