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holding that while a plaintiff's choice of form is typically entitled to a “heavy presumption,” that is rebutted by the application of the first-filed rule
Summary of this case from Fellowes, Inc. v. ACCO Brands Corp.Opinion
03 Civ. 7157 (WHP).
June 16, 2004
Robert C. Scheinfeld, Esq., Eliot D. Williams, Esq., Baker Botts LLP, New York, NY, Attorneys for plaintiffs.
Michael O. Sutton, Esq., Nathan Dunn, Esq., Locke, Liddell Sapp, LLP, Houston, TX, Attorneys for defendant.
MEMORANDUM and ORDER
Plaintiffs MasterCard International Inc. and MasterCard International, LLC (collectively, "MasterCard") bring this action for a declaratory judgment of non-infringement and invalidity of defendant Lexcel Solutions Inc.'s ("Lexcel's") patents for an electronic funds transfer network test system, U.S. Patent No. 6,129,271, and U.S. Patent No. 6,336,590. Lexcel moves to dismiss this action pursuant to Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction, and alternatively moves to transfer this action to the District of Arizona, pursuant to 28 U.S.C. § 1404(a). For the reasons stated below, Lexcel's motion to dismiss is denied, and its motion to transfer venue is granted.
BACKGROUND
This action stems from the deterioration of a relationship between parties to a software license agreement. Lexcel sells and licenses software called "financial transaction network testing and simulation software" to test financial transaction systems, such as electronic funds transfer systems. (Compl. ¶ 8.) MasterCard operates financial transaction networks and supplies testing and simulation software to its member financial institutions to allow them to verify that their systems will operate with MasterCard's financial transaction networks. (Compl. ¶¶ 9-10.) Until April 2003, MasterCard licensed this testing and simulation software from outside vendors, including Lexcel. (Compl. ¶ 11.) In collaboration with another vendor, MasterCard is developing network testing and simulation software for distribution to its associated financial institutions. (Compl. ¶ 15; Supplemental Declaration of Simon Dix, dated November 24, 2003 ("Dix Decl. II.") ¶¶ 2-5.) As a result, Lexcel filed suit against MasterCard in the District of Arizona on July 29, 2003, (the "Arizona Action") claiming breach of contract, misappropriation of trade secrets, unfair competition, copyright infringement and breach of fiduciary duty. (Compl. ¶ 12; Declaration of Nathan Dunn, dated Oct. 30, 2002 ("Dunn Decl.") Ex. F: Lexcel Arizona Complaint.) The Arizona Action concerns the same technology and products at issue here. (Transcript of Oral Argument, dated December 5, 2003 ("Tr.") at 11; Compl. ¶ 12; Dunn Decl. Ex. F.) Specifically, Lexcel alleges in the Arizona Action that MasterCard improperly accessed the confidential source code of Lexcel's financial network testing software. (Dunn Decl. Ex. F ¶¶ 11-18, 23, 25, 34, 37, 40, 43.) On August 15, 2003, MasterCard answered and counterclaimed for breach of a license agreement in that action. (Dunn Decl. Ex. C: MasterCard Arizona Answer and Counterclaim.)
On September 4, 2003, Lexcel's counsel advised MasterCard's counsel in the context of a compromise negotiation that Lexcel might have a claim for patent infringement against MasterCard for "infringement that may occur in the future or that may have already occurred." (Compl. ¶ 13; Dunn Decl. Ex. B at 2.) Further, during an "in-person meeting between MasterCard and Lexcel personnel subsequent to the filing of the Arizona Action, Lexcel personnel allegedly told MasterCard that Lexcel owned at least two government-issued U.S. patents, and suggested that the existence of those patents would prevent MasterCard from pursuing alternate sourcing of network testing and/or simulator software other than from Lexcel without facing a lawsuit from Lexcel." (Compl. ¶ 14.)
