Data Scape Limited v. Box, Inc.

Western District of Texas, txwd-6:2019-cv-00025

Response in Opposition to Motion, filed by Data Scape Limited, re [27] Opposed MOTION to Change Venue to the Northern District of California filed by Defendant Box, Inc.

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5 UNITED STATES DISTRICT COURT IN THE WESTERN DISTRICT OF TEXAS WACO DIVISION DATA SCAPE LIMITED, C.A. No. 6:19-cv-00025-ADA Plaintiff, v. JURY TRIAL DEMANDED BOX, INC., Defendant. PLAINTIFF DATA SCAPE LIMITED'S OPPOSITION TO DEFENDANT BOX, INC.'S MOTION TO TRANSFER VENUE TO THE NORTHERN DISTRICT OF CALIFORNIA 5 Table of Contents I. INTRODUCTION .......................................................................................1 II. FACTUAL BACKGROUND ......................................................................2 III. LEGAL STANDARD ..................................................................................3 IV. ARGUMENT ...............................................................................................3 A. The Private Interest Factors Weigh Against Transfer ..........................3 i. On balance, witnesses with relevant and material knowledge are more accessible in this District than in the Northern District of California ................................................................3 ii. The accessibility of documents in this District is similar to the accessibility of documents in the Northern District of California ..................................................................................6 iii. The availability of compulsory process to secure attendance of witnesses is neutral ...................................................................6 iv. The cost of attendance for willing witnesses is either indeterminate and or weighs against transfer ...........................7 v. Practical Concerns Weigh Against Transfer ............................9 B. The Public Interest Factors Weigh Against Transfer ...........................9 i. Administrative difficulties from court congestion weigh against transfer .........................................................................9 ii. Localized interests are neutral in the transfer analysis ...........10 iii. Other public interest factors are neutral ..................................10 V. CONCLUSION ..........................................................................................10 i 5 Table of Authorities Cases Auto-Dril, Inc. v. Pason Sys. USA Corp., No. 6:15-CV-00093, 2015 WL 12780779 (W.D. Tex. June 29, 2015) .................. 7 B/E Aerospace, Inc. v. Zodiac Aerospace, No. 216CV01417JRGRSP, 2018 WL 7140299 (E.D. Tex. Nov. 30, 2018)........... 7 Casey on Behalf of RVNB Holdings, Inc. Employee Stock Ownership Plan v. Reliance Tr. Co., No. 4:18-CV-00424, 2018 WL 7138386 (E.D. Tex. Dec. 12, 2018) ..................... 7 Cf. Sentry Select Ins. Co. v. McCoy Corp., 980 F. Supp. 2d 1072 (W.D. Wis. 2013) ................................................................ 4 Healthpoint, Ltd. v. Derma Scis., Inc., 939 F. Supp. 2d 680 (W.D. Tex. 2013)................................................................... 7 In re Volkswagen of Am., Inc., 545 F.3d 304 (5th Cir. 2008) .............................................................................. 1, 3 Kroy IP Holdings, LLC v. Starbucks Corp., Inc., No. 2:13-CV-936-JRG, 2014 WL 5343168 (E.D. Tex. Sept. 30, 2014) ................ 4 Texas Data Co., LLC v. Target Brands, Inc., 771 F. Supp. 2d 630 (E.D. Tex. 2011) .................................................................... 3 Uniloc USA Inc. v. Box, Inc., No. 1:17-CV-754-LY, 2018 WL 2729202 (W.D. Tex. June 6, 2018).................... 9 United States v. Patel, No. 4:18CR127, 2018 WL 6274034 (E.D. Tex. Nov. 14, 2018) ............................ 6 ii 5 I. INTRODUCTION As the party seeking transfer, Box, Inc. ("Box")—a Delaware corporation—carries a heavy burden of demonstrating that the factors articulated by the Fifth Circuit in In re Volkswagen of Am., Inc., 545 F.3d 304, 314 (5th Cir. 2008) ("Volkswagen II") weigh in favor of transfer such that the Northern District of California would be "clearly more convenient" than the venue chosen by the plaintiff, Data Scape Limited ("Data Scape"). Box has not and cannot meet this burden, as the relevant factors either weight against transfer or are neutral at best. Although Data Scape is not a Texas company, its choice of forum in this District is nonetheless entitled to substantial deference because Data Scape selected this forum for legitimate reasons. Box infringes Data Scape's patents through its