Echologics, LLC v. Orbis Intelligent Sys.

ORDER DENYING DEFENDANT'S MOTION TO TRANSFER VENUE (ECF No. 18)

Hon. Cynthia Bashant United States District Judge

In this patent infringement action, Plaintiffs Echologics, LLC; Mueller International, LLC; and Mueller Canada, Ltd. (collectively “Plaintiffs”) allege that Defendant Orbis Intelligent Systems, Inc. (“Orbis”) has infringed one of its Echologics' patents. (ECF No. 1.) Defendant Orbis moves pursuant to 28 U.S.C. § 1404(a) to transfer this action to the District Court of Delaware (ECF No. 18), which Plaintiffs oppose (ECF No. 19). The motion is suitable for determination on the papers submitted and without oral argument. See Fed. R. Civ. P. 78(b); Civ. L.R. 7.1(d)(1). For the reasons herein, the Court DENIES Defendant's motion to transfer.

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I. BACKGROUND

“Plaintiffs Echologics, LLC, Mueller International, and Mueller Canada are indirect subsidiaries of Mueller Water Products, Inc., a public company with subsidiaries that are manufacturers of products and services used in the transmission, distribution, and measurement of water.” (Compl. ¶ 10.) “Echologics provides technologies, products, and services that can non-invasively detect underground leaks and assess the condition of water mains.” (Id. ¶ 11.) Echologics holds patents covering related water monitoring technologies, including the patent at issue here: U.S. Patent No. 10, 881, 888 (“the ‘888 patent”). (Id. ¶¶ 11-12, 14.) Technology covered in the ‘888 patent includes a “nozzle cap” that when attached to a fire hydrant, turns it into a “‘smart' fire hydrant that can detect leaks early” and notify utility companies efficiently. (Id. ¶ 13.) Within the nozzle cap, an attached “antenna cover . . . is used to transmit a signal carrying data gathered by one or more sensors . . . .” (Id.)

Defendant Orbis is a private company incorporated in Delaware and headquartered in San Diego. (Compl. ¶ 6; Def.'s Mem. P & A ISO Mot. to Transfer (“Def.'s Mem.”), ECF No. 18-1 at 16:7.) Orbis has developed and patented “innovative sensors that can be used to detect leaks and defects in water pipes and pipe walls.” (Def.'s Mem., at 2:11-12.) Its product, the Prodigy SmartCap, was designed with “its sensors built into a cap that screws onto fire hydrants[.]” (Id. at 2:14-15.) Orbis sent its “first deliveries of the SmartCap product . . . to customers in June 2020.” (Id. at 2:15-16.)

Prior to this suit, Plaintiffs filed a claim in October 2019 against “Orbis in the District of Delaware for patent infringement of U.S. Patent Nos. 10, 305, 178 and 10, 386, 257.” (Id. at 2: 18-20.) United States District Court Judge Richard G. Andrews presided over the case. The patents at dispute in Delaware covered similar technology for products with a “nozzle cap configured to mount on a fire hydrant.” (Id. at 4:7-8.) Orbis attaches transcripts from the Delaware litigation: the first transcript is from a discovery dispute videoconference on July 29, 2020, and the second transcript is from a joint conference discussing the terms of a potential settlement on February 25, 2021. (See Ex. 1 to Geyer

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Decl. in Supp. (“Disc. Conf.”), ECF No. 18-3 ¶ 2; Ex. 2 to Geyer Decl. in Supp. (“Settlement Conf.”) ECF No. 18-4 ¶ 3.) In the Delaware litigation, Judge Andrews facilitated conversations between the parties to reach a resolution without involving himself with the substantive merits of the case. (See Disc. Conf, at 3:13-21; Settlement Conf., at 11-12.) A point of contention relevant to this motion arose during a hearing with Judge Andrews. (Compare Def.'s Mem., at 9:24-26, 10:1-5; with Opp'n, ECF No. 19 at 10:6-16.) Plaintiffs acknowledged that it would be helpful to inspect Orbis' alleged infringing product not only to determine if the product infringed on their patents in that suit but also to see if other patents not alleged in the complaint might have been violated. (Disc. Conf., at 15: 6-11.) Judge Andrews advised Plaintiffs that using discovery to investigate whether other future claims might be filed was an “abuse of discovery.” (Id. at 15:17-21.)

Later, the parties agreed to dismiss the action, and Judge Andrews facilitated discussions between the parties regarding the terms of dismissal. (See Settlement Conf.) Orbis' counsel expressed concerns about Judge Andrew's involvement in the settlement discussions. (Id. at 11:25, 12:1-7.) Judge Andrews responded: “if either side thinks some time after today that I've involved myself too much in talking about your positions or essentially trying to settle this case . . . just write me a letter, and I'll get it reassigned to a different judge if you're going to go forward and litigate.” (Id. at 18:16-21.) After a year and a half of litigation, the parties agreed to dismiss the case with prejudice on June 21, 2021. (Id. at 3:7, 24-25.) The following day, Echologics filed this action in the Southern District of California against Orbis for allegedly infringing Echologics' ‘888 patent. (Compl. ¶ 1.)

