Velocity Patent LLC v. Audi of America, Inc. et al

Filing 107

MEMORANDUM Opinion and Order Signed by the Honorable John W. Darrah on 8/19/2014. Mailed notice (tg, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

VELOCITY PATENT LLC,
Plaintiff,
v.
AUDI OF AMERICA, INC.,
Defendant.

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Case No. 1:13-cv-08418
Judge John W. Darrah

MEMORANDUM OPINION AND ORDER
Plaintiff Velocity Patent LLC (“Velocity”) brought an action against Defendant Audi of
America, Inc. (“Audi”) for patent infringement under 35 U.S.C. § 1 et seq. Audi filed a Motion
to Dismiss Velocity’s First Amended Complaint, pursuant to Federal Rule of Civil Procedure
12(b)(6), and a Motion to Transfer this case to the United States District Court for the Eastern
District of Michigan, pursuant to 28 U.S.C. § 1404(a).
BACKGROUND
Velocity is a limited liability corporation organized under the laws of Illinois, with a
principal place of business in Atherton, California. (Am. Compl. ¶ 2.) Audi is a corporation
organized under the laws of Michigan with a principal place of business in Auburn Hills,
Michigan. (Id. at ¶ 3.) Audi advertises, markets, and distributes automobiles throughout the
United States. (Id. at ¶ 4.) Velocity owns all rights, title, and interest in U.S. Patent
No. 5,954,781 (“the ’781 patent”), which was issued on September 21, 1999. (Id. at ¶¶ 8-9.)
Audi manufactures, uses, imports, offers for sale, and sells automobiles that include:
radar-based safety features comprising a “Driver Assistance package”; displays providing drivers

information regarding fuel consumption and efficiency of operation; engines with cylinder on
demand technology; and automatic transmissions with manual gear-shifting features. (Id. at
¶¶ 11-14.) Twenty-five of Audi’s models include one or more of these features, with an onboard
computer system that manages the features. (Id. at ¶¶ 15-16.) By manufacturing and selling the
aforementioned models equipped with these features, Audi has directly infringed, and continues
to infringe, either literally or under the doctrine of equivalents, at least claims 1, 7, 13, 17, 23, 26,
28, and 31 of the ’781 Patent in violation of 35 U.S.C. § 271. (Id. at ¶¶ 15, 17.) Audi received
notice of the alleged infringement. (Id. at ¶ 18.)
LEGAL STANDARD
A properly stated claim in a well-pleaded complaint must contain “a short and plain
statement of the claim showing that the pleader is entitled to relief and a demand for the relief
sought.” Fed. R. Civ. P. 8. A defendant may file a motion to dismiss the claim for failure to
state a claim on which relief can be granted. Fed. R. Civ. P. 12(b)(6). Withstanding such a
motion requires alleging enough facts to support a claim that is “plausible on its face.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570). A claim is facially plausible “when the plaintiff pleads factual content that allows the court
to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal,
556 U.S. at 678. Although the plausibility standard does not require a showing of “probability,”
a mere showing of the possibility that the defendant acted unlawfully is insufficient. Id.
A district court may transfer any civil action “[f]or the convenience of parties and
witnesses, in the interest of justice ... to any other district or division where it might have been
brought . . . .” 28 U.S.C. § 1404(a). This decision “permits a flexible and individualized
analysis” unconstrained by “a narrow or rigid set of considerations in their determinations.”
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Research Automation, Inc. v. Schrader Bridgeport Int’l, Inc., 626 F.3d 973, 978 (7th Cir. 2010)
(citations and quotations omitted). The movant bears the burden of showing the transfer forum is
more convenient. Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219-20 (7th Cir. 1986).
ANALYSIS
Motion to Dismiss
“A motion to dismiss for failure to state a claim upon which relief can be granted is a
purely procedural question not pertaining to patent law.” McZeal v. Sprint Nextel Corp.,
501 F.3d 1354, 1355-56 (Fed. Cir. 2007). Therefore, Seventh Circuit law applies. Id. However,
the Federal Rules of Civil Procedure provide a series of forms that “suffice under the[] rules and
illustrate the simplicity and brevity that the[] rules contemplate.” Fed. R. Civ. P. 84. It follows
that any pleading that properly adheres to the specificity of one of the forms “cannot be
successfully attacked.” In re Bill of Lading Transmission & Processing Sys. Patent Litig., 681
F.3d 1323, 1334 (Fed. Cir. 2012)
Form 18 in the Appendix of Forms lays out the components of a complaint for patent
infringement. K-Tech Telecomms., Inc. v. Time Warner Cable, Inc., 714 F.3d 1277, 1283 (Fed.
Cir. 2013). It requires “1) an allegation of jurisdiction; 2) a statement that the plaintiff owns the
patent; 3) a statement that defendant has been infringing the patent ‘by making, selling, and
using [the device] embodying the patent’; 4) a statement that the plaintiff has given the defendant
notice of its infringement; and 5) a demand for an injunction and damages.” McZeal, 501 F.3d at
1357. “That Form 18 would control in the event of a conflict between the form and Twombly
and Iqbal does not suggest, however, that we should seek to create conflict where none exists.”
K-Tech, 714 F.3d at 1284.

