Smartflash LLC et al v. Apple Inc, et al
MEMORANDUM AND OPINION and ORDER DENYING 127 MOTION for Reconsideration of Denial of Apple's Inc.'s Motion to Sever and Motion to Transfer Venue Pursuant to 28 U.S.C. s. 1404(a) filed by Apple Inc. Signed by Judge Michael H. Schneider on 9/8/2014. (gsg)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
SMARTFLASH LLC, et al.,
APPLE, INC., et al.,
CIVIL ACTION NO. 6:13-cv-447
MEMORANDUM AND OPINION ORDER
Before the Court is Defendant Apple, Inc.’s Motion for Reconsideration of Denial of
Apple, Inc.’s Motion to Sever and Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a)
(Doc. No. 127). For the reasons set forth below, the motion is DENIED.
Plaintiffs Smartflash LLC and Smartflash Technologies Limited filed this action against
Apple, Inc., Robot Entertainment, Inc., KingIsle Entertainment, Inc., and Game Circus LLC
alleging infringement of the following patents: U.S. Patent No. 7,334,720; U.S. Patent No.
7,942,317; U.S. Patent No. 8,033,458; U.S. Patent No. 8,061,598; U.S. Patent No. 8,118,221;
and U.S. Patent No. 8,336,772 (Doc. No. 1 at 8–15). Robot Entertainment, Inc., KingIsle
Entertainment, Inc., and Game Circus LLC are developers who created apps using Apple’s Store
Kit Framework which is alleged to infringe the patents-in-suit.
On October 18, 2013, Apple filed a Motion to Sever (Doc. No. 45) and a Motion to
Transfer Venue Pursuant to 28 U.S.C. § 1404(a) (Doc. No. 46). Apple sought severance from the
three developer defendants and transfer to the Northern District of California. The Court found
that joinder was not improper and that the Northern District of California was not clearly more
convenient. On April 18, 2014, Apple moved to reconsider the denial of its motions to sever and
“Motions to reconsider serve a very limited purpose: “to permit a party to correct
manifest errors of law or fact, or to present newly discovered evidence.” Krim v. pcOrder.com,
Inc., 212 F.R.D. 329, 331 (W.D. Tex. 2002); Tex. Instruments, Inc. v. Hyundai Elecs Indus., Co.,
50 F. Supp. 2d 619, 621 (E.D. Tex. 1999). Only three grounds permit granting a motion to
reconsider: (1) an intervening change in controlling law; (2) the availability of new evidence not
previously available; or (3) the need to correct a clear error of law or to prevent manifest
injustice. In re Benjamin Moore & Co., 318 F.3d 626, 629 (5th Cir. 2002).
Mere disagreement with a district court’s order does not warrant reconsideration of that
order. Krim, 212 F.R.D. at 332. A party should not restate, recycle, or rehash arguments that
were previously made. Id. at 331. Rather, “litigants are expected to present their strongest case
when the matter is first considered.” Louisiana v. Sprint Comms. Co., 899 F. Supp. 282, 284
(M.D. La. 1995).
Joinder is normally governed by Federal Rule of Civil Procedure 20. However, in actions
involving patents, joinder is governed by the Leahy–Smith America Invents Act (AIA).
35 U.S.C. § 299. Under the AIA, patent defendants may be joined only if:
(1) Any right to relief is asserted against the parties jointly, severally, or in the alterative with
respect to or arising out of the same transaction, occurrence, or series of transactions or
occurrences relating to the making, using, importing into the United States, offering for
sale, or selling of the same accused product or process; and
(2) Questions of fact common to all defendants or counterclaim defendants will arise in the
35 U.S.C. § 299(a).
Even if these requirements are met, “district courts have the discretion to refuse joinder in
the interest of avoiding prejudice and delay, ensuring judicial economy, or safeguarding
principles of fundamental fairness.” In re EMC, 677 F.3d at 1360 (citing Acevedo, 600 F.3d 516,
521 (5th Cir. 2010)). In reaching a conclusion, a court should “examine whether permissive
joinder would ‘comport with principles of fundamental fairness’ or would result in prejudice to
either side.” In re Nintendo Co., Ltd., 2013 WL 5345899 at *5 (Fed. Cir. Sept. 25, 2013) (citing
Coleman v. Quaker Oats Co., 232 F.3d 1271, 1296 (9th Cir. 2000)).
