Thomas Swan & Co. Ltd. v. Finisar Corp.
OPINION AND ORDER - Finisar's Motion to Transfer Venue is Denied. Signed by Judge Rodney Gilstrap on 1/6/2014. (ch, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
THOMAS SWAN & CO. LTD.,
FINISAR CORP. and FUJITSU NETWORK
CASE NO. 2:13-cv-178-JRG
OPINION AND ORDER
Pending before the Court is Finisar Corp.’s (“Finisar”) Motion to Transfer Venue (Dkt.
No. 20). Finisar contends that the Northern District of California (NDCA) is a more convenient
forum than the Eastern District of Texas (EDTX). The Court, having considered the motion and
related briefing, DENIES Finisar’s motion to transfer venue because the balance of the private
and public factors fails to demonstrate that the transferee venue is clearly more convenient.
FACTUAL AND PROCEDURAL BACKGROUND
Thomas Swan & Co. Ltd. (“Swan”) filed suit against Finisar on February 26, 2013 for
infringement of four United States patents relating to wavelength selective switches used in fiber
optic communications. Swan accuses the use of Liquid Crystal on Silicon (LCoS) technology in
optical switching devices. Swan alleges that Finisar’s Wavelength Selective Switch (WSS)
products, products containing the WSS products, and Waveshaper products infringe the asserted
Finisar is a Delaware corporation with its principal place of business in Sunnyvale,
California and with established offices in Texas, Pennsylvania, and Australia. Finisar maintains a
design and manufacturing facility in Allen, Texas. Allen is within EDTX, but Finisar avows that
the Allen facility is not used to design, manufacture or sell the accused products. The parties
dispute where the development of the accused products takes place, whether it is primarily in
NDCA or Australia. However, they agree that the accused products are manufactured and
assembled abroad. Finisar sells the accused products to various customers across the US,
including several with significant facilities in EDTX. One of its customers is the co-defendant in
this case, Fujitsu Network Communications, Inc. (“FNC”). FNC is a California corporation with
its principal place of business at 2801 Telecom Parkway in Richardson, Texas, which is within
EDTX. In addition to its direct sale customers, Finisar also employs five distributors to market
and sell the accused products, one of which is Nu Horizons Electronics Corp (“Nu Horizons”).
Nu Horizons has twelve domestic locations, including one in Plano, Texas, which is also within
Swan is headquartered and operates principally in the United Kingdom. The sole inventor
of the asserted patents, Melanie Holmes, resides in the UK. The two prosecuting attorneys are
Timothy Meagher, who works in Massachusetts, and Bill Neobard, who is located in the UK.
Finisar filed the present motion to transfer venue on July 3, 2013. On August 26, 2013,
Swan filed an amended complaint to add FNC, an alleged customer of Finisar. (See generally
Amended Complaint, Dkt. No. 41.) FNC has since filed a Notice of Non-Objection to Finisar’s
Motion to Transfer Venue stating that it consents to service of process and venue in NDCA for
purposes of this suit only. (Dkt. No. 80.) Since briefing was completed, both parties have also
filed Notices of Supplemental Evidence in support of their respective positions. (Dkt. No. 97 and
Change of venue is governed by 28 U.S.C § 1404(a). Under § 1404(a), “[f]or the
convenience of parties and witnesses, in the interest of justice, a district court may transfer any
civil action to any other district court or division where it might have been brought.” 28 U.S.C. §
1404(a). However, a motion to transfer venue should only be granted upon a showing that the
transferee venue is “clearly more convenient” than the venue chosen by the plaintiff. In re
Nintendo Co., 589 F.3d 1194, 1197 (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 America, Inc. (Volkswagen II), 545 F.3d 304, 315 (5th Cir. 2008). District courts
have “broad discretion in deciding whether to order a transfer.” Balawajder v. Scott, 160 F.3d
1066, 1067 (5th Cir. 1998) (quoting Caldwell v. Palmetto State Sav. Bank, 811 F.2d 916, 919
(5th Cir. 1987)).
The initial question in applying the provisions of § 1404(a) is whether the suit could have
originally 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 public and private factors of the current venue against the transferee venue. Id.
