Opinion
CIVIL ACTION NO. 2:10-CV-448
01-09-2012
EON CORP. IP HOLDINGS, LLC, Plaintiff, v. SENSUS, USA, INC., et al., Defendants.
ORDER
Before the Court is Defendants Cisco Systems, Inc., Aruba Networks, Inc., Broadsoft, Inc., ip.access, Inc., Meru Networks, Inc., Stoke, Inc., Tatara Systems, Inc., and Kineto Wireless, Inc.'s (collectively, the "Moving Defendants'") Joint Motion to Transfer Venue to the Northern District of California. Dkt. No. 128. Also before the Court are Plaintiff's response and the Moving Defendants' reply. Dkt. Nos. 163 & 202. Defendant Palm, Inc. also joined in the motion but has since been dismissed. Dkt. Nos. 248, 273 & 275. Having considered the briefing and all relevant papers and pleadings, the Court finds that the Moving Defendants' motion should be GRANTED.
I. BACKGROUND, LEGAL PRINCIPLES, AND THE PARTIES' POSITIONS
Plaintiff alleges infringement of United States Patent No. 5,592,491 ("the '491 Patent"), which is titled "Wireless Modem" and which, in general, relates to communication networks.
The Moving Defendants move to transfer the above-captioned case to the Northern District of California ("the Northern District") pursuant to Title 28, United States Code, Section 1404(a), which provides: "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought."
The first determination is whether the claims "might have been brought" in the proposed transferee district. In re Volkswagen of Am., Inc., 545 F.3d 304, 312-13 (5th Cir. 2008) ("Volkswagen II"). Second, the district court should balance the relative conveniences. Id. at 314-16. The movant must show "good cause" and "clearly demonstrate" that transfer is appropriate. Id. at 314.
"The determination of 'convenience' turns on a number of private and public interest factors, none of which are given dispositive weight." In re Volkswagen AG, 371 F.3d 201, 203 (5th Cir. 2004) ("Volkswagen I"). "The private interest factors are: '(1) the relative ease of access to sources of proof; (2) the availability of compulsory process to secure the attendance of witnesses; (3) the cost of attendance for willing witnesses; and (4) all other practical problems that make trial of a case easy, expeditious and inexpensive.' The public interest factors are: '(1) the administrative difficulties flowing from court congestion; (2) the local interest in having localized interests decided at home; (3) the familiarity of the forum with the law that will govern the case; and (4) the avoidance of unnecessary problems of conflict of laws or in the application of foreign law.'" Volkswagen II, 545 F.3d at 314 (citations omitted).
Defendants argue that the above-captioned case has no connection to the Eastern District of Texas ("the Eastern District") other than Plaintiff's filing of other suits in the Tyler Division. Dkt. No. 128 at 1-2. Defendants submit that six of the Defendants, as well as the attorney who prosecuted the patent-in-suit, are located in the Northern District and that two other Defendants are located in Washington State. Id. at 2. "[N]one of the Defendants are based in or have substantial operations in the Eastern District of Texas." Id. Defendants further argue that because Plaintiff has no business other than litigation, and because Plaintiff acquired a license to the patent-in-suit on the same day that Plaintiff filed suit, the Section 1404(a) analysis should disregard Plaintiff's presence in the Eastern District. Id. at 3-4.
Plaintiff responds that its presence in the Eastern District should be considered and that "six defendants are located on the East Coast, four defendants are located in the Midwest, three defendants are based in Washington state, [Plaintiff] and one defendant are located in Texas, and two defendants are located in nearby Southern states. In addition there are two overseas defendants." Dkt. No. 163 at 2-3. Plaintiff also submits that its managers live in Monterrey, Mexico, and regularly conduct business in Austin, Texas. Id. at 3.
II. DISCUSSION
Plaintiff challenges whether the above-captioned case could have been filed in the Northern District because Defendant Cellular South, Inc. contended that it was not subject to personal jurisdiction outside of its service areas in Mississippi, Tennessee, Florida, Alabama, and Georgia. See Dkt. No. 163 at 6.
Because Cellular South has been dismissed from the above-captioned case (see Dkt. Nos. 151 & 155), Cellular South need not be considered as to this first prong of the Section 1404(a) analysis. In re Fine Paper Antitrust Litig., 685 F.2d 810, 819 (3d Cir. 1982) ("[A] party's settlement of his portion of the action cures any objection to venue in the transferee district with respect to that party.") (citing Hynes v. N.Y. Cent. R.R. Co., 231 N.Y. 229, 235, 131 N.E. 898, 900 (1921) (Cardozo, J.) (declining to follow "a maxim or a definition with relentless disregard of consequences to 'a dryly logical extreme'")); see also Korzyk v. Swank Enters., Inc., No. CV- 04-343, 2005 WL 1378758, at *12 (E.D. Wash. June 9, 2005) (noting that dismissal of one of the defendants gave rise to diversity jurisdiction in the potential transferee forum).
