Chrimar Systems, Inc. et al v. ADTRAN, Inc.
Filing
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MEMORANDUM OPINION AND ORDER transferring Consolidated Civil Action 6:15cv630 to the Northern District of California. Signed by Magistrate Judge John D. Love on 01/11/16. (mll, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
TYLER DIVISION
CHRIMAR SYSTEMS, INC., and
CHRIMAR HOLDINGS COMPANY,
LLC
Plaintiffs,
V.
JUNIPER NETWORKS, INC.
Defendant.
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CIVIL ACTION NO. 6:15CV618
CONSOLIDATED WITH
CIVIL ACTION NO. 6:15-CV-630
JRG-JDL
JURY TRIAL DEMANDED
MEMORANDUM OPINION AND ORDER
Before the Court is Defendant Juniper Networks, Inc.’s (“Juniper”) Motion to Transfer
Venue Pursuant to 28 U.S.C. §1404(a). (Doc. No. 19.) Plaintiffs Chrimar Systems, Inc. and
Chrimar Holding Company, LLC (“Chrimar”) filed a response (Doc. No. 20) to which Juniper
filed a reply (Doc. No. 22), and Chrimar filed a sur-reply (Doc. No. 23). Upon consideration of
the parties’ arguments, the Court GRANTS Juniper’s Motion to Transfer Venue (Doc. No. 19).
BACKGROUND
Chrimar Systems Inc. is a Michigan corporation, with a principal place of business
located at 36528 Grand River Avenue, Suite A-1, Farmington Hills, Michigan 48335. (Doc. No.
12, at ¶ 1.) Chrimar Holding Company, LLC is a Texas limited liability company with a place of
business located at 911 NW Loop 281, Suite 211-30, Longview, Texas 75604. Id. at ¶ 2.
Chrimar Systems, Inc. is the owner of the patents-in-suit and licensed those patents to Chrimar
Holding Company, LLC. (Doc. No. 20-1, Declaration of John F. Austermann, III, at ¶ 6)
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(“Austermann Decl.”).) Chrimar Holding Company, LLC maintains a single office in Longview,
Texas, where it employs one full-time employee, Amanda Barnes. Id. at ¶ 7. Ms. Barnes’s
duties include supporting Chrimar’s licensing efforts by conducting product research, product
testing, and marketing support. Id.
Juniper is a Delaware Corporation with a principal place of business in Sunnyvale,
California. (Doc. No. 19-2, Declaration of Scott J. Coonan, at ¶ 2) (“Coonan Decl.”).) Juniper
has approximately 3500 employees in its Sunnyvale headquarters, approximately 1800 of which
are in Juniper’s engineering organization. Id. at ¶¶ 3, 4. Juniper specifically identifies five
employees who have knowledge regarding the accused products and work at Juniper’s
Sunnyvale headquarters. Id. at ¶¶ 7, 9, 10, 12. Juniper’s documents related to the accused
products, such as documents related to engineering and R&D for the accused products, financial
documents, marketing documents, and source code are located in the Northern District of
California. Id. at ¶¶ 8, 11, 13, 14. Samples of Juniper’s products are also maintained in its
headquarters in Sunnyvale, California. Id. at ¶ 15. Juniper has sales offices around the country,
including Texas, and a few employees in Texas who work from home. Id. at ¶¶ 17, 18.
LEGAL STANDARD
Section 1404(a) provides that “[f]or the convenience of the 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 pursuant to 28 U.S.C.
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§ 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 must show good
cause for the transfer. In re Volkswagen of America, Inc., 545 F.3d 304, 315 (5th Cir. 2008) (en
banc) (“Volkswagen II”).
To show good cause, the moving party must demonstrate the
transferee venue is clearly more convenient. Id.
When deciding whether to transfer venue, a district court balances the private interests of
the parties and the public interests in the fair and efficient administration of justice. The private
interest factors the court considers 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. In re Volkswagen AG, 371 F.3d 201, 203 (5th Cir. 2004)
(“Volkswagen I”). 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 laws or in the application of foreign law. Id.
DISCUSSION
The threshold issue in a § 1404(a) analysis is “whether the judicial district to which
transfer is sought would have been a district in which the claim could have been filed.”
