Delaware IP Law Blog

Today, Judge Andrews issued a memorandum opinion finding that the Court could not exercise personal jurisdiction over seven of eight defendants. Serverside Group Limited, et al. v. CPI Card Group – Minnesota Inc., et al., C.A. No. 11-559-RGA (D. Del. Feb. 17, 2012). The plaintiffs in the case were an English company and a New York corporation, neither of which had business operations in Delaware. The first group of defendants was comprised of two Iowa corporations with principal places of business in Iowa and no operations in Delaware. The second group was comprised of six defendants, only one of which was a Delaware corporation and none of which had business operations in Delaware. The plaintiffs alleged that the Court should exercise personal jurisdiction over all eight defendants under Delaware’s long-arm statute, based on their allegation that each defendant “made, used, sold, and/or offered for sale infringing technology in Delaware.” The Court was not persuaded by the plaintiffs’ “boilerplate” jurisdictional allegations, and emphasized that despite attaching to their brief the results of a seemingly exhaustive scouring of the Internet for evidence that the defendants had sold or offered to sell infringing products in Delaware, no such evidence appeared to exist. In reaching this determination, the Court noted that “offers to sell” are defined by traditional contract analysis, and the plaintiffs’ suggestion that “advertisements that are in trade magazines that circulate in Delaware . . . [that] invite a call ‘for more information’ are not an offer to sell under a contract analysis.” Id. at 6 n.3. Similarly, “a webinar put on by one of the defendants that will discuss the advantages of [purportedly infringing technology] is not an ‘offer to sell.’” Id. at 6 n.3. Accordingly, the Court found that seven of the eight defendants were not subject to Delaware’s long-arm jurisdiction. Id. at 8. Finally, finding that the plaintiffs’ request for jurisdictional discovery was made without any citation of authority supporting their request, and mostly sought information the Court viewed as irrelevant to the long-arm jurisdiction analysis, Judge Andrews denied the plaintiffs' request for jurisdictional discovery, explaining that the case would be transferred to the Northern District of Iowa under 28 U.S.C. § 1406(a) (as to the Iowa defendants), and indicating that further factual support would be needed to justify transferring the case against the remaining defendants to the District of Colorado to ensure that venue was one where the case "might have been brought."

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The District of Delaware has produced another opinion in the recent line of cases considering motions to transfer venue, this time denying a motion to transfer to the Eastern District of Texas in Microsoft Corp. v. Geotag Inc., C.A. No. 11-175-RGA (Jan. 13, 2012). Much like Judge Andrew’s recent decision in Wacoh Co. v. Kionix Inc., the opinion distinguishes recent Federal Circuit precedent and relies on the Third Circuit’s Jumara public and private interest factors. The case involves a complaint for declaratory judgment of noninfringement and invalidity filed by Microsoft and Google against Geotag, Inc. Geotag, although a defendant in this suit, is a plaintiff against more than 450 companies in the Eastern District of Texas, alleging infringement of the same patent against all of them. Microsoft and Google filed a complaint in the District of Delaware seeking declaratory judgment regarding that patent, and Geotag moved for transfer to the venue where its infringement actions are currently pending.

Considering the Third Circuit’s private and public interests framework for analyzing motions to transfer, Judge Andrews stated: “[Plaintiff’s forum preference] supports the plaintiffs’ position that the case should not be transferred. [Defendant’s forum preference] supports the defendant’s request to transfer the case. The other interests do not add much to the balancing, as they are either inapplicable to this case, possibly applicable but not well-developed in the record, or applicable but pretty evenly-balanced as to which side they support.” Id. at 3-4. Judge Andrews’ opinion expressly considers and weighs each factor, explaining why each does or does not add to the balance. Of particular importance, he notes, “[p]laintiffs have chosen Delaware as a forum. That choice weighs strongly in the plaintiffs’ favor, although not as strongly as it would if the plaintiffs had their principal places of business (or, indeed, any place of business) in Delaware.” Id. at 4. By contrast, the defendant’s “lack of a substantial connection to the Eastern District is taken into account in the balancing of the other factors, and, in particular, by not according Geotag’s preference for the Eastern District the same weight as it might otherwise deserve.” Id. at 12.

Judge Andrews also addressed the Federal Circuit’s recent decision in In re Link_A_Media Devices Corp., 662 F.3d 1221, 1224 (Fed. Cir. 2011). In considering the convenience of witnesses, books, and records, Judges Andrews stated: “While there is a paragraph in In re Link_A_Media Devices Corp.[], about ‘the convenience of the witnesses and the location of the books and records,’ I do not understand the Federal Circuit to have altered the Third Circuit’s focus on the issue being not so much where the witnesses and evidence are, but whether they can be produced in court.” Id. at 6 n.2. Furthermore, he noted that the Geotag case was different from the Link_A_Media case in that there was a stronger connection to Delaware and a weaker connection to the transferee venue. “I have considered In re Link_A_Media Devices[], but I do not think it is particularly helpful in assessing the transfer request in this case, as its facts were very different. I would characterize that case generally as standing for the proposition that when the parties, all the witnesses, and all the evidence are in one distant jurisdiction, and the only connection to Delaware is that it is the state of incorporation of the defendant, and there is no other reason for the suit to be in Delaware, the suit must be transferred, upon timely request, to the distant jurisdiction. While in the present case there is a marginally greater connection to Delaware, as one of the plaintiffs is also a Delaware corporation, of much greater significance is that with the exception of Geotag’s CEO, the witnesses have no connection to the proposed transferee district, and most of the evidence is not going to be there either.” Id. at 12-13.

