Clerisy Corporation et al v. AirWare Holdings Incorporated, et al

Filing 32

ORDER granting in part and denying in part 14 Motion to Dismiss for Lack of Jurisdiction. Defendants' motion to transfer this case to the U.S. District Court for the District of Arizona is granted. The motion to dismiss for lack of personal jurisdiction is denied as moot and the motion to dismiss for lack of standing is left to be determined by the District of Arizona. Signed by Hon. Michael A. Telesca on October 4, 2012. (MES) [Transferred from nywd on 10/5/2012.]

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
________________________________________
CLERISY CORP., and REED TRANSITION
TECHNOLOGIES, LLC,
Plaintiffs,

12-CV-6396
DECISION AND ORDER

v.
AIRWARE HOLDINGS, INC.
(d/b/a/ AIRWARE LABS), and
CROWN DYNAMICS CORP.,
Defendants,
________________________________________
INTRODUCTION

Plaintiffs, Clerisy Corp. (“Clerisy”) and Reed Transition
Technologies, LLC (“Reed”) (collectively, “Plaintiffs”), bring this
action for patent infringement against AirWare Holdings, Inc. and
Crown Dynamics

Corp.

(collectively,

“Defendants”)

relating

to

United States Patent Number 6,295,982 (“the ‘982 Patent”) entitled
“Apparatus for and Methods of Administering Volatile Substances
into an Inhalation Flow Path”, issued by the United States Patent
and

Trademark

Office

on

October

2,

2001.

(Docket

No.

1.)

Defendants, both having their principal places of business located
in Scottsdale, Arizona, move for an Order transferring this case to
the United States District Court for the District of Arizona; or,
in the alternative, to dismiss for lack of personal jurisdiction
and lack of standing as to Clerisy Corp. (Docket No. 14.)
For

the

reasons

discussed

herein,

this

Court

grants

Defendants’ motion to transfer to the United States District Court
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for the District of Arizona and denies as moot the motion to
dismiss for lack of personal jurisdiction. In the interest of
consistency in the administration of this case, the Court leaves
the determination of the motion to dismiss for lack of standing to
the United States District Court for the District of Arizona.
DISCUSSION
28 U.S.C. § 1404 provides, “[f]or 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 or to any district or division to which
all parties have consented.”

A district court may consider, inter

alia, the following factors when determining whether to grant a
motion to transfer venue: “(1) the plaintiff's choice of forum, (2)
the

convenience

of

witnesses,

(3)

the

location

of

relevant

documents and relative ease of access to sources of proof, (4) the
convenience of parties, (5) the locus of operative facts, (6) the
availability of process to compel the attendance of unwilling
witnesses, and (7) the relative means of the parties.” N.Y. Marine
and Gen. Ins. Co. v. Lafarge N. Am., 599 F.3d 102, 112 (2d Cir.
2010)(quoting D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95,
106-7)). The party moving for transfer must show by clear and
convincing evidence that the factors favor the transfer. N.Y.
Marine, 599 F.3d at 113-114.

2

(1) Plaintiffs’ Choice of Forum
A

plaintiff’s

choice

of

forum

is

generally

entitled

to

substantial deference; however, if “the balance is strongly in
favor of the defendant” the court may, in its discretion, determine
that venue is more appropriate in another district court. See Gross
v. British Broadcasting Corp.,386 F.3d 224, 230 (2d Cir.2004).
Plaintiff’s choice of forum is entitled to little deference where
the “locus of operative facts lay elsewhere,” or if the plaintiff
(or, as in this case, one of the plaintiffs) is not located in the
forum district. See Fuji Photo Film Co., Ltd. v. Lear Media, Inc.,
415 F.Supp.2d 370, 376 (S.D.N.Y. 2006).
Plaintiffs
However, one

of

chose
the

to

bring

Plaintiffs,

this

case

Reed,

is

in

this

located

District.
within

the

District of Arizona, in Sedona, Arizona - a fact which will also
affect

the

analysis

of

the

convenience

of

the

parties.

Additionally, as discussed below, the most relevant facts will be
located outside of this district, primarily in the District of
Arizona.

Accordingly, the Court finds that Plaintiffs’ choice of

forum is entitled to some weight, but not substantial deference.
(2) The Convenience of the Witnesses
“Convenience of both the party and non-party witnesses is
probably the single-most important fact in the analysis of whether
transfer should be granted.” Fuji, 415 F.Supp.2d at 373 (quoting
Berman v. Informix Corp., 30 F.Supp.2d 653, 656 (S.D.N.Y.1998)).

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The expected materiality of the witness’ testimony should be
considered, and a mere tally of the number witnesses in each forum
is an insufficient method to determine whether the convenience of
the witnesses supports a transfer. Id.
Plaintiffs

state

that

“Plaintiff

Clerisy

has

five

party

witnesses in New York ... that have knowledge regarding Clerisy’s
patented products and its business.”

They further state that the

owner of Reed, and the wife of the deceased ‘982 Patent inventor,
who lives in Arizona, is willing to travel to New York.

Plaintiffs

also identify a non-party witness, an unspecified major grocery
chain in New York, that may testify regarding damages.
For their part, Defendants state that they have four witnesses
located within the District of Arizona who will testify regarding
the “accused products, their design and development, the market for
the accused products, and their sales and distribution.”