Volkswagen I, 371 F.3d at 203. In a patent infringement action, venue is proper in “the judicial
district where the defendant resides, or where the defendant has committed acts of infringement
and has a regular and established place of business.” 28 U.S.C. § 1400(b). In this case, Chrimar
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does not contest that Juniper conducts business within the Northern District of California and
transfer is permissible under § 1404.
I.
The Private Interest Factors
(a) The Relative Ease of Access to Sources of Proof
For this factor to weigh in favor of transfer, the movant must demonstrate that transfer
will result in more convenient access to sources of proof. The Federal Circuit requires the Court
to assume that the bulk of all relevant evidence will come from the accused infringer. In re
Genentech, 566 F.3d 1338, 1345 (Fed. Cir. 2009). As a result, “the place where the defendant’s
documents are kept weighs in favor of transfer to that location.” Id. (quoting Neil Bros. Ltd. v.
World Wide Lines, Inc., 425 F. Supp. 2d 325, 330 (E.D.N.Y. 2006)). To meet its burden, Juniper
must identify its sources of proof with some specificity such that the Court may determine
whether transfer will increase the convenience of the parties. In re Apple, 743 F.3d at 1379; see
also Invitrogen v. Gen. Elec. Co., No. 6:08–CV–113, 2009 WL 331889 at *3 (E.D. Tex. Feb. 9,
2009) (finding that general statements that relevant documents were located in either England or
New Jersey “fail to show that transfer would make access to sources of proof either more or less
convenient for the parties”).
Through its declarations, Juniper maintains that employees with relevant knowledge
regarding the accused products are located in the Northern District of California. (Coonan Decl.
at ¶¶ 6–13.)
Juniper specifically identifies the following five employees with relevant
information located in Sunnyvale, California:
Rahul Vir, Product Line Manager for the accused EX series switch;
Jeffrey Pochop, engineer for the accused WLA321 Access Point;
Marty Garvin, Senior VP of Worldwide Operations;
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Robyn Denholm, Chief Financial and Operations Officer;
Scott Miles, Senior Marketing Manager for the accused EX series switch.
Id. at ¶¶ 7-12.
As to its documents, Juniper contends that technical and financial documents relevant to
the accused products, including source code are stored in the Northern District of California. Id.
at ¶¶ 8, 11, 13, 14. Juniper also maintains that its product samples are available at its Sunnyvale
headquarters. Id. at ¶ 13.
Chrimar identifies one employee in its Longview, Texas office—Amanda Barnes—who
is responsible for supporting Chrimar’s licensing efforts, conducting product research, testing
products, and marketing. (Austermann Decl. at ¶ 7.) In its briefing, Chrimar contends it has
relevant documents in its Longview office, including patent prosecution documents, documents
related to Chrimar’s licensing activities, documents related to its EtherLock® products, and
documents related to testing. (Doc. No. 23, at 2.) Chrimar also states that its EtherLock®
products, which implement the patented technology, are physically located in the Eastern District
of Texas. (Doc. No. 20, at 7.) Chrimar maintains it intends to present and demonstrate these
products at trial and will make them available for inspection in this District. Id.
Chrimar also maintains that several third parties have relevant information and are
located in or near this District. Chrimar maintains that the PoE compliant equipment used to run
the Juniper Networks Junos operating system is manufactured by Dell, Inc., who is located in
Round Rock, Texas. (Doc. No. 20, at 7.) Chrimar also maintains that Silicon Laboratories Inc.
and Cisco have evidence regarding the state of the art in the relevant field of PoE technology,
and both are located in Texas. Id. at 7–8.
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Here, Juniper has specifically identified the location of its sources of proof in the
Northern District of California, including specific employees with relevant knowledge and
specific documents related to the accused products. Chrimar has identified only one employee
with relevant knowledge and one product located in this District, along with several relevant
documents located in this District. Chrimar identifies three third parties, including two third
parties who it contends will have documents relevant to the relevant state of the art, and one who
manufactures the operating system on which the accused products run.
While the Court
acknowledges that these entities will likely have at least some information relevant to Chrimar’s
infringement claims, the Court must also acknowledge that “the bulk of relevant evidence
usually comes from the accused infringer.” Genentech, 566 F.3d at 1345. Chrimar faults Juniper
for not identifying the total volume of documents it has in the Northern District, but neither party
has identified for the Court the total volume of relevant documents. Again, the Court must
acknowledge in this instance that the bulk of documents will come from the accused infringer;
particularly, where, as here, the accused infringer has identified specific documents located at its
headquarters.