MasterCard filed this action on September 12, 2003, alleging that it is entitled to a declaratory judgment of patent non-infringement and invalidity, and a finding that Lexcel's patents are unenforceable because: (a) both MasterCard and Visa publically used their own versions of financial transaction network testing or simulation software before Lexcel applied for its patents; and (b) Lexcel intentionally failed to disclose prior art to the United States Patent and Trademark Office ("PTO") during prosecution. (Compl. ¶¶ 17-39.) The underlying facts of the parties' dispute are nearly identical to those of the Arizona Action. (Dunn Decl. Ex. F ¶¶ 11-18; Compl. ¶¶ 8-16.) On December 3, 2003, two days before oral argument on this motion, this Court received notice from Lexcel that it moved to amend its complaint in the Arizona Action to add, inter alia, a "conditional" patent infringement claim. (Lexcel Supplemental Submission, dated December 3, 2003; Joint Status Letter to the Court, dated May 14, 2004 ("Joint Letter") at 2.) On May 28, 2004, the Arizona federal district court denied Lexcel's motion to amend its complaint to include a "conditional proposed count" of patent infringement because: (1) Lexcel's conditional amendment failed to satisfy the standards of Fed.R.Civ.P. Rule 8; and (2) Lexcel's conditional request failed to demonstrate that an actual case or controversy existed. Lexcel Solutions, Inc. v. MasterCard, Inc., CV-03-1454-PHX-JAT (D. Ariz. May 28, 2004).
DISCUSSION
I. Rule 12(b)(1) Standards
On a Rule 12(b) motion to dismiss, this Court generally must accept the factual allegations contained in the complaint as true, and draw all reasonable inferences in favor of the non-movant; it should not dismiss the complaint "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief."Conley v. Gibson, 355 U.S. 41, 45-46 (1957); accord Leatherman v. Tarrant County Narcotics Intelligence Coordination Unit, 507 U.S. 163, 164, 113 S.Ct. 1160, 1161 (1993) (noting that factual allegations in the complaint must be accepted as true on motion to dismiss); Press v. Quick Reilly, Inc., 218 F.3d 121, 128 (2d Cir. 2000) (same). In order to avoid dismissal, a plaintiff must assert a cognizable claim and allege facts that, if true, would support such a claim. Boddie v. Schnieder, 105 F.3d 857, 860 (2d Cir. 1997).
Under a Rule 12(b)(1) challenge to a court's subject matter jurisdiction, the disputed jurisdictional fact issues may be resolved by referring to evidence outside of the pleadings, such as affidavits, and if necessary, an evidentiary hearing. See Phifer v. City of New York, 289 F.3d 49, 55 (2d Cir. 2002);Zappia Middle East Constr. Co. v. Emirate of Abu Dhabi, 215 F.3d 247, 253 (2d Cir. 2000).
II. Declaratory Judgment Act
MasterCard asserts subject matter jurisdiction pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201 (2003) and the federal patent laws, pursuant to 28 U.S.C. § 1338(a) (2003). (Compl. ¶ 5.) Lexcel argues that this Court should dismiss the complaint for lack of subject matter jurisdiction, pursuant to Fed.R.Civ.P. 12(b)(1) because an actual controversy does not exist. Interpreting the Declaratory Judgment Act, 28 U.S.C. § 2201, the Federal Circuit has established a two-pronged test to determine if there is a justiciable controversy in a declaratory judgment action concerning patent law. A declaratory judgment plaintiff must show that, as of the time the complaint was filed: (1) the defendant's conduct "created on the part of plaintiff a reasonable apprehension that the defendant [would] initiate suit"; and (2) the plaintiff either produced or had taken steps to produce the accused device. Arrowhead Indus. Water, Inc. v. Ecolochem, Inc., 846 F.2d 731, 736 (Fed. Cir. 1988); Shell Oil Co. v. Amoco Corp., 270 F.2d 885, 888 (Fed. Cir. 1992).
