DIGONEX TECHNOLOGIES, INC. v. QCUE, INC.

Filing 54

CLOSED TRANSFER - Transferring this action to Texas would strongly promote the interest of justice. Under the circumstances, transfer is "clearly" proper, Coffey, 796 F.2d at 220 (citation omitted). The Court will, therefore, DENY AS MOOT Qcue's Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue, [dkt. 35 ]. Because the Court has not considered Qcue's substantive arguments regarding whether this Court has personal jurisdiction over Qcue or wh ether venue here is proper in the first instance, the Court DENIES AS MOOT Digonex's Motion For Leave To File Surreply, [dkt. 51 ], since the Surreply exclusively discusses those issues. The Court also DENIES AS MOOT Digonex's Unopposed Motion For Oral Argument, [dkt. 47 ]. The Clerk is directed to TRANSFER this action to the Western District of Texas. Any previously ordered dates and deadlines are VACATED and any pending motions not addressed above are TERMINATED. Signed by Judge Jane Magnus-Stinson on 8/30/2012.(JKS)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
DIGONEX TECHNOLOGIES, INC.,
Plaintiff,
vs.
QCUE, INC.,
Defendant.

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1:12-cv-00380-JMS-DKL

ORDER
Presently pending before the Court in this patent infringement dispute is Defendant Qcue,
Inc.’s (“Qcue”) Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue. [Dkt.
35.] Qcue argues that it is not subject to personal jurisdiction in Indiana and that venue is improper here. For the following reasons, the Court determines that it is appropriate to transfer this
action to the Western District of Texas, where another, broader lawsuit between these parties is
already pending. Accordingly, it will not address the merits of Qcue’s arguments that Plaintiff
Digonex Technologies, Inc.’s (“Digonex”) claims against it should be dismissed.
I.
BACKGROUND
Qcue is a Texas company with its principal place of business in Austin, Texas. [Dkt. 361 at 2, ¶ 3.] Qcue “develops software-based dynamic pricing products and services that enable
sports teams, entertainment venues, promoters, and ticketing organizations to set optimal upfront
prices, and adjust those prices based on shifting demand, changes in market conditions, and other
real-time sales data.” [Id. at 2, ¶ 4.]
Digonex is an Indiana company with its headquarters and sole office in Indianapolis.
[Dkt. 45 at 18.] Digonex has sued Qcue in this District, alleging that Qcue has infringed upon
two patents – the ‘424 Patent entitled “Dynamic Pricing of Items Based on Sales Criteria,” and
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the ‘303 Patent entitled “Digital Online Exchange for Pricing Items to Exhaust Inventory by an
Expiration Time.” [Dkt. 1 at 2.] Specifically, Digonex alleges that Qcue attempted to sell its
infringing dynamic pricing software products to at least one professional sports team based in
Indiana, [dkt. 1 at 1-2], which Digonex later identifies in its brief in opposition to Qcue’s Motion
To Dismiss as the Indiana Pacers, [dkt. 45 at 1]. Digonex also alleges that Qcue “ma[de] multiple contacts with representatives of Purdue University and [the University of] Notre Dame….”
[Id. at 1.]
Shortly after Digonex initiated this lawsuit, Qcue sued Digonex in the Western District of
Texas in Qcue, Inc. v. Digonex Technologies, Inc., No. 1:12-cv-00484-SS (the “Texas Litigation”). In the Texas Litigation, Qcue seeks a declaration that it has not infringed upon the ‘424
or ‘303 Patents or that they are invalid. [Texas Litigation, dkt. 3 at 8-10.] Qcue also sues Digonex for copyright infringement, alleging that Digonex has infringed upon its copyrighted
works, which include certain material on its website and in its promotional materials. [Id. at 4.]
In the Texas Litigation, Qcue and Digonex filed a Stipulated Motion For Stay of Deadline to Respond to Amended Complaint, advising the court there of Qcue’s pending Motion to
Dismiss here and stating that this Court’s decision “may have a significant impact [on] the scope
of this action, including whether Qcue’s declaratory judgment claims relating to the ‘424 Patent
and ‘303 Patent will be a part of this action.” [Texas Litigation, dkt. 8 at 2.] The court there
stayed the Texas Litigation pending our decision on Qcue’s Motion to Dismiss. [Texas Litigation, dkt. 9.]
With the exception of this ruling, this Court has not yet issued any substantive orders.

