`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
`
`
`
`
`
`C.A. No. 17-585 (CFC) (SRF)
`
`
`
`
`) ) ) ) ) ) ) ) )
`
`
`)
`
`UNIVERSAL SECURE REGISTRY LLC,
`
`
`Plaintiff,
`
`
`
`v.
`
`
`APPLE INC., VISA INC. and
`VISA U.S.A., INC.,
`
`
`Defendants.
`
`PLAINTIFF UNIVERSAL SECURITY REGISTRY LLC’S
`RESPONSE TO DEFENDANTS’ OBJECTIONS TO THE
`SEPTEMBER 19, 2018 REPORT AND RECOMMENDATION
`
`MORRIS, NICHOLS, ARSHT & TUNNELL LLP
`Jack B. Blumenfeld (#1014)
`Jeremy A. Tigan (#5239)
`1201 North Market Street
`P.O. Box 1347
`Wilmington, DE 19899-1347
`(302) 658-9200
`jblumenfeld@mnat.com
`jtigan@mnat.com
`
`Attorneys for Universal Secure Registry LLC
`
`
`
`
`
`
`
`
`
`OF COUNSEL:
`
`Harold Barza
`Tigran Guledjian
`Valerie Roddy
`Jordan Kaericher
`QUINN EMANUEL
`URQUHART & SULLIVAN, LLP
`865 S Figueroa Street, 10th Floor
`Los Angeles, CA 90017
`(213) 443-3000
`
`Sean Pak
`Brian E. Mack
`QUINN EMANUEL
`URQUHART & SULLIVAN, LLP
`50 California Street, 22nd Floor
`San Francisco, CA 94111
`(415) 875-6600
`
`October 17, 2018
`
`
`
`
`
`Case 1:17-cv-00585-CFC-SRF Document 150 Filed 10/17/18 Page 2 of 16 PageID #: 5073
`
`TABLE OF CONTENTS
`
`Page
`
`TABLE OF AUTHORITIES .......................................................................................................... ii
`
`I.
`
`II.
`
`INTRODUCTION ...............................................................................................................1
`
`JUDGE FALLON PROPERLY DENIED DEFENDANTS’ MOTION TO DISMISS ......1
`
`III.
`
`JUDGE FALLON PROPERLY DENIED DEFENDANTS’ TRANSFER MOTION ........7
`
`IV.
`
`CONCLUSION ..................................................................................................................10
`
`
`
`
`
`
`
`
`
`
`
`i
`
`
`
`Case 1:17-cv-00585-CFC-SRF Document 150 Filed 10/17/18 Page 3 of 16 PageID #: 5074
`
`TABLE OF AUTHORITIES
`
`Cases
`
`Page(s)
`
`Aatrix Software, Inc. v. Green Shades Software, Inc.
`882 F.3d 1121 (Fed. Cir. 2018)................................................................................................... 1
`
`Affinity Labs of Texas, LLC v. DIRECTV, LLC,
`838 F.3d 1253 (Fed. Cir. 2016)................................................................................................... 5
`
`Alice Corp. Pty. Ltd. v. CLS Bank Int’l,
`134 S. Ct. 2347 (2014) .................................................................................................... 3, 4, 5, 6
`
`In re Altera Corp.,
`494 F. App’x 52 (Fed. Cir. 2012) ............................................................................................... 9
`
`Asghari-Kamrani v. United Servs. Auto Ass’n,
`No. 15-cv-478, 2016 WL 3670804 (E.D. Va. July 5, 2016), aff’d, 2018 WL 4352098
`(Fed. Cir. Sept. 11, 2018) ............................................................................................................ 6
`
`Autodesk Canada Co. v. Assimilate, Inc.,
`No. CIV. 08-587-SLR-LPS, 2009 WL 3151026 (D. Del. Sept. 29, 2009) ............................... 10
`
`Bascom Glob. Internet Servs., Inc. v. AT&T Mobility, LLC,
`827 F.3d 1341 (Fed. Cir. 2016)................................................................................................... 3
`
`Bilski v. Kappos,
`561 U.S. 593 (2010) ................................................................................................................ 2, 3
`
`In re Bilski,
`545 F.3d 943 (Fed. Cir. 2008)..................................................................................................... 4
`
`Cellectis S.A. v. Precision Biosciences, Inc.,
`858 F. Supp. 2d 376 (D. Del. 2012) ............................................................................................ 8
`
`Diamond v. Diehr,
`450 U.S. 175 (1981) .................................................................................................................... 4
`
`Elec. Power Grp., LLC v. Alston S.A.,
`830 F.3d 1350 (Fed. Cir. 2016)................................................................................................... 6
`
`Enfish, LLC v. Microsoft Corp.,
`822 F.3d 1327 (Fed. Cir. 2016)....................................................................................... 2, 3, 5, 6
`
`Helicos Biosciences Corp. v. Illumina, Inc.,
`858 F. Supp. 2d 367 (D. Del. 2012 ............................................................................................. 8
`
`Idexx Labs., Inc. v. Charles River Labs., Inc.,