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Velocity’s First Amended Complaint contains each element required in Form 18. Audi
apparently concedes this fact, but argues that “merely identifying allegedly infringing systems as
required by the Form is not sufficient to state a claim.” (Dkt. No. 47 at 2.)1 Without offering
authority for this particular proposition, Audi transitions to the argument that the Seventh Circuit
requires plausibility in accordance with Twombly and Iqbal. However, Audi’s cited cases are
distinguishable.2

In this case, there is no conflict between Form 18 and Twombly and Iqbal.

The First Amended Complaint provided Audi with adequate notice. See McZeal, 501 F.3d at
1357 (“A patentee need only plead facts sufficient to place the alleged infringer on notice as to
what he must defend.”).
Audi’s assertion that Velocity must “plead specific facts showing not only which features
are accused, but also why those features would plausibly meet the limitations of the asserted
patent claims” is unpersuasive. The first case Audi cites in support of this argument is
K-Tech, which held such specificity among allegedly infringing parts is unnecessary to survive a
motion to dismiss. K-Tech, 714 F.3d at 1286 (“That K-Tech cannot point to the specific device
or product . . . that translates the digital television signals each receives — especially when the
operation of those systems is not ascertainable without discovery — should not bar K-Tech's

1

Because this opinion regards multiple motions, responses and replies, each is referred to
by its docket number.
2
Peters v. West, 692 F.3d 629 (7th Cir. 2012) (copyright action dismissed as a matter of
law after examination of supposedly infringing lyrics); Wolf Run Hollow, LLC v. State Farm
Bank, F.S.B., No. 12 C 9449, 2013 WL 6182941, at *2 (N.D. Ill. Nov. 26, 2013) (plaintiff
conceded that defendant’s technology performed a completely different task); K-Tech, 714 F.3d
at 1279 (district court’s dismissal reversed based on claims’ compliance with Form 18); In re
Bill of Lading, 681 F.3d at 1335 (district court’s dismissal reversed based on claims’ compliance
with Form 18); M-I Drilling Fluids UK Ltd. v. Dynamic Air Inc., Civil No. 13-2385 ADM/JJG,
2014 WL 494680, at *6 (D. Minn. Feb. 6, 2014) (dismissing claims against only one of two
defendants because plaintiff referred to them interchangeably throughout complaint resulting in
only one defendant being put on notice)
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filing of a complaint.”). Accordingly, Audi’s Motion to Dismiss Velocity’s Complaint for
failure to state a claim is denied.
Motion to Transfer
Pursuant to 28 U.S.C. § 1404(a), a district court may “for the convenience of parties and
witnesses, in the interest of justice . . . transfer any civil action to any other district or division
where it might have been brought.” Transfer is appropriate when: (1) venue is proper in both
the transferor and the transferee courts; (2) the transfer will serve the convenience of the parties
and witnesses; and (3) the transfer is in the interest of justice. 28 U.S.C. § 1404(a); see Coffey v.