Plaintiff does not otherwise challenge whether the above-captioned case could be filed in the Northern District, so the Court finds this first prong of the Section 1404(a) analysis has been met.
A. Private Interest Factors
(1) Relative Ease of Access to Sources of Proof
Plaintiff argues that "physical evidence is distributed across the country," including Plaintiff's documents in Tyler, Texas, within the Eastern District. Dkt. No. 163 at 7. "In patent infringement cases, the bulk of the relevant evidence usually comes from the accused infringer. Consequently, the place where the defendant's documents are kept weighs in favor of transfer to that location." In re Genentech, Inc., 566 F.3d 1338 (Fed. Cir. 2009). Given that several defendants are located in the Northern District, more documents and evidence are likely to be in the Northern District than in the Eastern District, so this factor weighs in favor of transfer. See, e.g., In re Nintendo Co., Ltd., 589 F.3d 1194, 1199-1200 (Fed. Cir. 2009) ("Because most evidence resides in Washington [the proposed transferee venue] or Japan with none in Texas, the district court erred in not weighing this factor heavily in favor of transfer.")
(2) Availability of Compulsory Process
Defendants identify patent prosecution counsel, a non-party, as residing in the Northern District. Defendants also submit that "the chipsets included in some of the accused products were manufactured by a non-party that is headquartered in the [Northern District]," and "many of the accused products include third-party software that may be relevant to this case provided by third parties located in the [Northern District]." Dkt. No. 128 at 11. Plaintiff responds that this "speculative and generic list falls far short of supporting transfer." Dkt. No. 163 at 7. Plaintiff has not, however, identified any relevant non-party witnesses in the Eastern District. See Dkt. No. 163 at 7-8.
On balance, the Northern District's "absolute subpoena power" (for depositions as well as trial) over non-parties, such as patent prosecution counsel, is a significant consideration in the venue analysis. In re Hoffmann-La Roche Inc., 587 F.3d 1333, 1338 (Fed. Cir. 2009). This factor therefore favors transfer.
(3) Cost of Attendance for Willing Witnesses
This factor is analyzed giving broad "consideration [to] the parties and witnesses in all claims and controversies properly joined in a proceeding." Volkswagen I, 371 F.3d at 204. Further, courts are not to consider the "significance of the identified witnesses' testimony," at least not beyond "assess[ing] the relevance and materiality of the information the witness may provide." In re Genentech, 566 F.3d at 1343. The relative materiality of witnesses' testimony is irrelevant to this inquiry. See id. ("Requiring a defendant to show that a potential witness has more than relevant and material information at this point in the litigation or risk facing denial of transfer on that basis is unnecessary."). Thus, for the transfer analysis, all potential material and relevant witnesses must be considered as offering testimony of equal importance.
The Fifth Circuit has adopted a "100-mile rule" to assist in analyzing this factor. See Volkswagen I, 371 F.3d at 204-205. "When the distance between an existing venue for trial of a matter and a proposed venue under § 1404(a) is more than 100 miles, the factor of inconvenience to witnesses increases in direct relationship to the additional distance to be traveled." Id. at 205. When applying the 100-mile rule, the threshold question is whether the plaintiff's chosen venue and the proposed venue are more than 100 miles apart. See Volkswagen II, 545 F.3d at 317; In re TS Tech USA Corp., 551 F.3d 1315, 1320 (Fed. Cir. 2008). If so, then a court determines the respective distances between the residences (or workplaces) of all the identified relevant witnesses and the two venues under consideration. See Volkswagen II, 545 F.3d at 317; In re TS Tech, 551 F.3d at 1320.
The 100-mile rule generally favors transfer (with differing degrees) if the proposed venue is a shorter average distance away from witnesses than the plaintiff's chosen venue. See Volkswagen II, 545 F.3d at 317; In re TS Tech, 551 F.3d at 1320. Finally, for this factor to favor transfer, the proposed venue need not be more convenient for all of the witnesses. In re Genentech, 566 F.3d at 1345. Instead, this factor can favor transfer when a "substantial number of material witnesses reside in the transferee venue" and no witnesses reside in plaintiff's chosen venue. Id.
Because the Northern District is more than 100 miles away from the Eastern District, the Court applies the 100-mile rule.
