UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA
November 6, 2007
SONY ELECTRONICS, INC., PLAINTIFF,
MEDIA TECHNOLOGIES, LTD., DEFENDANT.
The opinion of the court was delivered by: Hon. Rudi M. Brewster United States Senior District Judge
ORDER DENYING GUARDIAN DEFENDANT'S MOTION TO DISMISS OR TO TRANSFER [# 74-1 & 74-2]
The Federal Circuit held that these consolidated cases presented an "actual controversy" within the meaning of the Declaratory Judgment Act as interpreted by the Supreme Court in MedImmune, Inc. v. Genentech, Inc., 127 S.Ct. 764 (2007). Sony Elecs., Inc. v. Guardian Media Techs., Ltd., 497 F.3d 1271 (Fed. Cir. 2007). The Federal Circuit remanded for this Court to determine, in its discretion, whether to hear the actions filed by Sony Electronics, Inc., Mitsubishi Digital Electronics America, Inc., Victor Company of Japan, Ltd. ("JVC"), and Matsushita Electric Industrial Co., Ltd. (Thomson, Inc. has re-filed its suit) (hereinafter "Plaintiffs"). Defendant Guardian Media Technologies, Ltd., moves to dismiss or in the alternative to transfer the cases to the Central District of California. Having carefully considered the briefs and the arguments at the November 1, 2007 hearing, the Court denies both motions.
In 2003, Defendant Guardian purchased two patents related to the methods of blocking the viewing of certain television programs. U.S. Patent Nos. 4,930,158 and No. 4,930,160 expire in August 2008. The assignment agreement listed Guardian as having its office in La Jolla. Dowler Decl. Ex. 4. [# 22]
From August 2004 until these suits were filed in September 2005, Guardian pursued licensing agreements with the Plaintiffs, but Plaintiffs contended that the two patents were obvious and rejected Guardian's proposals. See Smith Decl. Ex. O (Guardian reports 26 licenses with other manufacturers). Plaintiffs allege that they do not infringe the two patents, and that they are not valid and not enforceable.
In October 2005, Plaintiffs filed ex parte applications with the Patent and Trademark Office ("PTO") requesting reexamination of the two patents. The PTO found substantial questions of patentability and granted both requests.*fn1
On March 16, 2006, this Court granted Guardian's motion to dismiss for lack of subject matter jurisdiction. Consequently, the Court denied as moot Plaintiffs' motion to stay pending the completion of the reexamination process.
Within two months, Guardian sued several different television manufacturers for patent infringement in the Western District of Wisconsin. Smith Decl. Ex. K (Kenwood Corp.); Id. Exs. M & N (Audiovox, Mustek, and their affiliates). One alleged infringer moved to either stay the action pending the reexamination proceedings, or in the alternative, to transfer the action to the Central District of California for the convenience of the witnesses. Id. Ex. N. Guardian opposed the transfer on the ground that it did not have any contacts with California. Id. Ex. P at 2, 11-12 & n.6; see id. Ex. L ¶ 2 (Guardian states it has no place of business in California). Nonetheless, the Guardian v. Mustek case was transferred to Los Angeles. Id. Exs. N & Q. (Guardian settled its two other Wisconsin patent infringement cases. Id. Exs. K & M). The Central District Court rejected the argument that Guardian's patent infringement case should be stayed pending the reexamination process. Id. Ex. Q (Docket Entry 40). Soon thereafter, Guardian filed another patent infringement case in Los Angeles against other manufacturers (including LG Electronics). Id. Ex. R. Subsequently, the Mustek action settled. Id. Ex. Q (Docket Entries 41 & 43). Answers were filed and some discovery has been exchanged in the LG Electronics case, which remains open in Los Angeles. Some parties in the LG Electronics action moved to stay the proceedings pending the reexamination process, but the Court, consistent with its prior order in the Mustek case, denied that motion. Id. Ex. R (Docket Entry 56); PACER (Docket Entry 62).
Following remand to this Court of the Federal Circuit's decision, Defendant Guardian renewed its motion to dismiss and argues that this Court should decline to exercise jurisdiction over Plaintiffs' declaratory judgment lawsuits. In the alternative, Defendant Guardian asks the Court to transfer these consolidated cases to the Central District, where it now has the previously-mentioned case pending on the same patents.