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.” 28 U.S.C. § 1404(a). The goals of § 1404(a) are to prevent
waste of time, energy, and money, and also to protect litigants, witnesses, and the public against
unnecessary inconvenience and expense. Van Dusen v. Barrack, 376 U.S. 612, 616 (1964).
Ultimately it is within a district court’s sound discretion to transfer venue under 28 U.S.C.
§ 1404(a), but the court must exercise its discretion in light of the particular circumstances of the
case. Hanby v. Shell Oil Co., 144 F. Supp. 2d 673, 676 (E.D. Tex. 2001); Mohamed v. Mazda
Corp., 90 F. Supp. 2d 757, 768 (E.D. Tex. 2000). The party seeking transfer of venue must show
good cause for the transfer. In re Volkswagen of America, Inc., 545 F.3d 304, 315 (5th Cir. 2008)
(“Volkswagen II”); In re TS Tech USA Corp., 551 F.3d 1320.
When deciding whether to transfer venue, a district court balances two categories of
interests: the private interests, i.e., the convenience of the litigants, and the public interests in the
fair and efficient administration of justice. Id. at 1319. The private interest factors weighed by
the court include: “(1) the relative ease of access to sources of proof; (2) the availability of
compulsory process to secure 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.” Id. 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 conflicts of laws or in the application of foreign law.” Id. None of the
factors are dispositive on their own. Id.
Apple contends that Judge Mitchell erred in finding that the allegedly infringing apps
were the same relevant to the patent (Doc. No. 127 at 4). Judge Mitchell found that despite the
alleged differences in each app, there was no dispute that all developers relied on the same Store
Kit framework for at least one app. Thus, she concluded that the Store Kit framework was an
identical component of the in-app payment process under 35 U.S.C. § 271(c).
In its motion to reconsider, Apple rehashes the same factual and legal arguments Judge
Mitchell previously rejected. A review of its arguments reveals no grounds to find Judge
Mitchell committed a clear error of law or that the Court needs to prevent a manifest injustice.
See Krim, 212 F.R.D. at 332.
First, Judge Mitchell rejected Apple’s contention that an accused processes must be
identical in order for joinder to be proper. Apple argued that even though the accused apps relied
on the Store Kit framework, the differences in server locations meant each process was not
identical (Doc. No. 45 at 3). But Plaintiff identified at least one claim that does not have
limitations on server location (Doc. No. 74 at 1–2; Doc. No. 134 at 2 n.2). Judge Mitchell found
that Plaintiff’s infringement contentions are directed to the implementation of Store Kit’s
payment functionality (Doc. No. 122 at 6). Based on that finding, Judge Mitchell concluded that
Defendants’ use of Store Kit constitutes the same process. That conclusion is not a clear error of
law and does not work a manifest injustice. See Krim, 212 F.R.D. at 332; see also Omega
Patents, LLC v. Skypatrol, LLC, 2012 WL 2339320, at *2 (S.D. Fla. June 19, 2012).
Judge Mitchell also rejected Apple’s second argument that joinder is improper because
each developer’s alleged infringement does not “arise out of the same transaction, occurrence, or
series of transactions or occurrences . . . .” 35 U.S.C. § 299(a)(1). As Judge Mitchell concluded,
Apple’s interpretation of “series of transaction or occurrences” is unfeasibly narrow and contrary
to the plain language of § 299(a)(1). Apple contended that joinder would not be proper even in
circumstances involving separate sales of the exact same products (Doc No. 45 at 8). Judge
Mitchell concluded that Apple sought to effectively limit joinder to individual transactions—an
interpretation that goes against the very idea of a “series of transactions of occurrences.” 35
U.S.C. § 299(a)(1) (emphasis added). Judge Mitchell noted that the practical result of Apple’s
interpretation would be joinder only being proper with an allegation of joint liability (Doc. No.
122 at 6–7). As Judge Mitchell concluded, Apple’s interpretation of joinder would be contrary to
the clear language of Rule 20 and § 299. 35 U.S.C. § 299(a)(1) (“any right to relief is asserted
jointly, severally, or in the alternative . . .”) (emphasis added); Fed. R. Civ. P. 20(a)(2); In re
EMC Corp., 677 F.3d 1351, 1356 (Fed. Cir. 2012).
