Novelpoint Learning LLC v. Leapfrog Enters. Inc.
| Decision Date | 06 December 2010 |
| Docket Number | No. 6:10-cv-229 JDL,6:10-cv-229 JDL |
| Parties | NOVELPOINT LEARNING LLC, Plaintiff, v. LEAPFROG ENTERPRISES, INC., et al, Defendant. |
| Court | U.S. District Court — Eastern District of Texas |
JURY DEMANDED
Before the Court is Defendants' Motion to Transfer Venue to the Northern District of California. (Doc. No. 44). The matter has been fully briefed. (Doc. Nos. 49, 54 & 56). Having considered the parties' arguments, the Court DENIES Defendants' motion.
In this suit, Plaintiff NovelPoint Learning LLC ("NovelPoint") alleges that Defendants LeapFrog Enterprises, Inc. ("LeapFrog"), VTech Holdings Limited, ("VTech Holdings"), and VTech Electronics North America, LLC ("VTech North America")1 (collectively, "Defendants") infringe U.S. Patent No. 6, 330, 427 ("the '427 patent").
On January 6, 2010, NovelPoint2 incorporated as a limited liability company under Texas law, with its principal place of business located in Allen, Texas in the Eastern District of Texas. NovelPoint's Response at 3. NovelPoint's principal place of business is at the residence of one of its co-founders and managing members. Id. One of NovelPoint's other co-founders and managing members lives in Texas, the other resides in Illinois. Id. All of NovelPoint's physical documents are located in its Allen office, including all the inventor's original documents and prototypes. Id. NovelPoint is also securing the original prosecution documents from a location in Illinois, but will eventually house all documents in its Texas office. Id. at 4-5.
Defendants' places of incorporation and principal places of business are scattered. LeapFrog is incorporated in Delaware, with its headquarters in the Northern District of California. Id. at 2. VTech Holdings is a foreign company incorporated in Bermuda with its principal place of business in Hong Kong, and VTech North America is headquartered in Illinois. Id. Despite the fact that VTech North America is headquartered in Illinois, it contends the Northern District of California is more convenient than the Eastern District of Texas. Id. at 1.
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. § 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.
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 case, 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).
Well-established authority makes clear that a transferee court must have jurisdiction over the defendants in the transferred complaint. In re Genentech, 566 F.3d 1338, 1346 (Fed. Cir. 2009) (citing Hoffman v. Blaski, 363 U.S. 335, 343-44 (1960)); Chirife v. St. Jude Medical, Inc., 2009 WL 1684563, at *3-4 (E.D. Tex. June 16, 2009). Therefore, the defendant has the burden to prove both personal jurisdiction and venue in the transferee court. Chirife, 2009 WL 1684563, at *1 (internal citations omitted); Balthasar Online, Inc. v. Network Solutions, LLC, 654 F. Supp. 2d 546, 549 (E.D. Tex. 2009) () (quoting Liaw Su Teng v. Skaarup Shipping Corp., 743 F.2d 1140, 1148 (5th Cir. 1984), overruled on other grounds by In re Air Crash Disaster Near New Orleans, Louisiana, 821 F.2d 1147 (5th Cir. 1987)). The "critical time" when making this threshold inquiry is the time when the lawsuit was filed. Balthasar, 654 F. Supp. 2d at 549 (citing Hoffman, 363 U.S. at 343).
NovelPoint disputes whether the action could have originally been brought in the Northern District of California because Defendants have failed to show that VTech Holdings, a Hong Kong company, is subject to personal jurisdiction in the Northern District of California. NovelPoint's Response at 6. NovelPoint further argues that any consent to personal jurisdiction in the Northern District of California is not determinative to show the lawsuit could have originally been brought in the transferee district. Id.
Defendants, on the other hand, argue that the accused products are sold throughout the United States, and therefore California may assert specific jurisdiction over Defendants. Dfts MTN AT 2. Defendants point to the Declaration of William To to show that the VTech Bugsby product is sold nationally. See id. (citing Ex. BB, Decl. of William To at ¶ 3(Doc. No. 45-28)). William To, however, is the president of VTech North America, and nowhere in his declaration does he state that VTech Holdings sells the Bugsby product, or any other product, within California. (Doc. No. 45-28). Furthermore, VTech Holdings states it "has no offices, facilities, distribution facilities, or employees in the United States." Ex. AA, Decl. of Pang King Fai at ¶ 6(Doc. No. 45-27). Thus, Defendants have not shown that VTech Holdings is subject to personal jurisdiction in the Northern District of California such that this lawsuit could have been originally filed there.
VTech Holdings hopes to create personal jurisdiction in the transferee forum by stating it "will not contest personal jurisdiction or venue in the Northern District of California." Dfts' Mtn AT 7. Such consent, however, is insufficient to conclude this lawsuit could have been filed in the Northern District of California. See U.S. Ethernet Innovation, LLC v. Acer, Inc., 2010 WL 2771842, at *4 (E.D. Tex. July 13, 2010); Chirife, 2009 WL 1684563, at *1 (E.D. Tex. June 16, 2009). "[I]t is immaterial [to the transfer analysis] that the defendant subsequently makes himself subject, by consent, waiver of venue and personal jurisdiction defenses or otherwise, to the jurisdiction of some other forum." Chirife, 2009 WL 1684569, at *1 (quoting Hoffman, 363 U.S. at 344). Because VTech Holdings' consent to personal jurisdiction is immaterial, the Court finds that VTech Holdings has not shown that it has sufficient minimum contacts in California to be subject to personal jurisdiction. Therefore, the lawsuit could not have been originally filed in the Northern District of California. As such, Defendants have not met the threshold inquiry under the § 1404(a) analysis with respect to VTech Holdings, and therefore the case as a whole. Failure to satisfy the threshold question weighs against transfer.3
Turning to a discussion of the private interest factors outlined in Volkswagen I, the Court finds these factors do not favor transfer.
Defendants argue that the bulk of the relevant physical evidence in this case is located in or near the Northern District of California. DFTS' MTN AT 2. Moreover, Defendants contend that NovelPoint's presence in Texas is "a fiction entitled to no weight," and therefore this factor weighs in favor of transfer. Id. at 10.
On the other hand, NovelPoint asserts it is a bona fide citizen of Texas and that its relevant documents, including the inventor's original documents, are located in the Eastern District of Texas. NovelPoint's Response at 9. In addition, NovelPoint argues any weight given to documents located in the Northern District of California is tempered by the volume of documents in VTech North America's possession, which are located in Illinois. Id. at 10. According to NovelPoint, the documents in Illinois are much closer to the Eastern...
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