Google Inc. v. Traffic Information LLC

Filing 27

Findings & Recommendation: Defendant's Motion to Dismiss for Lack of Subject Matter Jurisdiction and, Alternative Motion to Change or Transfer Venue 8 , should be denied. Objections to the Findings and Recommendation are due by 2/22/2010. Signed on 2/2/10 by Magistrate Judge Dennis J. Hubel. (see 15-page f&r) (kb)

1 2 3 4 5 6 7 8 9 10 11 Plaintiff, 12 vs. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 FINDINGS AND RECOMMENDATION Page 1 C. Dale Quisenberry John T. Polasek Jeffrfey S. David Robert A. Schlachter Timothy S. DeJong Stoll Stoll Berne Lokting & Schlachter 209 S.W. Oak Street, Fifth Floor Portland, Oregon 97204 Julia Markley Perkins Coie 1120 N.W. Couch Street, Tenth Floor Portland, Oregon 97209 Thomas H. Shunk Christina J. Moser Baker & Hostetler 1900 E. Ninth Street, Suite 3200 Cleveland, Ohio 44114 Attorneys for plaintiff TRAFFIC INFORMATION, LLC, a Texas corporation, Defendant. GOOGLE, INC., a Delaware corporation, ) ) ) ) ) ) ) ) ) ) ) ) IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON

Case No. CV09-642-HU FINDINGS AND RECOMMENDATION

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Polasek, Quisenberry & Errington 6750 West Loop South, Suite 920 Ballaire, Texas 77401 Attorneys for defendant HUBEL, Magistrate Judge: This is an action brought by Google, Inc. (Google) against Traffic Information, Inc. (Traffic), seeking a declaration of noninfringement or patent invalidity of two patents owned by Traffic (the `862 Patent and the `606 Patent, collectively the Traffic Patents). Google alleges that in the course of patent litigation against T-Mobile and other defendants, Traffic has asserted that Google Maps infringes the Traffic Patents. Google alleges that it has an objectively reasonable apprehension1 that Traffic will bring a patent infringement action asserting that Google's Maps traffic feature infringes the Traffic Patents. Traffic moves to dismiss for lack of subject matter

jurisdiction or, alternatively, to transfer the case to the Eastern District of Texas, where Traffic has filed several other actions claiming infringement of the Traffic Patents. Factual Background This action was triggered after Traffic told Google's business partner, T-Mobile, that Google's software product, Google Maps for Mobile (GMM) infringes the Traffic Patents when used on a T-Mobile

In MedImmune v. Genentech Inc., 549 U.S. 118 (2007), the Supreme Court rejected the "reasonable apprehension of suit" prong of a two-part test for jurisdiction under the Declaratory Judgment Act in patent cases that had been applied in the Federal Circuit. Sandisk v. STMicroelectronics, Inc., 480 F.3d 1372, 1379 (Fed. Cir. 2007). FINDINGS AND RECOMMENDATION Page 2

1

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cell phone. At the time, Traffic and T-Mobile were engaged in litigating a patent infringement case brought by Traffic against TMobile in the Eastern District of Texas. The assertion was made in an e-mail to T-Mobile's attorney that Traffic marked "confidential" and "for settlement purposes only, subject to FRE 408." T-Mobile disclosed the contents of the e-mail to Google. Traffic asserts that it did not consent to any disclosure of this communication, and that T-Mobile never told Traffic it was going to, or had, made the disclosure to Google. Standard In an action brought under the Declaratory Judgment Act, 28

12 U.S.C. § 2201(a), the standard for determining whether the action 13 is justiciable is whether the facts alleged, under all the

14 circumstances, show that there is a substantial controversy, between 15 parties having adverse legal interests, of sufficient immediacy and 16 reality to warrant 549 in U.S. light the at of issuance 127. the of In of a declaratory the judgment. Circuit the III