After rejecting Apple’s statutory interpretation, Judge Mitchell concluded that same the
“series of transactions or occurrences” test is satisfied by Apple offering its Store Kit framework
to app developers to help them implement in-app payment functionality. Apple puts forward no
controlling or persuasive authority that demonstrates how Judge Mitchell’s conclusion is clearly
erroneous or results in a manifest injustice. Accordingly, the Court finds no basis to reconsider
Judge Mitchell’s conclusions. See Krim, 212 F.R.D. at 332.
In sum, Apple sought to have a District Judge reconsider Judge Mitchell’s decision. To
be successful, Apple needed to show a change in controlling precedent, new evidence, or that
Judge Mitchell’s decision was clearly erroneous or manifestly unjust. Faced with that heavy
burden, Apple rehashed the same arguments and facts Judge Mitchell considered and resolved
against Apple. Judge Mitchell issued a well-reasoned order supported by case law, statutory
interpretation, and the record. Thus, even if Apple persuaded the undersigned to disagree with
Judge Mitchell’s decision—which it has not—Apple has not carried its heavy burden of
demonstrating that Judge Mitchell’s decision should be reconsidered.
Apple argues that Judge Mitchell’s order denying transfer was clearly erroneous for three
reasons: (1) Northern California has more sources of proof; (2) Northern California has a greater
local interest; and (3) no practical problems weigh against transfer.
a. Sources of Proof
Judge Mitchell found this factor was neutral because significant sources of proof were
located in both districts (Doc. No. 122 at 12). Apple is headquartered in the Northern District of
California while two of the developer defendants are headquartered in the Eastern District of
Texas. Apple’s main contention is that the amount of evidence in the Eastern District of Texas is
less than the amount of Apple’s evidence in California (Doc. No. 127 at 9). But Apple’s Motion
to Transfer did not make this argument. Apple only argued that all of its relevant documents
were located in California (Doc. No. 46 at 2). This is consistent with Judge Mitchell’s order,
which found that significant sources of proof also exist in this district since two of the developer
defendants are headquartered here. 1 Thus, it was not clearly erroneous for Judge Mitchell to
conclude this factor was neutral.
a. Local Interest
Apple’s second argument is that it was clearly erroneous to find that the local interest
factor was neutral. Apple contends that the Northern District of California has a greater local
interest because this suit calls into question Apple’s work and reputation (Doc. No. 127 at 11).
But as Judge Mitchell found, this case also involves two defendants located in this district.
Therefore this case calls into question these defendants’ work and reputation as well.
Accordingly, it was not clearly erroneous to find the localized interest factor was neutral.
b. Practical Problems
Apple’s final argument is that Judge Mitchell erred in concluding that practical problems
weighed against transferring the case. Judge Mitchell concluded that judicial efficiency would
best be served by keeping this case in the Eastern District of Texas (Doc. No. 122 at 17). She
The discovery material related to a party is presumed to be located at the company headquarters. See In re Acer
Am. Corp., 626 F.3d 1252, 1256 (Fed. Cir. 2010).
relied on the fact that even if Apple were severed and transferred, the developer defendants
would remain here. Id. Apple argues that this consideration should be mitigated by the fact that
the developer defendants consented to transfer. But defendant consent is not relevant the 1404(a)
transfer analysis. Empire Indem. Ins. Co. v. N/S Corp., 2011 WL 3648510, at *3 (E.D. Tex. July
20, 2011). The proper inquiry is whether the transferee venue is “clearly more convenient,” not
whether defendants are willing to be transferred. 28 U.S.C. § 1404(a).
In addition to the three developer defendants who would remain in this district, there is a
related case against Samsung and HTC. Apple argues that it was error to consider this related
lawsuit in the transfer analysis (Doc. No. 127 at 11–12). Apple’s argument is misplaced. A
district court can consider the benefits of judicial economy arising from one judge handling
related cases. In re EMC Corp., 501 F. App’x 973, 976 (Fed. Cir. Jan. 29, 2013). Thus, Judge
Mitchell’s findings were not clearly erroneous or contrary to law.
For the reasons stated more thoroughly above, Apple’s motion for reoconsideration (Doc.
No. 127) is DENIED.
It is SO ORDERED.
SIGNED this 8th day of September, 2014.
MICHAEL H. SCHNEIDER
UNITED STATES DISTRICT JUDGE
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