Vertical Computer Systems, Inc. v. Interwoven, Inc. et al

Filing 92

REPLY to Response to Motion re 84 SEALED MOTION to Sever and Transfer Claims filed by LG Electronics Inc, LG Electronics Mobilecomm USA Inc. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D)(Healey, David)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
VERTICAL COMPUTER SYSTEMS, INC.
Plaintiff,
v.
CIVIL ACTION NO. 2:10-CV-490
LG ELECTRONICS MOBILECOMM U.S.A.,
INC., LG ELECTRONICS, INC., SAMSUNG
ELECTRONICS CO., LTD., SAMSUNG
ELECTRONICS AMERICA, INC.

JURY TRIAL

Defendants.

REPLY TO VERTICAL’S RESPONSE IN OPPOSITION TO LG ELECTRONICS
MOBILECOMM U.S.A., INC. AND LGE ELECTRONICS INC.’S MOTION TO SEVER
AND TRANSFER CLAIMS TO THE U.S. DISTRICT COURT FOR THE DISTRICT OF
NEW JERSEY OR IN THE NORTHER DISTRICT OF CALIFORNIA
Vertical spends most of its Opposition on issues that have nothing to do with LGE or its
Motion to Sever and Transfer. But Vertical does not dispute key facts that are central to LGE’s
Motion. LGE’s Motion to Sever and Transfer should be GRANTED.
I.

LGE Is Improperly Joined To Samsung And Should Be Severed.

Vertical fails to meet the “same transaction or occurrence” test to properly join LGE with
Samsung. Fed. R. Civ. P. 20(a); In re EMC, 677 F.3d 1351, 1356 (Fed. Cir. 2012). It is true that
both LGE and Samsung accused products run Android software. However, Vertical does not
dispute that LGE and Samsung are independent companies—in fact, fierce competitors—that
develop, design, market, and sell their respective products independently. Merely “alleging a
common manufacturer, product type, and that they both infringe, along with the same patent is
not enough to support joinder where defendants are unrelated companies, selling different
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products.” In re EMC, 677 F.3d at 1359 (citing Sorensen v. DMG Holdings, Inc., No. 08-cv-559,
2010 WL 4909615, at *1 (S.D.Cal. Nov. 24, 2010)).
Vertical’s sole basis for infringement against both LGE and Samsung relies on a
hypothetical example from a book about the Android Operating System. When the program is
compiled and then executed, however, errors occur (“run-time errors”), contradicting Vertical’s
assertion that the hypothetical example ‘runs fine.’ See Ex. A, p. 11; Ex. B, p. 9. Vertical’s
Interrogatories in fact ask about modifications made to the Android OS -- implying that Vertical
is aware that the system running on LG products may not, in fact, be the same as Samsung’s. Ex.
C, Nos. 3-5. Vertical has no facts to show the products are indeed the same.
II.

This Case Should Be Transferred To the District of New Jersey Or, In the
Alternative, To The Northern District of California.
a. Vertical Does Not Dispute That LGE Has No Relevant Witnesses Or
Evidence In The Eastern District Of Texas

Vertical does not dispute the facts that LGE has no operations, no relevant witnesses,
and no relevant evidence in the Eastern District of Texas. Nor does Vertical dispute that LGE’s
U.S. mobile phone business is headquartered in New Jersey and that the knowledgeable
witnesses and documents concerning LGE’s U.S. marketing and sales of its accused mobile
phone products are located in New Jersey. Despite its argument that these witnesses are not
relevant, Vertical has, in fact, asked for discovery on the marketing and sales of LGE’s accused
products. See, e.g., Ex. D, Nos. 10-17, 19, 27. This evidence, and the witnesses that will testify
about it, are in New Jersey.
Nor is the Eastern District of Texas more convenient than the Northern District of
California. Vertical acknowledges that LGE’s Android team is located in San Jose, CA and

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works with Google at its Mountain View, CA headquarters. Relevant witnesses and evidence
concerning LGE’s implementation of Android for the U.S. market are located in California.
b. Vertical Does Not Properly Apply The § 1404 Transfer Factors
The proper inquiry for § 1404 transfer is well-established. The threshold question is
“whether the judicial district to which transfer is sought would have been a district in which the
claim could have been filed.” In re Volkswagen AG, 371 F.3d 201, 203 (5th Cir. 2004). There is
no dispute that Vertical’s claims against LGE could have been brought in New Jersey or the
Northern District of California.
When the transferee district is proper, the court must then consider the private and public
interest factors relating to the convenience of parties and witnesses as well as the interests of
particular venues in hearing the case. See e.g., In re Nintendo Co., Ltd., 589 F.3d 1194, 1197–98
(Fed. Cir. 2009). LGE applied each of these factors in its Opening Brief and the weight of the
analysis favors transfer. But instead of offering the Court a competing application of these
factors, Vertical crafts its own legal inquiry for transfer. Vertical’s analysis is inapplicable and,
in any event, unpersuasive. LGE addresses Vertical’s arguments below.
1. The First-To-File Doctrine Is Inapplicable Here
Vertical proclaims it has a “‘presumptive right’ as the first litigant to file, vis-à-vis LG”
to bring its case in the Eastern District of Texas. Opp. at 12. However, the first-to-file doctrine
under §1404 is inapplicable. See Abercrombie & Fitch Co. v. Ace European Group, Ltd., No.
2:11-cv-1114, 2012 WL 2995171, at *3 (S.D. Ohio Jul.23, 2012)(“The first-filed rule does not
supersede the inquiry into the balance of convenience under § 1404(a)”).