17 MedImmune, 18 concluded, 19 "reasonable

SanDisk,

Federal

MedImmune suit"

decision that

rejecting "Article

apprehension

test,

20 jurisdiction may be met where the patentee takes a position that 21 puts the declaratory judgment plaintiff in the position of either 22 pursuing arguably illegal behavior or abandoning that which he 23 claims a right to do." 480 F.3d at 1381. In Teva Pharms. USA, Inc. 24 v. Novartis Pharms. Corp., 482 F.3d 1330, 1339 (Fed. Cir. 2007), the 25 Federal Circuit held that an actual controversy, in the context of 26 the Declaratory Judgment Act, 27 28 FINDINGS AND RECOMMENDATION Page 3

1 2 3 4 5 6 7

requires only that a dispute be "definite and concrete, touching the legal relations of parties having adverse legal interests; and that it be real and substantial and admi[t] of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical set of facts."(Quoting Medimmune, 549 U.S. at 127). Discussion 1. Motion to dismiss

Traffic asserts that a "confidential" communication between

8 Traffic and T-Mobile fails to satisfy the "definite and concrete" 9 requirement of justiciability, arguing that Google's allegation in 10 the complaint of "reasonable apprehension" has to be grounded on 11 some act by Traffic directed at Google. Traffic cites SanDisk, 480 12 F.3d at 1380-81 ("jurisdiction generally will not arise merely on 13 the basis that a party learns of the existence of a patent owned by 14 another or even perceives such a patent to pose a risk of

15 infringement, without some affirmative act by the patentee.") 16 Traffic argues that in this case, Google's apprehension of suit was 17 caused by T-Mobile's disclosure of information Traffic considered 18 confidential, not by any affirmative act by Traffic, and therefore 19 that Google's apprehension is not "fairly traceable" to Traffic. 20 Traffic cites Prasco, LLC v. Medicis Pharm. Corp., 537 F.3d 1329, 21 1335 (Fed. Cir. 2008)(case or controversy must be based on injury 22 that is "caused by the defendants"). See also Dep't of Commerce v. 23 U.S. House of Representatives, 525 U.S. 316, 332 (1999)("traceable 24 connection" between facts forming basis for declaratory relief and 25 threatened harm to plaintiff). 26 /// 27 28 FINDINGS AND RECOMMENDATION Page 4

1

Google counters that Traffic has made a strategic decision to

2 sue Google's customers who use GMM on T-Mobile cell phones, rather 3 than confront Google directly, and that Google filed this action to 4 prevent Traffic from initiating piecemeal litigation in 5 against each GMM business partner. 6 Google points out that Traffic does not deny its claim against Texas

7 T-Mobile that GMM infringes the Traffic Patents, and does not deny 8 that the claim is "traceable" to Traffic. In response to Traffic's 9 assertion that there is no justiciable harm to Google merely because 10 Traffic "whisper[s] in the ears of Google's business partner," 11 Google cites the court to Arrowhead Indus. Water Inc. v. Ecolochem, 12 Inc., 846 F.2d 731, 735 n. 4 (Fed. Cir. 1988)(fact that a statement 13 was "nonpublic" is irrelevant when patent holder does not deny its 14 belief that defendant was infringer). 15 Google argues that there is no unfairness to Traffic in using

16 the e-mail as a basis for a declaratory judgment lawsuit, because 17 the e-mail was unilaterally labeled as confidential by Traffic, and 18 there is no confidentiality agreement between Traffic and T-Mobile. 19 Google contends that Rule 408 of the Federal Rules of Civil

20 Procedure is not a confidentiality provision and does not provide 21 a blanket exclusion of any use of information designated as a 22 settlement communication. Google relies on the SanDisk rejection of 23 the argument that materials marked as Rule 408 communications during 24 licensing negotiations could not be used to establish

25 justiciability: 26 27 28 FINDINGS AND RECOMMENDATION Page 5 To avoid the risk of a declaratory judgment action, [defendant] could have sought [plaintiff's] agreement to the

1 2 3 4 5

terms of a suitable confidentiality agreement. The record before us reflects that the parties did not enter into such an agreement. Rather, [defendant] sought to condition its open licensing discussions and the infringement study on adherence to [Rule] 408. That rule expressly relates to evidence of efforts toward compromising or attempting to compromise a claim in litigation and does not prevent [plaintiff] from relying on the licensing discussions and infringement study to support its claims.