`2016 WL 3647971 (D. Del. July 1, 2016) .................................................................................. 3
`
`Intellectual Ventures I LLC v. Altera Corp.,
`842 F. Supp. 2d 744 (D. Del. 2012) ............................................................................................ 9
`
`Jumara v. State Farm Ins. Co.,
`55 F.3d 873 (3d Cir. 1995).......................................................................................................... 7
`
`
`
`ii
`
`
`
`Case 1:17-cv-00585-CFC-SRF Document 150 Filed 10/17/18 Page 4 of 16 PageID #: 5075
`
`King Pharms., Inc. v. Eon Labs, Inc.,
`616 F.3d 1267 (Fed. Cir. 2010)................................................................................................... 4
`
`Kinglite Holdings, Inc. v. Micro-Star Int’l Co. Ltd,
`2015 WL 6437836 (C.D. Cal. 2015)........................................................................................... 6
`
`L’Athene, Inc. v. EarthSpring LLC,
`570 F. Supp. 2d 588 (D. Del. 2008) ............................................................................................ 9
`
`Mayo Collaborative Servs. v. Prometheus Labs., Inc.,
`132 S. Ct. 1289 (2012) ................................................................................................................ 4
`
`MAZ Encryption Techs. LLC v. Blackberry Corp.,
`2016 WL 5661981 (D. Del. Sept. 29, 2016) ............................................................................... 3
`
`McRO, Inc. v. Bandai Namco Games Am. Inc.,
`837 F.3d 1299 (Fed. Cir. 2016)....................................................................................... 3, 4, 5, 6
`
`Messaging Gateway Solutions LLC v. Amdocs, Inc.,
`2015 WL 1744343 (D. Del. April 5, 2015)................................................................................. 4
`
`In re Mobile Telecommc’ns Techs., LLC,
`243 F. Supp. 3d 478 (D. Del. 2017) ............................................................................................ 7
`
`PalTalk Holdings, Inc. v. Riot Games, Inc.,
`2017 WL 2106124 (D. Del. May 15, 2017) ................................................................................ 7
`
`Secured Mail Solutions LLC v. Universal Wilde, Inc.,
`873 F.3d 905 (Fed. Cir. 2017)..................................................................................................... 6
`
`Smart Audio Techs., LLC v. Apple, Inc.,
`910 F. Supp. 2d 718 (D. Del. 2012) ............................................................................................ 8
`
`Smart Meter Techs., Inc. v. Duke Energy Corp.,
`2017 WL 2954916 (D. Del. July 11, 2017) ................................................................................ 7
`
`Smart Systems Innovations, LLC v. Chicago Transit Authority,
`873 F.3d 1364 (Fed. Cir. 2017)................................................................................................... 6
`
`Stephenson v. Game Show Network, LLC,
`933 F. Supp. 2d 674 (D. Del. 2013) ............................................................................................ 8
`
`Stewart Org., Inc. v. Ricoh Corp.,
`487 U.S. 22 (1988) ...................................................................................................................... 7
`
`Tessera, Inc. v. Sony Elecs. Inc.,
`Civil No. 10-838 (RMB) (KW), 2012 WL 1107706 (D. Del. Mar. 30, 2012) ......................... 10
`
`Umland v. Planco Fin. Servs.,
`542 F.3d 59 (3d Cir. 2008).......................................................................................................... 1
`
`Van Dusen v. Barrack,
`376 U.S. 612 (1964) .................................................................................................................... 7
`
`Visual Memory LLC v. NVIDIA Corp.,
`867 F.3d 1253 (Fed. Cir. 2017)................................................................................................... 5
`
`
`
`iii
`
`
`
`Case 1:17-cv-00585-CFC-SRF Document 150 Filed 10/17/18 Page 5 of 16 PageID #: 5076
`
`28 U.S.C. § 1404(a) ........................................................................................................................ 7
`
`35 U.S.C. § 101 ............................................................................................................................... 2
`
`Statutes
`
`
`
`
`
`
`
`iv
`
`
`
`Case 1:17-cv-00585-CFC-SRF Document 150 Filed 10/17/18 Page 6 of 16 PageID #: 5077
`
`I.