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2. Vertical’s Judicial Economy Argument Improperly Depends On Joinder
Vertical claims that judicial economy would be served by keeping LGE in the Eastern
District of Texas and joined with Samsung in this action. However, proper joinder is a separate
inquiry from the judicial economy needed to justify transfer. And LGE is not properly joined
with Samsung.
Moreover, to date, this Court has had little to no substantive involvement in this action.
It is undisputed that this Court is unlikely to have historical knowledge about the patents or the
technology. Meanwhile, the Northern District of California is intimately familiar with the
patents and the technology, having already issued a Markman order1 in the Interwoven case that
this Court severed and transferred in May 2011. Judicial economy would be served by a transfer
to the Northern District of California.2
3. Vertical’s Claims Of “Convenience” Are Limited To Its Own Witnesses
The private interest factors of the parties must take into account (1) the relative ease of
access to sources of proof; (2) the availability of compulsory process to secure the attendance of
witnesses; (3) the cost of attendance for willing witnesses.
Vertical attempts to defend the “convenience” of this forum by relying on the self-serving
“convenience” of its own witnesses. Even so, and as noted by LGE in its Opening Brief, no
relevant evidence or witnesses are within the subpoena power of this Court. Vertical admits that
its headquarters are located 125 miles from this Court, which is outside of the 100-mile subpoena

 Chief Judge Davis’ recent opinion in Norman IP Holdings LLC v. Lexmark International, Inc.,
6:11-CV-495 (E.D. Tex. August 10, 2012) is not applicable since at least one Markman has
occurred in another jurisdiction, which is one of the alternative places to which transfer is sought.
But regardless of where the claim construction order issued, the existence of a prior claim
construction order anywhere moots the need for this Court to defer transfer so that its claim
construction order can be of use to the transferee court (whether adopted by it or not). 
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As LGE stated in its Opening Brief, the judicial economy inquiry is neutral with respect to
transfer to New Jersey.
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power of this Court. Opp. at 14. Moreover, Vertical’s chief technical officer Mr. Valdetaro and
chief executive officer Mr. Wade reside in Dallas, Texas, which is not in the Eastern District of
Texas. Id. The inventor, described by Vertical as “the most important witness” resides in Austin,
Texas, which is also not in the Eastern District of Texas. Id. at 14-15. While Vertical’s chief
financial officer purportedly resides in this District, Vertical has not identified this individual in
its Initial Disclosures as a person likely to have relevant knowledge in this litigation. None of
this supposed “convenience” outweighs the fact that no evidence pertaining to LGE’s U.S.
mobile phone business is located in the Eastern District of Texas. Instead, this evidence, which
Vertical has requested in discovery, (see Ex. C, Nos. 3-5, 9; Ex. D, Nos. 10-17, 19, 27), resides
in New Jersey and in California. The private interest factors therefore favor transfer when the
convenience of LGE’s evidence and witnesses is considered.
Finally, Vertical claims that the Eastern District of Texas is convenient for LGE because
it has availed itself in this District by filing its own lawsuits here. Opp. at 15. Vertical appears
to be confusing personal jurisdiction over LGE for the convenience of the LGE’s witnesses and
evidence in this case. In addition, this argument is misguided because a convenience inquiry in
other cases, if one was even raised as an issue, is irrelevant to the convenience inquiry here.
CONCLUSION
Given the above facts and arguments, LGE’s respectfully the requests that this Court
grant LGE’s Motion to Sever and Transfer.

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Dated: August 21, 2012

Respectfully submitted,

FISH & RICHARDSON P.C.
/s/ David J. Healey
David J. Healey
State Bar No. 09327980
Fish & Richardson P.C.
1221 McKinney, Suite 2800
Houston, TX 77010
713-654-5300 – Telephone
713-652-0109 – Facsimile
[e-mail]
OF COUNSEL:
Kevin Su
MA Bar No. 663726
Fish & Richardson P.C.
One Marina Park Drive
Boston, MA 02210-1878
617-542-5070 – Telephone
617-542-8906 – Facsimile
[e-mail]
Michael J. McKeon
Fish & Richardson P.C.
1425 K Street, NW, 11th Floor
Washington, DC 20005
202-783-5070 – Telephone
202-783-2331 – Facsimile
[e-mail]
Counsel for Defendants
LG ELECTRONICS MOBILECOMM
U.S.A., INC. AND LG ELECTRONICS,
INC.

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CERTIFICATE OF SERVICE
The undersigned hereby certify that a true and correct copy of the above and foregoing
document has been served on August 21, 2012 upon all counsel of record who are deemed to
have consented to electronic service via the Court’s CM/ECF system per Local Rule CV-5(a)(3).
Any other counsel of record will be served by first class mail.

/s/ David J. Healey

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