activities in this District, where it maintains an office of 200 employees, a portion of which are responsible for the (1) product strategy; (2) global marketing operations; (3) systems architecture; (4) software API development and support; (5) enterprise sales; and (5) database engineering of the accused Box products. Moreover, Box is a large, multi-national corporation that provides infringing services all over the world, including in this District. With respect to the potential sources of evidence, Box fails to specifically identify any Box employee, document, or source code that it could not reasonably produce if Data Scape's claims proceeded in this District. And although Box identifies a number of its former employees as potential third-party witnesses, none of those witnesses appears to be essential (or even important) to the case such that their presence would be required at trial. Moreover, as set forth below, Data Scape identified numerous Box employees located in 1 5 this District who are likely to have relevant knowledge of the accused data synchronization features and relevant Box products. Transferring this case from Data Scape's chosen venue to Box's home forum would serve only to shift the inconvenience of litigation from Box to Data Scape. Because Box fails to meet its burden to demonstrate that the Northern District of California would be a "clearly more convenient venue" for Data Scape's claims, the motion to transfer should be denied. II. FACTUAL BACKGROUND Data Scape is an Irish company. Its sole U.S. employee, Gerald Padian, resides in New York. Declaration of Gerald Padian ("Padian Decl.") ¶ 2. Data Scape asserts that Box's products and services infringe certain patents that it owns by assignment. Box is a Delaware corporation with its principal place of business in California. There is no dispute that Box's accused instrumentalities are available world-wide and are sold and used in this District. Data Scape filed the complaint against Box in the Waco division on January 25, 2019. There are three other suits pending in this District involving claims of infringement of at least some of the same patents: (1) Data Scape Limited v. Dropbox, Inc., 6:19-cv- 00023-ADA; (2) Data Scape Limited v. Dell Technologies, Inc., 6:19-cv-00129-ADA; and (3) Data Scape Limited v. Verizon Communications, Inc., 6:19-cv-00174-ADA. The defendants in 6:19-cv-00129-ADA, Dell Technologies, Inc. and EMC Corporation, moved to transfer its case to the Austin division of this District on May 1, 2019. The defendant in 6:19-cv-00023-ADA, Dropbox, Inc., filed a motion to transfer to the Northern District of California on April 24, 2019. The remaining case, 6:19-cv-00174, involving Verizon 2 5 Communications, Inc., Cellco Partnership, and Verizon Connect, is presently stayed pending a related action against certain of the defendants filed by Data Scape in the International Trade Commission. III. LEGAL STANDARD To prevail on a motion to transfer under §1404(a), there is "a significant burden on the movant to show good cause for the transfer." Volkswagen II, 545 F.3d at 314 fn. 10; Texas Data Co., LLC v. Target Brands, Inc., 771 F. Supp. 2d 630, 638 (E.D. Tex. 2011) ("[T]he Court, in accordance with the Fifth Circuit, recognizes the significance of the burden and does not take it lightly"). The movant "must satisfy the statutory requirements and clearly demonstrate that a transfer is '[f]or the convenience of parties and witnesses, in the interest of justice.'" Volkswagen II, 545 F.3d at 315. When the "transferee venue is not clearly more convenient than the venue chosen by the plaintiff, the plaintiff's choice should be respected." Id. at 314. To satisfy this significant burden, the movants must show that the Northern District of California is a "clearly more convenient" forum than this District. Id. The determination of whether the movant met its significant burden involves consideration of the Volkswagen II private and public interest factors. IV. ARGUMENT A. The Private Interest Factors Weigh Against Transfer i. On balance, witnesses with relevant and material knowledge are more accessible in this District than in the Northern District of California Box's arguments regarding the sources of proof are based on incomplete characterizations and omissions about its operations in Texas. To begin, Box identifies seven of its senior employees—including multiple Vice Presidents and Directors, as well 3 5 as Box's Chief Accounting Officer—as potential witnesses who are purported to be knowledgeable about the engineering, sales, and marketing of the accused products. 