`
`INTRODUCTION
`
`Defendants Apple Inc. (“Apple”) and Visa Inc. and Visa U.S.A. Inc. (“Visa”) have filed
`
`objections to Magistrate Judge Fallon’s carefully-considered 27-page September 19, 2018 Report
`
`and Recommendation (D.I. 137) (“R&R”). In their Objections (D.I. 147) (“Objections” or
`
`“Objs.”)—as in their original moving and reply papers—Defendants advance arguments that ignore
`
`both controlling Supreme Court and Federal Circuit precedent and facts that do not support their
`
`positions. The Court should adopt the R&R in its entirety.
`
`II.
`
`JUDGE FALLON PROPERLY DENIED DEFENDANTS’ MOTION TO DISMISS
`
`Judge Fallon’s R&R properly analyzed the challenged patent claims under the Supreme
`
`Court’s two-step framework for determining patent eligibility under Section 101 to conclude that the
`
`technical innovations claimed in the four Asserted Patents are patent-eligible subject matter. Closely
`
`adhering to the Supreme Court’s mandate to consider each claim’s recited elements “both
`
`individually and as an ordered combination”—a mandate that Defendants Apple and Visa
`
`repeatedly ignored—Judge Fallon correctly denied Defendants’ Motion to Dismiss after determining
`
`that each claimed invention presents a technological improvement sufficient to distinguish USR’s
`
`inventions from mere unpatentable abstract ideas. Plaintiff USR respectfully requests that the Court
`
`overrule Defendants’ Objections and adopt the R&R in its entirety.
`
`As Judge Fallon correctly noted, on a motion to dismiss, “the court must accept as true all
`
`factual allegations in the complaint and view them in the light most favorable to the plaintiff.” R&R
`
`at 12 (citing Umland v. Planco Fin. Servs., 542 F.3d 59, 64 (3d Cir. 2008); id. at 16 (citing Aatrix
`
`Software, Inc. v. Green Shades Software, Inc. 882 F.3d 1121, 1124 (Fed. Cir. 2018) (same)). In
`
`Plaintiff’s Answering Brief in Opposition to Defendants’ Motion to Dismiss (D.I. 30) (“101 Opp.”),
`
`USR provided a detailed explanation of the technical innovations of the claimed inventions,
`
`supporting each explanation with pinpoint evidentiary citations to the Complaint and to the
`
`
`
`1
`
`
`
`Case 1:17-cv-00585-CFC-SRF Document 150 Filed 10/17/18 Page 7 of 16 PageID #: 5078
`
`specifications of each of the four Asserted Patents. See, e.g., id. at 2-4, 10, 13-15, 17. For each
`
`analyzed claim, Judge Fallon repeatedly, and consistently, relied on the uncontroverted averments in
`
`the Complaint and the patents to conclude that each challenged claim presents “an improvement to
`
`computer functionality itself” by way of claiming “an unconventional technological solution…to a
`
`technical problem” that represents “a technological improvement sufficient to distinguish the
`
`invention from an unpatentable abstract idea.” See, e.g., R&R at 17-25. As such, Judge Fallon
`
`determined that the challenged claims are directed to patent-eligible subject matter under 35 U.S.C. §
`
`101 (“any new and useful process, machine, manufacture, or composition of matter, or any new and
`
`useful improvement thereof”).
`
`Defendants’ Objections—like their motion to dismiss—fail to show that any of the
`
`challenged claims fall within the three narrow exceptions of 35 U.S.C. § 101: “laws of nature,
`
`physical phenomena, and abstract ideas.” Bilski v. Kappos, 561 U.S. 593, 601-02 (2010).
