Opinion
Case No. CV 04-1059 DSF (AJWx).
March 24, 2004
ORDER DENYING MOTION TO DISMISS OR, IN THE ALTERNATIVE, TO TRANSFER VENUE
I. FACTUAL BACKGROUND
On December 19, 2003, James A. Coffing, licensing counsel for defendant Motorola, Inc. ("Motorola") wrote plaintiff Ever Win International Corporation ("Ever Win") regarding the "licensing of Motorola Patents and Copyrights." (Coffing Decl., Ex. A at p. 5) In the letter, Coffing informed Ever Win that Motorola patents and copyrights cover Ever Win's EVE5716 and EVE0900 battery packs. He also offered to grant Ever Win a non-exclusive license if a "fair and reasonable licensing arrangement and settlement for past infringement can be reached." (Coffing Decl., Ex. A at p. 5.)
In January 2004, Eric Leach, of Oswald Yap, then counsel for Ever Win, called Coffing and demonstrated a willingness to resolve past issues between the companies and to develop a future business relationship. (Coffing Decl., ¶ 4.) On or before January 22, Leach and Coffing had another telephone conversation in which Coffing agreed to supply Ever Win with a term sheet setting forth the terms of the proposed agreement. (Coffing Decl., ¶ 5.) Coffing forwarded the term sheet to Leach on the following day. (Coffing Decl., Ex. B.) Leach asked for additional time to review the sheet. (Coffing Decl., ¶ 6.)
On February 3, 2004, Leach informed Coffing that Frank Frisenda would be lead counsel in addressing Motorola's allegations of patent infringement. (Coffing Decl., Ex. C.) During the first week of February, Coffing attempted, unsuccessfully, to contact Frisenda to discuss the matter. (Coffing Decl., ¶ 7.) On February 5, 2004, Ever Win's Executive Vice President, Mae Quock, received a telephone communication from Motorola's employee, David Robak. Robak stated: "once the attorneys start talking, there will be little opportunity to negotiate and to come to an agreement." (Quock Decl., ¶ 14.) On February 9, 2004, Quock received an e-mail from Motorola describing the deadline for settlement of the dispute as February 13, 2004. (Quock Decl., Ex. 3 at p. 16.) On February 12, 2004, Robak sent an e-mail in which he told Quock that the unavailability of Ever Win's counsel would "jeopardize the ability for Ever Win to settle under the current terms and will result in our legal department's escalation of actions." (Quock Decl., Ex. 4 at p. 17.)
On February 14, 2004, Frisenda faxed Coffing a letter asserting that Ever Win's battery packs were subject to a Joint Venture Agreement between Nextel and Motorola. (Coffing Decl., Ex. D.) On February 16, Coffing replied, expressing disagreement with the assertion that the battery packs were covered under a Joint Venture agreement. Coffing stated: "[o]nce we mutually reach the conclusion that Ever Win has exposure, I would like to resume substantive discussions on our term sheet presented to Ever Win in January." (Coffing Decl., Ex. E at p. 4.) On February 17, 2004, Ever Win filed this action seeking declaratory relief and asserting violations of the Lanham Act, tortious interference with actual and prospective advantage and unfair competition. On February 18, 2004, Coffing spoke with Frisenda. Frisenda neglected to tell Coffing that this lawsuit had been filed. (Coffing Decl., ¶ 14.) On February 19, 2004, Ever Win forwarded Motorola a courtesy copy of the complaint. (Frisenda Decl., ¶ 13.) On February 20, 2004, Motorola received a copy of the complaint in the instant action, filed an assertive patent infringement suit in the United States District Court for the Northern District of Illinois, and served Ever Win with the complaint. (Coffing Decl., Ex. F.) On March 2, 2004, Motorola filed its Motion to Dismiss for Lack of Subject Matter Jurisdiction, Motion to Dismiss for Failure to State a Claim and, in the Alternative, to Transfer Venue to the Northern District of Illinois. The Court heard oral argument on March 22, 2004.
After receiving Ever Win's opposition, Motorola withdrew its motion as to Counts V-VIII.
II. LEGAL STANDARD
A. Motion to Dismiss for Lack of Subject Matter Jurisdiction
Plaintiff bears the burden of establishing subject matter jurisdiction. The court presumes lack of jurisdiction until plaintiff proves otherwise. Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994).
