Opinion
Civil No. 04-123 ADM/AJB.
June 15, 2004
Kevin H. Rhodes, Esq., and Dean M. Harts, Esq., 3M Innovative Properties Company, St. Paul, MN, appeared for and on behalf of Plaintiff.
Ken M. Peterson, Esq., and Robert W. Coykendall, Esq., Morris, Laing, Evans, Brock Kennedy, Chartered, Wichita, KS, and Charles N. Nauen, Esq., Lockridge Grindal Nauen P.L.L.P., Minneapolis, MN, appeared for and on behalf of Defendants.
MEMORANDUM OPINION AND ORDER
I. INTRODUCTION
On May 5, 2004, oral argument was presented before the undersigned United States District Judge on Defendants Kinik Co. ("Kinik") and Chien-Min Sung's ("Sung") (collectively, "Defendants") Motion to Dismiss or Transfer Venue [Docket No. 12]. Defendants seek dismissal on the bases of lack of personal and subject matter jurisdiction, improper venue and forum non conveniens. Alternatively, they request transfer of the instant action to the Eastern District of Texas. For the reasons set forth below, Defendants' Motion to Dismiss is granted in part and denied in part, and the Motion to Transfer is granted.
II. BACKGROUND
The parties have been involved in multiple prior legal disputes concerning their relationship in the manufacture of diamond-pad conditioners. Plaintiff 3M Company ("3M") is an international technology company headquartered in Minnesota. Sung is a United States citizen presently residing in Taiwan, and is the Vice President of Kinik, a Taiwanese corporation. Both 3M and Kinik manufacture and sell abrasive products, including pad conditioners that are used in the manufacture of semiconductors in the computer industry.
Sung is the owner or inventor of several United States patents related to diamond tools. He assigned to Kinik U.S. Patent No. 6,368,198 ("the '198 Patent"), which discloses a Diamond Grid CMP Pad Dresser. Also at issue in this litigation are Sung's U.S. Patent No. 6,286,498 B1 ("the '498 Patent"), claiming "a metal bond superabrasive tool," and U.S. Patent No. 6,679,243 ("the '243 Patent"), a process patent issued January 20, 2004. The U.S. Patent and Trademark Office ("PTO") is currently conducting a reexamination of the '498 Patent based on Sung's voluntary submission of this patent to the PTO.
3M's Amended Complaint seeks declaratory judgments of invalidity and non-infringement of each of these patents. Am. Compl. [Docket No. 4]. Additionally, 3M requests a declaration that it has no enforceable agreement with Defendants and therefore is not in breach of any contract. Id.
3M owns U.S. Patent No. 5,620,489 ("the '489 Patent"). On January 5, 2001, 3M filed a complaint with the International Trade Commission ("ITC") requesting investigation of alleged unlawful importation by Kinik and its Arizona-based distributor of pad conditioners made by a process that infringes the '489 Patent. The companion case, filed in federal district court in Arizona, was stayed pending termination of the ITC proceeding. After Kinik filed a letter of response in the ITC case, 3M proposed to Sung that the companies engage in settlement negotiations to resolve the dispute. On February 13, 2001, Sung and another Kinik executive traveled to St. Paul, MN for the first of a series of meetings. The initial proposal e-mail from 3M and various correspondence thereafter between representatives of Kinik and 3M specify that the discussions between the parties were to be confidential and for settlement purposes only. See Sung Decl. Ex. A (e-mail from 3M to Sung of 1/31/01 proposing "a `settlement' discussion"); Shin Decl. Ex. A (fax from Sung to 3M of 2/1/01), B (letter agreement between parties that "[t]he discussions are solely for the purposes of settlement and will not be used by either of the parties outside of that purpose"); Sung Decl. Ex. C (letter from 3M to Lin of 4/12/01) ("The existence and terms of this letter, the parties discussions under this letter and the information exchanged are for settlement purposes only"). Sung and other Kinik personnel made six trips to Minnesota between January and October 2001 to pursue a negotiated settlement. By June 2001, the parties' discussions included the potential acquisition by 3M of Kinik, a Kinik subsidiary and patents owned by Kinik and Sung. While Defendants contend all exchanges originated from and were specifically related to settlement of the ITC action, 3M asserts that the meetings evolved beyond settlement negotiations to unrelated business possibilities.
In August 2002, Sung filed suit against 3M in the Eastern District of Texas ("Texas action"), alleging infringement of his U.S. Patent No. 6,039,641 ("the '641 Patent"). The case is currently stayed pending official reexamination of the '641 Patent at 3M's request. Though not yet completed, the reexamination process has resulted in the PTO rejecting the claims as originally stated.
