Ixi Mobile (R&D) Ltd. et al v. Apple, Inc.

Northern District of California, cand-4:2015-cv-03755

REPLY MEMORANDUM OF LAW in Support re: 27 MOTION to Transfer Case Apple Inc.'s Notice of Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a). Document filed by Apple, Inc.

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5 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK Case No. 14-cv-7954-RJS-DF IXI Mobile (R&D) Ltd. and IXI IP, LLC, Plaintiffs, - against - APPLE INC., Defendant. DEFENDANT APPLE INC.'S REPLY IN SUPPORT OF ITS MOTION TO TRANSFER 5 TABLE OF CONTENTS I. INTRODUCTION .........................................................................................................1 II. ARGUMENT .................................................................................................................2 A. The Northern District Of California Is The Most Appropriate Locus Of Operative Facts For This Case ................................................................................2 B. IXI's Choice Of Forum Is Due No Deference .........................................................4 C. IXI Fails To Dispute That The Weight Of Non-Party Witnesses In The Northern District Of California Calls For Transfer .................................................6 D. Transfer Is Not Precluded By Interests Of Judicial Economy.................................8 III. CONCLUSION ............................................................................................................10 i 5 TABLE OF AUTHORITIES Federal Cases Atl. Recording Corp. v. Project Playlist, Inc., 603 F. Supp. 2d 690 (S.D.N.Y. 2009) ..................................................................................... 2, 3 Bristol–Myers Squibb Co. v. Andrx Pharms., LLC, No. 03-cv-2503 (SHS), 2003 WL 22888804 (S.D.N.Y. Dec. 5, 2003) ...................................... 2 Droplets, Inc. v. Amazon.com, Inc., No. 2:11-cv-392, 2012 WL 3578605 (E.D. Tex. June 27, 2012) ................................................ 9 Emblaze Ltd. v. Apple Inc., No. 10-cv-5713 (PKC), 2011 WL 724275 (S.D.N.Y. Feb. 25, 2011) ................................ 5, 6, 8 Fuji Photo Film Co. v. Lexar Media, Inc., 415 F. Supp. 2d 370 (S.D.N.Y. 2006) ......................................................................................... 7 Herbert Ltd. P'ship v. Elec. Arts Inc., 325 F. Supp. 2d 282 (S.D.N.Y. 2004) ......................................................................................... 8 In re Genentech, Inc., 566 F.3d 1338 (Fed. Cir. 2009) ................................................................................................... 8 In re Hoffmann-La Roche Inc., 587 F.3d 1333 (Fed. Cir. 2009) ................................................................................................... 3 In re Verizon Bus. Network Servs. Inc., 635 F.3d 559 (Fed. Cir. 2011). ................................................................................................ 8, 9 In re Zimmer Holdings, Inc., 609 F.3d 1378 (Fed. Cir. 2010) ................................................................................................... 9 Int'l Sec. Exch., LLC v. Chicago Bd. Options Exch. Inc., No. 06-cv-13445 (RMB) (THK), 2007 WL 1541087 (S.D.N.Y. May 24, 2007) ....................... 7 Iragorri v. United Techs. Corp., 274 F.3d 65 (2d Cir. 2001) .......................................................................................................... 6 Kwatra v. MCI, Inc., No. 96-cv-2491 (DC), 1996 WL 694444 (S.D.N.Y. Dec. 4, 1996) ............................................ 4 Medisim Ltd. v. BestMed LLC, No. 10-cv-2463 (SAS), 2010 WL 2697073 (S.D.N.Y. July 7, 2010) ......................................... 3 Morrow v. Microsoft Corp., 499 F.3d 1332 (Fed. Cir. 2007) ................................................................................................... 4 ii 5 Serconet, Ltd. v. Netgear, Inc., No. 06-cv-5026 (JSR), 2006 WL 2109462 (S.D.N.Y. July 27, 2006) ........................................ 6 Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22 (1988) ...................................................................................................................... 1 Tomita Techs. v. Nintendo Co., 818 F. Supp. 2d 770 (S.D.N.Y. 2011) ......................................................................................... 