The existence of an actual case or controversy is an absolute predicate for declaratory judgment jurisdiction. Spectronics Corp. v. H.B. Fuller Co., 940 F.2d 631, 633-34 (Fed. Cir. 1991). "The purpose of the declaratory action is to permit a threatened party to resolve its potential liability, but only when the relationship has progressed to an actual controversy, as required by Article III of the Constitution." Phillips Plastics Corp. v. Kato Hatsujou Kabushiki Kaisha, 57 F.3d 1051, 1053 (Fed. Cir. 1995). In a patent case, for declaratory jurisdiction to exist there must be "(1) an explicit threat or other action by the patentee, which creates a reasonable apprehension on the part of the declaratory plaintiff that it will face an infringement suit, and (2) present activity which could constitute infringement or concrete steps taken with the intent to conduct such activity."BP Chemicals Ltd. v. Union Carbide Corp., 4 F.3d 975, 978 (Fed. Cir. 1993). Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. Societe de Conditionnement en Aluminium v. Hunter Engineering Co., Inc., 655 F.2d 938, 943 (9th Cir. 1981).
B. Motion to Transfer Venue
This Court may transfer this action "to any other district or division where it may have been brought." 28 U.S.C. § 1404(a). To justify a transfer of venue a defendant must make "a strong showing of inconvenience to warrant upsetting the plaintiff's choice of the forum." Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986). In deciding whether to grant a transfer of venue, a district court considers the balance of conveniences and interests of justice. Courts weigh multiple factors in deciding whether a transfer is proper including: "(1) the location where the relevant agreements were negotiated and executed, (2) the state that is most familiar with the governing law, (3) the plaintiff's choice of forum, (4) the respective parties' contacts with the forum, (5) the contacts relating to the plaintiff's cause of action in the chosen forum, (6) the differences in the costs of the litigation in the two forums, (7) the availability of compulsory process to compel attendance of unwilling non-party witnesses, and (8) the ease of access to sources of proof." Jones v. GNC Franchising, Inc., 211 F.3d 495, 498-99 (9th Cir. 2000.) The convenience of witnesses is an important factor to be considered by the court when deciding the appropriateness of a transfer of venue. See A.J. Industries, Inc. v. United States District Court, 503 F.2d 384, 389 (9th Cir. 1974).
III. ANALYSIS
A. Motion to Dismiss for Lack of Subject Matter Jurisdiction
Creation of an actual case or controversy does not require an express charge of infringement or the explicit threat of a lawsuit. Rather, such apprehension may be induced by subtler conduct if that conduct rises "to a level sufficient to indicate an intent to enforce its patent." See Shell Oil Co. v. Amoco Corp., 970 F.2d 885, 889 (Fed. Cir. 1992). The Court finds such conduct present here. It is true that, initially, Motorola sought to negotiate with Ever Win in order to grant Ever Win a license to use battery packs EVE5716 and EVE0900. (Coffing Declaration, Ex. A, p. 5.) But even in the initial letter from Motorola to Ever Win, Motorola accused Ever Win of infringement.
The clear accusation of infringement continued throughout the negotiations between the parties. As discussed above, the "threats" began soon. On January 14, 2004, Robak, sent Quock an e-mail stating: "I NEED a written response to our letter regarding the infringement. The legal department here expected a response by Monday, Jan 12 and will escalate if we do not here [sic] something. I propose that you reply agreeing to settle the past damages so that it will improve your standing in respect to intellectual property." (Robak Decl., Ex. A, at p. 4.)
On February 5, 2004, Quock received a telephone communication from Robak stating: "once the attorneys start talking, there will be little opportunity to negotiate and to come to an agreement." (Quock Decl., ¶ 14.) In an e-mail dated February 12, 2004, and addressed to Quock, Robak said: "We have had very little cooperation from your new attorney to make himself available for discussions. This will jeopardize the ability for Ever Win to settle under the current terms and will result in our legal department's escalation of actions. I encourage you to have your attorney make himself VERY available for the remainder of today and tomorrow to best serve your interests." (Robak Decl., Ex. B, at p. 5.) From the content of these communications it was reasonable for Ever Win to believe that, unless Ever Win immediately agreed to settle on Motorola's terms, Motorola would take legal action against Ever Win.
