Rockstar Consortium US LP et al v. Samsung Electronics Co., LTD., et al

Filing 70

MEMORANDUM OPINION AND ORDER. Signed by Judge Rodney Gilstrap on 07/01/2014. (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.
SAMSUNG ELECTRONICS CO., LTD., et
al.,
Defendants.

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CASE NO. 2:13-CV-00894-JRG
LEAD CASE
CASE NO. 2:13-CV-00900-JRG
MEMBER CASE

MEMORANDUM OPINION AND ORDER
Before the Court is Defendants Google, Inc.’s (“Google”) and Samsung Electronics Co.,
Ltd.’s, Samsung Electronics America, Inc.’s, and Samsung Telecommunications America,
LLC’s (collectively, “Samsung”) Motion to Stay or, in the Alternative, to Transfer to the
Northern District of California (Dkt. No. 52), filed March 21, 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 bidding on the Nortel
patent portfolio (Dkt. No. 61-4). Rockstar Bidco LP outbid Google for the patents. Id. Rockstar

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Bidco LP then transferred the patents in suit here to the Rockstar Consortium US LP, a Delaware
limited partnership with its headquarters in 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 (Dkt. No. 61-7).
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 Samsung on October 31, 2013, alleging that
Samsung infringes seven of Rockstar’s patents, accusing certain mobile phones using a version
of Google’s 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 December 31, 2013, Rockstar
amended its complaint in this Court, accusing Google of violating three of the seven patents in
suit (Dkt. No. 19). Rockstar has since requested leave to file a Second Amended Complaint
accusing Google of infringing all seven of the patents in suit (Dkt. No. 45). On April 17th, 2014,
the NDCA issued an opinion denying Rockstar’s motion to dismiss, finding that the California
action was the first filed between Rockstar and Google (5933 Dkt. No. 58).
In this motion, Google asks the Court to stay the case pending resolution of the NDCA
suit. In the alternative, Google asks the Court to transfer this case to the NDCA.

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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)
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. Reasons such as “the
convenience and availability of witnesses, or absence of jurisdiction over all necessary or
desirable parties, or the possibility of consolidation with related litigation, or considerations
relating to the real party in interest” may trump the general first-filed rule. Genentech, Inc. v. Eli
Lilly 7 Co., 998 F.2d 931, 937-39 (Fed. Cir. 1998).
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,

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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)
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.

ANALYSIS

Defendants request a stay of these proceedings as their preferred relief. Because the
considerations involved in a decision to stay closely mirror those involved in a decision to
transfer, however, the Court will combine its discussion of these issues.
A. Availability of the Transferee Venue
The parties do not appear to dispute that this suit could originally have been brought in
the Northern District of California, and this Court agrees that the case could have been originally
brought in that district. See In re Genentech, Inc., 566 F.3d 1338, 1346 (Fed. Cir. 2009).

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B. Private Interest Factors
1. Relative Ease of Access to Sources of Proof
It is likely that the bulk of the relevant evidence in this action will come from Google.
See In re Genentech, 566 F.3d at 1345. Google avers that “all relevant documants and evidence
are [sic] accessible from Google’s headquarters in the Northern District,” but is pointedly silent
on the physical location where said documents are stored (Dkt. No. 52-29). Samsung, in contrast,
maintains a US headquarters in Richardson, Texas—within the Eastern District of Texas (Dkt.
No. 62-7). Samsung also maintains a laboratory in Dallas, Texas; the Dallas office appears to be
significantly involved in the development of the accused products (Dkt. No. 62-9). Moreover,
Rockstar’s documentary evidence relating to the patents-in-suit is stored at its Plano, TX
headquarters—also within the Eastern District (Dkt. Nos. 61-4, 61-7). Though Google suggests
that this evidence was transported to the Eastern District explicitly to game the Court’s transfer
analysis, the Court finds that such a conclusion is unwarranted given the evidence presented.
The evidence supports the conclusion that a substantial body of relevant evidence exists
in or near the Eastern District of Texas. In contrast, it is unclear whether and how much relevant
information actually exists within the Northern District of California. 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 is not dominant in its
ultimate 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