II. LEGAL STANDARD

“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). Section 1404 “place[s] discretion on the district court to adjudicate motions for transfer according to an individualized, case-by-case consideration of convenience and fairness.” Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988).

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District courts employ a two-step framework to resolve a transfer motion. A court first asks whether the plaintiff could have originally brought the action in the proposed transferee forum. Nat'l Prods. v. Wireless Accessory Solutions, LLC, No. C15-2024JLR, 2018 WL 1709494, at *2 (W.D. Wash. Apr. 9, 2018) (citing Hoffman v. Blaski, 363 U.S. 335, 344 (1960)); Ironworks Patents LLC v. Samsung Elecs. Co., No. 17-cv-01958-HSG, 2017 WL 3007066, at *1 (N.D. Cal. July 14, 2017). If the action could have been brought there, then the court considers the propriety of transfer. Peregrine Semiconductor Corp. v. RF Micro Devices, Inc., No. 12-cv-911-IEG-WMC, 2012 WL 2068728, at *2 (S.D. Cal. June 8, 2012).

III. ANALYSIS

Defendant moves to transfer this case to the District of Delaware pursuant to 28 U.S.C. § 1404(a) on the grounds that litigating this case there would be in the interest of justice to avoid forum shopping and preserve judicial economy. (Mot. to Transfer, at 1- 2.) The Court rejects both arguments.

A. The Action Could Have Been Brought in the District of Delaware

No party affirmatively disputes that this action could have been brought in the District of Delaware. However, because a defendant cannot waive Section 1404's “might have been brought” requirement, the Court must address it here. See In re Bozic, 888 F.3d 1048, 1053 (9th Cir. 2018). “The phrase where an action ‘could have been brought' is interpreted to mean that the proposed transferee court would have subject matter jurisdiction, proper venue, and personal jurisdiction.” Peregrine Semiconductor Corp., 2012 WL 2068728, at *2 (citing A.J. Indus., Inc. v. U.S. Dist. Ct. for Central Dist. of Cal., 503 F.2d 384, 386-88 (9th Cir. 1974) and Shapiro v. Bonanza Hotel Co., 185 F.2d 777, 779-81 (9th Cir.1950)); see also Amazon.com v. Cendant Corp., 404 F.Supp.2d 1256, 1259 (W.D. Wash. 2005) (concluding there was “no question” action could have been brought in proposed transferee forum by analyzing venue as well as subject matter and personal jurisdiction in the transferee forum). The Court addresses each of these considerations.

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1. Subject Matter Jurisdiction

The District of Delaware would have subject matter jurisdiction over Plaintiffs' federal patent infringement claims. See 28 U.S.C. § 1338(a); AstraZeneca Pharms. LP v. Apotex Corp., 669 F.3d 1370, 1377 (Fed. Cir. 2012) (“The district courts have original jurisdiction over any civil action arising under any Act of Congress relating to patents.”). Thus, this consideration is satisfied.

2. Venue

A district court's broad discretion to transfer a case is subject to the prohibition that an action cannot be transferred to a district in which venue would have been improper if the action were originally filed there. See Finjan, Inc. v. Sophos Inc., No. 14-cv-01197-WHO, 2014 WL 2854490, at *2 (N.D. Cal. June 20, 2014).

The federal patent venue provision establishes that “[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” 28 U.S.C. § 1400(b). For the purposes of Section 1400(b), a domestic corporation “resides” only in the state where it is incorporated. TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514, 1517 (2017); Columbia Sportswear N. Am., Inc. v. Seirus Innovative Accessories, Inc., 265 F.Supp.3d 1196, 1200 (D. Or. 2017) (“TC Heartland reaffirmed that for venue purposes in patent cases, a domestic corporation ‘resides' only in its state of incorporation.”). Orbis is incorporated in Delaware, (Compl. ¶ 6), and thus, Section 1400(b)'s first clause is satisfied to establish venue in the District of Delaware. Therefore, venue would have been proper in the District of Delaware.

3. Personal Jurisdiction

Neither party disputes that the District of Delaware could exercise personal jurisdiction. “The question of personal jurisdiction[] goes to the court's power to exercise control over the parties.” Leroy v. Great W. United Corp., 443 U.S. 173, 180 (1979). “Rule 4 is the starting point for any personal jurisdiction analysis in federal court.” Synthes (U.S.A.) v. G.M. Dos Reis Jr. Ind. Com de Equip. Medico, 563 F.3d 1285, 1293 (Fed. Cir. 2009).

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