On one hand, Plaintiff and one Defendant, Mavenir Systems, Inc., are located in or near the Eastern District. Dkt. No. 163 at 8. Plaintiff also cites "hundreds of former EON Corporation employees, many of which reside on the East Coast, particularly in and around Virginia . . . ." Id. at 9. On the other hand, five of the remaining defendants are located in the Northern District, namely Aruba Networks, Inc., Cisco Systems, Inc., Meru Networks, Inc., Stoke, Inc., and Kineto Wireless, Inc. Dkt. No. 128 at 4. Although Plaintiff urges that the parties are "distribut[ed] . . . across the country and the globe," the Court of Appeals for the Federal Circuit has rejected this type of reliance on the "Eastern District of Texas' centralized location." In re Genentech, 566 F.3d at 1344 ("[T]he district court improperly used its central location as a consideration in the absence of witnesses within the plaintiff's choice of venue.). In particular, Plaintiff relies on its headquarters in the Eastern District and witnesses Plaintiff has identified in Texas, but Plaintiff has not identified any witnesses within the Eastern District. See Dkt. No. 163 at 8-9. On balance, this factor favors transfer.
(4) Other Factors Favoring Expedient Adjudication
Delay associated with transfer is only relevant "in rare and special circumstances" and only if "such circumstances are established by clear and convincing evidence." In re Horseshoe Entertainment, 337 F.3d 429, 434 (5th Cir. 2003).
Plaintiff relies on the Court's handling of Plaintiff's other cases in the Eastern District, including two claim construction proceedings regarding parent patents of the patent-in-suit. Dkt. No. 163 at 9-10. Defendants reply that those prior proceedings took place in the Tyler Division, not the Marshall Division. Dkt. No. 202 at 2.
On balance, the Court finds this factor neutral.
B. Public Interest Factors
(1) Administrative Issues Related to Congestion
In deciding whether to transfer, a court may consider how quickly a case will come to trial and be resolved, but time to trial should not outweigh other factors and should be viewed with caution because this consideration is the "most speculative." See Versata Software, Inc. v. Internet Brands, Inc., No. 2:08-CV-313, 2009 WL 3161370 at *4 (E.D. Tex. Sept. 30, 2009).
Defendants submit that the median time to trial is 24.2 months in the Northern District as opposed to 25.8 months in the Eastern District. On balance, Defendants have failed to show that this factor significantly favors transfer, at best having shown that the median time to trial in the Northern District is less than two months quicker than in the Eastern District. The Court accordingly finds this factor neutral.
(2) Local Interest in Deciding the Dispute
Plaintiff notes it incorporated in Texas and established its principal place of business in the Eastern District over two years prior to filing the above-captioned case. Dkt. No. 163 at 10-11. Defendants argue that Plaintiff's only business is litigation and licensing. Defendants do not address whether Plaintiff's formation two years prior to filing the above-captioned case was done "in anticipation of litigation," perhaps as to Plaintiff's prior suits in this district. In re Microsoft Corp., 630 F.3d 1361, 1365 (Fed. Cir. 2011) (rejecting reliance on place of incorporation where done "in anticipation of litigation"); see also In re Zimmer, 609 F.3d 1378, 1381 (Fed. Cir. 2010) (finding that patentee's "presence in Texas appears to be recent, ephemeral, and an artifact of litigation"). Nonetheless, whatever weight might be afforded Plaintiff's presence in the Eastern District is outweighed by the presence of five defendants in the Northern District, where the decisions and events giving rise to this case likely were made or occurred. See In re Hoffman-La Roche, 587 F.3d at 1336 (noting that "the cause of action calls into question the work and reputation of several individuals residing in or near [the proposed transferee] district and who presumably conduct business in that community"). By contrast, Defendants have no comparable presence in the Eastern District.
On balance, this case has greater local connections to the Northern District than to the Eastern District, and this factor accordingly favors transfer.
(3) Court's Familiarity with the Controlling Law
Neither party has shown that this factor is applicable. The Court accordingly finds this factor neutral.
(4) Potential Conflict of Law Issues
Neither party has shown any concerns about potential conflict of law in this matter. The Court finds this factor neutral.
C. Summary
In sum, the location of sources of proof, availability of compulsory process, witnesses' cost of attendance, and the local interest factors weigh in favor of transfer, and the remaining factors are neutral. On balance, the Moving Defendants have clearly demonstrated that the Northern District would be a more convenient venue than the Eastern District. Defendants' motion to transfer venue should therefore be GRANTED.
III. CONCLUSION
Defendants' Joint Motion to Transfer Venue to the Northern District of California (Dkt. No. 128) is hereby GRANTED. The above-captioned case is hereby TRANSFERRED to the Northern District of California.
IT IS SO ORDERED.
SIGNED this 9th day of January, 2012.
/s/_________
DAVID FOLSOM
UNITED STATES DISTRICT JUDGE