A plaintiff may establish an objective reasonable apprehension of suit through evidence of a defendant's express charge of infringement or through a totality of the circumstances.Cardinal Chem. Co. v. Morton Int'l, Inc., 508 U.S. 83, 96 (1993); Shell Oil, 270 F.2d at 888; Arrowhead, 846 F.2d at 734-36. "To invoke the court's declaratory judgment jurisdiction, a plaintiff must show 'more than the nervous state of mind of a possible infringer,' but does not have to show that the patentee is 'poised on the courthouse steps.'" Vanguard Research, Inc. v. PEAT, Inc., 304 F.3d 1249, 1255-56 (Fed. Cir. 2002) (citations omitted). Finally, even if there is an actual controversy, a court still retains discretion to decline jurisdiction. E.M.C. v. Normand Corp., 89 F.3d 807, 813 (Fed. Cir. 1996).
A. Reasonable Apprehension
Lexcel contends that its conduct did not create a reasonable apprehension that it would initiate a patent suit against MasterCard because: (a) it did not make an express charge of infringement against MasterCard; (b) its complaint in the Arizona Action does not allege a patent claim that could have been easily included; (c) it had not begun an investigation into pursuing a patent infringement action; and (d) the statements to which MasterCard points in support of the existence of a reasonable apprehension were made in the context of settlement negotiations and do not indicate a threat of litigation. Lexcel does not dispute that it engaged in discussions with MasterCard concerning its patents, but instead characterizes those communications as "pure positional statement[s]," "jawboning," or "a reservation of rights" in order to minimize the likelihood of a finding of reasonable apprehension of suit. (Def. Br. at 5-6.) As noted, however, when determining whether a reasonable apprehension exists, the test is an objective one, and the subjective intent of a plaintiff or defendant is irrelevant. Goodyear Tire, 824 F.2d at 955-56; Vangaurd Research, 304 F.3d at 1255.
In opposition, MasterCard argues that Lexcel's conduct amounted to an express charge of infringement, and that even assuming it did not, jurisdiction is still proper because the totality of Lexcel's conduct created a reasonable apprehension of a future lawsuit. MasterCard points to a letter it received from Lexcel, dated September 4, 2003 (the "September 4 Letter"), in which Lexcel charged that it may have a claim for patent infringement against MasterCard and would consider such infringement to be willful. (Compl. ¶ 14; Dunn Decl. Ex. B. at 2.) Additionally, MasterCard alleges that Lexcel asserted it owned two patents that would prevent MasterCard from "pursuing alternate sourcing of network testing and/or simulator software other than from Lexcel without facing a lawsuit from Lexcel." (Compl. ¶ 15.) MasterCard argues that Lexcel's conduct placed it under a reasonable apprehension that Lexcel would file a patent infringement suit if MasterCard were to use another vendor's software. (Compl. ¶ 16.)
This Court finds that Lexcel's conduct constituted an express charge of infringement that created a reasonable apprehension of suit by MasterCard. Specifically, in the September 4 Letter from Lexcel's counsel to MasterCard's counsel in the Arizona Action, Lexcel charged that it:
reserves all rights for any claim that Lexcel might have for patent infringement that may occur in the future or that may have already occurred. Indeed, we would consider any infringement to be willful, notwithstanding your suggestion that an action for patent infringement would be "ill advised." MasterCard should know, better than anyone, the process covered in Lexcel's patents for testing software readiness was not known previously. . . . In fact, it is my understanding that MasterCard had a failed effort at providing a testing and certification software system before it went to Lexcel. As you know, this is powerful evidence of patent validity, on top of the statutory presumption of validity. You should also see the brochures that MasterCard has distributed which tout the advantages and character of Lexcel's software. This, too, will be powerful evidence.