`
`Defendants’ arguments distill essentially to asserting that patent-eligible claims can neither include
`
`computer components, nor describe an invention that can be used on general purpose computer
`
`components (in other words, cannot be directed to a software improvement). Federal Circuit
`
`authority is to the contrary. First, there is no general rule that an invention’s novel use of
`
`purportedly “known” computer components—e.g., a biometric sensor, user
`
`interface,
`
`communication interface, processor, and a secure registry—to provide more secure mobile
`
`transaction authentication dooms the claims under Section 101, and Judge Fallon was right to reject
`
`this reasoning. See Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1338 (Fed. Cir. 2016) (“[W]e are
`
`not persuaded that the invention’s ability to run on a general-purpose computer dooms the claims.”).
`
`Moreover, the Federal Circuit has repeatedly and soundly rejected Defendants’ suggestion that
`
`software inventions are unpatentable. See id., 822 F.3d at 1339 (claims not required to be defined by
`
`reference to “physical” components, for holding otherwise “risks resurrecting a bright-line machine-
`
`
`
`2
`
`
`
`Case 1:17-cv-00585-CFC-SRF Document 150 Filed 10/17/18 Page 8 of 16 PageID #: 5079
`
`or-transformation test,…or creating a categorical ban on software patents, [citing Bilski]”). The
`
`Federal Circuit’s rejection of Defendants’ simplistic argument that a claim’s reference to “known”
`
`computer components makes the claim unpatentably abstract is amply demonstrated in Bascom
`
`Glob. Internet Servs., Inc. v. AT&T Mobility, LLC, 827 F.3d 1341 (Fed. Cir. 2016), where the Court
`
`held that a claim directed to an abstract idea was still patent-eligible, even though “the limitations of
`
`the claims, taken individually, recite generic computer, network and Internet components, none of
`
`which is inventive by itself.” Id. at 1349.
`
`The primary disconnect between Judge Fallon’s sound reasoning and Defendants’ flawed
`
`arguments is that, although Judge Fallon focused in her Step 1 analysis on the actual, recited
`
`limitations of the challenged claims (see, e.g., R&R at 17-18, 19-20, 21-22, 23), Defendants’ Step 1
`
`approach was to grossly oversimplify (and ignore) express claim language, “run[ning] afoul of the
`
`Federal Circuit’s guidance in Enfish that courts should not ‘oversimplif[y]’ key inventive concepts or
`
`‘downplay’ an invention’s benefits in conducting a step-1 analysis.” MAZ Encryption Techs. LLC v.
`
`Blackberry Corp., 2016 WL 5661981 at *6 (D. Del. Sept. 29, 2016); see also McRO, Inc. v. Bandai
`
`Namco Games Am. Inc., 837 F.3d 1299, 1313 (Fed. Cir. 2016) (“[C]ourts must be careful to avoid
`
`oversimplifying the claims by looking at them generally and failing to account for the specific
`
`requirements of the claims.”) (internal quotation marks omitted). “Describing the claims at such a
`
`high level of abstraction and untethered from the language of the claims all but ensures that the
`
`exceptions to § 101 swallow the rule.” Enfish, 822 F.3d at 1337; Alice Corp. Pty. Ltd. v. CLS Bank
`
`Int’l, 134 S. Ct. 2347, 2354 (2014) (“[W]e tread carefully in construing this exclusionary principle,
`
`lest it swallow all of patent law….At some level, ‘all inventions. . .embody, use, reflect, rest upon, or
`
`apply laws of nature, natural phenomena, or abstract ideas’); Idexx Labs., Inc. v. Charles River
`
`Labs., Inc., 2016 WL 3647971, *4 (D. Del. July 1, 2016) (The “level of abstraction” “in describing
`
`the claims must be consonant with the level of abstraction expressed in the claims themselves.”);
`
`
`
`3
`
`
`
`Case 1:17-cv-00585-CFC-SRF Document 150 Filed 10/17/18 Page 9 of 16 PageID #: 5080
`
`Messaging Gateway Solutions LLC v. Amdocs, Inc., 2015 WL 1744343, *5 (D. Del. April 5, 2015)
`
`(“If one looks at almost any patent from far enough away, it could arguably claim an abstract idea.”).
