U.S. Ethernet Innovations, LLC v. Xerox Corporation

Filing 70

MEMORANDUM OPINION AND ORDER. Defendant's Objections 57 to and appeal of the magistrate judge's order denying transfer are OVERRULED. Signed by Judge Michael H. Schneider on 02/11/14. (mll, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
TYLER DIVISION
U.S. ETHERNET INNOVATIONS, LLC

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v.
XEROX CORPORATION

No. 6:12-CV-237

MEMORANDUM OPINION AND ORDER
Currently before the Court is Defendant Xerox Corporation’s objections to and appeal of
the magistrate judge’s order denying transfer (Doc. No. 57). Having considered the parties’
briefing, the record in this case, and the applicable law, it is ORDERED that the objections to
the order denying transfer are OVERRULED.
I.

Background
Plaintiff U.S. Ethernet Innovations, LLC (USEI) is a Texas limited liability company

with a principal place of business in Tyler, Texas.

Plaintiff filed this suit against Defendant

Xerox Corporation (Xerox) alleging infringement of the following U.S. Patents: No. 5,732,094;
No. 5,434,872; No. 5,307,459; No. 5,530,874; and No. 5,299,313.
Defendant is a New York Corporation with a principal place of business in Norwalk,
Connecticut. The products that Plaintiff accuses of infringement include components that are
supplied by third parties, including Broadcom Corporation.
II.

Standard of Review
A motion to transfer venue is a non-dispositive motion under this Court’s local rules.

CV–7(a)(2). If a party objects to a magistrate judge’s decision on a non-dispositive motion,
“[t]he district judge in the case must consider timely objections and modify or set aside any part
of the order that is clearly erroneous or is contrary to law.” Fed. R. Civ. P. 72(a).

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The district judge applies a “clearly erroneous” standard to the magistrate judge’s factual
conclusions, a “contrary to law” standard to his legal conclusions, and an “abuse of discretion”
standard to the “numerous instances in which magistrate judges exercise discretion in resolving
nondispositive matters.” Lahr v. Fulbright & Jaworski, LLP, 164 F.R.D. 204, 208 (N.D. Tex.
1996).
The Court “has wide discretion to determine whether to transfer for the convenience of
parties and in the interest of justice.” Weber v. Coney, 642 F.2d 91, 93 (5th Cir. Unit A Mar.
1981) (per curiam). “An abuse of discretion exists only when there is definite and firm
conviction that the [magistrate judge] committed clear error of judgment in the conclusion it
reached upon a weighing of the relevant factors.” Smith v. Smith, 154 F.R.D. 661, 665 (N.D. Tex.
1994) (quoting Conkling v. Turner, 18 F.3d 1285, 1293 (5th Cir. 1994)).
III.

Legal Standard for Transfer of Venue
“For 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 or
to any district or division to which all parties have consented.” 28 U.S.C. § 1404(a). A threshold
inquiry is whether suit “might have been brought” in the proposed transferee venue. In re
Volkswagen of Am., Inc., 545 F.3d 304, 312 (5th Cir. 2008) (en banc) (hereinafter Volkswagen
II). Once a defendant satisfies that burden, the Court weighs the Gilbert factors to determine if
transfer is warranted. Volkswagen II, 545 F.3d at 314 n.9; see also Gulf Oil Corp. v. Gilbert, 330
U.S. 501, 508–09 (1947) (listing the relevant factors). The moving party must show good cause
by demonstrating the transferee venue is clearly more convenient. Volkswagen II, 545 F.3d at
315.

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The Gilbert factors are divided between private and public interests. “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 (internal quotation marks omitted). “The public interest factors
are: (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.” Id. (internal quotation marks omitted). These factors are not
exhaustive, and no single factor is dispositive. Id.
IV.

Discussion
Defendant makes two general challenges to the magistrate judge’s order. First, Defendant

argues that the magistrate judge erred in not transferring the case despite finding that all of the
factors either weighed in favor of transfer or were neutral (Doc. No. 57 at 1–2). Second,
Defendant argues that the magistrate judge improperly weighed some of the factors, either by not
weighing them heavily enough or by determining that they were neutral.

Plaintiff argues that

the magistrate judge did not err in the amount of weight attributed to each factor or the overall
balancing of the factors (Doc. No. 60 at 6–9).
After reviewing the parties’ arguments and the magistrate judge’s order, the Court makes
two slight modifications to the magistrate judge’s conclusions on two private interest
factors: the cost of attendance of willing witnesses and all other practical problems. However, the
Court agrees with the magistrate judge that the overall balance of the private factors remains
neutral.

