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Expert Microsystems, Inc. v. University of Chicago

August 5, 2009

EXPERT MICROSYSTEMS, INC., PLAINTIFF,
v.
UNIVERSITY OF CHICAGO AND ARCH DEVELOPMENT CORPORATION, DEFENDANTS.



MEMORANDUM AND ORDER RE: MOTION TO TRANSFER VENUE OR IN THE ALTERNATIVE TO DISMISS FOR LACK OF PERSONAL JURISDICTION

Expert Microsystems Inc. ("EM") brought this action against the University of Chicago ("UC") and ARCH Development Corporation ("ARCH") for correction of inventorship, 35 U.S.C. § 256, and ownership of United States Patent Numbers 5,987,399 ("'399 patent") and 6,202,038 ("'038 patent"). Defendants now move to transfer venue pursuant to 28 U.S.C. § 1404(a) or, in the alternative, to dismiss for lack of personal jurisdiction as to ARCH pursuant to Federal Rule of Civil Procedure 12(b)(2).

I. Factual and Procedural Background

Plaintiff is a California corporation, currently comprised of four employees, that provides systems for monitoring assets and equipment as well as related consulting services. (First Am. Compl. ("FAC") ¶ 1; Bickford Decl. ¶ 8.) Its principal place of business is Orangevale, California, where its president, Randall L. Bickford, works. (FAC ¶ 1; Bickford Decl. ¶ 2.) Plaintiff is the successor entity to ExperTech--a sole proprietorship of Bickford--which was part of a joint venture created to obtain prime contracts with NASA.*fn1 (FAC ¶ 25.) In 1996, NASA awarded the joint venture a prime contract for a project entitled "Dynamics Sensor Data Validation for Reusable Launch Vehicle Propulsion" that involved UC as a subcontractor. (Id. ¶¶ 34, 41.) The relationship between ExperTech/EM and UC continued for a number of years and involved multiple cooperative research and development agreements and a contract by which plaintiff acquired rights to software products and embodiments of the '399 and '038 patents ("203 contract"). (See id. ¶ 47.)

From 1995 through 1996, as part of the process of preparing the proposal for the NASA contract, Bickford allegedly disclosed proprietary information to UC employees Stephan W. Wegerich and Kenneth C. Gross concerning his concept for a method of performing a regression sequential probability ratio testing ("regression SPRT") procedure for a pair of sensors with signals that are linearly or non-linearly related. (Id. ¶¶ 32-33, 35, 44.) One such disclosure occurred in January 1996 when Wegerich and Gross traveled to Roseville, California, to meet with Bickford at ExperTech's offices. (Id. ¶ 32.) Plaintiff alleges that at least part of the embodiments of Bickford's regression SPRT procedure are claimed in one or both of the '399 and '038 patents, which are directed to a method and apparatus for monitoring a source of data for determining an operating state of a working system. (Id. ¶¶ 23, 36, 45.)

The '399 and '038 patents--issued on November 16, 1999, and March 13, 2001, respectively--list only Wegerich, Gross, and another person, Kristin K. Jarman, as inventors without naming Bickford. (Id. ¶¶ 16, 19, 46.) The listed inventors assigned ownership of the '399 and '038 patents to defendant ARCH, an affiliate of UC tasked with commercializing intellectual property produced by UC scientists. (Id. ¶¶ 17, 20; Thomas Decl. ¶ 2.) Plaintiff filed the instant action on March 2, 2009, alleging that Bickford invented or co-invented at least part of the embodiments of the '399 and '038 patents. (See FAC ¶¶ 24, 55.)

