WI-LAN Inc. v. HTC Corporation et al

Filing 92

MEMORANDUM OPINION AND ORDER - Dft's motion to transfer venue is DENIED. Signed by Judge Rodney Gilstrap on 6/27/2012. (ch, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
WI-LAN, INC.,
Plaintiff,
v.
HTC CORPORATION, et al.,
Defendants.

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CASE NO. 2:11-cv-68-JRG

MEMORANDUM OPINION AND ORDER

I.

INTRODUCTION
Pending before the Court is Defendants HTC Corporation, HTC America, Inc. and

Exedea, Inc.’s (collective, “HTC” or “Defendants”) motion to transfer venue. HTC contends
that the United States District Court for the Western District of Washington is a more convenient
forum than the Eastern District of Texas and seeks to transfer venue pursuant to 28 U.S.C. §
1404(a). The Court, having considered the venue motion, the related briefing, and oral argument
of counsel, DENIES HTC’s motion to transfer venue. HTC has failed to satisfy the threshold
question of whether this action could have originally been brought in the Western District of
Washington. This is HTC’s burden and they have failed to meet it. See In re Nintendo Co., 589
F.3d 1194, 1197-98 (Fed. Cir. 2009); In re Genentech, Inc., 566 F. 3d 1388, 1342 (Fed. Cir.
2009); In re TS Tech USA Corp., 551 F.3d 1315, 1319 (Fed. Cir. 2008); In re Volkswagen of
Am., Inc. (Volkswagen II), 545 F.3d 304, 315 (5th Cir. 2008) (en banc).

II.

FACTUAL AND PROCEDURAL BACKGROUND
Wi-LAN, Inc. (“Wi-LAN”) filed the present suit on February 2, 2011, alleging that

certain HTC products infringe U.S. Patent Nos. RE37,802 (“the ‘802 patent”) and 5,282,222
(“the ‘222 patent”). Wi-LAN is a Canadian patent-holding company based in Ottawa, Ontario,
Canada, with an office located in Marshall, Texas. (Dkt. No. 20.)
HTC Corporation is organized and existing under the laws of Taiwan and has its principal
place of business in Taoyuan, Taiwan. HTC America, Inc., a subsidiary of HTC Corp., is a
Washington corporation with its principal place of business in Bellevue, near Seattle,
Washington. HTC America is responsible for the marketing and sale of HTC cell phones in the
United States. Exedea, Inc. (“Exedea”), now a dissolved company,1 was formerly a corporation
organized under the laws of Texas, but had no locations or employees in the United States.
Exedea’s sole function within the HTC corporate structure was to take title to imported phones
from overseas before transferring them to a third-party distribution center in Indiana.
III.

LEGAL STANDARDS
“For the convenience of parties, 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 Fifth and Federal Circuits have enunciated the standard to be used in deciding
motions to transfer venue. See Volkswagen III, 566 F.3d 1349; In re Genentech., 566 F.3d 1338;
In re TS Tech USA Corp., 551 F.3d 1315 (applying the Fifth Circuit’s en banc Volkswagen II
decision to rulings on transfer motions out of this Circuit); Volkswagen II, 545 F.3d 304. The

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Exedea’s corporate dissolution occurred during the pendency of this lawsuit and, according to Texas law, its
existence continues for the purposes of this suit and the present motion to transfer. See TEXAS BUSINESS
ORGANIZATIONS CODE § 11.356 (“Notwithstanding the termination of a domestic filing entity under this chapter, the
terminated filing entity continues in existence until the third anniversary of the effective date of the entity’s
termination only for the purposes of … prosecuting or defending in the terminated filing entity’s name an action or
proceeding brought by or against the terminated entity”).

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moving party must show “good cause,” and this burden is satisfied “when the movant
demonstrates that the transferee venue is clearly more convenient.” Volkswagen II, 545 F.3d at
314.
The initial threshold question is whether the suit could have been brought in the proposed
transferee district. In re Volkswagen AG (“Volkswagen I”), 371 F.3d 201, 203 (5th Cir. 2004). If
the transferee district is a proper venue, then the court must weigh the relative conveniences of
the current district against the transferee district. In making the convenience determination, the
Fifth Circuit considers several private and public interest factors, none of which are given
dispositive weight. Id. “The private interest factors are: ‘(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; and (4) all other practical problems that make
trial of a case easy, expeditious and inexpensive.’” Volkswagen II, 545 F.3d at 315 (quoting
Volkswagen I, 371 F.3d at 203).