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A. Cost to Willing Witnesses
The magistrate judge found that this factor slightly favors transfer. Upon review, the
Court finds that this factor is neutral. The magistrate judge concluded that nine witnesses live in
the transferee district, three live in Texas, and four live in Boston, Massachusetts. Although more
witnesses reside in the transferee district than in this district, the four witnesses in Boston are
much closer to this district. Thus, the transfer forum is more convenient for nine witnesses, while
this district is more convenient for seven witnesses. As such, regardless of where this case is
tried, a relatively equal number of willing witnesses will be inconvenienced. Accordingly, this
factor is effectively neutral.
B. Other Practical Problems
The magistrate judge concluded that the retirement of two judges in the transferee district
who had experience with the patents in suit rendered this factor neutral. After examining “all
other practical problems that make trial of a case easy, expeditious and inexpensive,” the Court
determines that this factor slightly favors transfer. The magistrate judge observed that several of
the patents in suit were the subject of litigation in the Northern District of California.
Specifically, Northern District of California Judge Vaughn Walker presided over litigation,
including a 2008 trial, involving two of the patents in suit. 1 That case closed in 2008, and Judge
Walker retired before this case was filed. Additionally, this Court previously transferred two
cases involving several of the patents in suit to the Northern District of California. 2 Those cases

1
2

See 3COM Corp. v. D-Link Sys., Inc., No. 3:03-CV-2177 (N.D. Cal. Sept. 12, 2008).
See U.S. Ethernet Innovations, LLC v. Acer, Inc., No. 4:10-CV-3724, Doc. No. 310 (N.D. Cal. July 13, 2010);
U.S. Ethernet Innovations, LLC v. AT&T Mobility, LLC, No. 4:10-CV-5254, Doc. No. 178 (N.D. Cal. Oct. 27,
2010).

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were assigned to Judge James Ware, who entered a claim construction order in January 2012.
Judge Ware retired after this case was filed.
In its objections, Defendant argues that the interests of judicial economy favor transfer
because the Northern District of California has experience with litigation involving the patents in
suit (Doc. No. 57 at 8).
In response, Plaintiff argues that the only judges in the Northern District of California
familiar with the patents in suit have retired (Doc. No. 60 at 5). Plaintiff also argues that this
Court has gained familiarity with the technology because of recent activity in related cases in this
Court. Additionally, Plaintiff argues that this Court will become familiar with the technology
because there are several related cases pending before the Court, some of which have already
proceeded to claim construction.
The Court finds that this factor slightly favors transfer because a court properly considers
“any judicial economy benefits which would have been apparent at the time the suit was filed.”
In re EMC Corp., 501 F. App’x at 976. “[A] district court’s experience with a patent in prior
litigation and the co-pendency of cases involving the same patent are permissible considerations
in ruling on a motion to transfer venue.” Id. (citing In re Vistaprint, Ltd., 628 F.3d 1342, 1346–
47 & n.3 (Fed. Cir. 2010)). Plaintiff filed its complaint on April 2, 2012. In January 2012, Judge
Ware in the Northern District of California entered a claim construction order construing terms
of four of the patents in suit. U.S. Ethernet Innovations, LLC v. AT&T Mobility, LLC, No. 4:10CV-5254, Doc. No. 331 (N.D. Cal. Jan 31, 2012). 3 Accordingly, at the time this case was filed,

3

Judge Ware retired in August 2012 and the case was assigned to another judge in September 2012. U.S.
Ethernet Innovations, LLC v. AT&T Mobility, LLC, No. 4:10-CV-5254, Doc. No. 381 (N.D. Cal. Sept. 5, 2012).
According to the magistrate judge, Judge Ware announced his retirement after this case was filed. Thus, Judge
Ware’s retirement was not a judicial economy consideration “which would have been apparent at the time the
suit was filed.” In re EMC Corp., 501 F. App’x at 976.

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this Court had relatively less familiarity with the technology than the Northern District of
California.
Thus, this factor slightly favors transfer.
C. Balance of Factors
Only three factors slightly favor transfer. The remaining factors are neutral. Defendant’s
burden is to show that the transferee venue is clearly more convenient. On balance, Defendant
only succeeded at showing a slightly more convenient venue. Accordingly, Defendant failed to
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meet its burden to show that the Northern District of California is clearly more convenient. See
Volkswagen II, 545 F.3d at 314–15.
V.

Conclusion
For the reasons discussed more fully above, it is ORDRED that Defendant’s objections

to the order denying transfer are OVERRULED.
It is SO ORDERED.
SIGNED this 11th day of February, 2014.

____________________________________
MICHAEL H. SCHNEIDER
UNITED STATES DISTRICT JUDGE

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