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McRo, Inc. v. Activision Blizzard, Inc.

United States District Court, Third Circuit

December 13, 2013

McRO, INC, d/b/a PLANET BLUE, Plaintiff,
v.
ACTIVISION BLIZZARD, INC, Defendant. McRO, INC, d/b/a PLANET BLUE, Plaintiff,
v.
INFINITY WARD, INC, Defendant. McRO, INC, d/b/a PLANET BLUE, Plaintiff,
v.
LUCASARTS ENTERTAINMENT COMPANY LLC, Defendant. McRO, INC, d/b/a PLANET BLUE, Plaintiff,
v.
WARNER BROS. INTERACTIVE ENTERTAINMENT INC., Defendant.

REPORT AND RECOMMENDATION

CHRISTOPHER J. BURKE, UNITED STATES MAGISTRATE JUDGE

Plaintiff McRo, Inc., d/b/a Planet Blue ("McRo" or "Plaintiff) filed the instant four actions for patent infringement against defendants Activision Blizzard, Inc. ("Activision"), Infinity Ward, Inc. ("Infinity Ward"), LucasArts Entertainment Company LLC ("LucasArts") and Warner Bros. Interactive Entertainment Inc. ("Warner Brothers") (collectively, "Defendants"). Presently pending before the Court is Defendants' joint motion to transfer venue to the Central District of California ("Motion"). (D.I. 23)[1] For the reasons that follow, the Court recommends that Defendants' Motion be GRANTED.[2]

I. BACKGROUND

A. The Parties

Plaintiff McRo is a Delaware corporation with its principal place of business in Marina del Rey, California, located in the Central District of California ("Central District").[3] (D.I. 30 at 2) According to McRo, the company is "actively involved in the advertising industry as a computer graphic, visual effects, and animation services company[.]" (D.I. 1 at ¶1; D.I. 30 at 2)

Defendants are all companies active in the video game industry and are all incorporated in Delaware. (See D.I. 1 at ¶ 2; D.I. 24 at 1) Activision, Infinity Ward, LucasArts and Warner Brothers have their principal places of business in Santa Monica, Los Angeles, San Francisco and Burbank, California, respectively. (D.I. 1 at ¶ 2; D.I. 24 at 1) Aside from LucasArts (whose place of business is located in the neighboring Northern District of California), each of these locations is within the Central District. (See D.I. 1 at ¶ 2; D.I. 24 at 1) Although Defendants are incorporated in Delaware, none has a facility in the state. (D.I. 24 at 2)

B. Procedural Background

The instant four cases are among thirteen related cases filed in this District by Plaintiff ("the Delaware Actions"). Plaintiff filed eleven of these related cases—including these four—on November 21, 2012.[4] (See D.I. 1; D.I. 24 at 1) Plaintiff filed one of the remaining cases on June 6, 2013, and the other on October 25, 2013.[5] All of the thirteen cases are assigned to Judge Leonard P. Stark, all have been referred to the Court by Judge Stark for all purposes up to and including the resolution of case-dispositive motions, and all remain pending. No Rule 16 or Rule 26 Conference has yet been held in any of these cases, nor has any discovery taken place.

These related cases all allege infringement of United States Patent Nos. 6, 307, 576 and 6, 611, 278 (collectively, the "patents-in-suit"), patents that "cover a method and system for automating the lip-synchronization process for three dimensional animated characters, as used in computer and/or video games." (See D.I. 30 at 1; D.I. 14 at ¶ 10) McRo alleges that Defendants infringed these patents by "employing] automated lip-synchronization methods and processes to create and develop [ ] computer and/or video games" that are "purchased by consumers in the United States [and] the State of Delaware[.]" (D.I. 14 at ¶¶ 11-12, 14, 18)

Plaintiff filed a First Amended Complaint in all four of the instant cases on February 28, 2013. (D.I. 14) In lieu of filing an Answer, on March 18, 2013, Defendants jointly filed a motion to dismiss the First Amended Complaint pursuant to Rule 12(b)(6). (D.I. 16) That motion remains pending.