The Court does not discount Chrimar’s relevant documents in this District.
However, on balance, considering the number of witnesses identified in each district, as well as
the specific categories of documents identified, the Court finds this factor weighs in favor of
transfer.
(b)The Availability of the Compulsory Process to Secure the Attendance of Witnesses
The second private interest factor instructs the Court to consider the availability of
compulsory process to secure the attendance of witnesses, particularly non-party witnesses
whose attendance may need to be secured by a court order. See In re Volkswagen II, 545 F.3d at
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316. The Court gives more weight to those specifically identified witnesses and affords less
weight to vague assertions that witnesses are likely located in a particular forum. See Novelpoint
Learning v. Leapfrog Enter., No 6:10-cv-229, 2010 WL 5068146, at *6 (E.D.Tex Dec. 6, 2010)
(stating that the Court will not base its conclusion on unidentified witnesses); See also West
Coast Trends, Inc. v. Ogio Int’l, Inc., No. 6:10-cv-688, 2011 WL 5117850, at *3 (E.D. Tex. Oct.
27, 2011).
Juniper does not identify any individual third-party witnesses located in the Northern
District of California. Instead, Juniper identifies Broadcom Corp. and Microsemi Corp. who
supply PoE controllers to Juniper for the accused products and who are both located in Southern
California. Coonan Decl. at ¶ 16. These identifications do not weigh heavily in the analysis.
First, Juniper has not identified any individuals or specific documents and where they would be
located. Second, because both of these companies are not located within the Northern District of
California, and likely more than 100 miles away, the Court cannot perform an adequate analysis
under Fed. R. Civ. P. 45(c).1
Chrimar specifically identifies two third-party witnesses who are claimed to have
relevant knowledge. (Doc. No. 20, at 12–13.) Chrimar first identifies Martin Patoka of Texas
Instruments (“TI”) who Chrimar maintains has knowledge regarding the IEEE 802.3at Task
Force’s knowledge of Chrimar’s patents and the decision to adopt the standard without
considering these rights. Id. at 12. Chrimar contends that Mr. Patoka is still employed by TI,
which is located within 100 miles of this Court, and therefore that he is subject to the full
subpoena power of this Court. Id. Chrimar also identifies Marc Sousa, a former Firmware
Design Manager at TI who has knowledge of the design of PoE controllers. Id. at 13. Chrimar
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For example, any witnesses further than 100 miles away which would require a showing that they “would not incur
substantial expense” in order to be compelled to trial. Fed. R. Civ. P. 45(c)(1)(B)(ii).
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contends Mr. Sousa is subject to the full subpoena power of this Court as he is located in
McKinney, Texas. Id.
Weighing the two third-party corporations located in California, against the two
specifically identified third-party witnesses located in Texas, the Court finds this factor weighs
slightly against transfer.
(c) The Cost of Attendance for Willing Witnesses
In analyzing this factor, all parties and witnesses must be considered. Volkswagen I, 371
F.3d at 204. “Because it generally becomes more inconvenient and costly for witnesses to attend
trial the further they are away from home, the Fifth Circuit established in Volkswagen I a ‘100mile’ rule, which requires that ‘[w]hen the distance between an existing venue for trial of a
matter and a proposed venue under §1404(a) is more than 100 miles, the factor of inconvenience
to witnesses increases in direct relationship to the additional distance to be traveled.’” In re TS
Tech USA Corp., 551 F.3d 1315, 1320 (Fed. Cir. 2008) (citations omitted).
As discussed, Juniper has specifically identified five employees as willing witnesses with
relevant knowledge of the accused products who are located in the Northern District of
California. (Coonan Decl. at ¶¶ 6–13.)
Chrimar identifies Ms. Barnes who is a full-time employee located in Longview, Texas
who will testify about the marketing of Chrimar’s patented EtherLock® products. (Doc. No. 20,
at 10.)
Chrimar also identifies the inventors of the patents-in-suit, John Austermann and
Marshall Cummings, who are located in the Detroit area and therefore are closer to this District
than the Northern District of California. Id. Chrimar maintains a trial in this District would be
more convenient and less expensive for these witnesses. As discussed above, Chrimar has also
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specifically identified two third-party witnesses who are located in or near this District. (Doc.
