Koh v. Microtek Intern., Inc.

• Decision Date: 05 March 2003
• Docket Number: No. CIV.A. 3:02CV191.,CIV.A. 3:02CV191.
• Citation: 250 F.Supp.2d 627
• Court: U.S. District Court — Eastern District of Virginia
• Parties: Franklin C. KOH and Francis H. Koh, Plaintiffs, v. MICROTEK INTERNATIONAL, INC.; Microtek Lab, Inc.; Microtek International Development Systems Division, Inc.; Micro Electronics, Inc., t/a Micro Center; and Micro Center Sales Corp., Defendants.

250 F.Supp.2d 627

Franklin C. KOH and Francis H. Koh, Plaintiffs, v. MICROTEK INTERNATIONAL, INC.; Microtek Lab, Inc.; Microtek International Development Systems Division, Inc.; Micro Electronics, Inc., t/a Micro Center; and Micro Center Sales Corp., Defendants.

No. CIV.A. 3:02CV191.

United States District Court, E.D. Virginia, Richmond Division.

March 5, 2003.

Franklin C. Koh, Esquire, Potomac, MD, for Plaintiff

Kevin M. Henry, Esquire, Edward G. Poplawski, Esquire, Sidley, Austin, Brown & Wood, Washington, D.C., Jon E. Hokanson, Esquire, Hokanson & Drazich LLP, Los Angeles, CA, for Defendants.

MEMORANDUM OPINION

PAYNE, District Judge.

BACKGROUND

The plaintiffs, Franklin C. Koh and Francis H. Koh (collectively, the "Kohs"), own U.S. Patent No. 6,166,830 (the "'830 patent") entitled "Integrated Scan—to Store Apparatus," which discloses an electronic stand-alone scanner that scans images and stores them to a removable storage device. Francis H. Koh is a lawyer and is representing himself and Franklin C. Koh. The Kohs have filed a Fourth Amended Complaint against Microtek Lab, Inc. ("MLI"), Microtek International Development Systems Division, Inc. ("MIDSDI"), Micro Electronics, Inc. ("MEI"), and Micro Center Sales, Corp ("MCSC") (collectively, the "Defendants"). Although Microtek International, Inc. ("Mil"), a Taiwanese corporation, is named in the Fourth Amended Complaint, the Kohs have not yet properly served MIL¹ AH defendants bearing the name "Microtek" are related. MEI and MCSC are related to each other but not to the Microtek defendants.

The Fourth Amended Complaint alleges that the Defendants infringe the '830 patent by importing, using, offering to sell, or selling the patented invention within the United States. The Kohs further allege that Mil, MLI, and MIDSDI are willful infringers who actively induce MEI and MCSC to infringe the '830 patent. Therefore, the Kohs request the following relief:

(1) a declaratory judgment that the Defendants infringe the '830 patent; (2) an injunction preventing the Defendants from further infringement; (3) an accounting for the profits the Defendants have gained by infringing; (4) compensatory damages for the Defendants's previous infringement; (5) $4,000,000 due to the willful and intentional nature of that infringement; and, (6) a determination that this action is exceptional within the meaning of 35 U.S.C. § 285, and that, therefore, the Kohs are entitled to legal fees and related expenses.

Mil is the Taiwanese parent corporation of MLI, which is a California corporation with its principal place of business in California. MLI's Vice President of Engineering, Loi Han, allegedly conceived the invention, a scanner product known as the "ImageDeck," and reduced it to practice in Redondo Beach, California. See Defendants' Motions To Dismiss And Transfer Venue ("Opening Br. p. ___") Exh. C ¶ 7 ("Chow Affidavit"). An independent designer, SLH Design Corp., created the preliminary drawings for the ImageDeck and made the first ImageDeck housing prototype in Cypress, California. Id. ¶¶ 8, 10. A separate independent designer, Circo Design, completed the final ImageDeck design in Irvine, California. Id. ¶ 9. Mil manufactures the ImageDeck exclusively in Taiwan and MLI imports the Image-Deck solely in Ontario, California, where it also warehouses ImageDeck units and distributes them domestically. Id. ¶¶ 11-14. All sales and marketing decisions respecting MLI's ImageDeck sales are made from MLI's headquarters in Carson, California and all of MLI's accounting books and business records are located in Carson. Id. Hit 15,16.

