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Judge Sleet grants motion to transfer declaratory judgment action

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In Constant Contact Inc. v. Umbanet Inc., C.A. No. 12-1467-GMS (D. Del. Mar. 12, 2014), Chief Judge Gregory M. Sleet granted Umbanet Inc.’s (“Umbanet”) motion to transfer Constant Contact Inc.’s (“Constant Contact”) declaratory judgment action to the District of New Jersey. In September 2012, Umbanet filed an action for patent infringement against one of Constant Contact’s customers, Englewood Wine Merchants (“EWM”) in the District of New Jersey, alleging that EWM infringes U.S. Patent Nos. 7,067,730 and 7,444,374 (collectively, the “patents-in-suit”) via its use of Constant Contact’s e-mail marketing service. Id. at 1. In November 2012, Constant Contact filed an action in the District of Delaware seeking, among other things, a declaratory judgment that the patents-in-suit are invalid and that none of Constant Contact’s customers infringe the patents-in-suit by using Constant Contact’s products. Id. at 1.

First, Judge Sleet determined that the declaratory judgment action could have brought in the District of New Jersey, as “[b]oth Constant Contact’s declaratory judgment suit and Umbanet’s suit against EWM in New Jersey arise out of the use by EWM in New Jersey of Constant Contact’s e-mail marketing products.” Id. at 5. Turning to the Jumara private interest factors, Judge Sleet noted that “Constant Contact’s choice of forum is Delaware, where it is incorporated, but Constant Contact’s principal place of business is in Massachusetts.” Id. at 6. Accordingly, Judge Sleet did not grant Constant Contact’s choice of forum as much deference “as that normally shown a plaintiff’s choice of forum.” Id. Judge Sleet found, on the other hand, that Constant Contact’s choice of New Jersey as a venue was legitimate as “New Jersey is where the use of Constant Contact’s products by EWM that gave rise to the instant suit occurred.” Id. Judge Sleet therefore found that the parties’ forum choice “weigh[ed] slightly in favor of transfer.” Id. Considering whether the claim “arose elsewhere,” Judge Sleet explained that “both the declaratory judgment action currently at issue and Umbanet’s suit against EWM in New Jersey arise out of EWM’s use in New Jersey of Constant Contact’s allegedly infringing products.” Id. Accordingly, Judge Sleet found this factor weighed “strongly” in favor of transfer. Id. at 7.

Judge Sleet also found the convenience of the parties weighed in favor of transfer. Id. at 7-8. Specifically, Judge Sleet noted that Constant Contact had its principal place of business in Massachusetts and Umbanet had its principal place of business in New York. Id. at 7. While Constant Contact argued that New York was only a “short train ride” from Delaware, Judge Sleet explained that “New Jersey is a much shorter train ride from New York.” Id. Further, Umbanet was only a “one-employee operation” while Constant Contact had a market capitalization of approximately $473 million. Id. Judge Sleet thus found that Constant Contact can “much more easily bear the cost of leaving Massachusetts to litigate in New Jersey than Umbanet can bear the cost of venturing from New York to litigate in Delaware.” Id. at 7-8. Judge Sleet found the location of books and records, and the convenience of witnesses to be neutral in the Court’s analysis. Id. at 8.

Turning to the public interest factors, Judge Sleet determined that judicial efficiency favored transfer. Id. at 8-9. Specifically, Judge Sleet found that the New Jersey action involves “the same patents, the same technology, the same prior art, and the same accused product.” Id. at 9. Further, as Judge Sleet explained, “full discovery continues and the claim construction process has commenced and is well underway,” and there is therefore “some efficiency to be achieved in allowing that process to continue without the interruption and potential conflict of a parallel proceeding before this court.” Id. Judge Sleet similarly found that New Jersey’s interest in this matter favors transfer. Id. Specifically, “New Jersey has an interest in this matter because the underlying use by EWM of Constant Contact’s alleged infringing product occurred in New Jersey and is currently being litigated in New Jersey.” Id. Delaware’s interest in the instant matter, as Judge Sleet explained, was “more tenuous.” Id.

Considering the Jumara factors a whole, Judge Sleet determined that Umbanet met its burden of demonstrating that “the interests of justice and convenience strongly favor stay.” Id. at 10.

Constant Contact Inc. v. Umbanet Inc., C.A. No. 12-1467-GMS (D. Del. Mar. 12 2014),

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