1 See Dkt. 27-1, at ¶¶ 8-10. Box's name dropping of senior managers and officers, whose California location is hardly surprisingly (given the location of Box's headquarters there), obscures that their testimony will likely be of little significance for trial. Indeed, their testimony is unlikely to outweigh that of Box's mid-level and line employees responsible for the executing engineering, sales, and marketing functions on a daily basis and who, as shown below, reside in this District. Cf. Sentry Select Ins. Co. v. McCoy Corp., 980 F. Supp. 2d 1072, 1078 (W.D. Wis. 2013) (denying motion to transfer to Texas, and faulting movants for failing to explain why potential witnesses who "witnessed the aftermath of the accident" were "more important than the witnesses who actually saw the accident occur"). Box also contends that nine other former Box employees have technical knowledge of the accused products, but fails to explain why the testimony of those individuals is unique or particularly important. In other words, Box "failed to indicate why the testimony of its former employees would not be duplicative of testimony provided by current employees who presumably understand the operation and design" of Box's products. Kroy IP Holdings, LLC v. Starbucks Corp., Inc., No. 2:13-CV-936-JRG, 2014 WL 5343168, at *3 (E.D. Tex. Sept. 30, 2014). Unsurprisingly, Box downplays the importance of its presence in this District and its relevance to the accused instrumentalities. But Data Scape has identified multiple current and former Box employees who are likely to have relevant and material knowledge 1Box references "seven named individuals" as possible party witnesses and cites the declaration of Joely Urton, but the cited portion of the declaration identifies only three Box witnesses. Compare Dkt. 27, at 13, with Dkt. 27-1, at ¶¶ 8–10. 4 5 for this case. For example, listed below are seven Box employees located in this District likely to possess relevant, direct, and personal knowledge about the development, operation, sales, and marketing of the accused products: Name Role Location Relevant Knowledge Adam Senior Product Austin, Design, development, and Whaley Strategist Texas operation of the accused products Glen Global Head of Austin, Sales and marketing of the Shillinglaw Marketing Texas accused products Operations Jason Pan Associate Software Austin, Design, development, and Engineer Texas operation of the accused products, including the use of the Box API in data synchronization functions Matt Behn Box Technical Austin, Design, development, and Support Engineer- Texas operation of the accused products, Platform API including the use of the Box API in data synchronization functions Phillip Staff Site Austin, design, development, and Moore Reliability Engineer Texas operation of the system architecture supporting the accused products Tyler Staff Database Austin, Design, development, and Mitchell Engineer Texas operation of cloud databases used by the accused products Kyle Croft Solutions Architect Austin, Sales, marketing, and customer Texas demand for the accused products See Declaration of Paul A. Kroeger Decl. ("Kroeger Decl.") ¶¶ 2-8 (attaching and describing relevant LinkedIn profiles). The technical roles of so many Box employees in this District suggests that the averment, that "[n]one of the design or development of any Box product has ever taken place in Box's Austin office" (Dkt. 27-1, at ¶ 13), is not credible. Box also omitted discussion of other relevant third parties who likely possess information that is relevant to the prosecution and assignment of Data Scape's asserted patents, who are geographically closer to this District than to the Northern District of California. See Kroeger Decl. ¶¶ 9-10. Finally, Data Scape's sole U.S. employee, Gerald 5 5 Padian, resides in New York. Padian Decl. ¶ 2. If called to testify at trial, this District would be more convenient for Mr. Padian than the Northern District of California. Id. ¶ 4. The presence of so many party and non-party witnesses in this District with direct and personal knowledge that is relevant and material to this case suggests not only that Box has failed to meet its burden to demonstrate that the transferee forum is "clearly more convenient" but that this District would be, on balance, more convenient for the deposition and other witness discovery anticipated to occur in this case. ii. The accessibility of documents in this District is similar to the accessibility of documents in the Northern District of California Box's party declarant concedes that all of Box's relevant documentary evidence