5 TouchTunes Music Corp. v. Rowe Int'l Corp., 676 F. Supp. 2d 169 (S.D.N.Y. 2009) ......................................................................................... 3 Wechsler v. Macke Int'l Trade, Inc., No. 99-cv-5725 (AGS), 1999 WL 1261251 (S.D.N.Y. Dec. 27, 1999) ...................................... 2 Federal Statutes 28 U.S.C. § 1404(a) ........................................................................................................................ 1 Rules Northern District of California Civil Local Rule 3-2(h) ................................................................. 5 iii 5 I. INTRODUCTION IXI's Opposition ("Opp.") confirms that the Court should transfer this action to the Northern District of California.1 IXI agrees that its claims could have been brought in the Northern District of California and that the accused Apple products were designed, developed, and marketed at Apple's Cupertino headquarters there. Similarly, IXI concedes that there is not a single shred of evidence regarding the design and development of these products in New York. Finally, IXI fails to refute that the majority of third-party witnesses are located in the Northern District of California and beyond the reach of this District's subpoena power. IXI's Opposition also fails to acknowledge the critical fact that the Supreme Court has long held that a transfer analysis requires an "individualized, case-by-case consideration of convenience and fairness." Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988) (internal citation omitted). IXI's action against Apple has no meaningful connection at all to New York, versus an overwhelming connection to the Northern District of California, where the accused products were designed and developed. Moreover, neither the Samsung nor the BlackBerry action bears any connection to this District.2 Despite IXI's attempt to muddy the record with misleading and inaccurate facts, nothing changes the fact that this District has no real connection to this case. Beyond the presence of a single individual working for a company created days before filing suit and solely for that purpose, even IXI has no ties to this forum. The Northern District of California is clearly the more convenient forum for this action. 1 Apple uses "IXI" to refer to the New York-based IXI IP, the owner of the patents. As explained below, IXI Mobile, the Israeli entity, lacks standing to be a party and therefore is irrelevant to this analysis. 2 Apple refers the Court to the Motions to Transfer Venue Pursuant to 28 U.S.C. § 1404(a) submitted by BlackBerry and Samsung in their respective actions, as well as their reply briefs filed concurrently herewith. 1 5 II. ARGUMENT A. The Northern District Of California Is The Most Appropriate Locus Of Operative Facts For This Case It is undisputed that the Apple products were designed, developed, and marketed at Apple's headquarters in Cupertino, and that all witnesses and documents Apple expects to present at trial are also located there. Mot. at 7-9. To diffuse the overwhelming facts tying this case to the Northern District of California, IXI attempts to show that where there is more than one locus of operative facts, transfer is improper. But IXI fails to address the fact that the Southern District of New York is not, under any measure, a locus of operative facts. IXI urges that the correct test is to look to where the accused products are manufactured. Opp. at 11-13. This is wrong: where the products are manufactured is entirely irrelevant to the transfer analysis in a patent case, and in any event, none of IXI's patents have anything to do with methods of manufacture. See Mot. at 11-12. IXI's own authorities show how wrong its proposed "place of manufacture" test is. For example, in Atl. Recording Corp. v. Project Playlist, Inc., 603 F. Supp. 2d 690, 697 (S.D.N.Y. 2009), which itself did not involve patent claims, the court relied on Bristol–Myers Squibb Co. v. Andrx Pharms., LLC, No. 03-cv- 2503 (SHS), 2003 WL 22888804, at *3 (S.D.N.Y. Dec. 5, 2003), which did, for the principle that "one locus of operative facts is the place where the allegedly infringing product was designed and developed" (emphasis added). Atlantic Recording says nothing about the location where the product was "produced," contrary to IXI's citation. Opp. at 11. The fact that copyright and trademark cases like Atlantic Recording may find a locus in a forum where the works are sold is irrelevant in the patent context. See Wechsler v. Macke Int'l Trade, Inc., No. 99-cv-5725 (AGS), 1999 WL 1261251, at *5 (S.D.N.Y. Dec. 27, 1999) (explaining that when assessing the locus of operative facts, "sales alone are insufficient to establish a material connection to the forum in a patent infringement action where, as here, defendants' products are sold in many states") 2 5 (internal citation omitted). IXI's Medism case also contradicts IXI, holding that "the transferee forum is the locus of operative facts if the design, development, and some of the marketing of the product allegedly infringing plaintiff's patent occurred in the transferee forum." Medisim Ltd. v. BestMed LLC, No. 10-cv-2463 (SAS), 2010 WL 2697073, at *3 (S.D.N.Y. July 7, 2010) (finding China to be a locus of operative facts only because development took place there). While the Medism court acknowledged that the locus could be the place where "acts of infringement, dilution, or unfair competition occurred," this was relevant only to the unfair competition and false advertising claims in the case—not the patent infringement analysis. See id. IXI's cited authorities also offer no support for its argument that transfer would never be appropriate where there are multiple loci of operative facts. For example, in the TouchTunes case, Opp. at 11, the court found this factor neutral only where significant events also took place in the original forum. See TouchTunes Music Corp. v. Rowe Int'l Corp., 676 F. Supp. 2d 169, 175 (S.D.N.Y. 2009); see also Atl. Recording Corp., 603 F. Supp. 2d at 697 (same). Here, the majority of operative facts took place in the Northern District of California and none occurred in New York. See Mot. at 12. IXI's assertion that Apple's retail locations should be considered also contradicts the law. See In re Hoffmann-La Roche Inc., 587 F.3d 1333, 1338 (Fed. Cir. 2009) (explaining that the sale of an accused product offered nationwide does not give rise to a substantial interest in any single venue). It is undisputed that the non-retail Apple locations in New York have nothing to do with the accused products, and no witnesses or documents from these locations will be relevant. Mot. at 4. In sum, where not a single relevant event occurred in this District, the fact that there are multiple loci of operative facts cannot defeat Apple's transfer request where New York itself is not an independent locus. See Kwatra v. MCI, Inc., No. 96-cv-2491 3 5 (DC), 1996 WL 694444, at *3 (S.D.N.Y. Dec. 4, 1996). B. IXI's Choice Of Forum Is Due No Deference In an attempt to deflect the clear weight of all the factors favoring California over New York, IXI argues that its choice of forum is due "substantial deference." Opp. at 2. Central to that argument is the presence of IXI Mobile, the Israeli entity. IXI repeatedly cites the involvement of IXI Mobile as its "trusted business partner" and just as often complains about the burden of traveling from Israel to California. IXI thereby justifies its having chosen New York. However, IXI Mobile's interests are irrelevant to the forum choice because it lacks standing to be a plaintiff. Based on a document disclosed yesterday, it is clear that IXI cannot show either that IXI Mobile retains any exclusionary interest in the asserted patents, or that IXI Mobile has retained any substantial rights in the patents. See Declaration of Gregory Chuebon ("Chuebon Decl.") at ¶¶ 8-9.3 Without exclusionary rights or substantially all rights in the patents, IXI Mobile has no standing to sue Apple. See Morrow v. Microsoft Corp., 499 F.3d 1332, 1340-41 (Fed. Cir. 2007) (explaining that plaintiffs "that hold less than all substantial rights to the patent and lack exclusionary rights" do not meet the "injury in fact" requirement for standing).4 Lacking standing, the concerns, choices, and preferences of IXI Mobile are irrelevant to the transfer analysis. 3 IXI declined a request to allow Apple to submit to the Court this two-page document unless it was filed under seal. Should the Court wish to see the document, Apple will work with IXI to secure its agreement that the document does not, as Apple believes, need sealing. IXI has also said there are additional documents relating to the respective rights of IXI IP and IXI Mobile beyond what it has provided, but has not yet made them available to Apple. 