Google Inc. v. Rockstar Consortium US LP et al
Filing
108
NOTICE by Google Inc. of Filings in The Court of Appeals for The Federal Circuit Regarding Petitions for Writ of Mandamus to The Eastern District of Texas (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C)(Warren, Matthew) (Filed on 8/27/2014) Modified on 8/28/2014 (cpS, COURT STAFF).
EXHIBIT A
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Misc. No. 2014-____
UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT
IN RE ZTE CORPORATION AND ZTE (USA) INC.,
Petitioners.
On Petition for a Writ of Mandamus to the
United States District Court for the Eastern District of Texas
Case No. 2:13-cv-901
Judge Rodney Gilstrap
PETITION FOR A WRIT OF MANDAMUS
Alexas D. Skucas
King & Spalding LLP
1185 Avenue of the Americas
New York, NY 10036
Telephone: (212) 556-2100
Facsimile: (212) 556-2222
Daryl L. Joseffer
King & Spalding LLP
1700 Pennsylvania Ave., NW
Washington, DC 20006
Telephone: (202) 737-0500
Facsimile: (202) 626-3737
Steven T. Snyder
Adam M. Conrad
Anup M. Shah
King & Spalding LLP
100 N. Tryon Street, Suite 3900
Charlotte, NC 28202
Telephone: (704) 503-2600
Facsimile: (704) 503-2622
Attorneys for Petitioners ZTE
Corporation and ZTE (USA) Inc.
August 22, 2014
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CERTIFICATE OF INTEREST
Counsel for Petitioners ZTE Corporation and ZTE (USA) Inc. certifies the
following:
1.
The full name of the party represented by me is ZTE Corporation and ZTE
(USA) Inc.
2.
The name of the real party in interest represented by me ZTE Corporation
and ZTE (USA) Inc.
3.
ZTE (USA) Inc. is a wholly-owned subsidiary of ZTE Corporation. There
are no publicly held companies that own 10% or more of ZTE Corporation's stock.
4.
The names of all law firms and the partners or associates that appeared for
the party now represented by me in the trial court or are expected to appear in this
Court are:
King & Spalding LLP: Adam M. Conrad; Daryl L. Joseffer; Anup M. Shah;
Alexas D. Skucas; Steven T. Snyder
Law Office of Everett Upshaw, PLLC: Everett McClyde Upshaw
This 22nd day of August, 2014.
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TABLE OF CONTENTS
RELIEF SOUGHT ..................................................................................................... 1
ISSUES PRESENTED............................................................................................... 1
INTRODUCTION ..................................................................................................... 1
STATEMENT OF RELEVANT FACTS .................................................................. 3
A.
The Parties ............................................................................................. 3
B.
The Android Operating System Is At Issue In Both The
California And Texas Actions. .............................................................. 3
C.
The Northern District Of California Held That Google’s Suit
Takes Precedence, And That Texas Is Not More Convenient. ............. 5
D.
The Texas Court’s Analysis of the Transfer Issues. ............................. 7
REASONS WHY THE WRIT SHOULD ISSUE ..................................................... 8
II.
NORTHERN
CALIFORNIA
IS
A
CLEARLY
MORE
CONVENIENT FORUM. ............................................................................... 9
A.
B.
III.
The District Court Clearly Abused Its Discretion By Ignoring
Judge Wilken’s Findings That Google’s Manufacturer Suit
Takes Precedence. ................................................................................. 9
The District Court Clearly Abused Its Discretion By Crediting
Rockstar’s Transparent Efforts To Manipulate Venue. ...................... 13
THE DISTRICT COURT REACHED A PATENTLY ERRONEOUS
RESULT IN DENYING TRANSFER. ......................................................... 15
A.
B.
IV.
