Case 1:09-cv-00740-LMB-JFA Document 100 Filed 09/10/2009 Page 1 of 38 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA ALEXANDRIA DIVISION SPH AMERICA, LLC, Plaintiff, v. ACER, INC., et al., AMAZON.COM, INC., APPLE, INC., CASIO COMPUTER CO., LTD., et al., DELL, INC., FUJITSU AMERICA, INC., et al., GENERAL DYNAMICS ITRONIX CORP., HEWLETT PACKARD CO., et al., HUAWEI CASE NO. 1:09-cv-740-LMB TECHNOLOGIES CO., LTD. et al., LENOVO GROUP LTD., et al., MOTOROLA, INC., NOKIA CORPORATION, et al., NOVATEL WIRELESS INC., et al., OPTION, INC., et al., PALM INC., PANASONIC CORPORATION, et al., PERSONAL COMMUNICATIONS DEVICES LLC, et al., SIERRA WIRELESS, INC., et al., SONY CORPORATION, et al., SONY ERICSSON MOBILE COMMUNICATIONS AB, et al., UTSTARCOM, INC., and ZTE CORPORATION, et al., Defendants. DEFENDANTS’ BRIEF IN SUPPORT OF THEIR JOINT MOTION TO TRANSFER VENUE PURSUANT TO 28 U.S.C. § 1404(a) TO THE U.S. DISTRICT COURT FOR THE SOUTHERN DISTRICT OF CALIFORNIA Defendants Acer, Inc., Acer America Corporation (collectively, “Acer”); Amazon.com, Inc. (“Amazon”); Apple, Inc. (“Apple”); Casio America, Inc., Casio Corporation of America, Inc. (collectively, “Casio”); General Dynamics Itronix Corp. (“General Dynamics Itronix”); Motorola, Inc. (“Motorola”), Nokia, Inc. (“Nokia”); Novatel Wireless Inc., Novatel Wireless Solutions, Inc., Novatel Wireless Technology, Inc. (collectively, “Novatel Wireless”); Option 1 Case 1:09-cv-00740-LMB-JFA Document 100 Filed 09/10/2009 Page 2 of 38 NV, Option Wireless USA, Inc. (collectively, “Option”); Palm Inc. (“Palm”); Panasonic Corporation of North America, Panasonic Consumer Electronics Company, Panasonic Electronic Devices Corporation of America (collectively, “Panasonic”); Sierra Wireless, Inc., Sierra Wireless America, Inc. (collectively, “Sierra Wireless”); Sony Corporation of America, Sony Electronics Inc. (collectively, “Sony”); Sony Ericsson Mobile Communications (USA) Inc. (“Sony Ericsson”); UTSTARCOM, Inc. (“UTStarcom”) (collectively, “Defendants”) hereby respectfully and jointly submit this brief in support of their Motion To Transfer Venue Pursuant To 28 U.S.C. § 1404(a) To The U.S. District Court For The Southern District Of California.1 Defendants further respectfully request oral argument on this motion to be set pursuant to Local Rule 7(E) on Friday, October 9, 2009 or at the convenience of the Court. I. INTRODUCTION SPH first filed an action in this District in July 2008 against Kyocera Wireless Corp. (“Kyocera”) and other defendants, asserting three of the five patents-in-suit here. Judge Gerald Bruce Lee of this District transferred that case to the Southern District of California on Kyocera’s motion because there were no meaningful contacts with Virginia and because key witnesses, including employees of third-party chip maker Qualcomm, were located in California. After transfer, Judge Dana Sabraw in San Diego federal court denied SPH’s motion to re-transfer the case back to Virginia. In the wake of this prior transfer order, SPH filed, over a span of two weeks, two actions asserting those same patents in this District – one on June 25, 2009 (naming 1 Defendants Dell, Inc., Hewlett-Packard Company (“HP”); Lenovo Group Ltd., Lenovo Holding Co., Inc., Lenovo (USA) Inc. (collectively “Lenovo”); Personal Communications Devices, LLC, Personal Communications Devices Holdings, LLC (collectively “PCD”) and ZTE (USA) Inc. have not yet joined but do not oppose the joint motion. Defendants have yet to determine the position of defendants not yet served. Defendants Amazon, Apple, General Dynamix Itronix, Motorola, Nokia, Novatel Wireless, Option, Palm, Sierra Wireless, Sony, Sony Ericsson, and UTStarcom have submitted declarations in support of this Motion. These declarations have been attached as Exhibits 6-16, 27 to this brief. 2 Case 1:09-cv-00740-LMB-JFA Document 100 Filed 09/10/2009 Page 3 of 38 some of the same defendants in this action) and this action on July 6, 2009. After drawing Judge Lee in its first attempt, SPH voluntarily and without explanation dismissed that action on July 2 and filed this current action, naming more defendants and adding a patent. The second suit was assigned to this Court, which played no role in Judge Lee’s original transfer of the Kyocera action. SPH’s strategy was clear: keep filing new suits until someone other than Judge Lee was assigned to the case. SPH’s strategy succeeded when this case was assigned. This action just like the prior related action filed by SPH and transferred to California by Judge Lee belongs in California, clearly a more convenient venue than Virginia for the likely witnesses and the parties. The defendants in this action and crucial third-party witnesses do not appear to have any meaningful contacts with this District. By contrast, California, and in particular the Southern District of California, has a far greater interest in this lawsuit and is far more convenient to the likely witnesses and to the parties. Nearly all of the Defendants have some connection with California