Van Dorn Iron Works, 796 F.2d 217, 219 (7th Cir. 1986). A district court must consider these
factors in light of all the circumstances, on a case-by-case basis, and has discretion regarding the
weight accorded to each factor. Coffey, 796 F.2d at 219. The party seeking transfer bears the
burden of establishing that the transferee court is clearly more convenient. Id. at 219-20.
Venue
In this case, the first requirement is not in dispute. Both parties agree that venue is proper
in the United States District Court for the Northern District of Illinois and the United States
District Court for the Eastern District of Michigan.
Convenience of the Parties and Witnesses
Most importantly, a transfer of venue must support the convenience of the parties and
witnesses. Body Sci. LLC v. Bos. Scientific Corp., 846 F. Supp. 2d 980, 992 (N.D. Ill. 2012).
Courts in this district consider five factors in evaluating convenience: (1) the plaintiff’s initial
choice of forum; (2) the situs of material events; (3) the relative ease of access to sources of
proof; (4) the convenience of the parties litigating in the respective forums; and (5) the
convenience of the witnesses. Id. (citing Research Automation, 626 F.3d at 978).
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Plaintiff’s Choice of Forum
The plaintiff’s choice of forum is usually entitled to a degree of deference in transfer of
venue cases. Moore v. Motor Coach Indus., Inc., 487 F. Supp. 2d 1003, 1006 (N.D. Ill. 2007).
Although the chosen forum is important, it is not dispositive in the evaluation. Amoco Oil Co. v.
Mobil Oil Corp., 90 F. Supp. 2d 958, 960 (N.D. Ill. 2000); see also Law Bulletin Publ’g, Co. v.
LRP Publ’ns, Inc., 992 F. Supp. 1014, 1017 (N.D. Ill. 1998) (“While a plaintiff's choice of forum
is an important consideration in determining whether a motion to transfer should be granted, it is
not absolute and will not defeat a well-founded motion to transfer.”). The plaintiff’s choice of
forum receives less deference “when another forum has a stronger relationship to the dispute or
when the forum of plaintiff's choice has no significant connection to the situs of material events.”
Moore, 487 F. Supp. 2d at 1007. Velocity is organized under the laws of Illinois and chose to
bring this suit in the Northern District of Illinois. This factor weighs slightly against transfer.
Situs of Material Events
In patent infringement cases, the business and activities of the alleged infringer are the
operative facts. See Gen 17, Inc. v. Sun Microsys., Inc., 953 F. Supp. 240, 243 (N.D. Ill.1997).
Audi’s principal place of business is in Auburn Hills, Michigan; but its products are sold and
distributed in Illinois. However, “sales alone are insufficient to establish a substantial
connection to the forum if the defendant's goods are sold in many states.” Anchor Wall Sys., Inc.
v. R & D Concrete Prods. Inc., 55 F.Supp.2d 871, 874 (N.D. Ill. 1999). Some courts in this
district have found that the location of the alleged infringer’s principal place of business is
“critical” because patent suits often focus on the actions of the alleged infringer, its employees,
and documents. Addiction and Detoxification Inst., LLC v. Rapid Drug Detox Ctr., No. 11-cv-