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II.
DISCUSSION
Qcue asks this Court to dismiss this action for lack of personal jurisdiction and improper
venue. Specifically, Qcue argues that it is not subject to personal jurisdiction in Indiana because
it has not had adequate minimum contacts with Indiana to warrant exercise of either specific or
general jurisdiction since: (1) it did not sell or offer for sale the ‘424 or ‘303 Patents in Indiana
since its discussions with organizations in Indiana were “preliminary,” [dkt. 36 at 6-8]; and (2) it
does not have “continuous and systematic business contacts” with Indiana – it has no offices,
employees, agents, representatives, corporate presence, realty or bank accounts in Indiana; it is
not registered with the Indiana Secretary of State or qualified to do business in Indiana; it does
not maintain an address or telephone number in Indiana; it does not pay Indiana taxes nor has it
ever applied for or received any Indiana business licenses; it has never entered into a contract in
Indiana with a person or entity based in Indiana; and it has never sold its dynamic pricing software products or related services to any person or entity in Indiana, [id. at 9]. Qcue argues that
litigating the case in Indiana would be fundamentally unfair because its assets and most of its
representatives, agents, and employees who are likely to be witnesses are located in Texas. [Id.
at 11.] Finally, Qcue argues that venue is improper here under 28 U.S.C. § 1391(b) because it
does not “reside” in Indiana, the events giving rise to the claim did not occur in Indiana, and it
does not do business in Indiana. [Id. at 12.]
Digonex responds that Qcue has sufficient contacts with Indiana because it “purposefully
directed its activities at Indiana” by engaging in “multiple and protracted communications” with
potential customers here. [Dkt. 45 at 10.] Digonex points to evidence uncovered during sixty
days of jurisdictional discovery which the parties jointly requested and stipulated to, [dkt. 41],
and which the Court granted, [dkt. 42], arguing that Qcue made offers for sale and demonstrated
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its products in Indiana, [dkt. 45 at 16]. Digonex asserts that any burden on Qcue from litigating
here is small, given “its protracted relationships with the Pacers and other potential customers in
Indiana,” and the fact that Qcue’s sole salesperson resides in California so could travel to Indiana
as easily as he could travel to Texas. [Id. at 17-18.] Additionally, Digonex claims that Indiana
has a strong interest in resolving the dispute because Digonex’s patent rights were allegedly violated here, Digonex is headquartered here, and many of the witnesses and much of the evidence
are located here. [Id. at 18.] Digonex notes the existence of the Texas Litigation, and states that
“Qcue apparently expects Digonex to undergo a mirror-image burden to the burden Qcue is
complaining about here [by litigating its case in Texas].” [Dkt. 45 at 18, n.3.] Finally, Digonex
argues that venue in a patent infringement case is governed by 28 U.S.C. § 1400(b), and that, because Qcue is subject to personal jurisdiction here, venue is proper here as well. [Id. at 19.]
A. Applicable Law
An action for patent infringement may be brought “in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and
established place of business.” 28 U.S.C. § 1400. “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.” 28 U.S.C. § 1404(a).
The Court typically considers four factors in deciding whether to transfer an action: (1)
the convenience of the parties; (2) the convenience of the witnesses; (3) the situs of material
events and access to proof; and (4) the interest of justice. No Baloney Mktg., LLC v. Ryan, 2010
U.S. Dist. LEXIS 30296, *26-35 (S.D. Ind. 2010). Federal district court have the inherent power
to administer their dockets so as to conserve scarce judicial resources. Trippe Mfg. Co. v. Am.
Power Conversion Corp., 46 F.3d 624, 629 (7th Cir. 1995).