This action is not the first to arise out of the parties' exchange of information during their business relationship under the NASA contract. In August 2007, plaintiff filed an action in Illinois state court in which it alleges that UC breached two cooperative research and development agreements and misappropriated trade secrets. (Fagel Decl. Ex. B at 2-3.) Then, on December 5, 2008, plaintiff filed a complaint in a California state court alleging breach of the 203 contract and fraud against UC, ARCH, and related entities. (Id. Ex. C at 7:20, 26:5-7, 38:18-20.) Finally, on December 22, 2008, plaintiff filed a separate action in Illinois state court against UC and ARCH for misappropriation of trade secrets. (Id. Ex. D at 35.) On February 17, 2009, defendants proposed that these three actions be consolidated before an Illinois state court. (Id. ¶ 4.) Although plaintiff rejected the proposal to consolidate the three actions, on June 11, 2009, an Illinois state court transferred the two Illinois actions to the same judge for consideration of consolidation. (Defs.' Reply Ex. B at 5.)

Defendants now move to transfer venue to the Northern District of Illinois pursuant to 28 U.S.C. § 1404(a) or, in the alternative, to dismiss defendant ARCH for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2).

II. Discussion

A. Motion to Transfer Venue

"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." 28 U.S.C. § 1404(a).*fn2 Under § 1404(a), a district court "has discretion to adjudicate motions for transfer according to an individualized, case-by-case consideration of convenience and fairness." Jones v. GNC Franchising, Inc., 211 F.3d 495, 498 (9th Cir. 2000) (quoting Stewart Org. v. Ricoh Corp., 487 U.S. 22, 29 (1988)) (internal quotation marks omitted). To undertake this analysis of "convenience" and the "interest of justice," a district court may weigh "multiple factors," including the plaintiff's choice of forum, the contacts relating to the plaintiff's cause of action in the chosen forum, the convenience of the parties and witnesses, and the ease of access to sources of proof.*fn3 Id. at 498-99; see DeFazio v. Hollister Employee Share Ownership Trust, 406 F. Supp. 2d 1085, 1088-89 (E.D. Cal. 2005) (Karlton, J.).

"No single factor is dispositive and a district court has broad discretion to adjudicate motions for transfer on a case-by-case basis." Ctr. for Biological Diversity v. Kempthorne, No. 08-1339, 2008 WL 4543043, at *2 (N.D. Cal. Oct. 10, 2008) (citing Stewart Org. Inc., 487 U.S. at 29; Sparling v. Hoffman Constr. Co., Inc., 964 F.2d 635, 639 (9th Cir. 1988)). Ultimately, the party moving for a transfer of venue under § 1404(a) "bears the burden to show that another forum is more convenient and serves the interest of justice." F.T.C. v. Watson Pharm., Inc., 611 F. Supp. 2d 1081, 1086 (C.D. Cal. 2009) (citing GNC Franchising, 211 F.3d at 499).

1. Plaintiff's Choice of Forum

The plaintiff's choice of forum is ordinarily entitled to great weight. DeFazio, 406 F. Supp. 2d at 1088 (citing Lou v. Belzberg, 834 F.2d 730, 739 (9th Cir. 1987)). When there is an indication that the plaintiff's choice resulted from forum shopping, however, the "plaintiff's choice will be accorded little deference." Williams v. Bowman, 157 F. Supp. 2d 1103, 1106 (N.D. Cal. 2001); see Belzberg, 834 F.2d at 739 (noting that a plaintiff's chosen venue is accorded only minimal deference if the operative facts have not occurred within the forum and the forum has no interest in the parties or subject matter of the litigation). Defendants argue that plaintiff's choice of forum is not entitled to any deference because the filing of concurrent cases in Illinois and California state courts, coupled with plaintiff's refusal to consolidate those actions, demonstrates that the instant action is part of a larger strategy of harassment and forum shopping. (Defs.' P. & A. 15:26-16:4.)

Defendants' argument focuses chiefly on the alleged similarities between the actions pending before the California and Illinois state courts. (Id. at 10:11-11:5.) Contentions regarding the degree of relatedness of those state court actions, however, do not support the argument that plaintiff's choice of forum in the instant action qualifies as forum shopping. Because civil actions "arising under any Act of Congress relating to patents" lie within the exclusive original jurisdiction of federal district courts, 28 U.S.C. ยง 1338(a), the patent law claims in this case simply could not have been asserted in the earlier-filed state court actions, even if those ...


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