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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
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.
Google suggests that “former employees of Google and Andrioid Inc. remain heavily
concentrated in the Northern District. At least one named inventor resides in the Northern
District . . . and dozens of relevant prior artists of record live in the Northern District” (Dkt. No.
52, at 11). They also suggest that employees of Apple, one of Rockstar’s corporate owners, may
be compelled to testify in the Northern District.
Google does not, however, identify any former employees who are expected to testify at
trial. Nor does this 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 Google’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. 63-17, 63-18).
In contrast, Rockstar specifically identifies two prosecuting attorneys, two former Nortel
employees, and one former Samsung employee in or near the Eastern District of Texas whom it
suggests might be called to testify (Dkt. No. 61, at 11). It also suggests that Samsung customers

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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
certainly 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.
3. Cost of Attendance for Willing Witnesses
A critical factor in this Court’s analysis of this case is the cost of attendance for willing
witnesses. As noted above, Google’s headquarters is in Mountain View, California. Many of the
Google employees who work on the Android operating system are located in or near the
Northern District of California (Dkt. No. 52-29). Samsung is a Korean entity with its U.S.
headquarters in the Eastern District of Texas; moreover, Samsung maintains a Dallas office that
appears to do substantial work on its Android-based products (Dkt. No. 62-7, 62-9). Rockstar’s
headquarters is in Plano, Texas, and Rockstar has identified several potential witnesses who
work at its Plano office.
Google employees from northern California would face substantial costs in traveling to
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, and also (potentially) some
Samsung witnesses. Samsung witnesses located in Korea, 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

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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
possible, considerations of judicial economy bear heavily upon the Court’s transfer analysis.
See In re Volkswagen of Am., Inc., 566 F.3d 1349, 1351 (Fed. Cir. 2009).
Google argues that its suit against Rockstar in California presents identical issues among
identical parties, and that the Court should stay or transfer this litigation under the first-filed rule.
It also argues that, even if this litigation is the first-filed (because of Rockstar’s October
complaint against Samsung and subsequent addition of Google as a defendant), the Court should
stay or transfer this case because Rockstar’s Texas suits are essentially “customer suits,” whose
major issues will be resolved in the California declaratory judgment action.
The Court need not resolve the formalistic question of whether Rockstar’s October
complaint makes this suit the first-filed case. The decision to stay or transfer a case is contextual
and multifaceted, and the Court may give weight to considerations beyond the simple race to the
courthouse. See Micron Tech., 518 F.3d at 904. This is particularly so in this case, where the
merits of the “first filed” designation are by no means clear. The considerations of judicial
economy that underlie the general first-filed rule, in this case, weigh against a transfer or stay.
First, the Court notes that 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 except venue (Dkt. No. 51). These cases will
present common issues of claim construction and damages, and (most likely) validity. Moreover,

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now that Google is a party to this litigation, Google will have every opportunity to participate
fully in these proceedings. 1 Considerations of judicial economy weigh strongly in favor of
consolidating all cases on these patents in the Eastern District of Texas, if possible.
Second, the Court does not expect the current California litigation to dispose of key
issues in this case and the related Rockstar cases. See Spread Spectrum Screening LLC v.
Eastman Kodak, 657 F/3d 1349, 1358 (Fed. Cir. 2011). Though the patents-in-suit in the Texas
cases 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. Nos. 63-6, 63-11). 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.
The Texas actions also present issues relating to each phone manufacturer’s devices and
hardware, which the California litigation does not. One of the patents-in-suit claims only
hardware (Dkt. No. 63-10). Rockstar alleges that the other patents-in-suit cover the interaction of
the parties’ Android implementations with hardware (Dkt. No. 61, at 4). Thus, only if the patents
are invalidated completely in the California court will major issues in the Texas cases be
resolved.
The Court finds that this factor weighs heavily against transfer. This factor also weighs
against a stay of proceedings.
C. Public Interest Factors

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An Order of this Court to be released contemporaneously grants Rockstar leave to amend its
complaint to assert all seven patents-in-suit against Google.

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1. Local Interest
Google argues that “[t]he Northern District of California has an interest in protecting
intellectual property rights that stem from research and development in Silicon Valley” (Dkt. No.
52, at 15) (quoting Affinity Labs of Tex. v. Samsung Elecs. Co., Ltd., 2013 WL 5508122, No.
1:12-cv-557-RC (E.D. Tex. Sept. 18, 2013). 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. Also, the products
here accused are so ubiquitous throughout the nation that no single community can establish an
exceptional link that rightly makes any venue preferable to any other. 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.
IV.

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. 52) should be and hereby is DENIED.

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SIGNED this 19th day of December, 2011.
So ORDERED and SIGNED this 1st day of July, 2014.

____________________________________
RODNEY GILSTRAP
UNITED STATES DISTRICT JUDGE

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