With apologies to Garrison Keillor, it’s been a quiet summer in the Central District of California, my home town. While the Eastern District of Texas has been stirring things up with its reading of the Supreme Court’s eBay v. MercExchange case in z4 Technologies, Inc. v. Microsoft Corp., the Central District has published few patent decisions of note.
One C.D. Cal. case, Broadcast Data Retrieval Corp. v. Sirius Satellite Radio, Inc., Case No. CV 06-1190 JFW (SSx), 2006 U.S. Dist. LEXIS 37641 (C.D. Cal. June 6, 2006), offers some pointers to plaintiffs seeking to forum shop, and defendants seeking a convenience transfer of venue. Broadcast Data is a patent infringement case filed by patent owner Coupon Radio and exclusive licensee Broadcast Data Retrieval Corp. ("BDRC"), a corporation formed by the well-known (some would say notorious) Acacia Research Corporation and Acacia Global Acquisition Corporation. Defendant Sirius had previously filed a declaratory judgment action against the Acacia entities in the Southern District of New York regarding the same patent at issue in Broadcast Data, but the New York court had dismissed the case for lack of subject matter jurisdiction, finding no actual case or controversy. About one week after the dismissal, Acacia incorporated BDRC, and three weeks later, BDRC sued Sirius in the Central District of California. Sirius moved to transfer the case to the Southern District of New York under 28 U.S.C. § 1404(a).
Judge John F. Walter agreed with Sirius that the case should be transferred to New York. Noting that "[t]he convenience of the witnesses is often the most important factor considered by the Court when deciding a motion to transfer under Section 1404(a)," the court found that all relevant witnesses were located in New York, including the inventor of the patent at issue, the lawyer who prosecuted the patent before the U.S. Patent and Trademark Office, and the witnesses expected to testify about the design, function, and operation of the allegedly infringing products. Id. at *7-*8. Although "courts afford the plaintiffs’ choice of forum substantial weight in a Section 1404(a) analysis," this factor was trumped by the New York location of the witnesses, the fact that BDRC had engaged in little activity would give the Central District of California a significant connection to the case, and the fact that the allegedly infringing products were designed and developed in New York. Neither the fact that BDRC had its principal place of business in the Central District, nor the fact that Sirius sells and transmits satellite radio in the Central District , sufficed to keep the case in California. The Central District simply had "no particular interest in the subject matter of this action." Id. at *10.
The court did not overlook Acacia’s conduct in forming BDRC one week after getting the S.D.N.Y. case dismissed: "BDRC filed this action based on the same facts and issues as the SDNY Action within a month of Acacia representing to [the S.D.N.Y.] that there was no ‘actual controversy.’" Id. Calling Acacia’s actions "nothing more than an elaborate scheme to forum shop," id. at *10-*11, Judge Walter transferred the case to the S.D.N.Y.
Although not an especially significant decision in the grand scheme of things, the Broadcast Data case offers some take-aways to parties in cases where venue is at issue. First, a patentee cannot assume that it will get its choice of forum just because the alleged infringer conducts business in the district where the patentee has its principal place of business. Second, a court might very well consider a party’s past litigation conduct (and even the past litigation conduct of a party’s parent company) in deciding the propriety of venue in a certain district. Arguably, Acacia would have done better to wait longer between the dismissal of the S.D.N.Y. action and the filing of the C.D. Cal. action, although the Broadcast Data opinion does not make clear whether this would have been a viable option. In short, a patentee is not necessarily free to file an affirmative suit for patent infringement in its home district after the alleged infringer’s declaratory judgment action is dismissed as an anticipatory suit in another district.