National Products, Inc v. Arkon Resources, Inc

REPLY

W.D. Wash.January 12, 2018

Fox Rothschild LLP 1001 F our th Av enue, S ui t e 4 500 Seattle, Washington 98154-1192 206.624 .36 00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 ARKON’S REPLY IN SUPPORT OF MOTION TO DISMISS FOR IMPROPER VENUE (No. 15-cv-01984-JLR) - 1 THE HONORABLE JAMES L. ROBART UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE NATIONAL PRODUCTS INC., Plaintiff, v. ARKON RESOURCES, INC., Defendant. CONSOLIDATED CASE Lead Case No. 2:15-cv-01984-JLR DEFENDANT ARKON RESOURCES, INC.’S REPLY IN SUPPORT OF MOTION TO DISMISS OR, IN THE ALTERNATIVE, TRANSFER, FOR IMPROPER VENUE PURSUANT TO RULE 12(B)(3) JURY TRIAL DEMANDED REPLY ARGUMENT Plaintiff National Products, Inc. (“NPI”) does not dispute that venue is improper, and instead argues that Arkon Resources, Inc. (“Arkon”) waited too long to file its Motion. But as explained below, Arkon filed this Motion within fifteen days of when the Federal Circuit clarified that the U.S. Supreme Court’s decision in TC Heartland was an “intervening” change in the law, and that defendants like Arkon had not waived their rights to challenge venue in patent cases by not pleading improper venue in their answers. See In re Micron Tech., Inc., 875 F.3d 1091, 1101–02 (Fed. Cir. Nov. 15, 2017); FOX Factory, Inc. v. SRAM, LLC, No. 3:16-CV- 00506-WHO, 2018 WL 317839, at *1 (N.D. Cal. Jan. 8, 2018) (noting that the Federal Circuit’s Case 2:15-cv-01984-JLR Document 123 Filed 01/12/18 Page 1 of 6 Fox Rothschild LLP 1001 F our th Av enue, S ui t e 4 500 Seattle, Washington 98154-1192 206.624 .36 00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 ARKON’S REPLY IN SUPPORT OF MOTION TO DISMISS FOR IMPROPER VENUE (No. 15-cv-01984-JLR) - 2 recent decision in In re Micron Technology, Inc. resolved a split of authority among district courts). To the extent NPI is complaining about delay, NPI itself asked Arkon to extend the noting date on this Motion. In the meantime, Arkon diligently continued to litigate this case as part of the consolidated cases. Moreover, because this case is set to be transferred back to Judge Jones for dispositive motions and trial and Judge Jones has no familiarity with the case, there is no economy for the Court to maintain this action in this district. Accordingly, the Court should dismiss, or in the alternative transfer, this case for improper venue. A. NPI Does Not Dispute That Venue is Improper TC Heartland held that venue in patent cases is only proper where Defendant is incorporated or has a regular and established place of business. NPI does not dispute that Arkon is a corporation organized and existing under the laws of the State of California and that Arkon therefore does not reside in Washington under §1400(b) and TC Heartland. NPI does not dispute that Arkon does not have a regular and established place of business in the Western District of Washington. Accordingly, there is no dispute that venue is improper in the Western District of Washington. B. Arkon Did Not Waive Its Venue Objections Nor does NPI dispute that TC Heartland is Intervening Law and that Arkon has therefore not waived its venue objections pursuant to Federal Rule 12(h)(1)(A). Rather, NPI wrongly argues that Arkon has waived its venue objection under “non-Rule” authority. While the Federal Circuit suggested that a forfeiture under “non-Rule” authority could be found in certain circumstances (such as when trial is imminent), it quickly followed that statement with “we are not suggesting that the lee-way to find such forfeiture is broad.” In re Micron Tech., Inc., 875 F.3d 1091, 1102 (Fed. Cir. 2017). Next, NPI notes that Arkon did not object to venue in its Answers to the Complaint and Amended Complaint, but both of those Answers were filed over a year before the Supreme Court decided TC Heartland. Additionally, the case was consolidated Case 2:15-cv-01984-JLR Document 123 Filed 01/12/18 Page 2 of 6 Fox Rothschild LLP 1001 F our th Av enue, S ui t e 4 500 Seattle, Washington 98154-1192 206.624 .36 00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 ARKON’S REPLY IN SUPPORT OF MOTION TO DISMISS FOR IMPROPER VENUE (No. 15-cv-01984-JLR) - 3 “through the conclusion of discovery/Markman matters” over a year before the Supreme Court decided TC Heartland.1 NPI is correct that Arkon diligently conducted discovery both before and after TC Heartland and that Akon participated in claim construction briefing and proceedings during the period between TC Heartland and In re Micron