In making such a convenience determination, the Court considers several private and public
interest factors, none of which are given dispositive weight. Id. The private interest factors
include: “(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.”
Nintendo, 589 F.3d at 1198; Genentech, 566 F.3d at 1342; TS Tech., 551 F.3d at 1319;
Volkswagen II, 545 F.3d at 315. The public interest factors include: “(1) the administrative
difficulties flowing from court congestion; (2) the local interest in having localized interests
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.”
Nintendo, 589 F.3d at 1198; Genentech, 566 F.3d at 1342; TS Tech., 551 F.3d at 1319;
Volkswagen II, 545 F.3d at 315.
Swan does not dispute that this case could have originally been brought in the Northern
District of California, so the initial threshold in this case has been met.1
Private Interest Factors
Relative Ease of Access to Sources of Proof
Despite technological advances in transportation of electronic documents, physical
accessibility to sources of proof continues to be an important private interest factor. See
Volkswagen II, 545 F.3d at 316; TS Tech, 551 F.3d at 1321. Indeed, the Federal Circuit has
indicated that access to an alleged infringer’s proof is important to venue transfer analyses in
patent infringement cases. See Genentech, 566 F.3d at 1345 (“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.”).
The parties dispute what technology or product is really at the core of Swan’s
infringement allegations, and therefore the corresponding location of their supporting
documentation. Finisar admits that relevant work on the accused products is conducted in
FNC consents to service of process and venue in the Northern District of California (Dkt. No. 80 at 2).
multiple locations in the US and worldwide: Fremont and Sunnyvale, California; Horsham
Pennsylvania; Sydney, Australia; Tel-Aviv, Israel; and Shanghai, China. However, Finisar
claims that the LCoS technology is at the core of Swan’s claims and the LCoS technology was
originally acquired by Finisar from a company located in Fremont, California, called
MicroDisplay Corporation, which is no longer in business. Finisar argues that the relevant
evidence and witnesses consequently must be located in NDCA. Swan disagrees on Finisar’s
characterization of the accused technology and instead contends that it is accusing the entire
WSS product line originally developed by an Australian company called Engana and later
acquired by Finisar. Swan asserts that the bulk of the relevant documentation is stored in
Finisar’s Australia facilities.
Allegations against both LCoS and WSS for embodying the claimed invention appear in
the Amended Complaint; hence, both are equally likely to be subject to discovery. Indeed, the
discovery conducted so far reveals that the majority of Finisar employees identified by Finisar in
interrogatory responses as having relevant knowledge are located in Australia. Additionally,
there is no dispute that manufacture and assembly of the accused products takes place abroad –
in Australia and China. The Court is persuaded that Finisar’s relevant documentary evidence is
located across the globe, with a predominant presence in Australia since that is the only location
where some aspect of the design, development, manufacture, and assembly of the accused
products takes place.
Turning to an analysis of the plaintiff’s sources of proof, Swan does not dispute that it is
a foreign company and its relevant documents are situated in the UK and Washington DC. Its
witnesses are located in Massachusetts and the UK. Though Swan urges that these sources of
proof are more accessible in EDTX than NDCA, the difference is trivial. Accordingly, the Court
assigns minimal weight to the ease of access of Swan’s evidence as part of this analysis.
Swan also identified several non-party companies that are expected to have documents
and witnesses relevant to Swan’s inducement claims. These third-party customers of Finisar are
located within or immediately adjacent to EDTX. They include Alcatel-Lucent (substantial
facility in Plano, Texas with 2500 employees), Huawei (Plano, Texas location with 650
employees), Cisco (Richardson, Texas facility with 1200 employees), and Verizon (Richardson,
Texas facility with 2250 employees). In addition, Finisar’s customer FNC was added as a
defendant in this case after the present motion was filed. Although Finisar questions Swan’s
motivation in adding FNC for purposes of this venue analysis, it does not allege that the joinder
is improper. Accordingly, the Court must consider FNC’s headquarters in Richardson, Texas as
part of the venue consideration.2 Additionally, Swan has identified Nu Horizons, one of Finisar’s
sales and distribution partners located in EDTX, as having information relevant to its allegations
of infringement and damages.
