Case 1:16-cv-02690-AT Document 140 Filed 08/18/16 Page 1 of 12
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF GEORGIA
`ATLANTA DIVISION
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`EMERSON ELECTRIC CO., et al.,
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`Plaintiffs,
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`v.
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`SIPCO LLC, et al.,
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`Defendants.
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`SIPCO LLC, et al.,
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`Plaintiffs,
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`v.
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`EMERSON ELECTRIC CO., et al.,
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`Defendants.
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`CIVIL ACTION NO.
`1:15-CV-0319-AT
`
`CIVIL ACTION NO.
`1:16-CV-2690-AT
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`ORDER
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`This matter is before the Court on SIPCO, LLC and IP CO, LLC’s
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`(collectively, “SIPCO”) Motion to Transfer Venue [1:15-CV-0319-AT, Doc. 118;
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`1:16-CV-2690-AT, Doc. 137] as well as BP’s Motion to Sever and Stay [1:16-CV-
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`2690-AT, Doc. 71]. For the following reasons, the Motions to Transfer are
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`
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF GEORGIA
`ATLANTA DIVISION
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`EMERSON ELECTRIC CO., et al.,
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`Plaintiffs,
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`v.
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`SIPCO LLC, et al.,
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`Defendants.
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`SIPCO LLC, et al.,
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`Plaintiffs,
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`v.
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`EMERSON ELECTRIC CO., et al.,
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`
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`Defendants.
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`CIVIL ACTION NO.
`1:15-CV-0319-AT
`
`CIVIL ACTION NO.
`1:16-CV-2690-AT
`
`ORDER
`
`This matter is before the Court on SIPCO, LLC and IP CO, LLC’s
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`(collectively, “SIPCO”) Motion to Transfer Venue [1:15-CV-0319-AT, Doc. 118;
`
`1:16-CV-2690-AT, Doc. 137] as well as BP’s Motion to Sever and Stay [1:16-CV-
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`2690-AT, Doc. 71]. For the following reasons, the Motions to Transfer are
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`
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`Case 1:16-cv-02690-AT Document 140 Filed 08/18/16 Page 2 of 12
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`DENIED. As explained below, the Court defers entering its ruling on the Motion
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`to Sever or Stay until after the conference on Friday, August 19, 2016.
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`I.
`
`INTRODUCTION
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`On January 30, 2015, Emerson Electric Co., Fisher-Rosemount Systems,
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`Inc., and Rosemount Inc. (collectively “Emerson”) filed a declaratory judgment
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`action in this Court asserting invalidity and non-infringement of United States
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`Patent Nos. 7,103,511 (“the ‘511 Patent”) (“the SIPCO Patent”) and 6,044,062
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`(“the ‘062 Patent”) (“the IP CO Patent”). On October 16, 2015, SIPCO filed a
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`Complaint against Emerson in the Eastern District of Texas alleging infringement
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`of ten other patents, each of which is a member of either the SIPCO Patent family
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`or the IP CO Patent family. (See 1:16-CV-2690-AT, Doc. 98 at 6.) On December
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`10, 2015, Emerson moved the Texas court to transfer its case to this District, and
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`soon after moved this Court to enjoin SIPCO from prosecuting the Texas action.
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`On December 30, 2015, SIPCO amended its Complaint in the Texas action
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`to add defendants BP America, Inc., BP America Production Company, and BP
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`p.l.c. (collectively, “BP”).
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` That First Amended Complaint also alleged
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`infringement of one additional patent. (1:16-CV-2690-AT, Doc. 19 at 8.) The
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`allegations against BP in the First Amended Complaint were essentially that BP
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`uses Emerson’s allegedly infringing technology in its oil wellhead monitoring, (id.
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`¶ 69), that Emerson “directs and controls” BP’s use of the relevant technology in
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`certain ways, (id. ¶ 70), and that BP uses the technology in such a way that it
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`performs “at least one, but less than all” of a number of steps of certain of the
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`2
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`Case 1:16-cv-02690-AT Document 140 Filed 08/18/16 Page 3 of 12
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`method patent claims. (See, e.g., id. ¶ 106.) The allegations against BP in the
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`Second Amended Complaint are similar.