No. 20, at 12–13.)
In sum, Juniper has identified five willing witnesses in the Northern District of
California, and Chrimar has named one willing witnesses in this District and two third-party
witness in or near this District. The convenience of the named inventors, being located in
Michigan, is neutral. Thus, on balance, the Court finds this factor weighs in favor of transfer.
(d) Other Practical Problems
(i) Judicial Economy
Although judicial economy is not among the list of the enumerated factors, it can be a
consideration when determining whether a transfer is in the interest of justice. Volkswagen II,
565 F.2d at 1351. Chrimar contends that judicial efficiency weighs against transfer because of
this Court’s familiarity with the patents-in-suit. (Doc. No. 20, at 5.) There are five cases filed in
this District in 2013 that allege infringement of one of the patents-in-suit, U.S. Patent No.
8,155,012 (“the ’012 Patent”): 6:13-cv-879, -880, -881, -882, -883 (hereinafter “Chrimar I”
cases). There are also two cases filed in this District in 2015 that involve all four of the patentsin-suit: 6:15-cv-163, -164 (hereinafter “Chrimar II” cases). As discussed, the Chrimar I cases all
involved one of the asserted patents in the instant action. The undersigned presided over all five
of those cases and issued a claim construction opinion construing disputed terms of the ’012
Patent. All five cases settled prior to the filing of the instant action. One of the Chrimar II
cases, 6:15-cv-163, involves all four of the asserted patents-in-suit, and the other, 6:15-cv-164,
involves two of the patents-in-suit. Both of these cases are assigned to the undersigned. At the
time the instant action was filed, the Chrimar II cases had been consolidated and were ready for
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a scheduling conference. In addition, on the same day the instant action was filed, twenty-five
additional cases were filed in this District alleging infringement of the same patents, and five
recently-filed additional cases involving two of the asserted patents were also pending in this
District.
Juniper maintains that the Northern District of California will have some experience from
handling one currently pending case, 4:13-cv-1300, involving a related patent, U.S. Patent No.
7,457,250 (“the ’250 Patent”). (Doc. No. 19, at 7.) Prior to the initiation of this action, Judge
White issued a claim construction opinion construing the disputed terms of the ’250 Patent.
(4:13-cv-1300, Doc. No. 254.)
For purposes of judicial economy, the Court recognizes those benefits that were apparent
at the time the instant action was filed. See In re EMC Corp., 501 F. App’x. 973, 976 (Fed. Cir.
2013) (“a district court may properly consider any judicial economy benefits which would have
been apparent at the time the suit was filed”). Here, at the time the instant action was filed, the
undersigned had previously construed the disputed terms of one of the patents-in-suit in a
terminated case, had one case pending with all four asserted patents, six additional cases with
two of the asserted patents, and twenty-five co-filed cases with all four of the patents-in-suit
asserted. The Northern District of California had one case pending involving a related patent for
which it had construed the disputed claim terms.
Given that this Court is the only court with substantive experience with some of the
patents-in-suit, and currently has twenty-five pending cases involving all four asserted patents,
and six cases involving two asserted patents—all assigned to the same judge—there were at least
some apparent judicial economy benefits at the time of the filing that favor this action remaining
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in this District. While it appears the Northern District of California also had some familiarity
with a related patent, this Court’s substantive familiarity with the patents-in-suit weighs slightly
against transfer.
II.
The Public Interest Factors
The parties agree that the public interest factors are neutral, aside from the administrative
difficulties flowing from court congestion, the familiarity of the forum with the law, and local
interest considerations.
(a) The Administrative Difficulties Flowing From Court Congestion
This factor is the most speculative, and cannot alone outweigh other factors. Genentech,
566 F.3d at 1347. However, the speed with which a case may get to trial is relevant under the §
1404(a) analysis. Id. Juniper cites varying general civil litigation statistics and contends this
factor is neutral. (Doc. No. 19, at 14.) Chrimar cites the specific cases pending in both districts as
exemplary of the time to trial. (Doc. No. 20, at 14.) Chrimar contends that the case pending in
the Northern District of California involving one related patent has a trial date set for August 22,
2016, forty-one months after it was initiated in the Northern District of California. Id. Chrimar
compares that schedule to the schedule of the Chrimar II cases (involving all four and two of the
patents-in-suit, respectively), which are set for trial in October 2016, less than nineteen months
from when those cases were initiated in this District. Id. While generally the Court finds this
factor to be speculative in nature, in this instance, the co-pendency of related patent infringement
actions is instructive. Where this Court has set trial on its related patent cases in a time frame that
moves the case to trial twice as fast as the related case in the Northern District of California
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(nineteen months compared to forty-one months), the Court finds this factor weighs slightly
against transfer.