Under § 1404(a), the movant bears the burden to clearly demonstrate that a transfer is
“[f]or the convenience of parties and witnesses, in the interest of justice.” Volkswagon II, 545
F.3d at 315. Based on the evidence presented, there are certainly some sources of proof for the
development of the LCoS technology in Finisar’s California offices. On the other hand, there is
also relevant evidence from co-defendant FNC, as well as numerous other non-party customers
and distributors who maintain a significant presence in EDTX. Where a transfer will only shift
the inconvenience from one district to another, the movant has not met its burden of persuasion.
Here, the bulk of information for the development and manufacturer of the accused products, as
Since FNC does not object to Finisar’s motion transfer venue to NDCA, the Court does not assign much weight to
FNC’s sources of proof.
well as the knowledgeable party witnesses, are clearly located abroad in Australia. On balance,
the Court finds that this factor does not weigh in favor of transfer and is, at best, neutral.
Availability of Compulsory Process
The second private interest factor is the availability of compulsory process to secure the
attendance of non-party witnesses. A venue that has “absolute subpoena power for both
deposition and trial” is favored over one that does not. Volkswagen II, 545 F.3d at 316. Rule 45
of the Federal Rules of Civil Procedure limits the court’s subpoena power by protecting nonparty witnesses who work or reside more than 100 miles from the courthouse. Id.
Neither NDCA nor EDTX has absolute subpoena power over all the relevant non-party or
party witnesses. Finisar’s relevant witnesses are concentrated in Australia and NDCA, and one is
located in Denver. Finisar also has a design and manufacturing facility in Allen, Texas, though
the relevance of that facility is in dispute. FNC is headquartered in EDTX and most assuredly
has relevant witnesses working in those facilities. Swan’s relevant witnesses are located in
Massachusetts and the UK.
Among Finisar’s third-party customers in EDTX, Swan has specifically identified several
individuals within this Court’s subpoena power who are alleged to be knowledgeable about the
FNC’s David Gutierrez
Huawei’s Xavier Orozco and Kent Jordan
Alexander Umnov, who was formerly with FNC and is now with Huawei, and has
relevant information about FNC’s pre-suit knowledge of the patents-in-suit
Glenn Wellbrock, with Verizon, who has knowledge of marketing the accused
On the other hand, Finisar was also able to identify two ex-employees of MicroDisplay,
Jean-Jacques Drolet and Carlin Vieri, who are within NDCA’s subpoena powers.3 Ultimately,
and on balance, Swan has the better argument that more relevant non-party witnesses are within
this Court’s subpoena power. Indeed, Swan has already utilized this Court’s subpoena powers to
obtain documents and deposition testimony in EDTX from three of Finisar’s EDTX-based
customers. Considering the facts presented and the trajectory of the case thus far, Finisar has not
shown that NDCA would be any better in this regard than EDTX, and the Court finds this factor
to weigh against transfer.
Cost of Attendance for Willing Witnesses
The third private interest factor is the cost of attendance for willing witnesses. “The
convenience of the witnesses is probably the single most important factor in a transfer analysis.”
In re Genentech, Inc., 556 F.3d at 1342. The Court in Volkswagen I explained:
[T]he factor of inconvenience to witnesses increases in direct relationship to the
additional distance to be traveled. Additional distance means additional travel
time; additional travel time increases the probability for meal and lodging
expenses; and additional travel time with overnight stays increases the time which
these fact witnesses must be away from their regular employment.
371 F.3d at 205. Although the court must consider the convenience of both the party and nonparty witnesses, “it is the convenience of non-party witnesses…that is the more important factor
and is accorded greater weight in a transfer of venue analysis.” Mohamed v. Mazda Motor
Corp., 90 F.Supp.2d 757, 775 (E.D. Tex. 2000); see also id. at 204 (requiring courts to
“contemplate consideration of the parties and witnesses”); Fujitsu Ltd. v. Tellabs, Inc., 639 F.
Supp. 2d 761, 765-66 (E.D. Tex. 2009).
Finisar also identified Sergei Yakovenko as a third party witness who lives and works in NDCA, but does not
explain his relevance to this case.