(Dunn Decl. Ex. B. at 2.) This is the paradigm of an express charge of infringement. See Arrowhead, 846 F.2d at 737-38 (finding express charge of infringement where defendant's letter made "thinly veiled threats" to enforce its patent rights by litigation); FindWhat.com v. Overture Servs., 02 Civ. 447 (MBM), 2003 WL 403649, at *3-4 (S.D.N.Y. Feb. 21, 2003) (finding express charge of infringement where defendant asserted to plaintiff twice in conversation that plaintiff was infringing its patent) (citing Applexion S.A. v. Almalgamated Sugar Co., No. 95 C 858, 1995 WL 229049 (N.D. Ill. Apr. 17, 1995) (same)). Indeed, Lexcel expressly warns that it may pursue a patent infringement suit against MasterCard for past or future conduct, and cites to "powerful evidence" of its patents' validity. (Dunn Decl. Ex. B at 2.) "If [a] defendant has expressly charged a current activity of the plaintiff as an infringement, there is clearly an actual controversy, certainty has rendered apprehension irrelevant, and one need say no more." Arrowhead Indus., 846 F.2d at 736.
The facts of the present case are analogous to those inGoodyear Tire Rubber Co. v. Releasomers, Inc., 824 F.2d 953 (Fed. Cir. 1987). In Goodyear Tire, the Federal Circuit reversed a district court's dismissal of a declaratory judgment action and held that plaintiff had an objectively reasonable apprehension that defendant would file a patent infringement suit because: (1) the defendant had filed a trade secret misappropriation claim against plaintiff in state court that related to the same technology; and (2) the defendant had made innuendos during negotiations over the state court action that could have reasonably led the plaintiff to believe defendant would bring a patent infringement action. See Goodyear, 824 F.2d at 955-56 (finding "objective inference of an impending infringement suit" where defendant asserted patents and made "innuendoes" concerning possible litigation during settlement negotiations in a separate action).
That the parties were engaged in compromise negotiations when Lexcel advanced a charge of infringement is of no moment.Goodyear, 824 F.2d at 955-56. Further, the existence of Lexcel's suit against MasterCard for the same technology in another forum also favors a finding of a reasonable apprehension of suit because it demonstrates a "willingness to protect that technology." Vanguard Research, 304 F.3d at 1255 (reversing district court dismissal, holding that plaintiff had a reasonable apprehension of suit where defendant had filed a previous misappropriation of trade secrets claim relating to the same technology). Accordingly, this Court finds that Lexcel's conduct created an objective reasonable apprehension of suit.
B. Production of the Accused Device
Lexcel argues for the first time in its reply brief that MasterCard cannot meet the requirements for initiating a declaratory judgment action because it has not actually produced or prepared to produce the accused device. (Def. Reply Br. at 1-2.) MasterCard, however, avers in its complaint that it is preparing to release its competitive "Alternative Software" into the market shortly, and details "concrete steps" it has undertaken in preparation for that release. (Compl. ¶ 15.) Indeed, MasterCard's supporting affidavits and exhibits support its assertion that it has developed the Alternative Software, that it will market to financial institutions in early 2004. (Dix Decl. I ¶¶ 9, 16, 18; Dix Decl. II ¶¶ 3-5, Ex. A.) Lexcel fails to raise anything other than its own conjecture to dispute Mastercard's position. Thus, Lexcel's argument that MasterCard fails to meet this second requirement of the Declaratory Judgment Act is without merit.
In conclusion, this Court finds that Lexcel's conduct created a reasonable apprehension that a lawsuit would be initiated and that MasterCard has already taken steps to produce the accused device. Accordingly, this Court has subject matter jurisdiction over this action because MasterCard has established an actionable case or controversy under the Declaratory Judgment Act. Lexcel's 12(b)(1) motion to dismiss is denied.