The Private Interest Factors Clearly Favor Transfer. .......................... 15
The Public Interest Factors Clearly Favor Transfer. ........................... 19
THE TEXAS DISTRICT COURT CLEARLY ABUSED ITS
DISCRETION IN REJECTING ZTE’S MOTION TO STAY THE
TEXAS ACTION. ......................................................................................... 20
CONCLUSION ........................................................................................................ 21
CERTIFICATE OF SERVICE
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TABLE OF AUTHORITIES
Cases
A.C. Aukerman Co. v. R.L. Chaides Constr. Co.,
960 F.2d 1020 (Fed. Cir. 1992) .........................................................................13
Hertz Corp. v. Friend,
559 U.S. 77 (2010) ............................................................................................14
In re Acer Am. Corp.,
626 F.3d 1252 (Fed. Cir. 2010) .........................................................................16
In re Genentech,
566 F.3d 1338 (Fed. Cir. 2009) .....................................................................9, 16
In re Hoffmann-La Roche Inc.,
587 F.3d 1333 (Fed. Cir. 2009) ...................................................... 13, 14, 18, 19
In re Microsoft Corp.,
630 F.3d 1361 (Fed. Cir. 2011) (per curiam) ............................................. 13, 14
In re Nintendo Co.,
589 F.3d 1194 (Fed. Cir. 2009) .....................................................................9, 15
In re Nintendo,
No. 2014-132, 2014 U.S. App. LEXIS 12707
(Fed. Cir. June 25, 2014) ........................................................................ 5, 10, 12
In re Toyota Motor Corp.,
747 F.3d 1338 (Fed. Cir. 2014) .........................................................................17
In re Volkswagen of Am. Inc.,
545 F.3d 304 (5th Cir. 2008) (en banc).................................................. 9, 16, 17
In re Zimmer Holdings, Inc.,
609 F.3d 1378 (Fed. Cir. 2010) .................................................................. 13, 14
Joy Techs., Inc. v. Flakt, Inc.,
6 F.3d 770 (Fed. Cir. 1993) ...............................................................................12
Katz v. Lear Siegler, Inc.,
909 F.2d 1459 (Fed. Cir. 1990) .........................................................................10
Seattle Box Co. v. Indus. Crating & Packing,
756 F.2d 1574 (Fed. Cir. 1985) .........................................................................13
Spread Spectrum Screening LLC v. Eastern Kodak Co.,
657 F.3d 1349 (Fed. Cir. 2011) .................................................................. 10, 20
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Statutes
28 U.S.C. § 1404 ......................................................................................................11
Rules
Fed. R. Civ. P. 45 .....................................................................................................18
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RELIEF SOUGHT
Petitioners ZTE Corporation and ZTE (USA) Inc. (collectively, “ZTE”)
respectfully petition for a writ of mandamus directing the United States District
Court for the Eastern District of Texas to vacate its order denying transfer or stay
of this action, and either to transfer this action to the Northern District of
California, or stay this action until resolution of the related action filed by Google
Inc. in the Northern District of California.
ISSUES PRESENTED
Whether the district court clearly abused its discretion in denying ZTE’s
motion to stay or transfer this action to the Northern District of California.
INTRODUCTION
ZTE’s petition raises the same basic issue as petitions filed in related cases
by Google, Asustek, HTC, and LG. See In re Google Inc., Misc. No. 2014-147
(Aug. 14, 2014) (“Google Pet.”); In re HTC, Misc. No. 14-148 (Aug. 20, 2014); In
re LG Electronics U.S.A. Inc., Misc. No. 14-150 (Aug. 22, 2014); In re Asustek
Computer, Inc., Misc. No. 14-149 (Aug. 20, 2014) (“ASUS Pet.”). This Court has
already called for responses to some of those petitions.
In short, six actions filed by Rockstar Consortium US LP and MobileStar
Technologies LLC (collectively, “Rockstar”) are currently pending in the Eastern
District of Texas. All of those actions target Google’s Android operating system,
which prompted Google (as Android’s manufacturer) to seek a declaratory
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judgment against Rockstar in the Northern District of California—Google’s
headquarters and the home of Android. As Google has argued, “[t]he only sensible
forum” to resolve these disputes “is the Northern District of California—where
Google built Android, where the lion’s share of witnesses and documents reside,
where the Northern District can compel critical third-party testimony, where there
is unique local interest in this action, and where there is already a case involving
the same patents and the same issues.” Google Pet. 2.
Google’s arguments equally support mandamus relief in this case because
the district court denied ZTE’s motion for transfer largely for the reasons cited in
its earlier denial of Google’s motion. PA5. Indeed, in an order denying Rockstar’s
motion to dismiss Google’s declaratory judgment action, Chief Judge Wilken of
the Northern District of California agreed with every one of Google’s arguments.
See PA719-46. Accordingly, there is no need for ZTE to belabor the points made
by Google and the other defendants in related Rockstar actions, all of which ZTE
adopts and incorporates here.
ZTE writes separately, in part, because the district court additionally denied
ZTE’s motion in the erroneous belief that ZTE has its U.S. headquarters in the
Eastern District of Texas. In fact, it is undisputed that one ZTE entity is based in
China and the other in the Northern District of Texas. The district court’s puzzling
factual error underscores the errors of law that pervade its transfer analysis: the
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court gave no precedence to Google’s manufacturer suit in California while
crediting non-existent contacts with East Texas, including those manufactured by
Rockstar for the purpose of establishing venue there.