4 Given its lack of standing, Apple has asked that IXI Mobile voluntarily dismiss itself from this lawsuit. 4 5 Even if the Court wanted to consider the views of IXI Mobile as part of the analysis, the purported "trusted business partnership" with IXI is non-existent. IXI's bare assertions are supported by no facts whatsoever. IXI fails to tell the Court about any of the history of the supposed "trusted business partner" relationship, other than parroting those three words (plucked from the Tomita case) in a pair of cookie-cutter declarations. See Tomita Techs. v. Nintendo Co., 818 F. Supp. 2d 770, 773 (S.D.N.Y. 2011). And this dearth of factual support is hardly unexpected: it would be hard to have much history with an entity that did not exist until days before filing suit. IXI also fails to provide any detail about its secretive other "partners" who supposedly are located in New York. This total failure of proof is in marked contrast to the situation in IXI's principal authority, the Tomita case. See Tomita, 818 F. Supp. 2d at 773. That case involved a foreign entity that filed suit in New York because its "friend and business partner for over twenty years," who had also co-founded the foreign company, was located there. See id. IXI also alleges that it would be inconvenient for IXI Mobile's Israeli witnesses to travel from Tel Aviv to San Francisco. Opp. at 9. As a threshold matter, any witness that works for IXI Mobile is a third-party, given its lack of standing. And as a third-party, the relevant inquiry is the overall burden to all material third parties, an analysis that clearly favors California. See Mot. at 12. But even taking its assertions at face value, IXI cannot legitimately complain about the convenience of traveling to the Northern District of California when IXI Mobile's predecessor was based in Redwood City, California, and its employees routinely travel to the Northern District of California to conduct business. See Mot. at 3, 5. Moreover, courts in this district have agreed that traveling to San Francisco rather than New York is a "not very substantial" burden for an Israeli witness. Emblaze Ltd. v. Apple Inc., No. 10-cv-5713 (PKC), 5 5 2011 WL 724275, at *2 (S.D.N.Y. Feb. 25, 2011).5 IXI separately claims that "the location of preferred counsel" is a factor that renders this District a legitimate choice. Opp. at 8-9. But IXI again misstates the law. The location of IXI's chosen counsel is irrelevant. Even the Iragorri case, on which IXI relies for this point, mentions only the consideration of "the availability of appropriate legal assistance" in the transferee forum—not the location of a plaintiff's preferred counsel. Iragorri v. United Techs. Corp., 274 F.3d 65, 72 (2d Cir. 2001). IXI has failed to make any showing that there is no "appropriate legal assistance" available in the Northern District of California; nor could it. In sum, all IXI is left with is the fact that it was created a few days before filing suit, and that it has a single employee who may testify about patent ownership. Those facts are not due deference, and certainly not any substantial deference. See Serconet, Ltd. v. Netgear, Inc., No. 06-cv-5026 (JSR), 2006 WL 2109462, at *2 (S.D.N.Y. July 27, 2006) (plaintiff's choice of forum given little weight where connection is slight). C. IXI Fails To Dispute That The Weight Of Non-Party Witnesses In The Northern District Of California Calls For Transfer IXI also admits that at least half of the inventors of the patents-in-suit, who will be non-party witnesses and are otherwise not subject to being compelled to attend trial in New York, are located within the Northern District of California. Opp. at 17. As a result, they will only be subject to the subpoena power of a trial court in the Northern District of California. See Mot. at 12. The availability of compulsory process is the hallmark of the analysis of non-party witnesses. See Emblaze, 2011 WL 724275, at *3 (location of nonparty witnesses residing within the subpoena power of the transferee forum weighed in favor of transfer, even in the absence of a showing that any were unwilling). 