MLI is the parent corporation of MIDDI, which is an Oregon corporation with its principal place of business in Oregon, where MIDSDI maintains all of its business records and accounting books. MIDSDI also has a secondary place of business in California. Opening Br. Exh. A, ¶¶ 3, 11 ("Ouyang Affidavit"). However, MIDSDI does not own or lease any property in Virginia, maintain any bank accounts in Virginia, or have any employees or agents in Virginia. Id. ¶¶ 5, 6. At no time has MIDSDI used, sold, offered to sell, induced others to sell, or distributed the ImageDeck in Virginia or anywhere else in the United States. Id. ¶ 9. MIDDI does sell microprocessor development tools in Virginia through an independent sales representative based in Newark, New Jersey, who visits Virginia to sell MIDSDI products approximately twice each year. Id. ¶ 8. The volume of MIDDI sales in Virginia over the last three years have been: $0.00 in 2002; $10,183 in 2001, representing 0.7% of MIDSDI's total revenue; and $50,928 in 2000, representing 2.1% of MIDSDI's total revenue. Id. ¶ 10. Thus, these sales represent an insignificant percentage of MIDSDI's total revenue. In any event, these sales provide little connection between the forum and the claim here because these sales relate to technologies distinct from the patent and the accused product.

MEI, a Delaware corporation with its principal place of business in Ohio, is not a part of the Microtek corporate family. MEI's subsidiary, MCSC, owns and operates a retail store in Fairfax, Virginia where Francis Koh purchased one Image-Deck scanner. Opening Br. Exh. B, 115 ("Koehler Affidavit"); Fourth Amended Complaint Exh. B. Although the record does not reflect whether MCSC carries on any business activity in California, MEI directly owns and operates two retail stores in California, each of which has sold ImageDeck scanners. MEI and its subsidiaries have collectively sold a total of approximately 40 ImageDeck scanners in the past three years, eight of which were sold in Virginia Id. ¶ 7, 8. Thus, although 20% of the total sales of the allegedly infringing product occurred in Virginia, that relatively large percentage is the consequence of the de minimis ImageDeck sales overall, and is not reflective of any significant Virginia based sales volume or revenue.

On December 6, 2002, three of the Defendants, MLI, MIDSDI and MEI (collectively, the "Movants"), filed a Motion To Dismiss And To Transfer Venue, requesting transfer of this action from the Eastern District of Virginia to the Central District of California, pursuant to 28 U.S.C. § 1404, and dismissal of this action against MIDSDI for lack of personal jurisdiction, pursuant to Fed.R.Civ.P. 12(b)(2). MCSC did not join in that motion because it was not made a party to this action until the Kohs moved for leave to file their Fourth Amended Complaint on January 14, 2003, which motion was granted on January 30, 2003.²

The motions to dismiss and to transfer venue have been fully briefed and, at the request of the parties, the Court dispenses with oral argument. In addition to addressing the motions to dismiss and transfer venue, it is also necessary to determine whether, in the interests of justice, severance and transfer of the remaining claims is an appropriate disposition. See Siemens Aktiengesellschaft v. Sonotone Corp., 370 F.Supp. 970, 974 (N.D.Ill.1973) ("The claims of infringement against unrelated defendants involving different acts should be tried against each defendant separately").

DISCUSSION

A. Transfer Under 28 U.S.C. § 1404(a)

[1] The controlling statute, 28 U.S.C. § 1404(a), provides that: "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." Thus, a decision whether to transfer an action to another district is committed to the district court's sound discretion, Southern Ry. Co. v. Madden, 235 F.2d 198, 201 (4th Cir.1956), cert, denied, 352 U.S. 953, 77 S.Ct. 328, 1 L.Ed.2d 244 (1956), and, in considering whether to transfer venue, a district court must make two inquiries: (1) whether the claims might have been brought in the transferee forum, and (2) whether the interest of justice and convenience of the parties and witnesses justify transfer to that forum. In this action, the resolution of these two inquiries warrants transfer to the Central District of California of all claims against all defendants except MCSC.

1. Might An Action Against MEI, MCSC And The Microtek Entities Have Been Brought In The Central District Of California?

In order to demonstrate that an action might have been brought in a proposed transferee district, a movant must establish that both venue and jurisdiction with respect to each defendant is proper in the transferee district. L.G. Elecs. Inc. v. Advance Creative Computer Corp., 131 F.Supp.2d 804, 812 (E.D.Va.2001). The venue provision for patent infringement actions states, in relevant part, "[a]ny civil action for patent infringement may be brought 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) (2003). The definition of "residence" is found in § 1391, which provides, in relevant part, "[f]or purposes of venue ... a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced." 28 U.S.C. § 1391(c) (2003). "Therefore, if a corporation `resides' in a district within the meaning of § 1391(c), venue is proper in that district within the meaning of § 1400(b)" and "the tests for venue and personal jurisdiction are interchangeable for corporations." L.G. Elecs., 131 F.Supp.2d at 809-10.

As a preliminary matter, the Kohs have not contested that venue and jurisdiction are proper in the Central District of California as to MEI and each of the Microtek Defendants and, as earlier indicated, MEI and the Microtek entities each carry on substantial business activity in that district. MLI is incorporated in California, has its principal place of business in California, and has admitted to engaging in the allegedly infringing activities in California. MIDSDI has contested...