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7992, 2013 WL 951115, at *2-3 (N.D. Ill. Mar. 11, 2013) (citing Body Sci., 846 F. Supp. 2d at
993). Yet, these elements are also properly considered in other parts of the convenience analysis.
Accordingly, the situs of material events is “largely irrelevant in patent cases, as
infringement is determined by comparing the alleged infringing device or product with the
language of the claim.” Kolcraft Enters. v. Chicco USA, Inc.,, No. 09 C 3339, 2009 U.S. Dist.
LEXIS 101605, at * 8 (N.D. Ill. Oct. 23, 2009) (citing SRI Int'l v. Matsushita Elec. Corp. of
Am., 775 F.2d 1107, 1121 (Fed. Cir. 1985)). The material events of a patent infringement case
are not connected to a particular situs. Medi USA v. Jobst Inst., Inc.,791 F. Supp. 208, 210 (N.D.
Ill. 1992). This factor is neutral.
Location of Proof
Most of the sources of proof, including files and equipment relating to the technical
design of Audi’s products are located in the Eastern District of Michigan.3 However,
documentary and digital evidence “is readily transferable and transporting it generally does not
pose a high burden upon either party.” Continental Cas. Co. v. Staffing Concepts, Inc., No. 06 C
5473, 2009 WL 3055374, at *5 (N.D. Ill. Sept. 18, 2009) (citations omitted); see also
Rabbit Tanaka Corp. USA v. Parodies Shops, Inc., 598 F.Supp.2d 836, 840 (N.D. Ill. 2009) (“In
this day and age, transferring documents from one district to another is commonplace and, given
the widespread use of digital imaging in big-case litigation, no more costly than transferring
them across town.”). Since most of the sources of proof are readily transferable, this factor
weighs only slightly in favor of transfer.

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Audi acknowledges that at least some of the relevant documents are located in
Herndon, Virginia.
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The Convenience of the Parties
The next factor is the convenience of the parties in litigating in the respective forums. In
determining the convenience of the parties, courts “should consider their respective residences
and their ability to bear the expenses of litigating in a particular forum.” Hanley v. Omarc, Inc.,
6 F. Supp. 2d 770, 776 (N.D. Ill. 1998). However, a “motion to transfer cannot be used simply
to shift the one party's inconvenience onto another party.” I.P. Innovation, L.L.C. v. Lexmark
Int'l, Inc., 289 F.Supp.2d 952, 955 (N.D. Ill. 2003); see also Medi, 791 F. Supp. at 211. Audi’s
principal place of business is in the Eastern District of Michigan. Velocity’s principal place of
business is in Atherton, California. While it would be more convenient for Audi to litigate in its
home forum, Velocity is presently litigating several other cases involving the patent-in-suit in the
Northern District of Illinois. “While it is feasible for plaintiffs to litigate in multiple fora, it is
obviously more convenient and cost efficient for plaintiffs to litigate all of their cases [in the
same forum.]” IP Innovation L.L.C. v. Matsushita Elec. Indus. Co, Ltd., No. 05 C 902,
2005 WL 1458232 at *9 (N.D. Ill. June 13, 2005). Transferring this case to the Eastern District
of Michigan would merely shift the inconvenience to Velocity; therefore, this factor weighs
against transfer.
The Convenience of the Witnesses
The final factor to consider is the convenience of the witnesses. “The convenience of
witnesses is often viewed as the most important factor in the transfer balance.” Rose v.
Franchetti, 713 F. Supp. 1203, 1214 (N.D. Ill. 1989). The convenience of third-party witnesses
is usually accorded more weight than party witnesses in considering whether transfer of venue is
proper. See Bd. of Trs. of Health & Welfare Dep't of Constr. & Gen. Laborers' Dist. Counsel of
Chi. & Vicinity v. Kruzan, 2011 WL 6140530, at *4 (N.D. Ill. Dec. 8, 2011). Determining which
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venue is more convenient for the witnesses requires more than calculating the length of each
party’s witness list. Chem. Waste Mgmt, Inc. v. Sims, 870 F. Supp. 870, 876 (N.D. Ill.1994).
Courts must look to the nature and quality of the witnesses' testimony with respect to the issues
of the case. Vandeveld v. Christoph, 877 F.Supp. 1160, 1168 (N.D. Ill.1995).
Audi states that there are potential party witnesses living in the Eastern District of
Michigan that have knowledge of the technical design of the systems used in its products. Audi
also lists specific third-party witnesses living in the Eastern District of Michigan who would
testify about prior-art systems. Velocity states that the inventors of the patent-in-suit live in
Illinois and would be inconvenienced if this case was transferred to the Eastern District of
Michigan. On the surface, it seems that the vast majority of third-party witnesses reside in the
Eastern District of Michigan. However, two of these witnesses are employees of Audi, four are
actually unspecified groups of “knowledgeable employees” of other companies, and one may be
unavailable to testify.4 Both parties argue inconvenience on behalf of specific third-party
witnesses with important, relevant testimony. Therefore, this factor is neutral.
The Interests of Justice
In evaluating the interest of justice, courts consider factors such as “docket congestion
and likely speed to trial in the transferor and potential transferee forums, each court’s relative
familiarity with the relevant law, the respective desirability of resolving controversies in each
locale, and the relationship of each community to the controversy.” Research Automation,