5 IXI's claim that Apple will "seek to have the case heard in the district court location in San Jose, California" ignores the fact that Apple cannot chose the division to which the case is assigned. See Northern District of California Civil Local Rule 3-2(h). 6 5 IXI stakes its position on the claim that the non-party inventors in California are currently "willing to travel to New York for trial." Opp. at 18. This is irrelevant. Their current willingness does not change the fact that these witnesses cannot be compelled to attend trial in New York. The declarations IXI has submitted from the inventors state only that they "intend" to appear at trial. Opp. at 18. These expressions of current intent from witnesses working in cahoots with IXI provide no comfort, much less any certainty, that these same witnesses will have the same intent when trial ultimately occurs, or when it is Apple doing the asking. The only thing that can provide the comfort and certainty that they will testify at trial is compulsory process, a power that this District does not have and that the Northern District of California does. Finally, IXI claims it may call an unnamed third-party witness from Verizon Communications, Inc. ("Verizon") at trial, and that this witness could conceivably be based in New York. Opp. at 19. This is irrelevant in light of the weight of non-party witnesses in California, and it is contrived: IXI made no mention of Verizon or any other wireless carriers as potentially relevant witnesses in its Rule 26 Initial Disclosures. See Mot. at 12. Even if legitimate, the potential presence of this witness should be given minimal weight where IXI concedes that this witness, if ever called, would offer only "evidence of the amount consumers paid to access the infringing features as evidence of consumer demand and damages." Opp. at 18-19. In assessing the presence and ability to compel non-party witnesses to attend trial, a court considers "the materiality, nature, and quality of each witness." Int'l Sec. Exch., LLC v. Chicago Bd. Options Exch. Inc., No. 06-cv-13445 (RMB) (THK), 2007 WL 1541087, at *3 (S.D.N.Y. May 24, 2007) (internal citation omitted). In a patent infringement suit, courts give "particular consideration to individuals who can testify about the technology of the allegedly infringing inventions." Id.; see also Fuji Photo Film Co. v. Lexar Media, Inc., 415 F. Supp. 2d 370, 373 (S.D.N.Y. 2006) ("The key issues in a patent infringement suit involve the technology of the 7 5 inventions claimed in the patents-in-suit"); Mot. at 7. As a result, the ability to compel non-party witnesses such as the inventors and engineers from Google and Broadcom should be given additional weight.6 In contrast, it is unlikely that Verizon's contributions, if any, would even require live testimony at trial. Information concerning "the amount consumers paid to access the infringing features" can be objectively verified, discussed by expert witnesses, or stipulated to by the parties. Opp. at 18; see Herbert Ltd. P'ship v. Elec. Arts Inc., 325 F. Supp. 2d 282, 286-87 (S.D.N.Y. 2004) (finding testimony unnecessary when issues often established by objective evidence); Emblaze, 2011 WL 724275, at *3 (downplaying a witness's knowledge of content supply because there was no suggestion that the witness's knowledge was unique). The potential presence of a single, unnamed Verizon witness in this District cannot defeat the otherwise overwhelming evidence that transfer is appropriate. D. Transfer Is Not Precluded By Interests Of Judicial Economy IXI's arguments regarding judicial efficiency ignore that the transfer analysis must be done on a case-by-case basis for each individual defendant. See In re Genentech, Inc., 566 F.3d 1338, 1346 (Fed. Cir. 2009).7 If IXI's assertions were accepted, its choice of forum for its first-filed suit would automatically and for all time anchor every other suit on the same patents to this district. To the contrary, courts widely accept that to "interpret § 1404(a) to hold that any prior suit involving the same patent can override a compelling showing of transfer would be inconsistent with the policies underlying § 1404(a)." In re Verizon Bus. Network Servs. Inc., 635 F.3d 559, 562 (Fed. Cir. 2011). 