Motorola contends that the February 14 and February 16 letters demonstrate that Motorola and Ever Win were still in negotiations, precluding jurisdiction because there was no imminent threat to sue. This Court disagrees. Just as a patentee cannot use "careful phrases in order to avoid explicit threats,"Phillips Plastics, 57 F.3d at 1053, this Court believes a patentee cannot "renew" negotiations after threats of litigation in an effort to assert there is no loner an "imminent threat. The February 14 letter from Frisenda asserted there was no infringement. There was no discussion of negotiation. The February 16 letter made clear the Motorola would not be persuaded.
The content of these letters reveals that Motorola and Ever Win clearly continued to have conflicting views regarding the patents involved in this case. Ultimately, because the facts demonstrate that it was evident that the two parties had very differing views of their rights regarding the battery pack patents, and that Motorola continually used the threat of litigation to speed the negotiation process, it was objectively reasonable that Ever Win would have an apprehension of imminent litigation. Thus, Ever Win has shown the existence of an actual controversy between the parties such that this court has subject matter jurisdiction to adjudicate Ever Win's claim for declaratory relief. A declaratory judgment action is proper to allow Ever Win, the threatened party, the opportunity to remove the "cloud on their commercial activity, instead of being obliged to await the convenience of the threatening party." Phillips Plastics, 57 F.3d 1053. Ever Win was "not required to wait for the patentee to decide when and where to sue, but can take the initiative and seek declaratory relief." EMC Corp. v. Norand Corp., 89 F.3d 807, 811 (Fed. Cir. 1996).
Moreover, the Court sees no reason to accept Motorola's invitation to decline to exercise jurisdiction. In assessing "whether a suit for a declaration of patent rights should yield to a later-filed infringement suit, the trial court's discretion is guided by the general rule favoring the forum in which the first suit was filed." Serco Services Co., L.P. v. Kelley Co., Inc., 51 F.3d 1037, 1039 (Fed. Cir. 1995). For the reasons stated below, the Court does not believe that the relevant factors strongly favor Illinois as a forum. Moreover, the mere fact that Ever Win did not warn Motorola that it intended to file, or even that it did not immediately advise Motorola that it had filed, does not convince the Court that there was anything improper — or even unseemly — in winning the race to the courthouse.
B. Motion to Transfer Venue
Motorola argues that a transfer of venue is necessary because four of the named inventors of the patent reside in Illinois and the three remaining inventors reside in Florida or Georgia, which are closer in distance to Illinois. Additionally, Motorola argues that many of its other witnesses reside in Illinois and that several of the documents pertaining to the patents are located in that district as well.
Ever Win maintains that transfer is improper because its principal place of business is in California and because most of its key witnesses are located within 100 miles of the Central District of California. Ever Win also contends that this forum is more appropriate because its books and records are located in California and because most of the allegedly infringing devices were sold in California.
Motorola argues, unpersuasively, that four Jones factors favor transfer. First, Motorola argues that Ever Win's anticipatory filing to ensure its choice of forum is improper. Ever Win, however, was entitled to file suit in its chosen forum to determine its declaratory rights if it was in reasonable apprehension of litigation for infringement. It follows that if Ever Win was justified in filing, then its choice of forum is entitled to weight. Second, Motorola contends Ever Win's cause of action is not connected to this forum. Ever Win has shown that its principal place of business is in California and that it sold the accused products in California. Thus, there is contact with this forum. Moreover, Ever Win is entitled to file in the forum that is most convenient to it with regard to witnesses and key documents. See Decker Coal, 805 F.2d at 843. Third, Motorola claims it would be too expensive and time consuming to have its witnesses travel to this district. Because most of Ever Win's witnesses are located in this forum, however, it is unclear that it would be more expensive and time consuming for Motorola's witnesses to travel to California than it would be for Ever Win's witnesses to travel to Illinois. Finally, because both parties would need access to the documents each claims are located in the forum of its choice, this factor weighs equally for both sides. Thus, the relevant factors do not weigh strongly in Motorola's favor.
Motorola has not demonstrated a showing of inconvenience strong enough to warrant transfer of this action Northern District of Illinois.
IV. CONCLUSION
For the reasons stated above, the Motion to Dismiss and the Motion to Transfer Venue are DENIED.