Applying proper legal
principles, the district court clearly abused its discretion in denying transfer.
STATEMENT OF RELEVANT FACTS
A.
The Parties
Google, in its separate petition for writ of mandamus, sets out the relevant
facts surrounding the original ownership of the Asserted Patents by Canada-based
Nortel Networks, Rockstar’s purchase of the Asserted Patents through a
bankruptcy auction, and the transfer of selected Asserted Patents to MobileStar,
literally on the eve of Rockstar’s Texas lawsuits. Google Pet. 6-8. For the
convenience of the Court, ZTE adopts those facts as stated in Google’s petition.
ZTE Corporation is based in China. PA30 ¶ 3; PA73 ¶ 3. ZTE (USA) Inc.
is based in Richardson, Texas, which is in the Northern District of Texas. PA30
¶ 4; PA513 ¶ 2-4. ZTE sells a variety of handheld devices, including certain
devices based on the Android operating system manufactured by Google. PA32
¶ 15.
B.
The Android Operating System Is At Issue In Both The California
And Texas Actions.
Rockstar filed its Texas complaint on October 31, 2013, accusing ZTE of
infringing various patents now owned by Rockstar and MobileStar (“the Texas
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action”). The seven patents now include U.S. Patent Nos. 5,838,551; 6,037,937;
6,128,298; 6,333,973; 6,463,131; 6,765,591; and 6,937,572 (“the Asserted
Patents”). PA73-75 ¶ 5-14. Rockstar’s Texas complaint defines ZTE’s accused
devices as devices “having a version (or adaption [sic] thereof) of Android
operating system” infringe the Asserted Patents. PA32 ¶ 15. Rockstar does not
allege that any of the non-Android devices offered by ZTE infringe the patents.
Google, the developer and manufacturer of the Android operating system,
filed a complaint for declaratory judgment in the Northern District of California on
December 23, 2013 (“the California action”). PA706-18. Google’s complaint
identifies ZTE as a “customer” that uses the Android platform in its devices, and
seeks a declaration that “[not] any version of Google’s Android platform” infringes
the seven Asserted Patents. PA710 ¶ 17, PA711 ¶ 25 (emphasis added).
The same Android-based ZTE devices are therefore at issue in both the
Texas and California cases. For example, in Texas, Rockstar alleges that ZTE
devices “with a version (or adaption [sic] thereof) of Android operating system”
infringe at least claim 13 of the ’937 patent, and similarly in California, Google
requests “a judgment declaring that Google’s Android platform . . . do[es] not
directly or indirectly infringe any claim of the ’937 patent.” Compare PA713 ¶ 37
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Parallel allegations are made in the respective Texas and
California complaints for each of the other six Asserted Patents.1
C.
The Northern District Of California Held That Google’s Suit
Takes Precedence, And That Texas Is Not More Convenient.
In response to Google’s declaratory judgment complaint in California,
Rockstar moved to dismiss or, in the alternative, transfer the action to Texas.
Chief Judge Wilken denied both requests based on established Federal Circuit case
law, recently reaffirmed in In re Nintendo, No. 2014-132, 2014 U.S. App. LEXIS
12707, at *4-5 (Fed. Cir. June 25, 2014), that a manufacturer’s suit takes
precedence. With regard to the relationship between Google and its customers,
and common issues between the cases, Chief Judge Wilken found that:
The relationship between Google and the Halloween defendants, including
ZTE, is one of manufacturer and customer.
Because the determination of the infringement issues in California would
likely be dispositive of the other cases, and the manufacturer presumably has
1
For the ’298 patent, compare ¶ 44 of the Texas complaint (PA42 ) with ¶ 43 of
the California complaint (PA714). For the ’551 patent, compare ¶ 18 of the Texas
complaint (PA33) with ¶ 31 of the California complaint (PA7134). For the ’973
patent, compare ¶ 59 of the Texas complaint (PA47) with ¶ 49 of the California
complaint (PA715). For the ’131 patent, compare ¶ 74 of the Texas complaint
(PA524) with ¶ 55 of the California complaint (PA716). For the ’591 patent,
compare ¶ 89 of the Texas complaint (PA58) with ¶ 61 of the California complaint
(PA717). For the ’572 patent, compare ¶ 104 of the Texas complaint (PA63-64)
with ¶ 67 of the California complaint (PA718).
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a greater interest in defending against charges of patent infringement than
the customers, the California suit takes precedence.