III. Motion to Transfer Venue
Lexcel also moves to transfer this action to the District of Arizona for consolidation with the parties' action currently pending there. Section 1404(a) states that "[f]or the convenience of the parties and witnesses, in the interests of justice, a district court may transfer any civil action to any other district or division where it might have been brought." 28 U.S.C. § 1404(a) (2004). The goal of Section 1404(a) "is to prevent waste of 'time, energy and money' and 'to protect litigants, witnesses and [the] public against unnecessary inconvenience and expense.'" Van Dusen v. Barrack, 376 U.S. 612, 616 (1964) (internal quotations omitted); accord Citicorp Leasing, Inc. v. United Am. Funding, Inc., 03 Civ. 1586 (WHP), 2004 WL 102761, at *2 (S.D.N.Y. Jan. 21, 2004). In analyzing a motion to transfer venue, courts use "broad discretion" and must make their determinations "upon notions of convenience and fairness on a case-by-case basis." In re Nematron Corp. Sec. Litig., 30 F. Supp.2d 397, 399 (S.D.N.Y. 1998); accord Bionx Implants, Inc. v. Biomet, Inc., 99 Civ. 0740 (WHP), 1999 WL 342306, at *3 (S.D.N.Y. May 27, 1999) (district court has "considerable discretion" in deciding whether to transfer venue).
In determining whether to transfer venue, courts examine: (1) whether the action could have been brought in the proposed transferee forum; and (2) whether the transfer would "promote the convenience of parties and witnesses and would be in the interests of justice." Clarendon Nat'l Ins. Co. v. Pascual, 99 Civ. 10840 (JGK)(AJP), 2000 WL 270862, at *2 (S.D.N.Y. Mar. 13, 2000). The parties do not dispute that this action could be brought in the District of Arizona. Instead, they focus on whether transfer would promote the interests of justice and convenience of the parties.
In analyzing whether transfer would promote such interests, courts consider several factors, including:
(1) the place where the operative facts occurred; (2) the convenience of the parties; (3) the convenience of the witnesses; (4) the relative ease of access of proof; (5) the availability of process to compel the attendance of unwilling witnesses; (6) the plaintiff's choice of forum; (7) the forum's familiarity with the governing law; and (8) trial efficiency and the interests of justice.Clarendon Nat'l Ins., 2000 WL 270862, at *3; accord J. Lyons Co. v. Republic of Tea, Inc., 892 F. Supp. 486, 492 (S.D.N.Y. 1995). "There is no rigid formula for balancing these factors and no single one of them is determinative." Citigroup, Inc. v. City Holding Co., 97 F. Supp.2d 549, 561 (S.D.N.Y. 2000). "In performing the analysis the Court must, however, give due deference to the plaintiff's choice of forum which should not be disturbed unless the balance of convenience and justice weigh heavily in favor of defendant's forum." Citigroup, 97 F. Supp.2d at 561; accord Reliance Ins. Co. v. Six Star, Inc., 155 F. Supp.2d 49, 57 (S.D.N.Y. 2001); NBA Props., Inc. v. Salvino, Inc., 99 Civ. 11799 (AGS), 2000 WL 323257, at *3 (S.D.N.Y. Mar. 27, 2000). Further, the balancing of these factors is an equitable task and an "ample degree of discretion is afforded to the district courts in determining a suitable forum." First City Nat'l Bank Trust Co. v. Simmons, 878 F.2d 76, 80 (2d Cir. 1989). Finally, the moving party, Lexcel, bears the burden of establishing by clear and convincing evidence that transfer is appropriate. Reliance, 155 F. Supp.2d at 56.