6 480 F.3d at 1375. Google points out that Rule 408 provides for the 7 confidentiality of settlement negotiations "when offered to prove 8 liability for, invalidity of, or amount of a claim that was disputed 9 as to validity or amount, or to impeach through a prior inconsistent 10 statement or contradiction," but does not bar such evidence when 11 "offered for [other] purposes ... [such as] proving a witness's bias 12 or prejudice." Google argues that using the e-mail to establish a 13 threat sufficient to satisfy the jurisdictional requirements for 14 declaratory relief is "perfectly acceptable under Rule 408," quoting 15 Dean Rhoades v. Avon Products, Inc., 504 F.3d 1151, 1161 (9th Cir. 16 2007). 17 In reply, Traffic argues that SanDisk supports Traffic's motion

18 because the Federal Circuit held in that case that the risk of a 19 declaratory judgment action could be avoided through a

20 confidentiality agreement. 480 F.3d at 1375 n. 1. I do not find this 21 argument persuasive because the record in this case contains no 22 evidence even of an implied confidentiality agreement between T23 Mobile and Traffic. There is nothing inherently confidential about

24 a statement accusing a third party's product of patent infringement. 25 Traffic should reasonably have anticipated­-and perhaps even

26 intended­-that its claim of infringement by Google's product would 27 28 FINDINGS AND RECOMMENDATION Page 6

1 be

communicated

to

Google­-how

better

for

T-Mobile

to

refute

2 Traffic's infringement claim than by seeking Google's help in 3 explaining GMM? The communication was an affirmative act fairly 4 traceable to Traffic; the fact that the email was marked

5 "confidential" does not affect the justiciability analysis. 6 Traffic acknowledges that it has recently filed a large number

7 of actions alleging infringement of the Traffic Patents. According 8 to the Declaration of Kevin Russell, one of the lawyers for Traffic, 9 five patent actions have been filed by Traffic in the Eastern 10 District of Texas, Marshall Division, for infringement of one or 11 both of the Traffic Patents, three of which are still pending: 12 Traffic Information, LLC v. American Honda Motor Co. et al.,07-39113 TJW (closed); Traffic Information, LLC v. Alpine Electronics of 14 America, Inc. et al., 08-7-TJW-CE (closed); Traffic Information, LLC 15 v. AT & T Mobility LLC et al. 09-83-TJW-CE (pending), Traffic 16 Information LLC v. HTC USA, Inc. et al.,08-404-TJW (pending); and 17 Traffic Information LLC v. Sony Electronics Inc. et al. 09-191-TJW18 CE. See Russell Declaration ¶ 3. 19 The test for justiciability, as articulated by the Federal

20 Circuit in SanDisk and Teva, is that the patentee take a position 21 that puts the alleged infringer in the dilemma of risking a lawsuit 22 or abandoning its product, and that the dispute be "definite and 23 concrete, touching the legal relations of parties having adverse 24 legal interests," and that it be "real and substantial and admi[t] 25 of specific relief through a decree of a conclusive character." All 26 these requirements are met here. When the statement made to T-Mobile 27 28 FINDINGS AND RECOMMENDATION Page 7

1 about GMM is put in the context of Traffic's aggressive patent 2 enforcement in Texas, it becomes a "definite and concrete" action 3 that touches upon the legal relations of parties­-Google and

4 Traffic­- having adverse legal interests, and a declaration of 5 infringement or noninfringement would not be an opinion "advising 6 what the law would be upon a hypothetical set of facts." 7 8 9 I recommend that the motion to dismiss be denied. 2. Traffic's alternative motion to transfer