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`In April 2016, BP moved to sever and stay the claims against it in the Texas
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`action pursuant to the Federal Circuit’s “customer-suit” doctrine. (Doc. 71). On
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`July 1, 2016, the Texas court ruled on Emerson’s earlier-filed motion to transfer
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`the case to Georgia; found the claims in the Texas and Georgia actions
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`“substantially overlap;” and, pursuant to Fifth Circuit law, transferred the Texas
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`action to this Court — the district of the first-filed suit — for this Court to
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`determine how best to proceed with both cases. (1:16-CV-2690-AT, Doc. 98 at
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`6-8.)
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`On August 2, 2016, SIPCO moved to transfer both cases back to the
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`Eastern District of Texas pursuant to 28 U.S.C. § 1404(a). (1:15-CV-0319-AT,
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`Doc. 118; 1:16-CV-2690-AT, Doc. 137.) Emerson and BP responded that venue
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`should remain in this district, and BP reasserted its contention that claims
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`against it should be stayed. The Court held a hearing on the matter on August 10,
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`2016. In deciding the motions before the Court, it has carefully reviewed the
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`evidence of record and the extensive briefing by the parties.
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`II. SIPCO’S MOTIONS TO TRANSFER
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`28 U.S.C. § 1404(a) provides that a district court may transfer a civil action
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`to another district where it might have been brought “[f]or the convenience of
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`parties and witnesses [and] in the interest of justice.” The first step under
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`§ 1404(a) is to determine whether the present action could have been brought in
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`3
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`Case 1:16-cv-02690-AT Document 140 Filed 08/18/16 Page 4 of 12
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`the United States District Court for the Eastern District of Texas. See Tommy
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`Bahama Group, Inc., v. The Walking Co., No. 1:07-CV-1402-ODE, 2007 WL
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`3156254, at * 2 (N.D. Ga. Oct. 18, 2007).
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`Once a court confirms that the plaintiff could have brought the action in
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`the transferee venue, it next looks to nine factors to determine the propriety of
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`transfer:
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`(1) the convenience of the witnesses; (2) the location of relevant
`documents and the relative ease of access to sources of proof; (3) the
`convenience of the parties; (4) the locus of operative facts; (5) the
`availability of process to compel the attendance of unwilling
`witnesses; (6) the relative means of the parties; (7) a forum’s
`familiarity with the governing law; (8) the weight accorded a
`plaintiff’s choice of forum; and (9) trial efficiency and the interests of
`justice, based on the totality of the circumstances.
`
`Manuel v. Convergys Corp., 430 F.3d 1132, 1135 n.1 (11th Cir. 2005).1 “[T]rial
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`judges are afforded considerable discretion” in weighing the criteria under 28
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`U.S.C. § 1404(a), Tommy Bahama, 2007 WL 3156254, at * 2, and “the burden is
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`on the movant to establish that the suggested forum is more convenient.” In re
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`Ricoh Corp., 870 F.2d 570, 573 (11th Cir. 1989). Finally, “[t]he plaintiff’s choice
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`of forum should not be disturbed unless it is clearly outweighed by other
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`considerations.” Robinson v. Giarmarco & Bill, P.C., 74 F.3d 253, 260 (11th Cir.
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`1996) (quoting Howell v. Tanner, 650 F.2d 610, 616 (5th Cir. 1981)).
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`The Court starts with the question of whether Emerson could have brought
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`this lawsuit in the Texas transferee forum. Emerson properly filed this suit here
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`1 The “law of the relevant regional circuit” applies to patent transfer motions. Micron Tech., Inc.
`v. Rambus Inc., 645 F.3d 1311, 1331 (Fed. Cir. 2011).
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`4
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`Case 1:16-cv-02690-AT Document 140 Filed 08/18/16 Page 5 of 12
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`in Atlanta where Defendant SIPCO is located. However, as Emerson was well
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`aware that SIPCO maintained that Emerson was infringing in the Eastern District
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`of Texas, it could have brought the action in that district, too.
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`Moving to the transfer factors, SIPCO has not carried its burden of showing
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`that the nine factors weigh in favor of transferring these cases to Texas,
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`particularly given Emerson’s choice to litigate the first-filed case here. In
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`addition, as described in some detail below, Emerson presented colorable, non-
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`rebutted evidence in connection with these motions showing that Atlanta, GA is a
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`more appropriate venue than Tyler, TX pursuant to the Eleventh Circuit’s test.