A. Balance of Conveniences
After conducting an analysis of the balance of conveniences, this Court finds that the factors weigh heavily in favor of transfer to the District of Arizona. First, the locus of operative facts favors transfer. "In determining the locus of operative facts a court must look to the site of events from which the claim arises." Transatlantic Reinsurance Co. v. Continental Ins. Co., 03 Civ. 3227 (CBM), 2003 WL 22743829, at *5 (Nov. 20, 2003) (internal citations omitted). "In infringement cases the operative facts usually relate 'to the design, development and production of a patented product.'"Findwhat.com, 2003 WL 402649, at *6 (quoting Invivo Research, Inc. v. Magnetic Resonance Equipment Corp., 119 F. Supp.2d 433, 439 (S.D.N.Y. 2000)); accord Bionx Implants, 1999 WL 342306, at *4. MasterCard's complaint alleging invalidity, uneforceability and noninfringment is largely focused on the contention that Lexcel failed to disclose prior art to the PTO during prosecution of the patents-in-suit. (Compl. ¶¶ 17-21, 30-39, Prayer for Relief at B-C.) Against that backdrop, the locus of operative facts strongly support transfer to Arizona, and do not weigh in favor of a New York forum. This action arose in Arizona, where Carl Kubitz, Lexcel's CEO, invented the patented systems. Additionally, the prosecution of the patent, which is essential to this action, took place in Arizona. (Declaration of Carl Kubitz, dated October 29, 2003 ("C. Kubitz Decl. I") ¶ 5; Reply Declaration of Carl Kubitz, dated November 19, 2003 ("C. Kubitz Decl. II") ¶ 2.) That the locus of operative facts concerning Lexcel's patents is in Arizona is further supported by the fact that all of Lexcel's employees with knowledge of Lexcel's products and patents continue to reside there, and all of Lexcel's records concerning the patented technology and its prosecution are maintained at Lexcel's headquarters in Scottsdale, Arizona. (Declaration of Flora Kubitz, dated October 29, 2003 ("F. Kubitz Decl.") ¶ 10; C. Kubitz Decl. II ¶ 2.) Since this action has only a gossamer connection to New York, this factor weighs strongly in favor of transfer. See United States v. Nature's Farm Products, Inc., 00 Civ. 6593 (SHS), 2004 WL 1077968, at *5 (S.D.N.Y. May 13, 2004) (transferring venue where locus of operative facts occurred mainly in transferee venue).
The convenience of witnesses is a neutral factor. Most, if not all, of the trial witnesses in this action will be party witnesses. All of Lexcel's employees and witnesses with knowledge of Lexcel's products and patents, including the inventor Carl Kubitz and the attorney who prosecuted the patents, reside in Arizona. (C. Kubitz Decl. I ¶ 5; F. Kubitz Decl. ¶ 10.) MasterCard's employees with knowledge of the development of the Alternative Software are located at its operations center in O'Fallon, Missouri. (F. Kubitz Decl. ¶ 4; Dix Decl. I ¶ 19.) MasterCard argues that two of its party witnesses reside in Purchase, New York and Miami, Florida, respectively. However, their testimony concerning prior use of simulation software will be presented in the Arizona Action in connection with Lexcel's copyright infringement claim. (C. Kubitz Decl. II ¶¶ 4-5; Declaration of Christopher Cosgrove, dated November 13, 2003 ("Cosgrove Decl.") ¶ 2; Declaration of Raquel White, dated November 13, 2003 ("White Decl.") ¶¶ 2-3.) Thus, this factor is neutral as party witnesses are located in Missouri, Arizona, New York, and Florida.
MasterCard identifies a vendor located in Belgium that may be a non-party witness outside of this Court's subpoena power. At this stage, this Court cannot assess the relevance and availability of that non-party witness. Accordingly, this Court finds the process over unwilling witnesses factor to be neutral.
The location of documents factor favors transfer. All of Lexcel's documents concerning the patents in suit are located in Arizona and the technology at issue in both actions was developed in Arizona. (C. Kubitz Decl. I ¶ 5; F. Kubitz Decl. ¶ 10.) Most of MasterCard's documents are located in O'Fallon, Missouri, where it conducts primary oversight and development of the Alternative Software. (Dix Decl. I ¶¶ 19-20; F. Kubitz Decl. ¶ 9.) Additional documents may be located in Belgium, where MasterCard's new, non-party vendor is located. (Dix Decl. ¶ 20.) While MasterCard contends that some documents are located in Purchase, New York, at its global headquarters (Dix Decl. ¶ 20), it does not explain how those documents are related to this action, much less how they relate to the development of the Alternative Software. After a review of the parties' submissions, it is evident that most of the pertinent documents in this action will be found in Arizona and Missouri. Accordingly, this factor weighs in favor of transfer.