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Velocity asserts that one named third-party witness, Wesley A. Rogers, an inventor of
GM’s prior-art system, passed away in 2010. Audi argues that Velocity is referring to another
Wesley A. Rogers. Although there is not conclusive evidence to confirm or refute this assertion,
whether or not Mr. Rogers is in fact alive has little bearing on the final decision to grant or deny
Audi’s Motion to Transfer.
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626 F.3d at 978 (citations omitted). This analysis is related “to the efficient functioning of the
courts, not to the merits of the underlying dispute.” Coffey, 796 F.2d at 221. The interest of
justice “may be determinative, warranting transfer or its denial even where the convenience of
the parties and witnesses points toward the opposite result.” Research Automation, 626 F.3d at
978; see also Coffey, 796 F.2d at 220 (“The interest of justice may be determinative in a
particular case, even if the convenience of the parties and witnesses might call for a different
result.”).
Docket Congestion and Speed to Trial
In 2013, the Northern District of Illinois docket was more congested compared to the
Eastern District of Michigan. The average caseload in the Northern District of Illinois was 563
pending cases per judge. In the Eastern District of Michigan, the average caseload was 457
pending cases per judge. Cases brought in the Eastern District of Michigan also proceed to trial
faster than those filed in the Northern District of Illinois. The median time from filing to trial for
civil cases in the Eastern District of Michigan in 2013 was 26.7 months. In the Northern District
of Illinois, the median time from filing to trial was 33.1 months. However, the median time from
filing to disposition is slightly faster in the Northern District of Illinois. In 2013, the median
time from filing to disposition in a civil case was 6.8 months in the Northern District of Illinois
and 8 months in the Eastern District of Michigan. See Comparison of Districts Within the
Seventh Circuit – 12 Month Period Ending December 31, 2013, http://www.uscourts.gov/
viewer.aspx?doc=/uscourts/Statistics/FederalCourtManagementStatistics/2013/comparisondistricts-within-circuit-december-2013.pdf&page=7. This difference in speed of disposition is
not significant relevant to the six-month difference in time to trial, as set out above. See
Coleman v. Buchheit, Inc., No. 03 C 7495, 2004 WL 609369, at *3 (N.D. Ill. Mar. 22, 2004)
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(stating that a median time difference from filing to disposition of less than three months would
not greatly affect the speed at which the case would proceed to trial). Since the Northern District
of Illinois docket is more congested and the average speed to trial is faster in the Eastern District
of Michigan, this factor weighs in favor of transfer.
Courts’ Familiarity with the Applicable Law
Another factor to consider in evaluating the interest of justice is whether the transferor or
transferee court has familiarity with the applicable law. Generally, this factor is immaterial to
patent cases because “the applicable law is the same nationwide.” Rabbit Tanaka Corp., 598 F.
Supp. at 841. The Northern District of Illinois, however, is a participant in the Patent Pilot
Program. Participation in the Patent Pilot Program is not dispositive in the evaluation; however,
it is an important quality that demonstrates familiarity with patent law. See Caterpillar, Inc. v.
ESCO Corp., 909 F. Supp. 2d 1026, 1035 (C.D. Ill. 2012); Tech. Licensing Corp. v. Harris
Corp., No. 9 C 820, 2012 WL 1298611, at *3 (N.D. Ill. Apr. 16, 2012) (“[E]xpediency of patent
discovery and trials promoted by the Patent Pilot Program is a material consideration for many
patent plaintiffs, and will not be discounted.”). Furthermore, the Northern District of Illinois also
has Local Patent Rules to facilitate planning and predictability in patent cases. The Eastern
District of Michigan is not a participant in the Patent Pilot Program; it also does not have local
patent rules. This factor weighs against transfer.
Communities’ Interest in Resolving the Case
Whether transfer of venue is appropriate also depends in part on the relationship of each
community to the controversy. “The administration of justice is served more efficiently when
the action is litigated in the forum that is closer to the action.” Carillo v. Darden, 992 F. Supp.
1024, 1026 (N.D. Ill. 1998); see also Hanley, 6 F. Supp. 2d at 777. Although the Northern
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District of Illinois may have an interest in preventing infringement operations from occurring in
its boundaries, the accused products are sold throughout the United States; therefore, Michigan
shares this interest. See Technical Concepts L.P. v. Zurn Indus., Inc., No. 02 C 5150,
2002 WL 31433408, at *7 (N.D. Ill. Oct. 31, 2002). Audi also employs hundreds of employees
in the Eastern District of Michigan that may be affected by the outcome of this case, although
Audi has offices in other parts of the country. Velocity does not argue that the community
surrounding the Northern District of Illinois has any interest outside of the general disinclination
to allow patent infringement to go unchecked and, therefore, this factor weighs slightly in favor
of transfer.
Desirability of Resolving Controversy in Each Locale
The final factor in determining the interest of justice is the respective desirability of
resolving controversies in each locale. Velocity has several other actions against MercedesBenz, BMW, Chrysler, and Jaguar involving the patent-in-suit pending in the Northern District
of Illinois. “The co-pendency of cases involving the same patent [is a] permissible
consideration[] in ruling on a motion to transfer venue.” In re EMC Corp., 501 F. App'x 973,
976 (Fed. Cir. 2013); see also In re Vistaprint Ltd., 628 F.3d 1342, 1346 (Fed. Cir. 2010).
Judicial economy is best served by having litigation involving the same patent-in-suit to remain
in the same district. This factor weighs strongly against transfer.5