PA742.
Chief Judge Wilken then turned to the convenience factors, and made
several key findings with respect to the parties:
“Google’s Android products, the target of this infringement action, were
designed and created [in the Northern District.] Many of the witnesses who
can testify to the design and development of the accused Android platform’s
features reside near Google’s headquarters in Mountain View, California.”
PA743 (citation omitted).
“[T]he circumstances here strongly suggest that Rockstar formed MobileStar
as a sham entity for the sole purpose of avoiding jurisdiction in all other fora
except MobileStar’s state of incorporation (Delaware) and claimed principal
place of business (Texas).” PA727.
Rockstar’s “nerve center,” or the place where its “officers direct, control,
and coordinate the corporation’s activities,” thus appears to be in Ottawa,
Canada. PA721 n.1 (citation omitted).
“Although Defendants [Rockstar and MobileStar] claim to have substantial
ties to Texas, their headquarters appear to be in Canada.” PA745.
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Chief Judge Wilken further made findings regarding third-party witness
Apple.
The California court described a “direct link” between Apple and
Rockstar’s actions against Google and its customers. PA736. Chief Judge Wilken
first observed that Apple contributed $2.6 billion, or a controlling 58% of the $4.5
billion paid by Rockstar Bidco (a consortium consisting of Apple, Microsoft, RIM,
Ericsson, Sony, and EMC) to acquire the Nortel patent portfolio. PA735. The
California court noted that Rockstar’s litigation strategy of suing Google’s
customers “is consistent with Apple’s particular business interests.” PA737. It
noted that Rockstar limited its infringement claims in the Texas action “to
Android-operating devices only” and, according to Chief Judge Wilken, “[t]his
‘scare the customer and run’ tactic advances Apple’s interest in interfering with
Google’s Android business.” Id.
The California court therefore denied Rockstar’s motion to transfer. PA746.
And Chief Judge Wilken has further ordered that the customer suits in Texas likely
would, if transferred to California, be related and consolidated for pretrial
purposes. PA744; PA747-48.
D.
The Texas Court’s Analysis of the Transfer Issues.
In sharp contrast, the Texas court did not give preference to the
manufacturer suit filed by Google in California. Nor did the Texas court analyze
the convenience factors within the context of the precedence to be given Google’s
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Indeed, the Texas court cited the principle that “litigation
against or brought by the manufacturer of infringing goods takes precedence over a
suit by the patent owner against customers of the manufacturer” (PA3), but then
never analyzed or applied that principle. In fact, the Texas court never mentioned
Chief Judge Wilken’s ruling, which had issued more than three months earlier.
Compare PA719-46 with PA1-16.
The Texas Court instead gave credit to
Rockstar’s manufactured contacts in Texas and found that every single
convenience factor was either neutral or weighed against transfer. In addition, the
court erroneously stated that ZTE is headquartered in the Eastern District.
REASONS WHY THE WRIT SHOULD ISSUE
The Court should grant a writ of mandamus for all of the reasons given in
Google’s co-pending petition, as well as the petitions filed by related defendants.2
The district court disregarded Chief Judge Wilken’s prior findings without
explanation, refused to determine whether Google’s manufacturer suit in California
satisfied the first-filed rule, and cited Rockstar’s choice to bring multiple actions in
the same inconvenient forum as a reason to deny transfer in all of them. Moreover,
although MobileStar is “a sham entity” that exists for manipulating jurisdiction
(PA727), the court nevertheless credited those contacts in finding a “substantial”
amount of evidence in East Texas. PA5. These errors of law infected the court’s
2
See, e.g., Google Pet. 15-30.
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entire analysis. As a result, “the denial of transfer was a ‘clear’ abuse of discretion
such that refusing transfer produced a ‘patently erroneous result.’”
In re
Genentech, 566 F.3d 1338, 1331 (Fed. Cir. 2009) (quoting In re Volkswagen of
Am. Inc., 545 F.3d 304, 310 (5th Cir. 2008) (en banc)).
Under correct legal standards, there is no basis for denying transfer to
Northern California.
As Chief Judge Wilken explained, “Google’s Android
products, the target of this infringement action, were designed and created” in
Northern California. PA743. Most of the relevant witnesses and evidence are
located there. See id. No relevant witnesses or evidence are located in East Texas.
See id. As this Court has repeatedly held, “in a case featuring most witnesses and
evidence closer to the transferee venue with few or no convenience factors
favoring the venue chosen by the plaintiff, the trial court should grant a motion to
transfer.” In re Nintendo Co., 589 F.3d 1194, 1198 (Fed. Cir. 2009).