Pursuant to 28 U.S.C. § 1404, courts have discretion to

10 transfer an action when another venue would serve the convenience 11 of the parties and witnesses and the interests of justice. Jones v. 12 GNC Franchising, Inc., 211 F.3d 495, 498 (9th Cir. 2000). The 13 statute requires that the proposed transferee district be one where 14 the action "might have been brought," and that the transfer be for 15 the "convenience of parties and witnesses" and "in the interest of 16 justice." 28 U.S.C. § 1404(a). The parties do not dispute that this 17 action might have been brought in the Eastern District of Texas. The 18 question to be considered, therefore, is whether a transfer would 19 serve the convenience of parties and witnesses and be in the 20 interest of justice. 21 When deciding whether to transfer a case, the court must

22 "balance the preference accorded the plaintiff's choice of forum 23 with the burden of litigating in an inconvenient forum." Gherebi v. 24 Bush, 352 F.3d 1278, 1302 (9th Cir. 2003). The defendant must "make 25 a strong showing of inconvenience to warrant upsetting the

26 plaintiff's choice of forum." Id. See also Telephone Management 27 28 FINDINGS AND RECOMMENDATION Page 8

1 Corp. v. The Goodyear Tire & Rubber Co., 5 F. Supp. 2d 896 (D. Or. 2 1998). 3 The court must consider both private and public interest

4 factors affecting the convenience of the forum. Private factors 5 include the relative ease of access to sources of proof,

6 availability of compulsory process for attendance of unwilling 7 witnesses, the cost of obtaining attendance of willing witnesses, 8 the possibility of a premises view, and "all other practical 9 problems that make the trial of a case easy, expeditious and 10 inexpensive." Gulf Oil v. Gilbert, 330 U.S. 501, 508 (1947). Public 11 factors include the administrative difficulties arising from court 12 congestion, the interest in having localized controversies decided 13 locally, the court's familiarity with the applicable law, avoidance 14 of unnecessary conflict of law problems, and the unfairness of 15 burdening citizens in an unrelated forum with jury duty. Piper 16 Aircraft Co. v. Reyno, 454 U.S. 235, 241 n. 6 (1981). 17 Traffic argues that the decisive factor is the presence in the

18 Eastern District of Texas of several other lawsuits involving the 19 Traffic Patents. Traffic's argument is that 1) the "interest of 20 justice" factor can outweigh all the others in some circumstances, 21 citing United States ex rel. Swan v. Covenant Care, Inc., 1999 WL 22 760610 (N.D. Cal. Sept. 21, 1999); 2) the Eastern District of Texas 23 is already familiar with the patents at issue, citing Allen v. 24 Scribner, 812 F.2d 426, 436-37 (9th Cir. 1987)(affirming denial of 25 motion to transfer in view of court's "familiarity with the case 26 after three and one half years"); and therefore 3) the existence of 27 28 FINDINGS AND RECOMMENDATION Page 9

1 the other actions in Texas should be the "paramount consideration," 2 citing In re Volkswagen of Am., Inc., 566 F.3d 1349, 1351 (Fed. Cir. 3 2009)("existence of multiple lawsuits involving the same issues is 4 a paramount consideration when determining whether a transfer is in 5 the interest of justice"). 6 Traffic contends that other factors listed in § 1404(a) also

7 favor transfer; judicial economy is served by trying the case in a 8 court already familiar with the issues, and with a less congested 9 docket than the District of Oregon, and the convenience of witnesses 10 and parties is served because Traffic is a Texas company conducting 11 its primary business in Marshall, Texas, and Google has litigated 12 other patent cases in the Eastern District of Texas.2 Traffic 13 acknowledges that ordinarily, courts give "great weight" to a 14 plaintiff's choice of forum, but argues that in this instance, 15 Google's choice is entitled only to minimal weight because of the 16 extent of Traffic and Google's contacts with the Eastern District 17 of Texas. Traffic cites Inherent.com v. Martindale-Hubbell,