They

argue that this factor weighs in favor of transfer because the key
witnesses, those with knowledge of the design and development of
the ‘982 Patent (Reed, and its owner and employees), and those with
knowledge of the design and development of the accused products,
employees of the Defendants, all reside in Arizona. Def. Reply at
4 (citing Fuji, 415 F.Supp.2d at 373 (“The key issues in a patent
infringement suit involve the technology of the inventions claimed
in the patents-in-suit.”).
This Court agrees.

Clerisy is a licensee of the ‘982 Patent,

4

which was developed by Reed, allegedly in North Carolina, and whose
owner, who resides in Arizona, will likely testify to the facts
surrounding its design and development. While the owner of Reed is
willing to travel to New York, this does not change the fact that
it is still more convenient, and less costly, for her to remain in
Arizona.

Although Clerisy’s employees residing in New York will

have knowledge of the production of Clerisy’s products which employ
the ‘982 patent, the Court finds that such facts are not as
relevant to a patent suit as the facts surrounding the design and
development of the patent itself and the design and development of
the allegedly infringing products. Further, testimony on damages
will

only

be

relevant

should

infringement

first

be

found.

Accordingly, the Court finds that this factor weighs in favor of
transfer.
(3) The Location of Relevant Documents
“In patent infringement cases, the bulk of the relevant
evidence usually comes from the accused infringer.” Fuji, 415 F.2d
at 375; accord Defenshield Inc. v. First Choice Armor & Equip.,2012
WL 1069088, *12 (N.D.N.Y. March 19, 2012). Although advances in
technology may lessen the importance of this factor to the overall
balance of the equities, the Court finds that this factor weighs in
favor of transfer.
(4) The Convenience of Parties
It is obviously more convenient for the Defendants to litigate

5

this case in Arizona.

While it would be inequitable for the Court

to shift the burden of convenience to the Plaintiffs, the Court
notes that it is only inconvenient for Plaintiff Clerisy, as Reed
is located in Arizona.

As three of the four parties reside in

Arizona, and, as discussed above, the bulk of the relevant evidence
will come from the Defendants, Reed, and Reed’s owner, the Court
finds that this factor weighs in favor of transfer.
(5) The Locus of Operative Facts
In a patent infringement case, the most relevant facts relate
to the “design, development and production of a patented product.”
Fuji, 415 F.Supp.2d at 375; Defenshield, 2012 WL 1069088, at *13.
Facts relating to both the patented product and the allegedly
infringing product may be relevant to the case, however, as noted
above, the majority of such facts in this case are located in
Arizona.

Accordingly, the Court finds that this factor favors

transfer.
(6) The Availability of Compulsory Process
Neither party contests that this factor is not relevant to
this case, as the majority of the witnesses, and those with the
most relevant testimony will be party witnesses. Accordingly, the
Court finds that this factor is neutral.
(7) The Relative Means of the Parties
Plaintiff Clerisy contends that “Clerisy is a small company
that

has

significant

financial

6

issues.

Clerisy

has

incurred

substantial operating losses over its seven-year existence.” Maida
Decl. at ¶10.

Plaintiffs provide no information regarding the

potential financial burden to co-Plaintiff Reed of litigating this
case in New York.

While it is unclear from the Plaintiffs’

submissions whether Clerisy intends to shoulder the financial
burden of this litigation, at least to some extent, the financial
burden of this litigation will be shared, based on the co-plaintiff
nature of this lawsuit.
regarding

the

relative

There is also no information in the record
financial

position

of

the

Defendants.

However, because the Defendants have the burden of coming forward
with

clear

and

convincing

evidence

that

this

factor

favors

transfer, and the only information in the record regarding the
relative financial situation of the parties is Clerisy’s statement
that it would suffer financial harm by litigating this case in
Arizona, the Court finds that this factor favors the Plaintiffs’
choice of forum. However, based on the co-Plaintiff nature of this
suit, the fact that Reed is in Arizona, and the relative lack of
information in the record regarding whether and how the Plaintiffs
intend to share the costs of this lawsuit, the Court attributes
this factor less weight.
(8) Balancing the Factors
Two factors weigh against transfer, the Plaintiffs’ choice of
forum and the relative means of the parties.

The Court has found

that both of these factors carry less weight than some of the other

7

factors, particularly, the convenience of the witnesses.

One

factor is neutral, and the remaining four factors weigh in favor of
transfer.

In its discretion and in the interest of justice, the

Court finds that, taken together, the factors weigh in favor of
transfer to the United States District Court for the District of
Arizona.
Because this Court has determined that this case should be
transferred to the District Court of Arizona, the motion to dismiss
for lack of personal jurisdiction is moot.

Further, to maintain

consistency in the administration of this case going forward, the
motion to dismiss the claims brought by Plaintiff Clerisy for lack
of standing is left to be determined by the District Court of
Arizona. Therefore, the Clerk of the Court is directed to transfer
this Case to the District Court of Arizona.
CONCLUSION
For the reasons set forth herein, the Clerk of the Court is
directed to transfer this case to the United States District Court
for the District of Arizona.

Defendants’ motion to dismiss for

lack of personal jurisdiction is denied as moot and the motion to
dismiss for lack of standing is left to be determined by the
District Court of Arizona.
ALL OF THE ABOVE IS SO ORDERED.
S/ MICHAEL A. TELESCA
HON. MICHAEL A. TELESCA
United States District Judge

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Dated:

Rochester, New York
October 4, 2012

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