The non-party witnesses identified by Swan and Finisar in the Court’s discussion of the
above factors show that they are spread across the country, including some in California and
Texas. With respect to party witnesses, Finisar has identified both employees from its Sunnyvale
offices as well as multiple employees (via interrogatory responses) from its Australia locations.
Swan’s willing witnesses will be traveling from the UK. FNC has not identified any of its
witnesses, but many are likely to work in its Richardson headquarters. Foreign witnesses will be
equally inconvenienced by traveling to NDCA as they will by traveling to EDTX. Finisar’s
Sunnyvale witnesses will be inconvenienced by traveling to EDTX. However, FNC’s Richardson
witnesses will be equally inconvenienced by traveling to NDCA. Once again, Finisar has failed
to carry its burden as the movant, and the Court finds this factor is neutral as to transfer.
Other Practical Problems
Practical problems include those that are rationally based on judicial economy. Eolas
Tech., Inc. v. Adobe Sys., Inc., 2010 WL 3835762, at *6 (denying a request to sever defendants),
aff’d In re Google, Inc., 412 Fed. Appx. 295 (Fed. Cir. 2011); see also Volkswagen II, 566 F.3d
1349, 1351 (Fed. Cir. 2009) (quoting Continental Grain Co. v. The FBL-585, 364 U.S. 19, 26
(1960) (“[T]he existence of multiple lawsuits involving the same issues is a paramount
consideration when determining whether a transfer is in the interest of justice … [T]o permit a
situation in which two cases involving precisely the same issues are simultaneously pending in
different District Court leads to the wastefulness of time, energy and money that § 1404 was
designed to prevent.”)).
The Court does not find any practical problems based in judicial economy to exist here.
Swan’s explanation for its decision to name or not name additional Finisar customers as
defendants in this suit is irrelevant to the venue consideration. Accordingly, this factor is neutral.
Public Interest Factors
Having addressed the private interest factors in the § 1404(a) transfer analysis, the Court
now turns to the public interest factors. The only two factors the parties dispute are court
congestion and local interest. The parties concede that the other factors are neutral.
In its § 1404(a) analysis, the court may consider how quickly a case will come to trial and
be resolved. Genentech, 566 F.3d at 1347. Finisar urges that the time to trial comparison between
EDTX and NDCA is “speculative,” and should be found to be neutral in this venue analysis. The
Court agrees. Where “several relevant factors weigh in favor of [or against] transfer and others
are neutral, the speed of the transferee district court should not alone outweigh all of the other
Local interest in having localized interests decided at home
The Court must also consider local interest in the litigation because “[j]ury duty is a
burden that ought not to be imposed upon the people of a community which has no relation to the
litigation.” Volkswagen I, 371 F.3d at 206 (5th Cir. 2004). Interests that “could apply virtually
to any judicial district or division in the United States,” such as the nationwide sale of infringing
products, are disregarded in favor of particularized local interests. Volkswagen II, 545 F.3d at
318; In re TS Tech, 551 F.3d at 1321.
Finisar contends that NDCA has a greater localized interest in this case than EDTX
because Swan is a foreign corporation, while Finisar is based in Sunnyvale, California. However,
FNC is based in Richardson, Texas and likely has witnesses and evidence in EDTX, so citizens
in EDTX likewise have an interest in adjudicating this dispute. On balance, this factor is neutral.
After weighing the evidence as a whole, the Court finds that this is not a situation where
venue is clearly more convenient in one district over another. No factor favors transfer and
all the other factors weigh against transfer or are neutral. However, a motion to transfer venue
should only be granted upon a showing that the transferee venue is “clearly more convenient”
than the venue chosen by the plaintiff. In re Nintendo Co., 589 F.3d at 1197; In re Genentech, Inc.,
566 F.3d at 1342 (Fed. Cir. 2009). Finisar has fallen short of meeting its burden to show that transfer
to NDCA would clearly be more convenient. Accordingly, Finisar’s Motion to Transfer Venue
(Dkt. No. 20) is DENIED.
SIGNED this 19th day of December, 2011.
So ORDERED and SIGNED this 6th day of January, 2014.
UNITED STATES DISTRICT JUDGE
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