Rockstar Consortium US LP et al v. LG Electronics Inc. et al

Filing 44

MEMORANDUM OPINION AND ORDER. Signed by Judge Rodney Gilstrap on 07/30/2014. (nkl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION

ROCKSTAR CONSORTIUM US LP, AND
MOBILESTAR TECHOLOGIES, LLC,
Plaintiff,
v.
LG ELECTRONICS, INC., et al.,
Defendants.

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CASE NO. 2:13-CV-00894-JRG
LEAD CASE
CASE NO. 2:13-CV-00898-JRG
MEMBER CASE

MEMORANDUM OPINION AND ORDER
Before the Court is Defendants LG Electronics, Inc.’s, LG Electronics U.S.A., Inc.’s, and
LG Electronics Mobilecomm USA Inc.’s (collectively, “LG”) Motion to Transfer (Dkt. No. 35),
filed March 25, 2014. For the reasons set forth below, the Court finds that the motion should be
DENIED.
I.

BACKGROUND AND PROCEDURAL HISTORY

Plaintiffs Rockstar Consortium US LP, Inc. and Mobilestar Technologies, LLC are
entities arising out of the demise of Nortel, a Canadian telecommunications company with a
substantial patent portfolio. When Nortel confronted bankruptcy in 2011, it held an auction for
its patents. Five major technology companies—Apple, Blackberry, Ericsson, Microsoft, and
Sony—pooled their resources into Rockstar Bidco LP for the purpose of purchasing the Nortel
patent portfolio at auction (Dkt. No. 38-8). Rockstar Bidco LP then transferred the patents in suit
here to the Rockstar Consortium US LP, a Delaware limited partnership with its headquarters in
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Plano, Texas and one of the plaintiffs in this case. Id. Rockstar Consortium US LP subsequently
created a wholly-owned subsidiary, MobileStar Technologies, LLC, to which it assigned five of
the seven patents-in-suit. Id. Meanwhile, Rockstar Consortium Inc. was formed as a vehicle to
hire certain of Nortel’s former employees. Id. Rockstar Consortium US LP contracts with
Rockstar Consortium, Inc. for “intellectual-property-support services.” Id.
Rockstar Consortium US LP, Inc. and MobileStar Technologies, LLC (hereinafter,
collectively, “Rockstar”) filed this suit against LG on October 31, 2013, alleging that LG
infringes seven of Rockstar’s patents, accusing certain mobile phones using a version of Google,
Inc.’s (“Google”) Android operating system (Dkt. No. 1). On the same day, Rockstar separately
sued six other mobile phone manufacturers, again accusing Android-based phones.
On December 23, 2013, Google filed an action for declaratory relief in the United States
Court for the Northern District of California (NDCA), seeking a judgment that the Android
operating system does not infringe the patents at issue in this case. Google Inc. v. Rockstar
Consortium U.S. LP, No. C-13-5933-CW (Dkt. No. 1). On July 1, 2014, this Court denied a
motion in a related case to stay the case pending resolution of the Google case or to transfer that
case to the NDCA (Case No. 2:13-CV-00894-JRG, Dkt. No. 122).
In this motion, LG asks the Court to stay the case pending resolution of the NDCA suit.
In the alternative, LG asks the Court to transfer this case to the NDCA.
II.