On July 29, 2013, Defendants jointly filed the instant Motion, seeking to have these actions transferred to the Central District pursuant to 28 U.S.C. § 1404(a). (D.I. 23) Plaintiff opposes this Motion, and requests limited "jurisdictional discovery" if the Court is not convinced it should be denied. (D.I. 30 at 19-20) Briefing on the instant motion was completed on August 26, 2013. (D.I. 32)

C. The Central District Actions

On December 4, 2012, less than two weeks after filing the instant actions (and seven others) in this District, McRo filed sixteen other cases in the Central District (collectively, the "Central District Actions").[6] (D.I. 24 at 1 & 6 n.2) The Central District Actions allege infringement of the same patents-in-suit by various video game companies, including some companies that are affiliated with Defendants here. (Id. at 1-2) As in the instant actions, McRo's allegations of infringement in the Central District Actions are based on the "alleged use of software processes ... that automatically perform lip-synchronization of three-dimensional characters[.]" (Id. at 17 (internal quotation marks and citation omitted))

II. DISCUSSION

A. Legal Standard

Section 1404(a) of Title 28 provides the statutory basis for a transfer inquiry. It provides that " for the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented." 28 U.S.C. § 1404(a).

1. Appropriateness of Transferee Venue

The first step in the transfer analysis is to determine whether this action could have been brought in the proposed transferee venue. "The party moving for transfer bears the burden of proving that the action properly could have been brought in the transferee district in the first instance." Mallinckrodt Inc. v. E-Z-Em Inc., 670 F.Supp.2d 349, 356 (D. Del. 2009) (internal quotation marks and citations omitted). Here, there is no dispute that this infringement action could have been properly brought in the Central District. (D.I. 24 at 4); see also 28 U.S.C. § 1400(b).

2. Applicable Legal Standards

"[S]ection 1404(a) was intended to vest district courts with broad discretion to determine, on an individualized, case-by-case basis, whether convenience and fairness considerations weigh in favor of transfer." Jumara v. State Farm Ins. Co., 55 F.3d 873, 883 (3d Cir. 1995) (citing Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 30-31 (1988)). The United States Court of Appeals for the Third Circuit has emphasized that when considering a motion to transfer venue pursuant to Section 1404(a), "courts normally defer to a plaintiffs choice of forum" and thus "the plaintiffs choice of venue should not be lightly disturbed." Id. at 879-80 (internal quotation marks and citation omitted). This general principle, drawn from the historic respect accorded a plaintiffs choice of venue, suggests that "a transfer is not to be liberally granted." Shutte v. Armco Steel Corp., 431 F.2d 22, 25 (3d Cir. 1970) (internal quotation marks and citation omitted).

The party seeking a transfer has the burden "to establish that a balancing of proper interests weigh[s] in favor of the transfer[.]" Id.; see also Jumara, 55 F.3d at 879. That burden is a heavy one: "unless the balance of convenience of the parties is strongly in favor of defendant, the plaintiffs choice of forum should prevail." Shutte, 431 F.2d at 25 (internal quotation marks and citation omitted) (emphasis added); see also CNH Am. LLC v. Kinzenbaw, C.A. No. 08-945(GMS), 2009 WL 3737653, at *2 (D. Del. Nov. 9, 2009). Accordingly, "transfer will be denied if the factors are evenly balanced or weigh only slightly in favor of the transfer." Angiodynamics, Inc. v. Vascular Solutions, Inc., C.A. No. 09-554-JJF, 2010 WL 3037478, at *2 (D. Del. July 30, 2010); see also Illumina, Inc. v. Complete Genomics, Inc., Civil Action No. 10-649, 2010 WL 4818083, at *2 (D. Del. Nov. 9, 2010).

The Third Circuit has observed that, in undertaking this transfer analysis, "there is no definitive formula or list of... factors to consider[.]" Jumara, 55 F.3d at 879. Instead, courts must analyze "all relevant factors" to determine whether "the litigation would more conveniently proceed and the interests of justice be better served by transfer to a different forum." Id. (internal quotation marks and citation omitted). Nevertheless, in Jumara, the Third Circuit identified a set of private interest and public interest factors that should be taken into account in this analysis (the "Jumara factors"). The private interest factors to consider include:

[1] [The] plaintiffs forum preference as manifested in the original choice, [2] the defendant's preference, [3] whether the claim arose elsewhere, [4] the convenience of the parties as indicated by their relative physical and financial condition, [5] the convenience of the witnesses—but only to the extent that the witnesses may actually be unavailable for trial in one of the fora ... and [6] the location of books and records (similarly limited to the extent that the files could not be produced in the alternative forum).

Id. at 879. The public interest factors to consider include:

[1] [T]he enforceability of the judgment, [2] practical considerations that could make the trial easy, expeditious, or inexpensive, [3] the relative administrative difficulty in the two fora resulting from court congestion, [4] the local interest in deciding local controversies at home, [5] the public policies of the for a, ... and [6] the familiarity of the trial judge with the applicable state law in diversity cases.