`
`Instead of adopting Defendants’ overly-abstracted, piecemeal interpretation of the claims,
`
`Judge Fallon’s Step 1 approach focused on the specific, concrete, technological solutions recited in
`
`the claims themselves, thus comporting with the Supreme Court’s and Federal Circuit’s mandate to
`
`analyze the entire claim as an ordered combination. See McRO, 837 F.3d at 1313 (“Whether at step
`
`one or step two of the Alice test,…a court must look to the claims as an ordered combination,
`
`without ignoring the requirements of the individual steps.”) (emphasis added). Defendants are
`
`wrong when they argue that Judge Fallon’s Alice analysis should have focused on the individual
`
`computer components in the claims, as this would contradict the Supreme Court’s mandate that
`
`claims are not to be dissected into individual components, but rather considered as a whole. See
`
`Diamond v. Diehr, 450 U.S. 175, 188-89 (1981); Alice, 134 S. Ct. at 2355 (“[W]e consider the
`
`elements of each claim both individually and ‘as an ordered combination’ to determine whether the
`
`additional elements ‘transform the nature of the claim’ into a patent-eligible application.”) (quoting
`
`Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1297-98 (2012)); In re Bilski,
`
`545 F.3d 943, 958 (Fed. Cir. 2008) (“[I]t is irrelevant that any individual step or limitation of such
`
`processes by itself would be unpatentable under § 101.”); King Pharms., Inc. v. Eon Labs, Inc., 616
`
`F.3d 1267, 1277 (Fed. Cir. 2010) (“The Supreme Court has stated that a § 101 patentability analysis
`
`is directed to the claim as a whole, not individual limitations.”).
`
`Defendants argue that Judge Fallon should not have considered the claim as a whole under
`
`Alice Step 1 in determining whether the claim is directed primarily to an abstract idea, but should
`
`have instead waited until Step 2 before taking into account the claimed invention’s character as a
`
`whole. Objs. at 5. The Federal Circuit has repeatedly held otherwise, as Judge Fallon correctly
`
`noted. R&R at 24 (citing McRO, 837 F.3d at 1313 (“Whether at step one or step two of the Alice
`
`
`
`4
`
`
`
`Case 1:17-cv-00585-CFC-SRF Document 150 Filed 10/17/18 Page 10 of 16 PageID #: 5081
`
`test…a court must look to the claims as an ordered combination, without ignoring the requirements
`
`of the individual steps.”)); see also Enfish, 822 F.3d at 1338; Affinity Labs of Texas, LLC v.
`
`DIRECTV, LLC, 838 F.3d 1253, 1257 (Fed. Cir. 2016) (“The ‘abstract idea’ step of the inquiry calls
`
`upon us to look at the ‘focus of the claimed advance over the prior art’ to determine if the claim’s
`
`‘character as a whole’ is directed to excluded subject matter.”); Visual Memory LLC v. NVIDIA
`
`Corp., 867 F.3d 1253, 1258 (Fed. Cir. 2017) (Alice two-step framework “involve[s] overlapping
`
`scrutiny of the content of the claims” requiring that the Court “ask whether the claims are directed to
`
`an improvement to computer functionality versus being directed to an abstract idea.”). Judge Fallon
`
`correctly followed Supreme Court and Federal Circuit guidance in choosing to consider the claim
`
`limitations on the whole (along with specific statements in each Asserted Patent) to determine under
`
`Alice Step 1 that the Asserted Claims are not directed to abstract ideas because the plain focus of
`
`each claim is “on an improvement to computer functionality itself, not on economic or other tasks
`
`for which a computer is used in its ordinary capacity.” R&R at 17, 19, 21, 23 (citing Visual
`
`Memory, 867 F.3d at 1258, Enfish, 822 F.3d at 1336).