The relative means of parties factor also favors transfer. "A party arguing against or for transfer because of inadequate means must offer documentation to show that transfer (or lack thereof) would be unduly burdensome to his finances." Federman Assocs. v. Paradigm Med. Indus., Inc., 96 Civ. 8545 (BSJ), 1997 WL 811539, at *4 (S.D.N.Y. Apr. 8, 1997); accord Orb Factory, Ltd. v. Design Sci. Toys, Ltd., 6 F. Supp.2d 203, 210 (S.D.N.Y. 1998). Lexcel notes that the disparity in wealth between the parties is significant, and avers that it would be unable to sustain a viable business and litigate two actions against MasterCard in two fora. (F. Kubitz Decl. ¶ 7; Declaration of Michael O. Sutton, Esq. ("Sutton Decl.") ¶ 4.) Examining the relative means of the parties, Lexcel's net income was $489,000 in 2002, as opposed to MasterCard Inc.'s revenues of $1.89 billion and net income of $116 million in 2002. (F. Kubitz Decl. ¶ 5; Dunn Decl. Ex. E at 5: MasterCard Income Statement.) Indeed, according to MasterCard's exhibits, Lexcel's highest credit line is $21,200, and it has a "moderate risk of severe payment delinquency over the next 12 months." (Def. Opp. Ex. 6: DB Report at 2-4.) This vast disparity between the parties' relative means, along with the fact that dual litigation will likely hamper Lexcel's viability, weighs heavily in favor of transfer. See Lynch v. Nat'l Prescription Adm'rs, 03 Civ. 1303 (GBD), 2004 WL 385156, at *4 (S.D.N.Y. Mar. 1, 2004) (relative means factor favors transfer where litigation would pose a greater financial burden on party with lesser resources);Everest Capital Ltd. v. Everest Mgmt., L.L.C., 178 F. Supp.2d 459, 467-68 (S.D.N.Y. 2002) (same); see also Mattel, Inc. v. Procount Business Servs., 03 Civ. 7234 (RWS), 2004 WL 502190, at *4 (S.D.N.Y. Mar. 10, 2004) (transferring action due in part to vast disparity in relative means between parties).
The choice of forum factor also weighs in favor of transfer. While MasterCard's choice of forum is entitled to a heavy presumption, that presumption is rebutted by the application of the first-filed rule. The first-filed rule creates a presumption that the first suit should have priority between two similar actions filed in different fora. Reliance, 155 F. Supp.2d at 54; Findwhat.com, 2003 WL 402649, at *4-5 (citing Kahn v. Gen. Motors Corp., 889 F.2d 1078, 1081 (Fed. Cir. 1989)). There are sufficient overlapping factual and legal issues between this action and the first-filed Arizona Action to trigger the first-filed rule. See GT Plus, Ltd. v. Ja-Ru, Inc., 41 F. Supp.2d 421, 423-24 (S.D.N.Y. 1998) (noting that the first-filed rule "generally applies where two actions involve same parties and embrace same issues"); Mfrs. Hanover Trust Co. v. Palmer Corp., 798 F. Supp. 161, 166-67 (S.D.N.Y. 1991) (finding cases related where they involved the same underlying facts, witnesses and parties and stating that "[t]he interests of justice require that the cases be related, not identical."). Indeed, both actions involve identical technology, and arise out of the same dispute between the same parties. While this action involves patents, and the Arizona Action involves, inter alia, misappropriation of trade secrets, copyright infringement and unfair competition, both actions concern alleged misappropriation of either the source code or the structure of the same electronic funds transfer testing equipment. (Compl. ¶¶ 1-16; Dunn Decl. Ex. F ¶¶ 11-18; Tr. at 11.) Additionally, any facts supporting a claim of willfulness here would be identical to facts supporting Lexcel's claims in the Arizona Action, including those for exemplary damages and statutory damages for willful infringement. (Dunn Decl. Ex. F ¶ 52, Prayer for Relief at ¶ b.) Accordingly, this factor favors transfer of venue.