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Audi argues that reassignment of the related cases to this Court cannot be considered
because transfer must be decided based on “The situation which existed when the suit was
instituted.” In Re EMC, 501 F. App’x at 976 (citations omitted). However, “a district court may
properly consider any judicial economy benefits which would have been apparent at the time the
suit was filed.” Id. (emphasis added). It is proper to consider the economy inherent in having
the same judge handle cases involving the same patent “as to which there [is] no issue of
transfer.” Id.
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In evaluating the interests of justice, the factors weigh against transferring the case to the
Eastern District of Michigan. The Northern District of Illinois has a greater interest in resolving
the issue because of the pendency of related actions involving the patent-in-suit.
Transfer to the Eastern District of Michigan is not appropriate considering the
requirements of 28 U.S.C. § 1404(a). Although both venues would be proper, the convenience
of the parties and the witnesses and the interest of justice would be best served by maintaining
this suit in the Northern District of Illinois. Therefore, Audi’s Motion to Transfer to the United
States District Court for the Eastern District of Michigan is denied.
CONCLUSION
For the foregoing reasons, Audi’s Motion to Dismiss for Failure to State a Claim [36] is
denied. In the interest of justice and fairness, as well as the sake of convenience, Audi’s Motion
to Transfer Venue [50] is denied. This case will remain in the United States District Court for
the Northern District of Illinois.

Date:

8/19/2014
JOHN W. DARRAH
United States District Court Judge

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