18 Lexis/Nexis Inc., 420 F. Supp.2d 1093, 1100 (N.D. Cal. 2006)("the 19 degree to which courts defer to the plaintiff's chosen venue is 20 substantially reduced when the plaintiff's choice is not its

21 residence or where the forum lacks a significant connection to the 22 activities alleged in the complaint.") Traffic notes that Google 23 does not have its headquarters in Oregon, and that the only of Oregon is the presence of two

24 connection to the District 25 26 27 28

See Marshall Declaration Exhibit 3 (listing 53 cases in the Eastern District of Texas in which Google is or has been a party between 2003 and 2009). FINDINGS AND RECOMMENDATION Page 10

2

1 inventors of the Traffic Patents in Oregon. Traffic gives the latter 2 circumstance little weight because the action is not against the 3 inventors personally. And finally, Traffic argues that litigation 4 costs will be lower if the case is transferred because only one 5 court will construe the terms of the patents. Traffic also points 6 out that relative congestion of this court and the Eastern District 7 of Texas supports transfer, citing statistics showing lower

8 caseloads per judge in Texas and an average of six months longer 9 getting to trial in Oregon. 10 Google argues despite that being its a choice of forum of is entitled when to the

11 deference,

non-resident

Oregon,

12 defendant is located in the forum state and most of the events 13 relevant to the case took place there. Google cites Home Indem. Co. 14 v. Stimson Lumber Co., 229 F. Supp.2d 1075, 1085-86 (D. Or. 2001). 15 Google asserts that the District of Oregon was chosen because it is 16 the forum most convenient to Google, and also to Traffic's

17 principals, who are the inventors of the Traffic Patents, and the 18 attorney who prosecuted the applications for the Traffic Patents. 19 Google asserts that private factors also weigh against

20 transfer, because 1) development of Google's accused product, GMM, 21 took place in Northern California and Washington; 2) GMM is operated 22 from Northern California and Washington; 3) inventors of the Traffic 23 Patents reside in Oregon and the invention that became the Traffic 24 Patents was likely conceived and reduced to practice in Oregon 25 and/or Washington; and 4) the Traffic Patents were prosecuted from 26 Oregon. 27 28 FINDINGS AND RECOMMENDATION Page 11

1

Consequently,

Google

argues,

the

documents

and

physical

2 evidence relevant to both GMM and the Traffic Patents are much 3 closer to Oregon than to Texas. Google cites a Western District of 4 Washington case: 5 6 7 8 9 10 11 Data Retrieval Technology, LLC v. Sybase, Inc., 2009 WL 960681 (W.D. 12 Wash. April 8, 2009) at *3. 13 Google asserts that Oregon is the "hub of activity" because its 14 own documents relating to the development of GMM are located in 15 Northern California and Washington, and access to Google's source 16 code is only available in Northern California or Washington, citing 17 Tse v. Apple Computer, Inc., 2006 WL 2583608 at *3 (hub of activity 18 is where accused software and products were designed and produced; 19 location of source code, technical specifications, schematics, and 20 technical 21 activity). Google points out that the documentation relating to the 22 Traffic Patents is likely located in this District because the 23 attorney who prosecuted the applications leading to the Traffic 24 Patents is located in Portland. 25 Google argues that the availability of compulsory process also 26 favors this forum, Traffic does not deny that two witnesses it has 27 28 FINDINGS AND RECOMMENDATION Page 12 operations documentation also relevant to hub of [I]n patent infringement cases, it is well-recognized that the preferred forum is "that which is the center of gravity of the accused activity." Amazon.com v. Cedant Corp., 404 F. Supp.2d 1256, 1260 (W.D. Wash. 2005)... The district court ought to be as close as possible to the milieu of the infringing device and the hub of activity centered around its production. [internal quotation and citation omitted] Additionally, a court should consider the location of the product's development, testing, research and production. [internal quotation and citation omitted] Also relevant is the place where the marketing and sales decisions occurred, not just the location of any particular sales activity.