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`The first five factors of the test do not weigh in favor of a transfer because
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`the record before the Court demonstrates an attenuated connection of the case to
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`the Eastern District of Texas. Emerson develops and manufactures the allegedly
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`infringing products in Minneapolis and St. Louis, and that is where most of
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`Emerson’s witnesses live and work. Emerson’s supplier of certain wireless
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`communication devices, Linear Technologies, is headquartered in California, and
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`Linear’s Dallas office apparently does not develop the devices at issue in this case.
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`To the extent BP and Emerson worked together to test the allegedly infringing
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`products, the alleged testing and other activity that could be construed as co-
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`development occurred primarily in Washington State. Finally, Emerson points
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`out that non-party witnesses that prosecuted the relevant patents have offices
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`and keep their patent prosecution documents in this district and appear to be
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`5
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`Case 1:16-cv-02690-AT Document 140 Filed 08/18/16 Page 6 of 12
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`unwilling to produce those documents at this juncture (though that issue is not
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`before the Court at this time).
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`The Court recognizes that some number (24, apparently) of the allegedly
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`infringing products are being used in BP’s oil well facilities in the Eastern District
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`of Texas. That fact does not sway the entire analysis, though, particularly given
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`that the allegations against BP are simply that BP is either “using” Emerson’s
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`infringing products or performing “at least one, but less than all, of the steps” of
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`certain claims of SIPCO’s patents. (See, e.g., 2d Am. Compl. ¶¶ 112, 119; 1:16-CV-
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`2690-AT, Doc. 109.)
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` Moreover, according to SIPCO’s Second Amended
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`Complaint, Emerson also allegedly “directs and controls” BP’s use of the relevant
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`technology in certain ways. (Id. ¶ 81.) Based on SIPCO’s own allegations, BP’s
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`activity in the Eastern District of Texas is secondary at best to Emerson’s activity
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`nationally. Emerson also has what appears to be a showroom in Texas. But the
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`showroom and some of the other entities referenced in SIPCO’s arguments are
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`located outside the Eastern District of Texas. Arguments based on the activities
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`of these entities lack persuasive effect.
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`The other § 1404(a) factors are either neutral or weigh against transfer. In
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`particular, factors six and seven are neutral and factors eight and nine weigh
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`against transfer. Accordingly, SIPCO has not met its burden of showing that the
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`Eastern District of Texas is so much more convenient that Emerson’s choice of
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`forum is clearly outweighed and should be disturbed. The Motions to Transfer
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`[1:15-CV-0319-AT, Doc. 118; 1:16-CV-2690-AT, Doc. 137] are therefore DENIED.
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`6
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`Case 1:16-cv-02690-AT Document 140 Filed 08/18/16 Page 7 of 12
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`III. CONSOLIDATION
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`Now that it is established that all of the cases are staying here, the Court
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`addresses the consolidation requested by Emerson and BP at the August 10, 2016
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`hearing. The claims in each of the above-captioned cases share a common core of
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`facts and questions of law, so the Court exercises its discretion under Rule 42(a)
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`of the Federal Rules of Civil Procedure to consolidate these cases. Accordingly,
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`the Clerk is DIRECTED to: (1) file this order in civil actions No. 1:15-CV-0319-
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`AT and No. 1:16-CV-2690-AT; (2) ADMINISTRATIVELY CLOSE civil action
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`No. 1:16-CV-2690-AT; and (3) CONSOLIDATE civil action 1:16-CV-2690-AT
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`with civil action No. 1:15-CV-0319-AT.
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`IV. BP’S MOTION TO SEVER AND STAY
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`It is well established that:
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`the power to stay proceedings is incidental to the power inherent in
`every court to control the disposition of the causes on its docket with
`economy of time and effort for itself, for counsel, and for litigants.
`How this can best be done calls for the exercise of judgment, which
`must weigh competing interests and maintain an even balance.
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`Landis v. N. Am. Co., 299 U.S. 248, 254-55 (1936). When considering the stay of
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`a patent infringement case, courts consider several factors, including: “(1)
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`whether a stay will unduly prejudice or tactically disadvantage the non-moving
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`party; (2) whether a stay will simplify the issues and streamline the trial; [and]
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`(3) whether a stay will reduce the burden of litigation on the parties and on the
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`court.” Baxa Corp. v. Forhealth Techs., Inc., No. 6:06-CV-0353-ORL-19J, 2006
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`WL 4756455, at *1 (M.D. Fla. May 5, 2006) (citing TAP Pharm. Prods., Inc. v.