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Although the Federal Circuit supervises the Court in this action, it will apply the law of
the Seventh Circuit regarding transfers of venue. See In re Link_A_Media Devices Corp., 662
F.3d 1221, 1222-23 (Fed. Cir. 2011) (“In reviewing a district court’s ruling on a motion to transfer pursuant to § 1404(a), we apply the law of the regional circuit….” (citation omitted)). And in
the Seventh Circuit, “[t]he 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, Inc. v. Schrader-Bridgeport Int’l, Inc., 626 F.3d 973, 978 (7th Cir. 2010)
(citing Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219-20 (7th Cir. 1986)).1 Given its potentially dispositive nature, the Court will begin with a discussion of the interest of justice, before
considering the relative convenience of the parties and the witnesses of the two venues.
B. Interest of Justice
As a separate element of the transfer analysis, the interest of justice considers “the efficient administration of the court system.” Research Automation, Inc., 626 F.3d at 978 (citation
omitted). Typically, courts evaluating this element “look to factors including 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.” Id. (citation omitted).

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Applying the law of the Fifth Circuit, the Federal Circuit called dicta Coffey’s “strong statement” about the independent considerations of judicial economy. In re Vistaprint Ltd., 628 F.3d
1342, 1345 (Fed. Cir. 2010). To the extent that Research Automation’s reaffirmation of Coffey’s
dicta might also be characterized as dicta – a question not considered in In re Vistaprint – the
Court notes that the Seventh Circuit has cautioned lower courts to avoid “treat[ing] lightly” dicta
“until disavowed,” Hendricks County Rural Electric Membership Corp. v. NLRB, 627 F.2d 766,
768 n.1 (7th Cir. 1980). Given the Seventh Circuit’s strong concerns about judicial economy,
see, e.g., Neal v. Honeywell Inc., 191 F.3d 827, 830 (7th Cir. 1999) (reviving, for reasons of judicial economy, an ultimately meritorious argument made below but not raised on appeal because “[s]ometimes the judiciary must act in self-defense”), the Seventh Circuit does not appear
likely to disavow Coffey / Research Automation anytime soon. This Court will act accordingly.
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The speed-to-trial factor heavily favors transfer to the Western District of Texas. According to the most recent figures from the Administrative Office of the United States Courts,
civil actions in the Western District of Texas had to wait 16.8 months from filing to trial, while
the median in this District was 31 months.2 The Texas Litigation already includes requests for
declarations regarding Qcue’s alleged infringement on the ‘424 and ‘303 Patents, making consolidation with this action for pretrial purposes likely.3
As for each District’s relative familiarity with governing law, that consideration is essentially neutral where, as here, federal law governs. See, e.g., Coffey, 796 F.2d at 221 (“In a diversity action it is also considered advantageous to have federal judges try a case who are familiar
with the applicable state law.” (citation omitted)).
The third consideration, “the respective desirability of resolving controversies in each
locale,” Research Automation, 626 F.3d at 978, strongly favors transfer. Judicial economy is
advanced by transferring this matter so the Western District of Texas can consolidate this matter
with the Texas Litigation and consider the ‘424 and ‘303 Patents in the same litigation as Qcue’s
copyright infringement claims. A transfer and consolidation would enable discovery to be better
coordinated between Digonex and Qcue, and would enable the magistrate judge there to explore
a global settlement between the parties. Those results would not be possible here, because
Qcue’s copyright infringement claims are not part of this lawsuit. To the extent that Markman
2

http://www.uscourts.gov/uscourts/Statistics/JudicialBusiness/2011/appendices/C05Sep11.pdf
(last accessed August 27, 2012).

