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Delaware Federal Court Examines Modern Analytical Framework for Motions to Transfer Patent Infringement Lawsuits

Segway Inc., et al. v. Inventist, Inc.
Case No. 15-808-SLR (United States District Court for the District of Delaware, April 25, 2016)
by Richard J. Medoff, Associate
Semmes, Bowen & Semmes (www.semmes.com)

Available at: http://www.ded.uscourts.gov/sites/default/files/opinions/slr/2016/april/15-808.pdf

Segway Inc., et al. v. Inventist, Inc. involved a patent infringement lawsuit filed in the United States District Court for the District of Delaware against a Washington corporation, with its principal place of business in Washington, that manufactured and designed two-wheeled personal transport devices similar to the Segway scooter. The Washington corporation subsequently filed a motion to transfer to the Western District of Washington, pursuant to 28 U.S.C. § 1404(a), which grants a district court the power to transfer a case “for the convenience of parties and witnesses, in the interest of justice.” See 28 U.S.C. § 1404(a). Although the Washington corporation had advertised and promoted its products nationwide, including in Delaware, the Court concluded that the Washington corporation was characterized accurately as a regional enterprise for whom litigating in Delaware would impose an unreasonable burden. Thus, the Court granted the motion to transfer.

By way of factual background, on September 11, 2015, Plaintiffs, Segway Inc. (“Segway”), DEKA Products Limited Partnership (“DEKA”), and Ninebot Technology Co., Ltd. (“Ninebot”) (collectively, “Plaintiffs”), filed the lawsuit at issue in the United States District Court for the District of Delaware, alleging that Defendant Inventist, Inc. (“Defendant”) infringed multiple patents regarding its personal transport devices. Specifically, Plaintiffs alleged that Defendant had directly or through intermediaries sold products that infringed the Plaintiffs’ patents across the United States, including in Delaware. Defendant subsequently filed a motion to transfer the case to the Western District of Washington, pursuant to 28 U.S.C. § 1404(a).

Segway is a Delaware corporation, with its principal place of business in New Hampshire. Segway is an innovative technology company that designs, develops, manufactures, distributes, and services patented personal transporters that have been publicly sold in the United States since 2002. DEKA is a New Hampshire limited partnership, with its principal place of business in New Hampshire. DEKA’s sole general partner is DEKA Research & Development Corporation, a New Hampshire corporation that focuses on research and development of innovative technologies, including certain technologies on which Segway’s patented personal transporters are based. Ninebot is a corporation organized and existing under the laws of the People’s Republic of China, with its principal place of business in Tianjin, China. Ninebot manufactures personal transporters under the “Ninebot” brand name.

Defendant is a Washington corporation, with its principal place of business in Washington. Defendant is in the business of designing and manufacturing products such as the accused personal transporter devices. Defendant employs six (6) full-time, and three (3) part-time, employees, all of whom are located in Washington, as are its corporate records. Defendant consults with engineers located in China; its product design is done in Washington and China, and its manufacturing is done in China. Defendant had no ties to Delaware except for its “advertising and promotional efforts” which were “directed to a national audience.”

Defendant’s national advertising and promotional efforts included: (1) maintaining “an interactive, commercial website store that is accessible to the general public and through which the general public (including Delaware residents) can purchase the accused products;” (2) selling its products on “Amazon.com’s website at http://www.amazon.com, and on Brookstone's website at http://www.brookstone.com;” and (3) posting “on its internet blog that large, well-known department stores, including Toys R Us, Nordstrom, Brookstone, Target, Sears, and Kmart, will sell Defendant’s products ‘across the United States.’”

The Court began its motion to transfer analysis by explaining the analytical framework for motions to transfer pursuant to 28 U.S.C. § 1404(a) as follows:

A plaintiff, as the injured party, has the privilege of initiating its litigation in the forum it chooses. A defendant’s place of incorporation is always an appropriate forum in which to bring suit. The purpose of § 1404(a) is not to usurp plaintiff's choice, but to give courts the discretion to transfer if the interests of justice so dictate. The Third Circuit in Jumara gave the courts some factors to balance in making their determination, keeping the above tenets in mind. The Jumara factors should be viewed through a contemporary lens.

See In re Link-A-Media Devices Corp., 662 F.3d 1221 (Fed. Cir. 2011); Jumara v. State Farm Ins. Co., 55 F.3d 873 (3d Cir. 1995); Helicos Biosciences Corp v. Illumina, Inc., 858 F.Supp.2d 367 (D. Del. 2012).

Regarding the Jumara factors, the Court declined to transfer “based on the location of potential witnesses and of books and records,” reasoning that “discovery is a local event and trial is a limited event.” On this point, the Court explained that “depositions are generally taken where the deponents reside,” that “books and records generally are kept in a digital format and easily transferable,” and that “according to national statistics, less than 13.9 % of patent infringement cases resolve on the merits.”

With respect to the Jumara factor related to “administrative difficulty from court congestion,” the Court concluded that this factor was “neutral.” In reaching that conclusion, the Court explained that “the case management orders always start with the schedules proposed by the litigators,” and that, in the Court’s experience, “most litigators (especially those representing defendants) are in no hurry to resolve the dispute.”

Next, the Court addressed Defendant’s argument that Delaware was “an arbitrary or irrational choice, or one selected to impede the efficient and convenient progress of the case.” The Court disagreed, finding that Delaware was an “appropriate” and “neutral” forum “with experience in patent litigation located such that the inconveniences of litigation [did] not rest solely with any one party.”

Nevertheless, the facts of the case persuaded the Court that transfer to the Western District of Washington was warranted. The Court explained that, although Defendant “clearly ha[d] global aspirations, those aspirations [were] more reflected in its promotional materials than its physical or fiscal presence in Delaware.” Accordingly, the Court concluded that Defendant was “accurately characterized as a regional enterprise for whom litigating in Delaware [would] impose an unreasonable burden.” Thus, the Court granted Defendant’s motion to transfer.