Id. at 879-80. District courts should explicitly consider each of these factors, at least to the extent that the parties make "arguments" about them. In re Link A Media Devices Corp., 662 F.3d 1221, 1224 (Fed. Cir. 2011) (citing Jumara, 55 F.3d at 879) (noting that it would be "improper to ignore" any of the factors in such a circumstance).[7]

a. Private Interest Factors

i. Plaintiffs choice of forum

When analyzing the first Jumara private interest factor—the "plaintiffs forum preference as manifested in the original choice"—the court should not consider simply the fact of that choice, but the reasons behind the choice. Pragmatus AV, LLC v. Yahoo! Inc., Civil Action No. 11-902-LPS-CJB, 2012 WL 4889438, at *4 & n.5 (D. Del. Oct. 15, 2012) ("Pragmatus F) (citing cases), report and recommendation adopted, 2013 WL 174499 (D. Del. Jan. 16, 2013); Affymetrix, Inc. v. Synteni, Inc., 28 F.Supp.2d 192, 200 (D. Del. 1998). "If those reasons are rational and legitimate, then they will weigh against transfer, as they are likely to support a determination that the instant case is properly venued in this jurisdiction." Pragmatus I, 2012 WL 4889438, at *4 (internal quotation marks and citations omitted); see also Intellectual Ventures I LLC v. Altera Corp., 842 F.Supp.2d 744, 753 (D. Del. 2012) ("Altera"). On the other hand, where a plaintiffs choice of forum was made for an improper reason—such as where the choice is arbitrary, irrational, or selected to impede the efficient and convenient progress of a case—it should not be afforded substantial weight. Pragmatus I, 2012 WL 4889438, at *4; Affymetrix, 28 F.Supp.2d at 200 (noting that if a plaintiff had no good reason, or an improper reason, for filing suit in this District, this would likely weigh in favor of transfer).[8]

McRo cites a number of reasons as to why it chose to file suit in this District, many of which have been oft-recognized as strong and legitimate by our Court. (D.I. 30 at 7) For example, McRo cites the fact that it has chosen to bring suit in a District in which it is incorporated. Our Court has found that it is a legitimate, rational choice for a plaintiff to make, as such a plaintiff has already associated itself with the forum and availed itself of the benefits and consequences of the State's laws. See, e.g., Altera, 842 F.Supp.2d at 754; Nice Sys., Inc. v. Witness Sys., Inc., No. CTV A 06-311-JJF, 2006 WL 2946179, at *2 (D. Del. Oct. 12, 2006); Joint Stock Soc 'y "Trade House Descendants of Peter Smirnoff, Official Purveyor to the Imperial Court" v. Heublein, Inc., 936 F.Supp. 177, 187 (D. Del. 1996). Similarly, McRo notes that it has sued in a District in which Defendants are incorporated (and where, it claims, that products made using the patented method are sold). These facts provide some certainty that there will be personal jurisdiction over Defendants in this District and are also rational, legitimate reasons as to why suit would be brought here. See, e.g., Helicos Biosciences Corp. v. Illumina, Inc., 858 F.Supp.2d 367, 371-73 (D. Del. 2012) (noting that "a defendant's state of incorporation had always been a predictable, legitimate venue for bringing suit" in that it is a venue where a defendant can be sued); Altera, 842 F.Supp.2d at 754.

Defendants argue that McRo's choice of forum should be given less weight because, by filing the Central District Actions, McRo "has decidedly not expressed a preference to litigate its patents in this [District." (D.I. 32 at 2 (emphasis in original)) Yet by filing the instant cases in this District, Plaintiff has expressed its preference—as to those particular cases—as clearly as it could. It is not made explicit in the record why Plaintiff chose to file other litigation regarding the patents-in-suit in the Central District, as opposed to this District. But though Defendants suggest that the mere fact of those other filings undercuts Plaintiffs asserted reasons for filing these cases in Delaware, there is not a sufficient basis for the Court to reach that conclusion here. The Central District filings do not, for example, expressly contradict any asserted rationale Plaintiff has put forward in arguing the instant motion. Indeed, instead of presuming contradiction (as Defendants do), it could just as easily be presumed that there are certain differences between the Central District Actions and the Delaware Actions that have not necessarily been made explicit on this record, but that motivated the filings in the other jurisdiction. Cf. Pragmatus A V, LLC v. Yahoo! Inc., Civil Action No. 11-902-LPS-CJB, 2013 WL 4629000, at *8 (D. Del. Aug. 28, 2013) ("Pragmatus IT) (finding, in case where plaintiff filed instant action in this District and later filed a partially-related action in the proposed ...


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