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Digonex suggests that it would face undue burden by being forced to litigate the Texas Litigation there, [dkt. 45 at 18 n.3], and stated in the Stipulated Motion for Stay of Deadline to Respond to Amended Complaint that “Digonex does not waive any objection to personal jurisdiction or venue in this Court and expressly reserves the right to challenge personal jurisdiction
and/or venue when Digonex responds to Qcue’s Amended Complaint in this action.” [Texas Litigation, dkt. 8 at 2.] However, Digonex has not formally raised any personal jurisdiction or venue issues in the Texas Litigation to date.
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rulings will be necessary, a transfer and consolidation would provide economies because only
one judge would have to construe the Patents. A transfer would also eliminate the possibility of
inconsistent judgments regarding the validity of the ‘424 and ‘303 Patents and any infringement
issues. And transfer might enable the district judge in Texas to manage the Texas Litigation and
this litigation so as to permit a consolidated appeal, furthering judicial economy at the appellate
level, too.
Finally, regarding the relationship that the community of each venue has to the controversy, it is neutral. Indiana has an interest in ensuring that corporations headquartered here receive
the protections afforded them under patent law, but also that entities are provided software-based
dynamic pricing products and services at the cost called for by open and fair competition. Texas,
home to Qcue, has an interest in ensuring that corporations headquartered there receive the protections they are entitled to under copyright law, but also that its corporations comport with applicable laws.
Given the likelihood that this action will be resolved significantly sooner in the Western
District of Texas, the desirability of having both this case and the Texas Litigation pending in the
same district in order to promote judicial efficiency and foreclose the possibility of inconsistent
judgments, and the neutrality of the remaining considerations, the Court finds that the interest of
justice strongly supports a transfer to the Western District of Texas.
C. Convenience of the Parties and Witnesses
The second branch of the transfer analysis considers the “convenience of parties and witnesses.” 28 U.S.C. § 1404(a). Factors relevant to this “convenience” inquiry include: “(1) the
plaintiff’s choice of forum; (2) the situs of material events; (3) the relative ease of access to
sources of proof; (4) the convenience of the witnesses; and (5) the convenience to the parties of

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litigating in the respective forums.” CMG Worldwide, Inc. v. Bradford Licensing Assocs., 2006
U.S. Dist. LEXIS 98674, *10-11 (S.D. Ind. 2006) (citation omitted).
Digonex’s choice of forum, Indiana, is given less deference when the operative facts have
little or no connection with the chosen forum. See MPH Techs. Oy v. Zyxel Communs. Corp.,
2010 U.S. Dist. LEXIS 72893, * 5 (N.D. Ill. 2010) (“[W]here the plaintiff’s choice of forum has
a relatively weak connection with the operative facts giving rise to the claim, the deference traditionally given to that selection is lessened”). Here, the only connection with Indiana that Digonex makes is that Qcue allegedly approached entities to buy its allegedly infringing products here.
But the sale of infringing products in a district, without more, does not establish a substantial
connection to the chosen forum. Id. at *6. The operative facts here have a weak connection to
Indiana and, for that reason, the Court gives little deference to the fact that Digonex chose to sue
here.4
The situs-of-material-events factor weighs slightly in favor of transferring this case.
While Digonex argues that Qcue offered infringing products for sale in Indiana, it has not alleged
that Qcue researched, designed, developed, or manufactured the allegedly infringing products in
Indiana – all key inquiries for the venue analysis in a patent infringement case. See, e.g., Neil
Bros. Ltd. v. World Wide Lines, Inc., 425 F.Supp.2d 325, 331 (E.D. N.Y. 2006) (“The locus of
operative facts in patent infringement cases usually lies where the allegedly infringing product
was designed, developed, and produced”); Skill-Craft Enterprises, Inc. v. Astro Mfg., Inc., 1990
U.S. Dist. LEXIS 18929, *13 (N.D. Ind. 1990) (situs-of-material-events factor neutral where de4