The forum's familiarity with the law is a neutral factor since "all federal district courts are assumed to be equally familiar with federal patent law." Findwhat.com, 2003 WL 402649, at *6 (citing Recoton Corp. v. Allsop, Inc., 999 F. Supp. 574, 578 (S.D.N.Y. 1998)).
Finally, judicial economy dictates that this action proceed in the District of Arizona. Judicial economy is "a separate component of the [c]ourt's [Section] 1404(a) transfer analysis . . . and may be determinative in a particular case." Tucker Anthony, Inc. v. Bankers Trust Co., 93 Civ. 0257 (SWK), 1994 WL 9683, at *8 (S.D.N.Y. Jan. 10, 1994) (citing Coffey v. Van Dorn Iron Works, 796 F.2d 217, 220 (7th Cir. 1986)). One of the goals of Section 1404(a) is to "prevent the waste of 'time, energy and money' and 'to protect litigants witnesses and the public against unnecessary inconvenience and expense.'" Van Dusen, 376 U.S. at 616. It would be inefficient and a waste of judicial resources to subject the same parties to suit over interconnected claims concerning identical technology and underlying disputes in two separate fora. See Wyndham Assocs. v. Bintliff, 398 F.2d 614, 619 (2d Cir. 1968) (noting the "strong policy favoring litigation of related claims" in the same forum). Indeed, the witnesses who may testify in this action are identical to the witnesses identified in the District of Arizona litigation. (See, e.g., C. Kubitz Decl. II ¶¶ 4-5; Cosgrove Decl. ¶ 2; White Decl. ¶¶ 2-3; Dix Decl. I ¶¶ 2-15; Dix Decl. II ¶¶ 2-5; F. Kubitz Decl. ¶ 10.) To compel such witnesses to travel to a second forum to give similar testimony on the same technology and dispute would be burdensome and inefficient for the parties, and would not promote judicial efficiency. See 800-Flowers, Inc. v. Intercontinental Florist, Inc., 860 F. Supp. 128, 135-36 (S.D.N.Y. 1994) ("The interests of judicial economy dictate that the two identical actions not both proceed");Amersham Pharmacia Biotech, Inc. v. Perkin-Elmer Corp., 11 F. Supp.2d 729, 730-31 (S.D.N.Y. 2003) (transferring patent infringement action where trial efficiency factor weighed heavily in favor of transfer). Accordingly, this factor strongly favors transfer.
B. Aggregation of Factors
Analyzing the Section 1404(a) factors as a whole, Lexcel overcomes the heavy presumption that this action should remain in New York. Of the eight convenience factors, the locus of operative facts, location of documents, relative means of parties, choice of forum and judicial economy factors strongly favor transfer to the District of Arizona. The forum's familiarity with the governing law, convenience of witnesses, and availability of process factors are neutral, and thus favor litigation of this action in New York. Accordingly, this Court finds that Lexcel has shown by clear and convincing evidence that transfer of this action to the District of Arizona would be in the interests of convenience and fairness.
CONCLUSION
For the reasons set forth in this Memorandum and Order, Lexcel's motion to dismiss the action is denied and its motion to transfer this action to the District of Arizona is granted. The Clerk of Court is directed to transfer this action to the District of Arizona, Phoenix Division, as related to case number CV 03 1454 (PHX)(JAT).
SO ORDERED.