II.
NORTHERN CALIFORNIA IS A CLEARLY MORE CONVENIENT
FORUM.
A.
The District Court Clearly Abused Its Discretion By Ignoring
Judge Wilken’s Findings That Google’s Manufacturer Suit Takes
Precedence.
The district court erred as a matter of law by refusing to determine whether
Google’s declaratory judgment action against Rockstar in California favors
transfer. Google has already explained why it does favor transfer under the firstfiled rule. See Google Pet. 15-19. It also supports transfer here because Rockstar’s
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action against ZTE is a customer suit. As this Court has repeatedly held, “[w]hen a
patent owner files an infringement suit against a manufacturer’s customer and the
manufacturer then files an action of noninfringement or patent invalidity, the suit
by the manufacturer generally take[s] precedence.” In re Nintendo of Am., Inc.,
2014 U.S. App. LEXIS 12707, at *4-5 (citing Spread Spectrum Screening LLC v.
Eastern Kodak Co., 657 F.3d 1349, 1357 (Fed. Cir. 2011); Katz v. Lear Siegler,
Inc., 909 F.2d 1459, 1464 (Fed. Cir. 1990)).
As Chief Judge Wilken found, there is no question that “the relationship
between Google and the Halloween defendants [including ZTE] is one of
manufacturer and customer.” PA742. Rockstar’s own complaint makes this plain.
It accuses ZTE of infringement based on its implementation of the Android
operating system, which Google develops and distributes. PA32 ¶ 15.
Chief Judge Wilken further concluded that Google’s manufacturer suit in
California “takes precedence” for two reasons:
“the determination of the
infringement issues here would likely be dispositive of the other cases”; and “the
manufacturer presumably has a greater interest in defending against charges of
patent infringement than the customers.” PA742 (emphasis added). Indeed, in its
California action, Google seeks a declaration that no version of the Android
platform infringes any of the seven asserted patents that are at issue in Texas.
PA65-66. If Google is successful, it will resolve most if not all issues in this case
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because Rockstar’s infringement contentions for six of the seven patents identify
stock Android source code as the basis for infringement. PA395-428. And for the
seventh patent, which is directed to hardware, Rockstar accuses only those ZTE
devices “having a version (or an adaption [sic] thereof) of Android operating
system.” PA32-33 ¶ 15 (emphasis added). The overlap between the cases is so
clear that Chief Judge Wilken ordered that “[i]f the customer suits were transferred
to the Northern District of California, th[e] Court would relate them to” Google’s
manufacturer suit. PA748.
The district court in this case did not disagree with Chief Judge Wilken’s
findings. It simply ignored them. Expressly putting the first-filed issue to the side,
the court instead pointed to the fact that Rockstar had filed a total of six actions in
the Eastern District. See PA14. But if one suit in an inconvenient forum warrants
granting transfer, the existence of five more inconvenient suits is hardly a reason to
deny it. If it were otherwise, plaintiffs could always defeat transfer by maximizing
the number of defendants and witnesses inconvenienced by an improper venue
choice. That is simply not a plausible reading of a statute that authorizes transfer
“in the interests of justice.” 28 U.S.C. § 1404(a).
In reality, the manufacturer-suit rule and the transfer statute work toward the
same goal: ensuring efficient and convenient resolution of a dispute in the proper
forum. Chief Judge Wilken’s order reflects that reality by giving Google’s suit the
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precedence demanded by this Court.
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The district court’s order here instead
subverts it. By ignoring the issue, the court effectively rejected the precedence of
Google’s manufacturer suit, skewing the transfer analysis and clearly erring as a
result.
The district court further suggested that it “does not expect the current
California litigation to dispose of key issues in this case and the other related
Rockstar litigations.”
PA4.
Google has already explained why that is
demonstrably incorrect. Google Pet. 18-19. But in any event, the district court’s
reasoning is legally incorrect even if it were factually accurate. This Court has
explained that, “although there may be additional issues involving the defendants
in the customer action, their prosecution will be advanced if the plaintiff is
successful on the major premises being litigated in the manufacturer litigation, and
may well be mooted if the plaintiff is unsuccessful.” In re Nintendo, 2014 U.S.
App. LEXIS 12707, at *7 (internal quotation marks omitted).
In short, giving Google’s suit precedence facilitates a just, convenient,
efficient, and economical resolution of what is, at bottom, a dispute over the
Android operating system.
The district court clearly abused its discretion by
holding otherwise. Joy Techs., Inc. v. Flakt, Inc., 6 F.3d 770, 772 (Fed. Cir. 1993)
(citing A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1039 (Fed.