The Court acknowledges that Digonex filed this lawsuit before Qcue initiated the Texas Litigation. The Seventh Circuit Court of Appeals has instructed that the order of filing is part of the
transfer analysis, but “should weigh no more heavily in the district court’s analysis than the
plaintiff’s choice of forum.” Research Automation, Inc., 626 F.3d at 982. Accordingly, the
Court gives this factor little or no weight given the weak connection, discussed above, between
this forum and the operative facts.
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velopment and production of allegedly infringing product took place in one forum and sale of
allegedly infringing products took place in another). Qcue presumably researched, designed, developed, and manufactured the allegedly infringing products in Texas but, in any event, those
activities did not occur in Indiana.
The third factor, ease of access to sources of proof, is neutral. Qcue’s documents are
primarily in Texas, [dkt. 36 at 11], and Digonex’s are primarily in Indiana, [dkt. 45 at 18]. This
factor is a wash, and may even weigh in favor of transfer since Qcue is the accused infringer so
its documents will likely be more relevant. See In re Genentech, Inc., 566 F.3d 1338, 1345 (Fed.
Cir. 2009) (“‘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.’” (citation omitted)).
As for the convenience of witnesses, this factor is also a wash. Qcue claims that “nearly
all” of its employees who are likely to be witnesses are located in Texas, [dkt. 36 at 11], although
two employees reside in California, [dkt. 36-1 at 3]. Digonex states that “many of [its] witnesses” are located here in Indiana. [Dkt. 45 at 18.] Litigating here will force Qcue’s witnesses to
travel, and litigating in Texas will force Digonex’s witnesses to travel.
The final factor – convenience to the parties – is also neutral. Qcue’s argument that it is
inconvenient to litigate here is equally applicable to Digonex having to litigate in Texas.5
In summary, the Court gives little deference to Digonex’s choice of forum due to its weak
connection with the operative facts, and considerations of convenience to the witnesses and the
parties, as well as the other convenience factors, are neutral. While transfers should not ordinari5

As required for transfer under 28 U.S.C. § 1404(a), the Court also finds that this matter could
have originally been brought in the Western District of Texas since that court clearly has personal jurisdiction over Qcue, which is a Texas corporation with its regular place of business in that
district, [dkt. 36-1 at 2].
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ly “merely shift[] inconvenience from one party to another,” Research Automation, 626 F.3d at
978, a transfer to the Western District of Texas will allow for a full and much speedier resolution
of all matters disputed in both cases, and foreclose the possibility of inconsistent judgments related to the ‘424 and ‘303 Patents. The Court finds that the “interest of justice” factors weigh
heavily in favor of transferring this matter to the Western District of Texas.6
III.
CONCLUSION
Transferring this action to Texas would strongly promote the interest of justice. Under
the circumstances, transfer is “clearly” proper, Coffey, 796 F.2d at 220 (citation omitted). The
Court will, therefore, DENY AS MOOT Qcue’s Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue, [dkt. 35]. Because the Court has not considered Qcue’s substantive
arguments regarding whether this Court has personal jurisdiction over Qcue or whether venue
here is proper in the first instance, the Court DENIES AS MOOT Digonex’s Motion For Leave
To File Surreply, [dkt. 51], since the Surreply exclusively discusses those issues. The Court also
DENIES AS MOOT Digonex’s Unopposed Motion For Oral Argument, [dkt. 47]. The Clerk is
directed to TRANSFER this action to the Western District of Texas. Any previously ordered
dates and deadlines are VACATED and any pending motions not addressed above are TERMINATED.
.
08/30/2012
_______________________________
Hon. Jane Magnus-Stinson, Judge
United States District Court
Southern District of Indiana

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Because the Court is transferring this matter, it has not considered whether it has personal jurisdiction over Qcue or whether venue in this Court is substantively proper.
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Distribution via ECF only:
Holiday W. Banta
ICE MILLER LLP
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Ben L. Bernell
BRACEWELL & GIULLIANA, LLP
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R. Trevor Carter
FAEGRE BAKER DANIELS LLP - Indianapolis
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Edward A. Cavazos
BRACEWELL & GIULLIANI, LLP
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BRACEWELL & GIULLIANI, LLP
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Jeffrey V. Lasker
FENWICK & WEST, LLP
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