1 identified, inventors and principals Kevin Russell and Bruce DeKock, 2 reside in Oregon.3 On Google's side, the individuals who created, 3 developed and support the GMM product are located in Northern 4 California and Washington. Google contends that Traffic has not 5 identified a single non-party witness residing or working within the 6 Eastern District of Texas's subpoena power. 7 Google argues that despite Traffic's representation that

8 Russell and DeKock would be "willing" to travel to the Eastern 9 District of Texas, it has not represented that a third inventor of 10 the Traffic Patents, Qian, would also be willing. 11 Google dismisses Traffic's argument that the Eastern District

12 docket is less congested: 13 14 15 16 [W]hile the Eastern District of Virginia may dispose of cases more quickly than the District of Oregon, Oregon's docket is relatively fast compared with other districts and the schedule set for this case anticipates a trial within twelve months of filing the case. The difference in time between the two districts is not enough to warrant upsetting plaintiff's choice of forum or to disregard the first to file rule.

17 CollegeNET, Inc. v. Apply Yourself, Inc., 2002 WL 33962845 at *5 (D. 18 Or. July 26, 2002). Google points out that the court has issued a 19 scheduling order in this case, while no scheduling order has issued 20 in the non-Google Eastern District of Texas cases. 21
4

And finally, Google disputes Traffic's contention that the

22 Eastern District's accumulated knowledge of the patents at issue and 23 24 25 26 27 28 The residence of a third inventor, Richard Qian, is not revealed in the record before the court. I note that the Eastern District of Texas has seven district judges, no active senior district judges, and seven magistrate judges. The District of Oregon has six district judges, four active senior judges, and six magistrate judges. FINDINGS AND RECOMMENDATION Page 13
4 3

1 the parties in the other pending cases generates enough judicial 2 efficiency to require the court to transfer, arguing that Traffic's 3 analysis ignores the fact that these various lawsuits involve 4 separate and unrelated parties, and, other than one of several 5 allegedly infringing products distributed by T-Mobile, products that 6 are separate from and unrelated to the product accused in this case. 7 Google argues that the central issue­-whether the accused product 8 is infringing Traffic's patents-­is likely to be unique with regard 9 to each of the lawsuits. 10 I recommend that Traffic's motion to transfer this case to the

11 Eastern District of Texas be denied. Because at least two of the 12 Traffic Patents' inventors and Traffic principals are situated in 13 Oregon, the attorney who prosecuted the Traffic Patents is in 14 Oregon, GMM is operated from Northern California and Washington, and 15 relevant source code for GMM is available in Northern California or 16 Washington, I am persuaded that this court is closer to the milieu 17 of GMM, the allegedly infringing device, and to the activity 18 centered around the production of both GMM and the Traffic Patents, 19 than the Eastern District of Texas. I am not persuaded that the 20 presence of other patent litigation initiated by Traffic in the 21 Eastern District of Texas, or Google's presence as a party in other 22 cases in the Eastern District of Texas, trumps Google's effort to 23 locate this case in a district closer to the hub of activity 24 pertinent to this case and to key witnesses. 25 /// 26 /// 27 28 FINDINGS AND RECOMMENDATION Page 14

1 2 I recommend that

Conclusion Traffic's motion to dismiss and the

3 alternative motion to transfer to the Eastern District of Texas 4 (doc. # 8) be DENIED. 5 6 These Findings and Scheduling Order Recommendation will be referred to a If

7 district judge.

Objections, if any, are due February 22, 2010.

8 no objections are filed, then the Findings and Recommendation will 9 go under advisement on that date. If objections are filed, then a 10 response is due March 11, 2010. When the response is due or filed,

11 whichever date is earlier, the Findings and Recommendation will go 12 under advisement. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 FINDINGS AND RECOMMENDATION Page 15 /S/ Dennis James Hubel Dennis James Hubel United States Magistrate Judge Dated this 2nd day of February, 2010.