`
`Defendants assert that Judge Fallon’s R&R “fails to follow Supreme Court and Federal
`
`Circuit precedent” (Objs. at 6, § C), but that assertion is without substance. Throughout the R&R,
`
`Judge Fallon repeatedly (and correctly) applied the appropriate Section 101 analysis set forth by the
`
`Supreme Court and the Federal Circuit. As a reading of Section C of their Objections shows, what
`
`Defendants appear to actually take issue with is Judge Fallon’s rejection of the analogies that
`
`Defendants attempted to draw between USR’s claimed technical innovation, and different patent
`
`claims analyzed by different courts in other cases. For example, Defendants cite the Supreme
`
`Court’s Alice decision as controlling, but nothing in Alice mandates a finding of unpatentability here;
`
`the Alice claims were directed to a “fundamental economic practice” covering concepts that had
`
`been “long prevalent in our system of commerce,” Alice, 134 S. Ct. at 2355-56, a showing that Judge
`
`
`
`5
`
`
`
`Case 1:17-cv-00585-CFC-SRF Document 150 Filed 10/17/18 Page 11 of 16 PageID #: 5082
`
`Fallon found Defendants failed to make here. Defendants also drew analogies to the claims at issue
`
`in Secured Mail Solutions LLC v. Universal Wilde, Inc., 873 F.3d 905 (Fed. Cir. 2017) and Smart
`
`Systems Innovations, LLC v. Chicago Transit Authority, 873 F.3d 1364, 13 72-73 (Fed. Cir. 2017),
`
`but Judge Fallon expressly distinguished those claims from those at issue here. See R&R at 25.
`
`Finally, Defendants also raise (for the first time) two decisions issued from trial courts outside of
`
`both this district and the Third Circuit.1 Obviously, neither of these out-of-circuit trial court
`
`decisions constitute “precedent” that would mandate a different conclusion here.
`
`Defendants object that Judge Fallon failed to “perform an Alice Step 2 analysis,” Objs. at 7,
`
`but acknowledge that, having found that the Asserted Claims are not directed to an unpatentable
`
`abstract idea in Alice step 1, Judge Fallon was under no obligation to analyze any of these claims
`
`under Alice step 2. See McRO, 837 F.3d at 1316 (“Because we find that claim 1 is not directed to
`
`ineligible subject matter, we do not reach Alice step two.”); Enfish, 822 F.3d at 1339 (same).
`
`Nevertheless, relying on her analysis of the technical innovations recited in the Asserted Claims, and
`
`noting the significant overlap between Steps 1 and 2 of the Alice inquiry, Judge Fallon still
`
`concluded that each of the four Asserted Patents claims an “inventive concept” sufficient to satisfy
`
`Alice Step 2. See R&R at 19, 21, 23, 26 (citing Elec. Power Grp., LLC v. Alston S.A., 830 F.3d
`
`1350, 1353 (Fed. Cir. 2016)).
`
`Finally, Defendants argue that Judge Fallon was required to consider whether the asserted
`
`claims of some (but not all) of the patents are directed to an “unpatentable mental process.” Objs. at
`
`8. There is no requirement that the Court review the abstractness of any challenged claim under a
`
`“mental steps” analysis. Moreover, although Defendants raised this “mental process” argument in
`
`
`1 Asghari-Kamrani v. United Servs. Auto Ass’n, No. 15-cv-478, 2016 WL 3670804 (E.D. Va. July
`5, 2016), aff’d, 2018 WL 4352098 (Fed. Cir. Sept. 11, 2018), and Kinglite Holdings, Inc. v. Micro-
`Star Int’l Co. Ltd, 2015 WL 6437836 (C.D. Cal. 2015).
`
`
`
`6
`
`
`
`Case 1:17-cv-00585-CFC-SRF Document 150 Filed 10/17/18 Page 12 of 16 PageID #: 5083
`
`their motion papers, and again in their objections, Defendants have never provided any citation to the
`
`record (either to the Complaint or to the Asserted Patents) to support this assertion, choosing to
`
`instead rely entirely on attorney argument. See, e.g., Objs. at 9-10, 15. In the absence of any
`
`evidence of record, Judge Fallon was under no obligation to consider Defendants’ “mental process”
`
`argument. See Smart Meter Techs., Inc. v. Duke Energy Corp., 2017 WL 2954916 at *3 n.1, *5 (D.
`
`Del. July 11, 2017) (rejecting on a motion to dismiss as “attorney argument” defendant’s statements
`
`where “the specification does not admit that humans could perform any of these functions.”);
`
`PalTalk Holdings, Inc. v. Riot Games, Inc., 2017 WL 2106124 at *5 (D. Del. May 15, 2017) (same).
`
`III.
`
`JUDGE FALLON PROPERLY DENIED DEFENDANTS’ TRANSFER MOTION
`
`28 U.S.C. § 1404(a) “is intended to place discretion in the district court to adjudicate motions
`
`to transfer according to an ‘individualized, case-by-case consideration of convenience and fairness.”
