Much has been written recently about the struggle between patentees who want their cases to be heard in Texas, and alleged infringers who want those cases to be heard elsewhere. But what happens when a patentee who has been sued in a declaratory judgment action tries to transfer its case to Texas?
For the two defendants in Roku, Inc. v. AlmondNet, Inc., C.A. No. 21-1035-MN, who asked Judge Noreika to move Roku's DJ case to Texas or dismiss it in favor of a co-pending Texas suit involving the same patents and parties, the answer was straightforward: the case stays in Delaware.
Following unsuccessful licensing discussions, Roku filed suit in Delaware just six hours before the defendants filed their mirror-image case in Texas. The defendants then moved to transfer the Delaware case to the Western District of Texas.
Regarding the transfer motion, Judge Noreika found that the threshold requirement for transfer under Section 1404(a) - that a suit may be transferred only to a district where it "might have been brought" - was not satisfied because defendants (both of which are incorporated in Delaware) had not established that the Texas court would have had personal jurisdiction over them when the Delaware case was filed, as required by the statute and controlling precedent:
All of Defendants’ actions in the Western District of Texas arose after the present action was filed. Even assuming the correctness of Defendants’ assertion that its enforcement actions in the Western District of Texas permit that District to exercise personal jurisdiction over them, that jurisdiction would have arisen only after Roku filed this action. Therefore, these later-filed actions cannot support an argument that the Western District of Texas could have exercised jurisdiction over AlmondNet and Intent IQ when Roku filed this declaratory action. For the very same reason, Defendants’ argument that they now consent to jurisdiction in the Western District of Texas does not confer jurisdiction at the time Roku filed the present action.
Judge Noreika also declined to dismiss the Delaware suit in favor of the later-filed Texas case, finding that "Defendants have not met their burden of demonstrating sound reasons that would justify departing from the first-filed rule."
In particular, she concluded that Roku's suit was not anticipatory (in other words it was not filed "in bad faith or to avoid what [Roku] perceived as an unfavorable forum"). She also found that neither convenience of witnesses nor judicial economy weighed in favor of departing from the first-filed rule where all parties were incorporated in Delaware, no particular witness was alleged to be inconvenienced, and where it was "Defendants' own litigation strategy" that resulted in several additional related cases being filed in Texas after the Delaware case was filed.
Roku has moved to dismiss or stay the Texas suit in favor of the Delaware suit, and promptly notified Judge Albright of Judge Noreika's decision on Monday. However, it remains to be seen how Judge Albright will rule on Roku's motion.
In the meantime, Roku has also moved to dismiss defendants' counterclaims of infringement in the Delaware suit on the grounds that defendants' patents are invalid under Section 101. Now that Judge Noreika has decided the suit will remain in Delaware, that motion will likely proceed.
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