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Cir. 1992) and Seattle Box Co. v. Indus. Crating & Packing, 756 F.2d 1574, 1581
(Fed. Cir. 1985)).
B.
The District Court Clearly Abused Its Discretion By Crediting
Rockstar’s Transparent Efforts To Manipulate Venue.
The district court’s denial of transfer rests on a second error of law: it
credits connections to Eastern Texas that Rockstar manufactured shortly before
filing suit. This Court has rejected that tactic on at least three occasions, and there
is no reason to sanction it here. See In re Hoffmann-La Roche Inc., 587 F.3d 1333,
1337 (Fed. Cir. 2009); In re Zimmer Holdings, Inc., 609 F.3d 1378, 1381 (Fed. Cir.
2010); In re Microsoft Corp., 630 F.3d 1361, 1365 (Fed. Cir. 2011) (per curiam).
As Chief Judge Wilken found, “the circumstances here strongly suggest that
Rockstar Consortium (a Delaware entity) formed MobileStar (another Delaware
entity) as a sham entity for the sole purpose of avoiding jurisdiction in all other
fora except MobileStar’s state of incorporation (Delaware) and claimed principal
place of business (Texas).” PA727. Indeed, MobileStar was formed one day
before the Texas complaint was filed. PA727. That is the epitome of the kind of
“recent” and “ephemeral” connection that cannot defeat a motion to transfer.
Zimmer Holdings, 609 F.3d at 1381.
The reality is that Rockstar is neither a Delaware nor a Texas entity. It is a
Canadian entity, which is what Rockstar itself told the Texas State tax authority.
See ASUS Pet. 16. Its officers and board members are “almost all based in
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Canada, except one in Colorado.” PA721 n.1. And “Rockstar’s ‘nerve center,’ or
the place where its ‘officers direct, control, and coordinate the corporation’s
activities,’ thus appears to be in Ottawa, Canada.” Id. (citing Hertz Corp. v.
Friend, 559 U.S. 77, 92-93 (2010)). Given that Rockstar produces no products,
and instead ‘operates a “patent licensing business that owns and manages a
portfolio of more than 4,000 patents developed by” Nortel,’ (PA721) the fact that
its “nerve center” is in Canada confirms that its ties to Texas have nothing to do
with business and everything to do with the “anticipation of litigation.” Microsoft,
630 F.3d at 1365; see also id. at 1364.
Accordingly, “[t]his is a classic case where the plaintiff is attempting to
game the system by artificially seeking to establish venue . . .” Zimmer Holdings,
609 F.3d at 1381. The mere fact that a plaintiff claims a principal place of
business in Texas and moves its documents there is insufficient to defeat transfer
as a matter of law. See id.; Hoffmann-La Roche, 587 F.3d at 1337. When those
contacts are a sham, as Chief Judge Wilken found, the plaintiff “has no presence in
Texas that should be given weight in the transfer analysis.” Zimmer Holdings, 609
F.3d at 1381.
Here, the district court gave “substantial” weight to Rockstar’s artificial
presence in Texas. PA11. And it did so virtually without explanation, stating in
conclusory fashion that a finding of venue manipulation “is unwarranted given the
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evidence presented.” PA11. This type of unreasoned analysis is no basis to
distinguish Chief Judge Wilken’s well-supported conclusions, much less this
Court’s holdings in Microsoft and Zimmer Holdings.
III.
THE DISTRICT COURT REACHED A PATENTLY ERRONEOUS
RESULT IN DENYING TRANSFER.
Stripped of the legally erroneous reasoning discussed above, the district
court’s denial of transfer falls apart. Under correct legal principles, all relevant
private convenience and public interest factors favor transfer. This Court has held
repeatedly “that in a case featuring most witnesses and evidence closer to the
transferee venue with few or no convenience factors favoring the venue chosen by
the plaintiff, the trial court should grant a motion to transfer.” In re Nintendo Co.,
589 F.3d at 1198. That is the case here.
A.
The Private Interest Factors Clearly Favor Transfer.
The district court erred in finding that the private interest factors weighed
against transfer, or were neutral. As Google’s manufacturer suit shows, the vast
majority of relevant witnesses and evidence are in Northern California.
By
contrast, the only evidence and witnesses purportedly in East Texas are those
manufactured by Rockstar to manipulate venue, which deserve no weight at all.