`
`Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988) (quoting Van Dusen v. Barrack, 376 U.S.
`
`612, 622 (1964)). “The burden of establishing the need for transfer…rests with the movant,” and
`
`“‘in ruling on [a motion to transfer] the plaintiff’s choice of venue should not be lightly disturbed.’”
`
`Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995). Judge Fallon correctly concluded
`
`that the private and public interest factors do not weigh in favor of transfer.
`
`The Parties’ Forum Preferences Do Not Favor Transfer. Although USR does not reside in
`
`this District, “[t]he deference afforded a plaintiff’s choice of forum will ordinarily apply as long as a
`
`plaintiff has selected the forum for some legitimate reason.” In re Mobile Telecommc’ns Techs.,
`
`LLC, 243 F. Supp. 3d 478, 483 (D. Del. 2017) (emphasis added). Here, USR had legitimate reasons
`
`for filing in Delaware instead of its “home turf” of Massachusetts, including that venue was likely
`
`improper as to Visa in Massachusetts,2 yet certain in Visa’s state of incorporation in nearby
`
`
`2 See Plaintiff Universal Secure Registry’s Answering Brief in Opposition to Defendants’ Motion to
`
`
`
`
`7
`
`
`
`Case 1:17-cv-00585-CFC-SRF Document 150 Filed 10/17/18 Page 13 of 16 PageID #: 5084
`
`Delaware. See, e.g., R&R at 2 (both Visa Defendants incorporated in Delaware); Helicos
`
`Biosciences Corp. v. Illumina, Inc., 858 F. Supp. 2d 367, 373 (D. Del. 2012) (suit was filed in
`
`Delaware “for legitimate reasons” because “Delaware is a venue close to [plaintiff’s] principal place
`
`of business [in Massachusetts] and . . . it is a venue where all of the defendants could be sued”); see
`
`also Cellectis S.A. v. Precision Biosciences, Inc., 858 F. Supp. 2d 376, 381 (D. Del. 2012)
`
`(plaintiff’s choice of forum was based on “legitimate reasons” where defendant was incorporated in
`
`Delaware, weighing against transfer). In any event, there is no merit to Defendants’ criticism that
`
`“the R&R errs by effectively making USR’s forum preference dispositive.” Objs. at 8. To the
`
`contrary, Judge Fallon expressly afforded USR’s forum preference less weight than if it had a
`
`presence in Delaware, finding it weighed only “slightly against transfer,” R&R at 6, just as
`
`Defendants urged her to do.3 Judge Fallon simply (and correctly) declined to give Defendants’
`
`preference for a home-field advantage in a venue where they happen to be major employers more
`
`weight than USR’s rational preference for trial in the “traditional and legitimate venue” of the Visa
`
`Defendants’ own chosen state of incorporation. R&R at 6; Stephenson v. Game Show Network,
`
`LLC, 933 F. Supp. 2d 674, 678 (D. Del. 2013)).
`
`The Location Where the Claim Arose Does Not Favor Transfer. Without citing to any
`
`authority, Defendants contend that “[t]he R&R errs by focusing on the sale of accused products
`
`nationwide, including in Delaware, as a basis for where the claim arose.” Objs. at 9. In fact, “when
`
`the defendant in a patent infringement action operates on a national or global level, this factor is
`
`typically neutral.” Smart Audio Techs., LLC v. Apple, Inc., 910 F. Supp. 2d 718, 729, n.10 (D. Del.
`
`2012). Defendants do not dispute that the accused products are ubiquitous nationwide (and
`
`
`Transfer Venue to the Northern District of California, D.I. 31 (“Transfer Opp.”) at 4 n.1.
`3 See, e.g., Defendants’ Reply (D.I. 38) at 2 (arguing that “USR’s ‘preference for Delaware’ . . .
`‘weighs minimally against transferring venue’”).
`
`
`
`8
`
`
`
`Case 1:17-cv-00585-CFC-SRF Document 150 Filed 10/17/18 Page 14 of 16 PageID #: 5085
`
`globally). Defendants’ singular focus on where the accused products were developed—rather than
`
`sold—finds no support in the law.