is in electronic form. See Dkt. 27-1, at ¶ 11 ("technical documentation, computer source code, sales, marketing, financial and other business information" is "located in Box's [electronic] datacenters or on third party servers"). In such case, the physical location of the computers that store those documents is given little weight in the transfer analysis. See United States v. Patel, No. 4:18CR127, 2018 WL 6274034, at *3 (E.D. Tex. Nov. 14, 2018) ("[the location of documents] is of no significant or relevance in cases involving electronically- stored documents that can be easily transferred or made available in any location"). Like with Box's anticipated document discovery, Data Scape's documents will be produced electronically in this case (as like with most modern patent litigation cases). The factor concerning the location of documentary evidence is therefore, at best, neutral. iii. The availability of compulsory process to secure attendance of witnesses is neutral Box's party witnesses are not material to the factor concerning the availability of compulsory process. See Casey on Behalf of RVNB Holdings, Inc. Employee Stock 6 5 Ownership Plan v. Reliance Tr. Co., No. 4:18-CV-00424, 2018 WL 7138386, at *3 (E.D. Tex. Dec. 12, 2018) ("Party witnesses do not require compulsory process for trial and their ability to be subpoenaed is not given much weight in this factor."). Rather, "the focus of this factor is on witnesses for whom compulsory process to attend trial might be necessary." Id. Accordingly, Box is required to "demonstrate and identify unwilling third-party witnesses that would benefit from the transfer." Id. Importantly, "[C]ourts, including courts within this district, have found this factor to be neutral 'where the parties have not alleged that non-party witnesses are unwilling to testify.'" Auto-Dril, Inc. v. Pason Sys. USA Corp., No. 6:15-CV-00093, 2015 WL 12780779, at *3 (W.D. Tex. June 29, 2015); see also Healthpoint, Ltd. v. Derma Scis., Inc., 939 F. Supp. 2d 680, 689 (W.D. Tex. 2013) ("[Movant] has not argued that compulsory process would be necessary to secure [third parties'] presence at trial. In the absence of such claims, this factor is neutral."). Box has given no indication that the non-party witnesses identified in its papers would be unwilling to testify in this litigation. The factor concerning availability of compulsory process is therefore neutral. And if those witnesses are unwilling to testify, they "could be deposed, and the Fifth Circuit views a videotape deposition as an acceptable substitute for live testimony." B/E Aerospace, Inc. v. Zodiac Aerospace, No. 216CV01417JRGRSP, 2018 WL 7140299, at *7 (E.D. Tex. Nov. 30, 2018). iv. The cost of attendance for willing witnesses is either indeterminate and or weighs against transfer Box contends that "all" of its expected witnesses are located in the Northern District of California. Dkt. 27, at 13. In reality, Box has intentionally selected and disclosed specific individuals in the Northern District of California whose cost and convenience it desires the Court to weigh. It omitted from its papers the significant connection of its 7 5 operations in this District to the accused instrumentalities and data synchronization features, as well as the existence of relevant Box employees in this District--including, for example, Box's engineers and Global Head of Marketing Operations. Box also omitted discussion of other relevant third party witness whose testimony could be useful, such as its Texas customers. Given the relatively early stage of this litigation, Data Scape suspects it is too early to accurately determine whether any of the individuals identified in the context of the transfer motion are actually necessary for trial such that their convenience should be considered in the transfer analysis. Though it is true that Box is entitled to choose which of its employees will testify on its behalf in this case, Data Scape is similarly entitled to choose seek discovery and trial testimony from the witnesses it believes are important to the case—including, for instance, Box's employees located in this District, the lawyers involved in the assignment and prosecution of the asserted patents (who, to the extent they are still available, are located on the East Coast), and Data Scape's intended representative who resides in New York. The California location of Box's seven disclosed employees should not obscure or outweigh the convenience of Data Scape's possible Box witnesses located in this District or that of the lawyers involved in the prosecution and assignments of the asserted patents. More to the point, the presence of so many potential witnesses in this District with relevant and material knowledge about the accused products suggests that this factor should weigh against transfer. 