Judge Andrews ultimately found that “the ‘interest of justice’ supports management and resolution of all the Geotag cases by one judge, but it does not really provide an answer to the question whether it should be a Texas or a Delaware judge. Under Third Circuit law, considerable deference is given to the plaintiffs’ choice of forum. Since there is little beyond the defendant’s choice of forum- which is less compelling than usual -to suggest transfer should be ordered, I do not think the defendant has shown that the balance of convenience tips significantly enough in the defendant’s favor so that transfer should be ordered. I will therefore deny the defendant’s motion to transfer.” Id. at 13.

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In Wacoh Co. v. Kionix Inc., C.A. No. 10-617-RGA, Judge Andrews recently granted defendants’ motions to transfer after distinguishing the Fed. Cir.’s decision in In re Link_A_Media Devices Corp. and concluding that the “balance of convenience” factors nonetheless tipped in defendants’ favor. Id. at 13. In Wacoh, the plaintiff, a Japanese corporation with its principal place of business in Japan, brought suit in Delaware against three defendants for patent infringement. Id. at 2. The three defendants were all Delaware corporations with principal places of business in New York (Ithaca), California (Pasadena) and California (Sunnyvale), respectively. Id. at 4-5. After filing answers to the complaint denying plaintiff’s allegations of infringement, the three defendants each filed motions to transfer. Id. at 2. Kionix, the defendant with its principal place of business in New York, filed a motion to sever and transfer the case against it to the Northern District of New York. Id. at 2. The other two defendants, VTI and Invensense, filed a joint motion to transfer the cases against them to the Northern District of California. Id. at 2. Following full briefing and oral argument, the Court granted each of the defendants’ motions. Id. at 4, 13. In applying the Third Circuit’s Jumara factors for analyzing § 1404(a) motions to transfer and considering the Fed. Cir.’s recent decision in Link_A_Media, the Court distinguished the facts of this case from those presented in Link_A_Media. Id. at 13. Specifically, the Court noted that, unlike the plaintiff here, the “Link_A_Media plaintiff had substantial connections to the transferee district (that is, its affiliate and its employees, including the inventors, were located there).” Id. at 13. The Court further noted that the conclusion it would draw from Link_A_Media is that “when a plaintiff sues a defendant in District A and the plaintiff, the defendant, and all potential witnesses and evidence are located in District B, and there is no other valid reason for denying a request for transfer to District B, it is an abuse of discretion not to grant the transfer.” Id. at 12-13. Notwithstanding the distinction between the two cases, the Court nonetheless granted defendants’ motions to transfer on the grounds, at least in part, that the plaintiff in this case was a “non-Delaware corporation with no connection of any kind to Delaware.” Id. at 13. Overall, the Court found that in this case the “balance of convenience tips enough in the defendants’ favor.” Id. at 13. The Court’s decision and analysis in this case is particularly noteworthy because it provides some insight as to how the holding in Link_A_Media might be construed and applied going forward.

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Judge Andrews recently issued a memorandum opinion in the case of WebXChange Inc. v. Dell Inc., et al., Civ. No. 08-132-RGA (D. Del. Dec. 15, 2011). WebXChange sued Dell and Federal Express for patent infringement, but has had a history of “irreconcilable-and total-breakdown[s] in the client-lawyer relationship.” Id. at 2-4. The defendants sought dismissal of the case, and on November 9, the court issued an order to show cause why the action should not be dismissed with prejudice. Id. at 4. When the plaintiff, without counsel, requested an extension of time to show cause, Judge Andrews noted that the plaintiff “has been in default of its obligations to prosecute the case since July 6, 2011.” Id. The plaintiff was “personally responsible for its lack of counsel . . . prejudice to the defendants arises from the delay . . . [and the] plaintiff’s conduct has been willful.” Id. at 6-7. Nevertheless, the court found that the plaintiff’s claim could be meritorious. Id. at 8. Therefore, although the facts “mostly suggest[ed] that dismissal [was] appropriate,” the court it instead took an “intermediate step . . . namely the imposition of a monetary sanction.” Id. at 8. Because “‘nothing has happened in the case’ since February 2011,” Judge Andrews concluded that it would “not make sense . . . that if new counsel do enter an appearance on January 17, 2012, the case should just go on as if the last six-to-eleven months had not happened.” Id. at 7. The plaintiff was therefore given until January 17, 2012 to both find new counsel and post $100,000 in escrow with the Clerk of the Court for defense costs.

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