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`7
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`Case 1:16-cv-02690-AT Document 140 Filed 08/18/16 Page 8 of 12
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`Atrix Labs., Inc., 70 U.S.P.Q.2d 1319 (N.D. Ill. 2004); ASCII Corp. v. STD Entm’t,
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`844 F. Supp. 1378, 1381 (N.D. Cal. 1994)); see also Capital Sec. Sys., Inc. v. NCR
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`Corp., No. 1:14-CV-1516-WSD, 2015 WL 3819336, at *2 (N.D. Ga. June 18, 2015);
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`Roblor Mktg. Grp., Inc. v. GPS Indus., Inc., 633 F. Supp. 2d 1341, 1347 (S.D. Fla.
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`2008).
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`In addition, courts also authorize the stay of patent infringement claims
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`against customers as a matter of judicial economy while litigation of the same
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`claims proceed against manufacturers. As explained by the Federal Circuit:
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`infringement suit against a
`When a patent owner files an
`manufacturer’s customer and the manufacturer then files an action
`of noninfringement or patent invalidity, the suit by the manufacturer
`generally take precedence. Spread Spectrum Screening LLC v.
`Eastman Kodak Co., 657 F.3d 1349, 1357 (Fed. Cir. 2011); Katz v.
`Lear Siegler, Inc., 909 F.2d 1459, 1464 (Fed. Cir. 1990). This
`“customer-suit” exception to the “first-to-file” rule exists to avoid, if
`possible, imposing the burdens of trial on the customer, for it is the
`manufacturer who is generally the “true defendant” in the dispute.
`Codex Corp. v. Milgo Elec. Corp., 553 F.2d 735, 737-38 (1st Cir.
`1977).
`
`In re Nintendo of Am., Inc., 756 F.3d 1363, 1365 (Fed. Cir. 2014).
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`This is not the standard “customer-suit” arrangement.
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` Here, the
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`manufacturer’s declaratory judgment action – Emerson v. SIPCO – was filed in
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`this Court before any infringement action was brought against BP, so there is no
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`need for an “exception” to the first-to-file rule. Then, when SIPCO brought its
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`infringement action, it did not initially name Emerson’s customer BP, but only
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`Emerson itself. And when SIPCO added BP, SIPCO alleged that BP was liable not
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`only as an Emerson customer, but also as a joint-infringer who allegedly
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`8
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`Case 1:16-cv-02690-AT Document 140 Filed 08/18/16 Page 9 of 12
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`undertook infringing activity of its own, albeit potentially directed and controlled
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`by Emerson. Thus, the customer-suit doctrine is not a perfect fit for this hybrid
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`customer case.
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`Even so, the Court finds it proper to stay the claims against BP, at least at
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`this time, for four reasons. First, though this may not be a typical customer-suit,
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`the same policies that favor staying claims against customers generally apply to
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`BP in this case. That is, Emerson is clearly the “true defendant” in this lawsuit;
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`Emerson sells the allegedly infringing product, and BP is one of their customers.
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`BP allegedly is either “using” Emerson’s infringing products or performing “at
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`least one, but less than all, of the steps” of certain claims of SIPCO’s patents.
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`(See, e.g., 2d Am. Compl. ¶¶ 112, 119; 1:16-CV-2690-AT, Doc. 109.) Emerson also
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`allegedly “directs and controls” BP’s use of the relevant technology in certain
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`ways. (Id. ¶ 81.)
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`Second, some of the ways in which BP is alleged to infringe potentially
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`require Emerson’s infringement as a predicate to BP’s infringement. For
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`example, one of the ways SIPCO contends BP infringes is BP essentially takes the
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`Emerson product and disperses it geographically so that each “node”/“client”
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`cannot communicate directly with the “gateway” and instead must communicate
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`with the gateway through another node/client. That may be true. But it is not
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`clear that BP would still be liable if Emerson did not infringe, or at least perform
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`the other steps of the relevant claims. Moreover, Emerson contends in the first-
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`filed suit that the patents themselves are invalid and not infringed for a number
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`9
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`Case 1:16-cv-02690-AT Document 140 Filed 08/18/16 Page 10 of 12
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`of reasons. If Emerson is successful and the patents are found invalid, neither
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`Emerson nor BP can be liable for infringing the invalid patents.