6 Apple refers the Court to the accompanying motions and replies from Samsung and BlackBerry for information regarding the Google and Broadcom witnesses. 7 For the same reason, the Court should disregard IXI's citation to old Apple briefs from different cases, in different districts, over different patents, and involving different witnesses. 8 5 IXI does not dispute that the Northern District of California is clearly the more convenient forum for its claim against Apple. See supra at 2. Faced with this fact, IXI ignores Federal Circuit authority holding that the preservation of judicial economy cannot preclude transfer where the proposed transferee forum is clearly more convenient. For example, in In re Zimmer Holdings, Inc., 609 F.3d 1378, 1382 (Fed. Cir. 2010), the court overturned a district court order denying transfer, despite the fact that transfer would create parallel proceedings involving overlapping patents in different courts. Similarly, in In re Verizon, 635 F.3d at 561-62, the trial court's denial of transfer in light of prior suits involving the same patents was found "patently erroneous" where the movant otherwise made a "compelling" showing that transfer was warranted, including the fact that every witness would be required to travel to trial if the case remained in the original forum. District courts around the country have followed this guidance. For example, in the Droplets, Inc. v. Amazon.com, Inc. case, the court ordered transfer where "the considerations of judicial economy are outweighed by the location of sources of proof, the availability of compulsory process, the convenience of witnesses, and the strong local interest of the Northern District of California in this suit." No. 2:11-cv-392, 2012 WL 3578605, at *7-8 (E.D. Tex. June 27, 2012). Under the current circumstances, however, there is no need to consider separating the cases. The facts here support transferring not only the Apple case, but also those against Samsung and BlackBerry. Neither of the Samsung or BlackBerry actions has a connection to New York that would preclude transfer of those actions with the case against Apple. As set out in the opening motions submitted by Apple, Samsung, and BlackBerry, this reply, and the replies of Samsung and BlackBerry, transfer of all three cases to the Northern District of California is appropriate, where these cases can proceed together. 9 5 Finally, IXI overstates the parties' conduct to date. Nothing done to date would in any way dictate that the case must remain in New York.8 IXI has failed to show how any effort expended or work completed by the parties at this time will be wasted or unusable should the case be transferred. Given that IXI has produced only two documents totaling six pages, and no other documents have been produced in discovery, IXI certainly overplays the "progress" that has occurred in the case to date. Similarly, the Court has not yet developed an expertise in the patents or technology at the heart of this suit, such that interests of efficiency would be harmed by a transfer.9 III. CONCLUSION For the reasons set forth above and in Apple's Motion, Apple respectfully requests that the Court grant Apple's motion to transfer this action to the Northern District of California. Dated: February 20, 2015 Respectfully submitted, By /s/ Patrick E. King PATRICK E. KING HARRISON J. FRAHN IV hfrahn@stblaw.com PATRICK E. KING pking@stblaw.com SIMPSON THACHER & BARTLETT LLP 2475 Hanover Street Palo Alto, California 94304 Telephone: (650) 251-5000 8 IXI contends that all "defendants have filed answers and counterclaims," Opp. at. 20, but Apple did not assert counterclaims against IXI. See Apple's Answer, Dkt. No. 18. 9 IXI suggests that Apple's Motion was motivated by the fact that it did not succeed in securing its preferred schedule. Opp. at 5. To the contrary, Apple notified the Court in its November 7, 2014 letter that Apple's "proposed schedule assumes that all defendants remain in this District; Apple is evaluating whether it should seek transfer, given this case's lack of connection to this District." Dkt. No. 13. Apple repeated its intention to file a motion in the parties' December 8, 2014 joint filing. See Dkt. No. 21. 10 5 GREGORY T. CHUEBON gchuebon@stblaw.com SIMPSON THACHER & BARTLETT LLP 425 Lexington Avenue New York, New York 10017 Telephone: (212) 455-2000 Attorneys for Defendant Apple Inc. 11