and most have connections with the Southern District that are material to resolution of this dispute. Moreover, the Southern District of California is the home of QUALCOMM, Inc. (“Qualcomm”), a third-party supplier of integrated circuits (“chips”). Qualcomm supplies the chips that contain the technology accused of infringement in the accused products of 19 of the 22 defendant groups.2 As a result, most of the relevant evidence and likely witnesses will be located in California, and none in Virginia. Section 1404(a) was enacted to address abuse of the venue statute: The underlying premise of § 1404(a) is that courts should prevent plaintiffs from abusing their privilege under § 1391 by subjecting defendants to venues that are inconvenient under the terms of § 1404(a). Thus, while a plaintiff has the privilege of filing his claims in any judicial division appropriate under the general venue statute, § 1404(a) tempers the effects of the exercise of this privilege. 2 The 41 defendants to this action can be arranged into 22 groups of defendants corresponding to the accused acts of infringement. 3 Case 1:09-cv-00740-LMB-JFA Document 100 Filed 09/10/2009 Page 4 of 38 In re Volkswagen of America, Inc., 545 F.3d 304, 313 (5th Cir. 2008) (citations omitted) (granting writ of mandamus requiring district court to transfer). The appropriate remedy for SPH’s conduct is to transfer this action to the same venue to which Judge Lee transferred SPH’s earlier case – the U.S. District Court for the Southern District of California. SPH’s allegations in this case are likely the same as in the Kyocera action: that defendants practice the claims of the patents-in-suit by selling products that access 3G cell networks.3 Both Judge Lee and Judge Sabraw have already found, on virtually identical facts, that this District was not as convenient as the Southern District of California to resolve SPH’s infringement allegations. Although this action involves numerous defendants who were not in the prior transferred suit, the defendants here also have no material connection to Virginia, but many strong connections to California. As in the Kyocera case, the prominent supplier of the accused technology is Qualcomm, which supplies chips used in accused products of at least 19 of 22 defendant groups. The transferee court already has experience litigating issues that will be raised in this action – it has decided several motions relating to substantive issues in the case and conducted an early evaluation of the parties claims and defenses. Moreover, the Southern District of California is the home forum of a number of Defendants, including Sony, Sierra Wireless, and Novatel Wireless and most importantly, third-party supplier Qualcomm. Even if this were the first time this District had considered transfer, the facts support transfer to California. While Plaintiff’s desire to litigate in this forum must be considered, it should be afforded no deference where, as here, there is no meaningful link between the alleged acts of infringement and the chosen forum. SPH is a shell corporation. It does not design, manufacture, sell, or distribute any product in Virginia, nor does it practice the patents-in-suit. 3 Plaintiff has not expressly limited its claims to 3G cell networks, nor do Defendants currently contend that they are so limited. 4 Case 1:09-cv-00740-LMB-JFA Document 100 Filed 09/10/2009 Page 5 of 38 Instead, it purports to be a licensee of the five asserted patents, while the inventors and licensor reside in Korea. The “business” of SPH is nothing more than acquiring patent licenses and filing infringement actions. In contrast, the defendants in this case and necessary third-party witnesses have significant ties to California: • Most of the defendant groups, including Acer, Apple, Fujitsu, HP, Huawei, Nokia, Novatel Wireless, Palm, Sierra Wireless, Sony, Sony Ericsson and UTStarcom reside in California or do business there. • Most of the accused products appear to be designed in California, including those of Amazon, Apple, HP, Novatel Wireless, Palm, Sierra Wireless, and Sony. • The sales and marketing operations of many of the defendants take place in California. • San Diego-based Qualcomm supplies at least 19 of 22 defendant groups with CDMA transceiver chips that allow the accused products to access 3G cell networks. The features and operation of these chips will be at the heart of this dispute. • The Qualcomm witnesses with knowledge of the relevant operation of the chips, and thus the accused products, all reside in or near San Diego. • Qualcomm is also a major source of documents and key witnesses relating to possible defenses based on participation of the patent owner in various standard setting organizations, such as 3GPP and 3GPP2. • At least one Qualcomm witness will have first-hand knowledge of the state of the art, and it is believed that other witnesses who have been involved with the development of the standards and CDMA technology that forms the prior art are also located in California.