Tech., Inc. Indeed, Arkon had no choice, because TC Heartland changed the standard for venue, and in the six months between TC Heartland and In re Micron Tech., Inc., the District Courts were split on whether TC Heartland was intervening law that excused a Defendant’s prior waiver of venue challenges. FOX Factory, Inc. v. SRAM, LLC, No. 3:16-CV-00506-WHO, 2018 WL 317839, at *1 (N.D. Cal. Jan. 8, 2018) (“the Federal Circuit’s recent decision in In re Micron Technology, Inc. resolved a split of authority among district courts”). Now that the split has been resolved, the case can and should be transferred. Indeed, Fox Factory is instructive. In Fox Factory, the Court had earlier denied a challenge to venue noting that the majority of district court decisions after TC Heartland did not find TC Heartland to be intervening law. The defendant then filed a motion for reconsideration shortly following In re Micron Technology, Inc. and the Court then granted Defendant’s motion to transfer. The Court granted the motion to transfer even though the case had already been pending for over two years, and claim construction had already been completed. A similar result should follow in this case. Other courts have reached similar conclusions. Rillito River Solar LLC v. Wencon Dev. Inc., No. CV-16-03245-PHX-DLR, 2017 WL 5598228, at *4 (D. Ariz. Nov. 21, 2017) (distinguishing cases where venue was challenged shortly before trial and finding that post TC Heartland litigation does not preclude transfer for improper venue, because 1 Although the Court stated that it adopted the parties’ Joint Memorandum Regarding Consolidation, the Court did not consolidate the cases for purposes of dispositive motions and Arkon understands from the Court’s order and the telephonic status conference held on April 7, 2016 that each Defendant will separately file dispositive motions before their originally assigned judge. Dkt. No. 24. Arkon further notes that in view of the Court’s Markman ruling and subsequent amended infringement, noninfringement and invalidity contentions that the Defendants have different claims asserted against them, different accused products and different invalidity arguments. Indeed, Defendants have all provided separate noninfringement and invalidity contentions and anticipate multiple expert witnesses on the issues of invalidity and noninfringement. Case 2:15-cv-01984-JLR Document 123 Filed 01/12/18 Page 3 of 6 Fox Rothschild LLP 1001 F our th Av enue, S ui t e 4 500 Seattle, Washington 98154-1192 206.624 .36 00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 ARKON’S REPLY IN SUPPORT OF MOTION TO DISMISS FOR IMPROPER VENUE (No. 15-cv-01984-JLR) - 4 although the parties had already briefed claim construction issues, the case was not so far along to justify continued litigation in the wrong venue); Columbia Sportswear N. Am., Inc. v. Seirus Innovative Accessories, Inc., 2017 WL 3877858, at *9-10 (D. Or. Sept. 5, 2017) (TC Heartland warranted transfer in case where the parties had already filed dispositive motions, engaged in claim construction and fully litigated the case up to the eve of trial.) NPI cites to Boston Sci. Corp v. Cook Group Inc., 2017 WL 3996110 *1 (D. Del. Sept. 11, 2017), to argue that Arkon’s efforts to litigate the case constitute a waiver. However, in Boston Sci. Corp., the Court held that although nearly two years had passed since the case was filed, there was no waiver. The Court further held that a venue challenge was proper because trial was six months away, and it transferred the case for improper venue. NPI further cites to outlying cases in the Eastern District of Texas. For example, in Intellectual Ventures II LLC v. FedEx Corp., 2017 WL 5630023 *1, 3 (E.D. Tex. Nov. 22, 2017), the court considered many factors in denying the defendant’s motion to dismiss, including pre TC Heartland activities, in concluding that waiver had occurred. NPI’s citations to Realtime Data LLC v. NetApp, Inc., No. 6:16-CV-00961-RWS, 2017 WL 3588047, at *2 (E.D. Tex. Aug. 21, 2017), Koninklijke Philips N.V. v. ASUSTeK Computer Inc., No. CV 15-1125-GMS, 2017 WL 3055517, at *4 (D. Del. July 19, 2017), and Infogation Corp. v. HTC Corp., No. 16-CV-01902-H-JLB, 2017 WL 2869717, at *4 (S.D. Cal. July 5, 2017) are inapposite, because all of those courts wrongly concluded that TC Heartland was not an intervening change in the law and their analysis of waiver in that context is therefore irrelevant.2 C. Judicial Economy Does Not Mandate That This Case Remain In The Wrong Venue The case was