`
`The Convenience of the Parties Does Not Favor Transfer. Defendants also incorrectly
`
`contend that Judge Fallon found Apple and Visa could not obtain transfer from an inconvenient
`
`forum simply because they are large companies. Objs. at 9. To the contrary, Judge Fallon noted the
`
`well-established principle that defendants who are incorporated in Delaware (like Visa) can rarely
`
`credibly argue that litigating in their own state of incorporation is inconvenient. R&R at 7; see also
`
`Intellectual Ventures I LLC v. Altera Corp., 842 F. Supp. 2d 744, 751 (D. Del. 2012) (Stark, J.)
`
`(“When transfer is sought by a defendant with operations on a national or international scale, that
`
`defendant ‘must prove that litigating in Delaware would pose a unique or unusual burden on [its]
`
`operations.’”) (quoting L’Athene, Inc. v. EarthSpring LLC, 570 F. Supp. 2d 588, 592 (D. Del.
`
`2008)), writ denied sub nom. In re Altera Corp., 494 F. App’x 52, 54 (Fed. Cir. 2012).4 Defendants
`
`also erroneously contend that the Court should not have considered the convenience of USR’s
`
`founder Dr. Weiss because “USR could have sued in Boston, less than ten miles from his home.”
`
`Objs. at 9. As noted above, however, venue over Visa would likely be improper in the District of
`
`Massachusetts (a point Visa did not contest in Defendants’ reply, D.I. 38) such that USR could not
`
`have sued in Boston. Judge Fallon correctly considered the relative inconvenience to USR—a small
`
`company with negative cash flows that, together with its sister company that develops and markets
`
`products practicing Dr. Weiss’s patents, has less than a dozen employees and consultants—of being
`
`forced to litigate on an opposite coast and found it greater than the inconvenience to Apple and Visa.
`
`R&R at 7-8. Defendants cite no basis for disturbing that finding.
`
`4 Although Apple is not incorporated in Delaware, it has a significant presence in Delaware. For
`example, Apple’s retail store in Newark, Delaware sells more infringing iPhones than any other
`Apple retail location, and sells and/or supports the second-most volume of infringing products out of
`any Apple retail location. See Transfer Opp. at 7 n.6.
`
`
`
`9
`
`
`
`Case 1:17-cv-00585-CFC-SRF Document 150 Filed 10/17/18 Page 15 of 16 PageID #: 5086
`
`The Convenience of the Witnesses Does Not Favor Transfer. Defendants complain that
`
`Judge Fallon did not afford greater weight to the location of six prior artists (identified by
`
`Defendants from patent applications) who happen to reside within the subpoena power of the
`
`transferee forum. But Defendants did not explain why these witnesses are relevant. Tessera, Inc. v.
`
`Sony Elecs. Inc., Civil No. 10-838 (RMB) (KW), 2012 WL 1107706, at *6 (D. Del. Mar. 30, 2012)
`
`(“It is the defendant[s’] burden to show . . . that witness’ importance to the defendant[s’] case.”).5 In
`
`contrast, a number of third party witnesses in Massachusetts (some of whom Apple has already
`
`subpoenaed), testified that they are willing to testify in Delaware. D.I. 32, 34, 79, 82.
`
`The Practical Considerations and Local Interest Factors Do Not Favor Transfer. Finally,
`
`Judge Fallon correctly declined to double-count the convenience of Defendants’ witnesses and the
`
`location of evidence as “practical considerations.” R&R at 10. Defendants’ ipse dixit assertion that
`
`considering these factors again is not double counting is erroneous on its face. Objs. at 10. Likewise,
`
`Defendants’ one-sentence argument that “N.D. Cal. has a stronger [local] interest because the
`
`accused products were designed and developed there” ignores the ample case law in this District
`
`rejecting this argument, see Transfer Opp. at 18-19, R&R 11-12, and Delaware’s competing local
`
`interest in suits against its citizens (here, Visa). See, e.g., Autodesk Canada Co. v. Assimilate, Inc.,
`
`No. CIV. 08-587-SLR-LPS, 2009 WL 3151026, at *9 (D. Del. Sept. 29, 2009) (in local interest
`
`analysis, defendant’s incorporation in Delaware is “the crucial fact”).
`
`IV. CONCLUSION
`
`For all of the foregoing reasons, the R&R should be adopted in its entirety.
`
`
`5 Although beyond the scope of the motion before Judge Fallon, the reason movants must explain
`the significance of third parties they identify in the tra