LEGAL STANDARDS

“The district court has the inherent power to control its own docket, including the power
to stay proceedings.” Soverain Software LLC v. Amazon.com, Inc., 356 F. Supp. 2d 660, 662
(E.D. Tex. 2005). In deciding whether to stay litigation, courts typically consider “(1) whether a
stay will unduly prejudice or present a clear tactical disadvantage to the nonmoving party; (2)
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whether a stay will simplify the issues in question and trial of the case; and (3) whether
discovery is complete and whether a trial date has been set. Id.
When cases between the same parties present the same issues for resolution, the general
rule favors the first-filed action. Micron Tech., Inc. v. Mosaid Techs., Inc., 518 F.3d 897, 904
(Fed. Cir. 2008). However, “trial courts have discretion to make exceptions to this general rule in
the interest of justice or expediency . . . . These exceptions are not rare.” Id. In particular,
“‘litigation against or brought by the manufacturer of infringing goods takes precedence over a
suit by the patent owner against customers of the manufacturer.’” Spread Spectrum Screening
LLC v. Eastman Kodak Co., 657 F.3d 1349, 1357 (Fed. Cir. 2011) (quoting Katz v. Lear Siegler,
Inc., 909 f.2d 1459, 1464 (Fed. Cir. 1990)).
28 U.S.C. section 1404(a) provides that “[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 or
division where it might have been brought.” The first inquiry when analyzing a case’s eligibility
for 1404(a) transfer 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) (Volkswagen I).
Once that threshold is met, the movant has the burden of proving that the transferee
venue is “clearly more convenient” than the transferor venue. In re Nintendo, 589 F.3d 1194,
1200 (Fed. Cir. 2009); In re TS Tech, 551 F.3d 1315, 1319 (Fed. Cir. 2008); In re Volkswagen of
Am., Inc., 545 F.3d 304, 315 (5th Cir. 2008) (Volkswagen II). In this regard, courts analyze both
public and private factors relating to the convenience of parties and witnesses as well as the
interests of particular venues in hearing the case. See Nintendo, 589 F.3d at 1198; TS Tech, 551
F.3d at 1319. The private factors include: (1) the relative ease of access to sources of proof; (2)
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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; TS Tech, 551 F.3d at 1319;
Volkswagen I, 371 F.3d at 203. The public 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 or in the application of foreign law.
Nintendo, 589 F.3d at 1198; TS Tech, 551 F.3d at 1319; Volkswagen I, 371 F.3d at 203. Though
the private and public factors apply to most transfer cases, “they are not necessarily exhaustive or
exclusive,” and no single factor is dispositive. Volkswagen II, 545 F.3d at 314-15.
III.

STAY

LG suggests that the Court stay proceedings in this case pending resolution of the Google
litigation in the Northern District of California. The Court does not expect the current California
litigation to dispose of key issues in this case and the other related Rockstar litigations. See
Spread Spectrum, 657 F.3d at1358. Though the patents-in-suit in the Texas litigations are the
same, the suits’ accused products are importantly different. Though each of the accused products
uses some version of Android, a product driven primarily by Google, each defendant mobile
phone manufacturer modifies and customizes the Android system to its own particular purposes
(Dkt. No. 39-7). It is by no means clear, then, that resolving infringement issues as to Android
proper will resolve issues relating to other manufacturers’ various implementations of the
Android system. These specialized implementations place these suits far outside of the usual
“customer suit” exemption from the first-filed rule. See Spread Spectrum, 657 F.3d at 1358.

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The Texas litigations also present issues relating to each phone manufacturer’s devices
and hardware, as the California litigation does not. One of the patents-in-suit claims only
hardware (Dkt. No. 39-5). Rockstar alleges that the other patents-in-suit cover the interaction of
the parties’ Android implementations with hardware (Dkt. No. 1). Thus, only if the patents are
invalidated completely in the California court will major issues in the Texas cases be resolved.
LG’s request for a stay, then, should be denied.
IV.

