Optolum, Inc. v. Cree, Inc.

244 F.Supp.3d 1005

OPTOLUM, INC., Plaintiff,

v.CREE, INC., Defendant.

No. CV–16–03828–PHX–DLR

United States District Court, D. Arizona.

Signed March 21, 2017

Jason Clarence Williams, Keith Toms, Kia L. Freeman, Leah R. McCoy, Mead Misic, Robert Alan Brooks, McCarter & English LLP, Boston, MA, for Plaintiff.

Shane Eric Olafson, Lewis Roca Rothgerber Christie LLP–Phoenix Office, Phoenix, AZ, Blaney Harper, Jones Day, Washington, DC, for Defendant.

ORDER

Douglas L. Rayes, United States District Judge

OptoLum and Cree manufacture and sell LED lights. At issue in this case is technology used inside LED lightbulbs allowing them to have the look and feel of traditional incandescent bulbs while also having energy efficiency, a long useful life, and a relatively low cost. OptoLum claims to be the inventor of this technology and alleges that Cree has misappropriated the reputation to which OptoLum is entitled and infringes on OptuLum's patents. OptoLum filed suit against Cree in November 2016. (Doc. 1.) The amended complaint asserts a false advertising under the Lanham Act, an unjust enrichment claim, and two patent infringement claims. (Doc. 32.)

Before the Court are Cree's motion to transfer and motion to dismiss counts one and two. (Docs. 22, 24.) The motions are fully briefed. (Docs. 31, 35, 41, 42.) For reasons stated below, the motion to transfer is denied and the motion to dismiss is granted.¹

I. The Motion to Transfer

OptoLum is based out of Tempe, Arizona and chose to file suit in this District. Cree contends that the case should be transferred to the Middle District of North Carolina pursuant to the change of venue statute, 28 U.S.C. § 1404, because Cree's facilities and records are in North Carolina, several potential witnesses reside there, and the case has little connection to Arizona. (Doc. 22 at 1–2.) Section 1404(a) provides that a court may transfer an action to any other district where it might have been brought for the "convenience of the parties and witnesses, in the interest of justice[.]"

There is no dispute that this action could have been brought in North Carolina. The Court therefore must determine whether transfer is warranted for the convenience of the parties and witnesses and in the interest of justice. The Court has broad discretion in making this determination "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). In Jones , the Ninth Circuit provided a list of non-exclusive factors to consider: (1) the location where relevant agreements were negotiated and executed, (2) the state most familiar with governing law, (3) the plaintiff's choice of forum, (4) the parties' contacts with the forum, (5) the contacts relating to the plaintiff's cause of action, (6) differences in cost to litigate in each forum, (7) the availability of compulsory process to compel witness attendance, and (8) the ease of access to sources of proof. Id. at 498–99. Cree bears the burden of showing that a transfer is warranted. See Commodity Futures Trading Comm'n v. Savage , 611 F.2d 270, 279 (9th Cir. 1979).

Having carefully considered the relevant factors, the Court finds that Cree has not met its burden. Cree asserts that North Carolina is a more convenient place for it to litigate because its products, documents, and witnesses are located there and this action has only minimal contacts with Arizona. (Doc. 22 at 9–10.) But these are insufficient reasons to transfer the case given that a transfer would merely shift inconvenience from Cree to OptoLum. This Circuit has made clear that a transfer is inappropriate under § 1404(a) if it "would merely shift rather than eliminate the inconvenience." Decker Coal Co. v. Commonwealth Edison Co. , 805 F.2d 834, 843 (9th Cir. 1986).

It undoubtedly would be more burdensome for Cree to litigate in Arizona than in North Carolina, where Cree has its principal place of business. Nevertheless, "with the advances in transportation and telecommunications and the increasing interstate practice of law, any burden is substantially less than in days past." CE Distribution, LLC v. New S ensor Corp. , 380 F.3d 1107, 1112 (9th Cir. 2004). Moreover, given the growth of "electronic communication and document production, discovery costs should be about the same in either forum." Roth v. Adtran, Inc. , No. CV-13-1735-PHX-DGC, 2013 WL 6058294, at *3 (D. Ariz. Nov. 18, 2013). Cree is a multi-million dollar company with employees and offices throughout the world. The burden it might suffer litigating in Arizona is not heavy enough to overcome the "great weight" accorded to OptoLum's choice of forum. Lou v. Belzberg , 834 F.2d 730, 739 (9th Cir. 1987).