The sources of proof. “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. Genentech, 566
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F.3d at 1345. Here, those documents are Google’s Android documents. See
PA743. Indeed, as Google noted in its petition, the district court acknowledged
that the “bulk of the relevant evidence in this action will come from Google,” yet
inexplicably questioned whether those documents were in the Northern District of
California. PA11. As discussed above, Rockstar’s supposed contacts in East
Texas are entitled to no weight. See pp. 13-15, supra. This factor therefore
strongly supports transfer.
The district court further erred by finding that ZTE is located in the Eastern
District of Texas. It is not. ZTE (USA) Inc. is located in the Northern District of
Texas, while ZTE Corp. is located in China. See p. 3, supra. The only evidence of
record confirms these facts, and Rockstar no longer disputes it. See PA513-14 ¶ 24; PA720. The district court’s contrary statement is clearly wrong and cannot
support its decision. See Volkswagen, 545 F.3d at 310 (“A district court abuses its
discretion if it . . . relies on clearly erroneous factual findings.” (internal quotation
marks omitted)). Moreover, ZTE’s presence in the Northern District of Texas
cannot support venue in the Eastern District because the vast majority of evidence
is in Google’s possession in Northern California. See In re Acer Am. Corp., 626
F.3d 1252, 1255 (Fed. Cir. 2010) (granting mandamus where Dell’s presence in
Texas outweighed by fact that “allegation of infringement against Dell is largely
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based on integrated software of other defendants with headquarters outside of
Texas”).
The witnesses. The convenience and availability of witnesses is “probably
the single most important factor” in the transfer analysis. In re Genentech, 566
F.3d at 1343. As Judge Wilken found, “[m]any of the witnesses who can testify to
the design and development of the accused Android platform’s features reside near
Google’s headquarters in Mountain View, California.” PA743. Google’s petition
explains that Northern California is a far more convenient venue for its witnesses.
See Google Pet. 24-25. Other potential witnesses, including prior art witnesses,
live in and around the Northern District of California. See PA128-29 & n.4.
Especially given that many of these witnesses, including Google’s potential
witnesses, are third-party witnesses in ZTE’s case, this factor strongly weighs in
favor transfer. See In re Toyota Motor Corp., 747 F.3d 1338, 1340 (Fed. Cir.
2014) (finding that, where no non-party witnesses reside in East Texas and many
witnesses residing in transferee forum have potentially relevant knowledge, this
factor weighs in favor of transfer).
The district court’s opposite conclusion was a clear abuse of discretion for
two reasons. First, the court factored in ZTE’s “likely witnesses” in the Eastern
District of Texas, even though ZTE is not located in that district. See Volkswagen,
545 F.3d at 310. And second, it improperly credited Rockstar’s Texas witnesses.
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The district court clearly erred by determining that this factor weighed against
transfer on these bases.
Compulsory process. The Northern District of California holds compulsory
process authority over the overwhelming majority of third-party witnesses,
including as many as several hundred Android engineers identified by Google in
the San Francisco Bay Area. Google Pet. 24-25. ZTE further identified at least
one named inventor and forty-five prior art inventors residing in the Northern
District of California, along with employees from Apple who will likely be
unwilling trial witnesses. PA128-29 & n.4. None of these witnesses are subject to
“absolute subpoena” power in East Texas. See Fed. R. Civ. P. 45(c). The district
court clearly abused its discretion in holding that this factor was neutral on the
basis of four witnesses (two prosecuting attorneys and two former Nortel
employees) Rockstar identified in or near the Eastern District of Texas.
See
Hoffmann-La Roche, 587 F.3d at 1337-38.
Other practical problems. The district court found that this factor, based
entirely on judicial economy, weighed heavily against transfer. This was clear
error. Judicial economy favors transfer precisely because Google’s manufacturer
suit takes precedence over this customer suit against ZTE. See pp. 9-13, supra.
The district court contradicted itself to hold otherwise. It first noted that
these actions “present common issues of claim construction and damages, and
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(most likely) validity” before concluding that Google’s California action would not
“dispose of key issues in this case and the related Rockstar cases.” PA14-15. To
the contrary, not only would Google’s manufacturer suit dispose of key issues, it
“would likely be dispositive of the” cases currently (and inconveniently) pending
in Texas. PA742 (emphasis added). Chief Judge Wilken has made clear that, “[i]f
the customer suits were transferred to the Northern District of California, this
Court would relate them to the above-entitled case.”
PA748.
Accordingly,
transfer would likely promote judicial economy; at a minimum, there is no
evidence that transfer would undermine it.
B.
The Public Interest Factors Clearly Favor Transfer.