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`Third, the claim that BP is in a “joint enterprise” with Emerson does not
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`appear to be supported by the record at this stage.
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`A joint enterprise requires proof of four elements: (1) an agreement,
`express or implied, among the members of the group; (2) a common
`purpose to be carried out by the group; (3) a community of
`pecuniary interest in that purpose, among the members; and (4) an
`equal right to a voice in the direction of the enterprise, which gives
`an equal right of control.
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`Akamai Techs., Inc. v. Limelight Networks, Inc., 797 F.3d 1020, 1023 (Fed. Cir.
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`2015) (en banc). It is unclear that Emerson and BP had an equal right of control
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`over the direction of the enterprise. Indeed, SIPCO alleges Emerson potentially
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`“directs and controls” BP’s use of the relevant technology in certain ways. (2d
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`Am. Compl. ¶ 81.) Also, it is not obvious what the “community of pecuniary
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`interest” is in the development of a product for use with a sole customer.
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`Fourth, going back to the general factors courts consider in staying patent
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`cases, a stay will not unduly prejudice or tactically disadvantage SIPCO. The
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`Court will permit SIPCO to obtain discovery of BP’s joint activity with Emerson to
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`the extent it is directly linked with allegations of Emerson’s alleged infringement
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`activity. And if SIPCO discovers persuasive evidence regarding BP’s actions as an
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`alleged joint infringer that would indicate BP is engaged in a true joint enterprise
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`with Emerson, SIPCO can move to lift the stay at that time.2 Right now, though,
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`2 This is not to imply how the Court would rule in the event such a motion were filed.
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`10
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`Case 1:16-cv-02690-AT Document 140 Filed 08/18/16 Page 11 of 12
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`a stay will simplify the issues in this case and will “reduce the burden of litigation
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`on the parties and on the court.” Baxa Corp., 2006 WL 4756455, at *1.
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`Although the Court finds that a stay is appropriate, the Court would like to
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`discuss a few items at the conference on Friday, August 19, 2016 before it actually
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`stays the claims against BP. Some of the following are directly related to the stay
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`and others are not:
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`1. Does BP agree to be bound by claim construction rulings in this case
`whether or not it participates in the claim construction process and even if
`the claims against BP are stayed?
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`2. The prompt scheduling of further mediation of this case.
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`3. The timeline for filing a proposed amended scheduling order in this case.
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`4. The appointment of a Special Master, whose first job will likely be to
`address with the parties the narrowing of claims in this case.
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`5. Are the relevant claims in the ‘511 Patent and the ‘062 Patent
`representative of the entire respective group or of both families?
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`6. Whether the parties are able to identify representative claims at this
`time.
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`7. The status of the production of the core technical documents to which
`SIPCO seeks access.
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`8. How do the parties propose the Court treat at this stage the May 6, 2011
`claim construction order in SIPCO v. Datamatic, No. 6:09-CV-0532-LED-
`JDL (E.D. Tex.) as to the claim construction of U.S. Patent Nos. 6,437,692
`and 7,468,661, which are also at issue in this case.
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`V. CONCLUSION
`
`For the foregoing reasons, the Motions to Transfer [1:15-CV-0319-AT, Doc.
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`118; 1:16-CV-2690-AT, Doc. 137] are DENIED and
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`these cases are
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`11
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`Case 1:16-cv-02690-AT Document 140 Filed 08/18/16 Page 12 of 12
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`CONSOLIDATED into 1:15-CV-0319-AT.3 The Court will enter its final Order
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`on the Motion to Stay during or after the conference on Friday, August 19, 2016.
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` IT IS SO ORDERED this 18th day of August, 2016.
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`_____________________________
`Amy Totenberg
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`
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`United States District Judge
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`
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`3 The parties have already informed the Court that Emerson’s Motion to Enjoin the Texas
`Action, (1:15-cv-0319-AT, Doc. 51), is moot, so SIPCO’s Motion for Leave to File a Sur-reply
`[1:15-cv-0319-AT, Doc. 78] to that Motion is DENIED as MOOT.
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`12
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`
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