TRANSFER

A. Availability of the Transferee Venue
The parties agree that this suit could originally have been brought in the Northern District
of California. The LG subsidiary responsible for importing and selling the accused products
maintains its headquarters in San Diego, California. LG also maintains an office in San Jose,
California, in the NDCA. Accordingly, the case could have been brought in the Northern District
of California. See In re Genentech, Inc., 566 F.3d 1338, 1346 (Fed. Cir. 2009).
B. Private Interest Factors
1. Relative Ease of Access to Sources of Proof
This being a patent case, it is likely that the bulk of the relevant evidence in this action
will come from LG. See In re Genentech, 566 F.3d at 1345. LG avers that “[d]ocuments and
records relating to LG-branded Android Products, such as sales agreements, marketing
documents and marketing strategy reports, are either physically present or electronically
accessible at the San Diego office” in the Southern District of California (Dkt. No. 34-13).
Because modern document production is done electronically, there is no practical difference
between the burden of producing documents from the Southern District of California to the
NDCA and that of producing them to the Eastern District of Texas. Furthermore, LG’s affidavit
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in support of this motion pointedly does not make firm representations about the physical
locations of its data (Dkt. No. 36). Rockstar, in contrast, avers that documentary evidence
relating to the patents-in-suit is stored at its Plano, Texas headquarters—within the Eastern
District of Texas (Dkt. No. 38-8). LG also suggests that Google retains documentary evidence at
its headquarters in Mountain View, California, but the Court has already rejected that claim as
insufficiently supported by evidence (Case No. 2:13-CV-00894-JRG, Dkt. No. 122).
The evidence supports the conclusion that a substantial body of relevant evidence exists
in or near the Eastern District of Texas. The location of LG’s documentary evidence is unclear,
and, to the extent that the data is in San Diego, that data would be insubstantially more difficult
to produce in this Court than the NDCA. The Court thus finds that this factor weighs against
transfer. The Court notes, however, that given the ease in the modern era of transferring
electronic data from one place to another, this factor weighs only slightly in its decision.
2. Availability of Compulsory Process
Under Federal Rule of Civil Procedure 45 (as recently amended), this Court may enforce
a subpoena issued to any nonparty witness in the State of Texas to appear at trial, provided the
party does not incur substantial expense. Fed. R. Civ. P. 45(c)(1)(B). Similarly, the Court may
enforce any subpoena for a deposition to be taken within its boundaries, provided that the
deposition is taken no more than 100 miles from a location where the person resides, is
employed, or regularly transacts business in person. See id. at (a)(2), (c)(1)(A), (d)(3)(a);
Ingeniador, LLC v. Adobe Systems Inc., 2014 WL 105106, No. 2:12-cv-805-JRG (E.D. Tex. Jan.
9, 2014). Rule 45, however, makes compulsory process for deposition effectively nationwide.
Moreover, party witnesses do not require compulsory process for trial and are not given much

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weight in this factor. See Ingeniador, supra. Rather, the focus of this factor is on witnesses for
whom compulsory process to attend trial might be necessary.
LG suggests that the case will require compulsory process for Google and Apple, Inc.
witnesses and documents in or near Mountain View, California, and Cupertino, California,
respectively. “[a]t least one named inventor resides in the [NDCA] . . . and dozens of relevant
prior artists of record live in the [NDCA]” (Dkt. No. 35, at 13).
LG does not, however, identify any particular nonparty witnesses who are expected to
testify at trial. Nor does the Court give particular credence to the assertion that prior artists will
be called to testify; this Court has previously noted that “inventors of prior art rarely, if ever,
actually testify at trial.” PersonalWeb Techs., LLC v. Target Brands, Inc., No. 6:11-cv-655-LED,
Dkt. No. 74, at 15 n.13 (E.D. Tex. Mar. 21, 2013). Finally, though the Court views LG’s asserted
interest in Apple’s testimony with some skepticism, it notes that other Rockstar parents—notably
Ericsson and Blackberry—maintain U.S. headquarters in Texas (Dkt. Nos. 39-12, 39-13).
In contrast, Rockstar identifies two prosecuting attorneys and two former Nortel
employees, in or near the Eastern District of Texas whom it suggests might be called to testify
(Dkt. No. 37, at 11-12). It also suggests that LG customers such as AT&T and Verizon might be
called to prove damages. Id. The Court is not convinced that any of these witnesses will likely be
called to testify, but their appearance in the case is at least plausible.
Weighing all considerations of available compulsory process, the Court finds that this
factor is neutral. One inventor’s presence in the Northern District of California weighs in favor
of transfer, but is counterbalanced by the presence of several potential nonparty witnesses in
Texas.