originally assigned to Judge Jones, but consolidated along with three other cases before Judge Robart for purposes of claim construction and discovery. Although the Court 2 NPI’s citation to Restoration Hardware, Inc. v. Haynes Furniture Co. Inc., No. 16 C 10665, 2017 WL 2152438, at *2 (N.D. Ill. May 17, 2017), a non-patent case, is also inapposite, because the Court considered waiver under Fed.R.Civ.P. 12(h)(1) and concluded that venue was waived because Defendant failed to raise the issue in its answer. Case 2:15-cv-01984-JLR Document 123 Filed 01/12/18 Page 4 of 6 Fox Rothschild LLP 1001 F our th Av enue, S ui t e 4 500 Seattle, Washington 98154-1192 206.624 .36 00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 ARKON’S REPLY IN SUPPORT OF MOTION TO DISMISS FOR IMPROPER VENUE (No. 15-cv-01984-JLR) - 5 has issued a claim construction order (Dkt. No. 96), discovery remains open for nearly another three months and no dates have been set for dispositive motions, a pre-trial conference or trial. (Dkt. No. 105.) Accordingly, this case is distinguishable from some cases where motions to transfer were made very close to trial. Next, although this case has been pending for two years and substantive discovery and claim construction have occurred, this is an opportune time for the case to be transferred. The case is to be reassigned to Judge Jones for dispositive motions and trial. Judge Jones has had no substantive involvement in the case and will need to familiarize himself with the case. Moreover, the cases against Arkon, Wireless Accessory Solutions, LLC and High Gear Specialties are all before different judges. Accordingly, there is no judicial economy to be obtained by retaining this case in this improper venue. NPI’s citations to In re Volkswagen of America, Inc., 566 F.3d 1349, 1351 (Fed. Cir. 2009), Amazon.com v. Cendant Corp., 404 F. Supp. 2d 1256 (W.D. Wash. 2005), O.S. Sec. LLC v. Schlage Lock Co. LLC, 2014 WL 6766265, at *2 (C.D. Cal. Sept. 17, 2014) and In re Vistaprint Ltd., 628 F.3d 1342 (Fed. Cir. 2010) are inapposite, because those cases involved motions to transfer under 28 U.S.C. §1404(a) for forum non conveniens and not a motion to dismiss for improper venue. NPI fails to cite any case where improper venue was retained because of other similar cases pending in that district.3 Finally, there is no interest of justice in keeping the cases here to be heard before at least three different judges (two of whom have no familiarity with the case) who may reach contrary decisions, than there is in transferring the cases to districts where venue is proper. 3 NPI’s attempt to bootstrap all of these case onto the totally unrelated, non-patent causes of action in the case against Wireless Accessory Solutions, LLC d/b/a IBOLT (“IBOLT”) is totally improper and should be rejected. NPI previously sued Arkon for trade dress infringement of the exact same product at issue against IBOLT. NPI abandoned four of the six causes of action on the eve of trial, lost one of the two remaining causes of action at trial and has already approached IBOLT about removal of the non-patent causes of action from the IBOLT case. See Case No. 2:15-cv-01553, Dkt. No. 179. The main subject of the case against IBOLT is the patent cause of action. Case 2:15-cv-01984-JLR Document 123 Filed 01/12/18 Page 5 of 6 Fox Rothschild LLP 1001 F our th Av enue, S ui t e 4 500 Seattle, Washington 98154-1192 206.624 .36 00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 ARKON’S REPLY IN SUPPORT OF MOTION TO DISMISS FOR IMPROPER VENUE (No. 15-cv-01984-JLR) - 6 229187\00002\52823397.v2 D. Arkon Is Amenable To Transfer To The Central District of California Arkon is incorporated in California and has its principal place of business in the Central District of California. Thus, venue would be proper in the Central District of California. Accordingly, if this Court is inclined to transfer this action in the interest of justice pursuant to 28 U.S.C. §1406(a), then Arkon respectfully requests that this action be transferred to the Central District of California. CONCLUSION Arkon thus respectfully requests dismissal pursuant to Rule 12(b)(3) or transfer to the Central District of California. RESPECTFULLY SUBMITTED, KARISH & BJORGUM PC By: s/ Marc Karish Marc Karish -AND- By: s/ James Breitenbucher James E. Breitenbucher (WSBA No. 27670) FOX ROTHSCHILD LLP 1001 Fourth Avenue, Suite 4500 Seattle, WA 98154-1192 Attorneys for Defendant ARKON RESOURCES, INC. Case 2:15-cv-01984-JLR Document 123 Filed 01/12/18 Page 6 of 6