The district court erred by treating the Northern District of California’s local
interest in this case as neutral. As Chief Judge Wilken found (citing this Court’s
precedents), “[t]he Northern District of California has the greater interest in this
litigation because the claims here will ‘call into question the work and reputation
of several individuals residing in or conducting business in this community.’”
PA745 (quoting Hoffman-LaRoche, 587 F.3d at 1336).
The district court here dismissed that conclusion (again without discussing
it) by finding that any interest in resolving cases involving intellectual property
developed within a particular jurisdiction “amounts to a bias in its jury pool” and a
“predisposition toward one party, independent of the merits of the case.” PA16.
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Pointing fingers at any forum’s potential jury bias is, at most, a two-way street.
And in any event, any local interest in “the work and reputation” of individuals
residing in the forum is not a mark of favoritism; it is due regard for having that
reputation evaluated by a jury of one’s peers. Hoffmann-La Roche, 587 F.3d at
1336.3
IV.
THE TEXAS DISTRICT COURT CLEARLY ABUSED ITS
DISCRETION IN REJECTING ZTE’S MOTION TO STAY THE
TEXAS ACTION.
This Court has recognized that a manufacturer suit “need only have the
potential to resolve the ‘major issues’ concerning the claims against the
customer—not every issue—in order to justify a stay of the customer suits.”
Spread Spectrum, 657 F.3d at 1358. Chief Judge Wilken explained why that is the
case here. Google is the manufacturer of Android, the remaining Texas defendants
are its customers, and the California case will resolve “major issues” involved in
the six other customer suits. PA742. As noted above, the district court here
acknowledged the overlapping issues. Thus, at a minimum, the court should have
stayed this action, and its refusal to do so confirms the need to transfer all of the
cases to a single forum so they can be handled in an efficient manner—exactly as
Chief Judge Wilken has proposed to do. See PA748.
3
The remaining public interest factors—administrative difficulties flowing from
court congestion; familiarity of the forum with the law that will govern the case;
and avoidance of unnecessary problems of conflict of laws—are neutral.
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CONCLUSION
ZTE respectfully requests that this Court issue a writ of mandamus directing
the District Court for the Eastern District of Texas to vacate its order denying
transfer or stay of this action, and to transfer this action to the Northern District of
California or, in the alternative, to stay this action until resolution of Google's
manufacturer suit in the Northern District of California.
Respectfully submitted,
DATED: August 22, 2014
By~~---u--W-~~~~~~~~~~~~
Daryl
oseffer
King & Spalding LLP
1700 Pennsylvania Ave., NW
Washington, DC 20006
Alexas D. Skucas
King & Spalding LLP
1185 Avenue of the Americas
New York, NY 10036
Steven T. Snyder
Adam M. Conrad
Anup M. Shah
King & Spalding LLP
100 N. Tryon Street, Suite 3900
Charlotte, NC 28211
Attorneys for Petitioners ZTE Corporation
and ZTE (USA) Inc.
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CERTIFICATE OF SERVICE
This is to certify that I have this day served the foregoing via first class
postage paid U.S. Mail to each party as follows:
MikeMcKool
mmckool@McKoolSmith.com
Douglas A. Cawley
dcawley@McKoolSmith.com
Ted Stevenson III
tstevenson@mckoolsmith.com
David Sochia
dsochia@McKoolSmith.com
Ryan Hargrave
rhargrave@McKoolSmith.com
Nicholas M. Mathews
nmathews@McKoolSmith.com
MCKOOL SMITH, P.C.
300 Crescent Court, Suite 1500
Dallas, TX 75201
Telephone: (214) 978-4000
Facsimile: (214) 978-4044
Jennifer Leigh Truelove
jtruelove@McKoolSmith.com
Samuel Franklin Baxter
sbaxter@McKoolSmith.com
MCKOOL SMITH, P.C.
104 East Houston St., Suite 300
Marshall, TX 75670
Telephone: (903) 923-9000
Facsimile: (903) 923-9099
Joshua W. Budwin
jbudwin@mckoolsmith.com
MCKOOL SMITH, P.C.
300 W. 6th Street, Suite 1700
Austin, TX 78701
Telephone: (512) 692-8700
Facsimile: (512) 692-8744
Additionally, a copy will be sent to:
Hon. Rodney Gilstrap, Judge
U.S. District Court for the Eastern District Of Texas
Sam B. Hall, Jr. Federal Building and United States Courthouse
100 East Houston Street
Marshall, Texas 75670
Telephone: (903) 935-3868
Facsimile: (903) 935-2295
August 22, 2014
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