“The public interest factors are: ‘(1) the administrative

difficulties flowing from court congestion; (2) the local interest in having localized [disputes]
decided at home; (3) the familiarity of the forum with the law that will govern the case; and (4)
the avoidance of unnecessary problems of conflict of laws [in] the application of foreign law.’”
Id. (quoting Volkswagen I, 371 F.3d at 203).

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IV.

ANALYSIS
A.

Whether the Action Could Have Originally Been Brought in the Western
District of Washington

The parties dispute whether this action could have originally been filed in the Western
District of Washington. Specifically, the parties disagree as to whether Exedea would be subject
to jurisdiction in the Western District of Washington.2
In determining whether specific jurisdiction over an out-of-state defendant exists in a
patent case, Courts look to whether: “(1) the defendant purposefully directed its activities at
residents of the forum state, (2) the claim arises out of or relates to the defendant’s activities with
the forum state, and (3) assertion of personal jurisdiction is reasonable and fair.” PacTool Int’l
Ltd. v. Kett Tool Co., 2011 U.S. Dist. LEXIS 21759, at *7, C06-5367BHS (W.D. Wash. March
3, 2011) (citing Electronics For Imaging, Inc. v. Coyle, 340 F.3d 1344, 1349 (Fed. Cir. 2003)).
HTC argues that Exedea satisfies all three prongs of this test because (1) it sold at least
5,135 Nexus One mobile phones through its distributor to numerous retail customers in the State
of Washington, (2) it sold a product that allegedly infringes a patent, which is a violation of the
law whenever the sale takes place in the United States, and (3) there is no indication that it would
be unreasonable to exercise jurisdiction in the Western District of Washington. (Dkt. No. 76, at
2.) Wi-LAN responds that the Western District of Washington has no specific jurisdiction over

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HTC did not even address this argument until it filed its Reply brief. In its opening Motion, HTC merely argued
that “Wi-LAN could have brought this action against HTC in the Western District of Washington … because HTC
America resides in that district. Therefore, the requirement that the proposed transferee venue is a proper one is
satisfied.” (Dkt. No. 20, at 5.) This analysis is clearly insufficient. There is no legal authority to support HTC’s
original assertion that a showing of jurisdiction over one corporation can be used to establish jurisdiction over a
separate corporation. To meet the threshold §1404 inquiry, HTC must show that the case could have been brought
against each Defendant in the proposed transferee forum. The threshold “determination to be made 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 (“Volkswagen I”), 371 F.3d 201, 203 (5th Cir. 2004); see also 28 U.S.C. § 1400(b) (“Any civil
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”).

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Exedea, because Exedea did not “purposefully” direct its activities to the residents of that
District. (Dkt. No. 81.)
The Court agrees with Wi-LAN. Testimony from HTC’s own 30(b)(6) witness makes it
clear that Exedea provided nothing more than “inventory management services” in connection
with the shipment of Nexus One phones from Google’s manufacturer (HTC Corp. in Taiwan) to
Google’s distributor (Brightpoint in Indiana). (Dkt. No. 66-12, ¶¶46, 87, 90-94.) Exedea’s
“services” consisted of simply signing for the Nexus One phones when they arrived in the United
States and verifying shipping information.

(Id.)

Exedea never transmitted instructions to

Brightpoint concerning shipments of products to Washington and had no role in determining
where or to whom the product would be shipped after it arrived at Brightpoint in Indiana. (Id., at
¶¶94-95.) Exedea never sold phones to end users in Washington (Id. ¶¶88-89), never conducted
marketing activities or solicited business in Washington (Id. ¶95), and never travelled to
Washington to sell products (Id. ¶96). Because Exedea never purposefully directed its activities
toward anyone in Washington, there is no specific jurisdiction over Exedea in Washington.3

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Magistrate Judge Love reached the same conclusion in a different case involving Exedea in the context of a motion
to transfer venue to the Northern District of California. See Gemalto S.A. v. HTC Corp., 6:10-cv-561, 2011 WL
5838212 (E.D. Tex. Nov. 18, 2011).

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V.

CONCLUSION
HTC has failed to meet its burden to satisfy the threshold inquiry under the §1404

analysis with respect to Exedea and therefore has not established that this action could have been
originally filed in the Western District of Washington. Accordingly, the Defendants’ Motion to
transfer venue is DENIED.
SIGNED this 19th day of December, 2011.
So ORDERED and SIGNED this 27th day of June, 2012.

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RODNEY GILSTRAP
UNITED STATES DISTRICT JUDGE

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