Recently Judge Albright issued an order denying LG Electronics’ Motion to Transfer to the Northern District of California (“NDCA”) in a case filed by co-plaintiffs Ikorongo Texas LLC and Ikorongo Technology LLC. What’s most interesting about this order (not just that it was denied) is Judge Albright’s rationale regarding one of the two plaintiff entities.
As most of you are well aware, Section 1404(a)’s threshold inquiry is whether the case initially “might have been brought” in the proposed transferee forum. Although both Ikorongo and LG agreed that LG committed acts of alleged infringement in the NDCA, and LG has a regular and established place of business in the NDCA, the Court was not persuaded. Instead, the Court found that LG did not meet its burden to show that Plaintiff Ikorongo Texas’s current action could have initially been brought in the NDCA.
Ikorongo Texas argued that this case could not have been brought in the NDCA because Ikorongo Texas owns “exclusive rights under the Asserted Patents only in a geographic location that includes [the WDTX].” (Ikorongo Texas was assignee under an agreement that conveyed rights only in the Texas counties that make up the Western and Eastern Districts.) Thus, argued Ikorongo, Ikorongo Texas’s ownership interests permitted it to file suit only in the WDTX and EDTX, because LG’s alleged acts of infringement with respect to Ikorongo Texas’s permitted enforcement zone occurred within this geographic location.
Relying on a US Supreme Court case from the late 1890s, Waterman v. Mackenzie, the Court agreed that LG had not carried its burden on the threshold issue, and stated that “an applicant, patentee, or the individual’s assigns or legal representatives can convey an exclusive right under his application to the whole or any specified part of the United States.” Such a right can include the right to sue infringers. But because Ikorongo Texas owned only rights that could be asserted in the WDTX (or EDTX), the Court stated “the focus turns not to where LG committed any alleged acts of infringement but to where LG committed any alleged acts of infringement as to Ikorongo Texas” (emphasis added). Thus, the Court found that the threshold inquiry was not met because Ikorongo Texas had the right to sue only for infringement that occurred within the districts included in its assignment -aka the WDTX and EDTX.
Is this the “golden ticket” plaintiffs can use to secure venue in the WDTX? Well, not so fast says Judge Albright. First, the Court stated that a suit “brought on any Specified Part still must satisfy the venue requirements of § 1400(b).” Second, “regardless of whether an entity’s right to sue has been limited by a Specified Part, an action may always be brought in the judicial district where the defendant resides. A § 1404 motion to transfer to that district will always satisfy the threshold issue.” We think this means that, even though Ikorongo Texas had the rights to sue only over acts of infringement that occurred in its “Specified Part,” Ikorongo Texas still could have sued LG over Texas-based infringement in Delaware, where LG Electronics U.S.A., Inc. is incorporated and “resides” under TC Heartland. And if LG had moved for a convenience transfer to Delaware, the Court would have found that LG at least met Section 1404(a)’s “might have been brought” threshold.
That still might not have made a difference: The Court didn’t just rely on the above “threshold”-related reasoning for denying LG’s Motion. The Court also found that the Fifth Circuit’s public and private interest Volkswagen factors also disfavored transfer.