I. Motion to Dismiss -- Discretion Whether to Decline Jurisdiction
The Declaratory Judgment Act, 28 U.S.C. § 2201, empowers federal courts to issue declarations of rights in actual controversies, but the district court has substantial discretion to decline that jurisdiction when proceeding to the merits "will serve no useful purpose." Wilton v. Seven Falls Co., 515 U.S. 277, 282-88 (1995).
Guardian argues the Court should exercise its discretion to decline jurisdiction because Plaintiffs' actions show they are not in a hurry to litigate the patents. For example, Plaintiffs waited until the end of the 120-day period to serve their complaints and they intend to move to stay these actions. Defendant Guardian also argues that the interests of justice weigh against entertaining the suits because Plaintiffs filed this suit as a "placeholder" until Guardian's patents expire in 2008, were trying to avoid the Eastern District of Texas forum, and are trying to undermine Guardian's licensing efforts with others.
The Court denies the motion because it finds no just reason to decline jurisdiction. Elecs. for Imaging, Inc. v. Coyle, 394 F.3d 1341, 1345 (Fed. Cir. 2005). Now that Guardian has sued several other manufacturers for patent infringement, the need for a judicial resolution of the validity of its' patents is apparent. Genentech v. Eli Lilly & Co., 998 F.2d 931, 937 (Fed. Cir. 1993) ("When there is an actual controversy and a declaratory judgment would settle the legal relations in dispute and afford relief from uncertainty or insecurity, in the usual circumstance the declaratory judgment is not subject to dismissal."). The Federal Circuit determined that the record did not indicate that Plaintiffs' actions revealed a "nefarious motive." Sony, 497 F.3d at 1289. There was nothing improper in Plaintiffs' decision to petition the PTO for reexamination and to request a stay of their lawsuits pending the administrative decision. See Ethicon Inc. v. Quigg, 849 F.2d 1422, 1427 (Fed. Cir. 1988) (citing Gould v. Control Laser Corp., 705 F.2d 1340, 1342 (Fed. Cir. 1983) ("One purpose of the reexamination procedure is to eliminate trial of that issue (when the claim is canceled) or to facilitate trial of that issue by providing the district court with its expert view of the PTO (when a claim survives the reexamination proceeding)."). Plaintiffs expect the PTO to issue its final decision within a few months and the Court will hear the merits of their motion to stay on December 10, 2007.
II. Motion to Transfer
Defendant Guardian moves to transfer these consolidated actions to the Central District, which is presently handling the case of Guardian v. LG Electronics. Transfer will prevent duplicative discovery on claim construction, patent validity, and enforceability issues. Guardian argues that the nature of its business is that it does not have contacts in any one place more than any other place, but cites its negotiations with Sony in Los Angeles to argue that venue and personal jurisdiction would be appropriate in the Central District. The Central District resolves cases faster (21 months compared to 33 months).
"For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district where it might have been brought." 28 U.S.C. § 1404(a); Hoffman v. Blaski, 363 U.S. 335, 343-44 (1960). The Court weighs factors such as "the relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; . . . and all other practical problems that make trial of a case easy, expeditious and inexpensive." Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947); accord Piper Aircraft, 454 U.S. 235, 241 n.6 (1981). In addition to these "private interests," the Court considers factors of "public interest," including whether the docket is congested and whether the burden of jury duty is justified by a local interest in the litigation. Gulf Oil, 330 U.S. at 508-09.
The Court denies the motion. Guardian has not made any showing on the Gulf Oil factors of the convenience of the parties or witnesses as between San Diego and Los Angeles. 15 Charles Alan Wright, et al., Federal Practice and Procedure § 3851 (West 2003). By contrast, two Plaintiffs have subsidiary operations in San Diego that relate to the challenged television sets. Marin Decl. ¶ 3 (Matsushita's subsidiary); Mitnick. Decl. ¶¶ 3-4 (JVC's subsidiaries). In sum, Guardian has not met its heavy burden of disrupting the Plaintiffs' choice of forum. Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986); accord Kahn v. GM Corp, 889 F.2d 1078, 1081 (Fed. Cir. 1989). Plaintiffs filed these several suits long before Guardian appeared (over its objection) in the Central District, where the proceedings are in the early stages. The Court is confident that counsel can cooperate to coordinate discovery, such as depositions of expert witnesses, to minimize any duplicative discovery.
Upon due consideration of the parties' memoranda and exhibits, the arguments of counsel, and a review of the record, the Court DENIES Defendant Guardian's Motions to Dismiss or Transfer these consolidated cases.
IT IS SO ORDERED.