(b) The Local Interest in Having Localized Interests Decided at Home
Juniper contends that the Northern District of California has a local interest in this case
because the research and development of the accused products in the United States took place
there. (Doc. No. 19, at 15.) Chrimar maintains that this District has a local interest in these
actions because Chrimar Holdings Company LLC is a Texas company that has been based in
Longview, Texas for several years and maintains one full-time employee. (Doc. No. 20, at 15.)
Because Juniper has identified several individuals whose work relates to the accused technology
and who are located in the Northern District of California, the Court finds that the Northern
District of California has a local interest in the outcome of the litigation. See Hoffman-La Roche,
587 F.3d at 1336 (“[L]ocal interest in this case remains strong because the cause of action calls
into question the work and reputation of several individuals residing in or near that district and
who presumably conduct business in that community.”); Eon Corp. IP Holdings, LLC v. Sensus,
USA Inc., No. 2:10-cv-448, 2012 WL 122562, at *5 (E.D. Tex. Jan. 9, 2012). This District also
has at least some local interest as Chrimar has an office in this District and employs at least one
permanent employee in this District. On balance, this factor weighs in favor of transfer because
Juniper has specifically identified individuals whose work and reputation are being called into
question by allegations of infringement. Such a designation weighs more heavily than Chrimar’s
identification of one individual largely involved in licensing and marketing activities.
(c) The Familiarity of the Forum with the Law
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Chrimar argues that this factor is weighs against transfer because this Court already
construed claim terms of the one of the patents-in-suit. (Doc. No. 20, at 15.)
However,
Chrimar’s argument puts this Court in no better position to have an understanding of the
applicable laws of claim construction than the Northern District of California.
Chrimar’s
argument on this point, rather, is really directed towards principles of judicial efficiency, which
were discussed above. Accordingly, the Court finds this factor neutral as both courts are familiar
with patent law.
(d) The Remaining Public Interest Factors
The remaining public interest factors are neutral.
CONCLUSION
Upon balancing the venue factors, the Court finds that the Northern District of California
is a clearly more convenient forum. Here, the location of sources of proof, the convenience of
willing witnesses, and the local interest weigh in favor of transfer. These three important factors,
considered together, ultimately weigh heavily in favor of transfer in this case. Considerations of
judicial economy, the availability of the compulsory process, and the administrative difficulties
arising from court congestion weighed slightly against transfer. All other factors are neutral. The
Court acknowledges that the strongest factor against transfer on the facts before it is judicial
economy. In this situation, where Juniper has made a strong showing in favor of transfer on
factors such as the location of sources of proof and the convenience of witnesses, the benefits of
judicial economy do not outweigh Juniper’s showing that the Northern District of California is
clearly more convenient. Simply put, where Juniper has shown the Northern District of
California is a clearly more convenient forum, the considerations of judicial economy involving
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this Court’s prior experience with an overlapping patent and co-pending cases do not override
that showing to warrant a denial of transfer. See In re Verizon, 635 F.3d 559, 562 (Fed. Cir.
2011) (“[t]o interpret § 1404(a) to hold that any prior suit involving the same patent can override
a compelling showing of transfer would be inconsistent with the policies underlying § 1404(a)”);
In re Morgan Stanley, 417 F. App’x 947, 949 (Fed. Cir. 2011) (“[t]he proper administration of
justice may be to transfer to the far more convenient venue even when the trial court has some
familiarity with a matter from prior litigation”); In re Apple, 581 F. App’x 886, 889 (“judicial
economy is just one relevant consideration in determining how administration of the court
system would best be served in deciding a transfer motion.”) Accordingly, the Court GRANTS
Juniper’s motion to transfer (Doc. No. 19).
So ORDERED and SIGNED this 11th day of January, 2016.
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