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3. Cost of Attendance for Willing Witnesses
The cost of attendance for willing witnesses is another key factor in the Court’s analysis.
LG argues that its employees in San Jose, California and San Diego, California, will be relevant,
but makes no particular assertions about its likely witnesses. 1 LG also suggests that Google
witnesses from the Northern District of California would testify as willing witnesses at trial (Dkt.
No. 35, at 9). Rockstar’s headquarters is in Plano, Texas, and Rockstar has identified several
potential witnesses who work at its Plano office (Dkt. No. 35, at 7-8).
LG employees from San Diego and San Jose would face somewhat lower costs in
traveling to the NDCA rather than the Eastern District of Texas for trial. However, if the court
were to transfer this case, roughly equivalent costs would be imposed on Rockstar’s witnesses.
LG witnesses located overseas, by contrast, will be subjected to substantial costs in either venue.
Transferring this case would, at best, merely redistribute the inconvenience of travel
among the parties; at worst, a transfer might substantially increase the cost of attendance for
willing witnesses. Cf. Thomas Swan & Co., Ltd. v. Finisar Corp., 2014 WL 47343, No. 2:13-cv178-JRG (E.D. Tex. Jan. 6, 2014). Having considered the evidence, the Court finds that this
factor weighs slightly against transfer.
4. Other Practical Problems
In this case, where multiple and parallel litigations in two different jurisdictions are
contemplated, judicial economy weighs heavily in the Court’s transfer analysis. See In re

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The Court notes that neither of LG’s two US-based entities appear to design or manufacture the
accused products. Common sense suggests that some LG witnesses might be traveling from
overseas, which would make travel to this Court only marginally more inconvenient for those
witnesses than a trip to the NDCA.
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Volkswagen of Am., Inc., 566 F.3d 1349, 1351 (Fed. Cir. 2009). These considerations weigh
against a transfer.
There are six Rockstar litigations currently proceeding in the Eastern District of Texas,
each suit alleging violations of the same patents. The Court has already consolidated these cases
for all pre-trial purposes save venue (Dkt. No. 32). The cases will present common issues of
claim construction and damages, and (most likely) validity.
C. Public Interest Factors
1. Local Interest
LG argues that “‘the [NDCA] has an interest in protecting intellectual property rights that
stem from research and development in Silicon Valley’” (Dkt. No. 35, at 14 (quoting Affinity
Labs of Texas v. Samsung Elecs. Co., Ltd., No. 12-CV-557-RC (E.D. Tex. Sept. 18, 2013))).
Rockstar also suggests that its location in the Eastern District of Texas should lead the Court to
find a specialized local interest in resolving the case (Dkt. No. 37, at 14-15). The Court has
previously been highly skeptical of arguments that a particular jurisdiction has a “local interest”
that amounts to a bias in its jury pool. See Ingeniador, 2014 WL 105106, at *3-4. A
predisposition toward one party, independent of the merits of the case, cannot be the kind of
“local interest” cognized by the federal rules, and this Court gives this consideration no weight in
its analysis. The Court finds that this factor is neutral.
2. Other Public Interest Factors
Both parties agree that other public interest factors are neutral. The Court sees no reason
to disagree with this conclusion.

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Having considered all appropriate factors, the Court finds that LG has not shown that it
would be clearly more convenient to transfer this case to the Northern District of California.
LG’s request for a transfer must therefore be denied.
V.

CONCLUSION

The Court finds that a stay of proceedings would not serve the interests of justice,
because major issues in this case and other pending cases will likely remain even after the
California litigation is resolved. The Court also finds that the Northern District of California is
not clearly a more convenient venue for this case.
Having considered the matter carefully, the Court finds that Defendants’ motion (Dkt.
No. 35) should be and hereby is DENIED.
So Ordered and Signed on this

Jul 30, 2014

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