8 5 v. Practical Concerns Weigh Against Transfer Box contends that considerations of judicial economy are neutral. Nonetheless, the effect of a transfer would undeniably impose a net burden on the Federal judiciary, insofar as the Northern District of California, in which have been no cases involving Data Scape or the asserted patents, would need to generate a docket and assign a judge with no familiarity with the patents to adjudicate Data Scape's patent infringement claims. Concerns of judicial economy would weigh, even if only minimally, against transfer. B. The Public Interest Factors Weigh Against Transfer i. Administrative difficulties from court congestion weigh against transfer Box contends that "the average time to trial in Northern California is marginally faster than in Western Texas." Dkt. 27, at 14 (citing Uniloc USA Inc. v. Box, Inc., No. 1:17-CV-754-LY, 2018 WL 2729202, at *4 (W.D. Tex. June 6, 2018)). The Uniloc court's conclusion (that "average time to trial" for patent cases is "marginally faster" in the Northern District of California), however, is without any evidentiary support. PwC's 2018 Patent Litigation Study, however, provides that the median time-to-trial for patent cases in the Northern District of California is 2.7 years. 2 This is consistent with the most recent December 2018 National Judicial Caseload Profile statistics released by the Administrative Office of the U.S. Courts, which records the median time to trial for civil cases in the Northern District of California to be at 29.2 months, whereas it is 20.4 months in this 2 See 2018 PwC Patent Litigation Study, at 14 (available at https://www.pwc.com/us/en/forensic-services/publications/assets/2018-pwc-patent- litigation-study.pdf). 9 5 District.3 Furthermore, Data Scape understands that the Court is well-equipped to handle patent litigation cases and expects the Court to issue its patent proceedings order to govern the scheduling and pace of this case. Accordingly, considerations of court congestion appear to weigh substantially against transfer. ii. Localized interests are neutral in the transfer analysis Box represents that its operations in this District "are not central to any of the complaint's allegations." Dkt. 27, at 14-15. But, as set forth above, Box appears to have intentionally omitted any material discussion of its activities in this District, which appear to comprise (at least) a significant component of the sales, marketing, and engineering of the accused products. Even assuming that a significant portion of Box's software development occurred in Redwood City (as Box contends), that would mean that this District and the Northern District of California share similar interests in resolving the issues raised in this case. This factor, therefore, is neutral. iii. Other public interest factors are neutral Data Scape agrees with Box that the other public interest factors, concerning familiarity with governing law and the avoidance of problems associated with conflicts of laws, are neutral in the transfer analysis. V. CONCLUSION As explained above, Box cannot meet its burden of showing that the Northern District of California is clearly more convenient than this District. Box's motion to transfer should be denied. 3 See United States District Courts - National Judicial Caseload Profile (December 2018), at 14, 37 (available at https://www.uscourts.gov/sites/default/files/fcms_na_distprofile1231.2018.pdf). 10 5 Dated: May 10, 2019 Respectfully submitted, /s/ Paul A. Kroeger Marc A. Fenster (CA SBN 181067) Reza Mirzaie (CA SBN 246953) Brian D. Ledahl (CA SBN 186579) Paul A. Kroeger (CA SBN 229074) C. Jay Chung (CA SBN 252794) Philip X. Wang (CA SBN 262239) RUSS AUGUST & KABAT 12424 Wilshire Boulevard, 12th Floor Los Angeles, CA 90025 (310) 826-7474 mfenster@raklaw.com rmirzaie@raklaw.com bledahl@raklaw.com pkroeger@raklaw.com jchung@raklaw.com pwang@raklaw.com Robert M. O'Boyle CLARK HILL LLP 720 Brazos Street, Suite 700 Austin, Texas 78701 Email: bob.oboyle@clarkhillstrasburger.com Telephone: (512) 499-3644 Facsimile: (512) 536-5707 Attorneys for Plaintiff Data Scape Limited 11 5 CERTIFICATE OF SERVICE The undersigned certifies that on May 10, 2019, all counsel of record who are deemed to have consented to electronic service are being served with a copy of this document via the Court's CM/ECF system pursuant to Local Rule CV-5(b)(1). /s/ Paul A. Kroeger 12