The federal Lanham Act and patent law claims asserted by OptoLum would be equally familiar to district courts in both Arizona and North Carolina, but Cree has not shown that the court in North Carolina is more familiar with Arizona law governing the unjust enrichment claim. Furthermore, "Arizona has a strong interest in ensuring that its citizens are compensated for their injuries." Roth , 2013 WL 6058294, at *3 (citing Ochoa v. J.B. Martin & Sons Farms, Inc. , 287 F.3d 1182, 1193 (9th Cir. 2002) ).

Courts do not lightly disturb a plaintiff's choice of forum, particularly where, as here, the forum chosen is the plaintiff's domicile. L.A. Mem'l Coliseum v. NFL , 89 F.R.D. 497, 499–500 (C.D. Cal. 1981). Indeed, when "the home forum has been chosen, it is reasonable to assume that this choice is convenient." Piper Aircraft Co. v. Reyno , 454 U.S. 235, 255–56, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981). The motion to transfer is denied because Cree has not made a "strong showing of inconvenience to warrant upsetting [OptoLum's] choice of forum," Decker Coal , 805 F.2d at 843, or that a change of venue otherwise is in the interest of justice.

II. The Motion to Dismiss

Cree moves to dismiss the Lanham Act and unjust enrichment claims pursuant to Federal Rule of Civil Procedure 12(b)(6). A successful Rule 12(b)(6) motion must show that the complaint lacks a cognizable legal theory or fails to allege facts sufficient to support such a theory. See Balistreri v. Pacifica Police Dep't , 901 F.2d 696, 699 (9th Cir. 1988). A complaint that sets forth a cognizable legal theory will survive a motion to dismiss only where it contains "sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ).

A. The Lanham Act Claim for False Advertising (Count One)

OptoLum purports to assert a false advertising claim under Lanham Act § 43(a), 15 U.S.C. 1125(a), in count one of the amended complaint. (Doc. 32 ¶¶ 192–97.) Section 43(a) creates a federal remedy against a person who, in connection with any goods, uses in commerce a "false designation of origin, false or misleading description of fact, or false or misleading representation of fact" that is likely to cause confusion as to the origin of the goods, 15 U.S.C. § 1125(a)(1)(A), or misrepresents the nature, characteristics, or qualities of the goods, § 1125(a)(1)(B). The elements of a false advertising claim are: (1) a false statement of fact by the defendant in a commercial advertisement about its own or another's product, (2) the statement actually deceived or has the tendency to deceive a substantial segment of its audience, (3) the deception is material, in that it is likely to influence the purchasing decision, (4) the defendant caused its false statement to enter interstate commerce, and (5) the plaintiff has been or is likely to be injured as a result of the false statement. Southland Sod Farms v. Stover Seed Co. , 108 F.3d 1134, 1139 (9th Cir. 1997).

OptoLum alleges that various statements Cree made are false and mislead consumers into believing that Cree, rather than OptoLum, invented the technology inside LED bulbs that allows them to produce omnidirectional light like traditional incandescent bulbs while also having energy efficiency, a long useful life, and a low cost. (Doc. 32 ¶¶ 13–21, 122–25, 171–86.) Specifically, OptoLum alleges that the following statements constitute false advertising under § 43(a):

• The "Cree Filament Tower™ Technology" is "the genius idea inside" the Cree LED bulb (Id. ¶¶ 17, 124);

• Cree "found a way to put the LEDs in the center of the bulb like a traditional light bulb" and "we're making an LED but we are actually inventing all the technology in between" (¶ 174);

• "[O]ne of the technical breakthroughs that enabled Cree to break the $10 threshold is our new Cree Filament Tower™ Technology. The Filament Tower™ is the Cree innovation that lets our LED bulb replicate the look and feel of filament based traditional lights" (¶ 175);

• "[Cree] engineers came up with a very elegant solution to the design issues inherent in LED bulbs. In a compact form, the Filament Tower produced the light dispersion we wanted without problematic heat building" (¶ 176);

• "[I]nventing the LED technology that delivers like an incandescent was hard work, but designing a bulb in a form-factor that consumers trust at a price they can afford was even harder. Designed with Cree LED Filament Tower Technology, the Cree LED bulb represents a breakthrough in LED bulb design and performance" (¶ 177);

• "[Cree] invented the lighting-class LED" (¶ 178); and

• Using in commerce the common law trademarks "Filament Tower™" and "Filament Tower™ Technology" (¶¶ 180–81).

Cree argues that the statements are nothing more than mere puffery and any claims to inventorship are not actionable...