During his deposition in the Texas action, Sung testified to his belief that 3M had also infringed the '498 Patent and the then-pending '243 Patent. Sung Dep. at 293-94 (Harts Decl. Ex. 5). Counsel for 3M also inquired of Sung whether he believed 3M breached a settlement agreement between 3M and Kinik, and he responded in the affirmative. Id. at 257. When asked whether Kinik had taken legal action, he replied that it had not done so because "3M's too big." Id.
On April 24, 2004, Judge T. John Ward of the Eastern District of Texas allowed Sung to amend his complaint to add a claim for infringement of the '243 Patent, but stayed the case with respect to that patent until this Court rules on the instant Motion.See Harts Decl. Ex. 4.
III. DISCUSSION
Defendants argue dismissal or transfer is appropriate for lack of personal jurisdiction, lack of subject matter jurisdiction, improper venue and the doctrine of forum non conveniens. See Fed.R.Civ.Pro. 12(b)(1), (2) and (3); 28 U.S.C. § 1404(a).
A. Personal jurisdiction
Personal jurisdiction over a nonresident party exists when the facts presented satisfy the long-arm statute of the forum state, and the exercise of jurisdiction comports with the constitutional requirements of due process. Minnesota Mining Mfg. Co. v. Nippon Carbide Indus. Co., 63 F.3d 694, 696-97 (8th Cir. 1995). Because Minnesota courts have held the state long-arm statute, Minn. Stat. § 543.19, extends jurisdiction to the limits of the Due Process Clause, the inquiry collapses to the single question of "whether the assertion of jurisdiction over [Defendants] offends due process." Id. at 697.
Jurisdiction over a nonresident defendant is permitted only if the defendant has sufficient minimum contacts with the forum state to render maintenance of the suit fair and in accordance with substantial justice. Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Minimum contacts are established when a defendant has purposefully availed itself "of the privilege of conducting activities within the forum state" such that it should reasonably anticipate being summoned to court there. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-75 (1985); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).
3M asserts that specific jurisdiction, as opposed to general jurisdiction, exists over Defendants in this Court. Specific personal jurisdiction requires a relationship between the plaintiff's claims and the defendant's connection to the forum state, which "is satisfied if the defendant has `purposely directed' his activities at residents of the forum and the litigation results from alleged injuries that `arise out of or relate to' those activities." Burger King, 471 U.S. at 472 (internal citations omitted). Once the court determines the defendant has the requisite minimum contacts, it must view the facts in the broader context to ensure "assertion of personal jurisdiction would comport with `fair play and substantial justice.'" Id. at 476.
In opposing a motion to dismiss, the plaintiff need only establish a prima facie case of personal jurisdiction over defendant, with the court resolving all factual disputes in favor of the non-movant plaintiff. Digi-Tel Holdings v. Proteq Telcoms., 89 F.3d 519, 522 (8th Cir. 1998). For purposes of assessing personal jurisdiction, the plaintiff's claims are addressed individually. See Zumbro, Inc. v. Cal. Nat. Prods., 861 F. Supp. 773, 779 (D. Minn. 1994). However, because 3M's patent claims all implicate the same technology and Minnesota nexus, they will be considered together.
1. Patent Claims: Non-infringement and Invalidity
With respect to the patent-related counts, Federal Circuit law governs and personal jurisdiction is assessed based on whether: (1) Defendants purposefully directed their activities at Minnesota residents; (2) 3M's claims arise out of or relate to those activities; and (3) assertion of personal jurisdiction over Kinik and Sung is "reasonable and fair." 3D Sys. v. Aarotech Lab., 160 F.3d 1373, 1378 (Fed. Cir. 1998).
The determination turns on whether Defendants purposefully established contacts with Minnesota to transact business, or whether the extensive talks and social activity between the parties in Minnesota was strictly for settlement purposes. 3M argues that the agenda and declarations of the involved employees establish that Sung, Kinik and 3M discussed matters beyond settlement of the ITC action. They contend that the final meetings focused on ideas for collaboration and potential acquisition of Kinik, and therefore that Defendants availed themselves of the benefits of transacting business in Minnesota. Defendants respond that all these proposals and exchanges grew out of a plan for continuing negotiations to settle the ITC and Arizona cases.
Defendants made several trips to Minnesota and undertook extensive and extended business discussions with 3M, evidenced by trip agendas and the parties' correspondence. See generally Shin Decl. Exs. By the summer and fall of 2001, it appears the ITC action no longer merited explicit mention. Id. Exs. H, I (visit schedules of July and October 2001); Kummeth Decl. ¶¶ 8, 10; Visser Decl. ¶¶ 8, 9, 10. However, contacts with a forum state that may otherwise be significant and purposeful, may not be sufficient for jurisdiction when made as part of an attempt to settle a legal dispute. See Conwed Corp. v. Nortene, S.A., 404 F. Supp. 497, 504-05 (D. Minn. 1975). Although Defendants did discuss and advocate development of various business relationships with 3M, that appear to have expanded in scope and evolved over the course of the negotiations, 3M admits the dialogue began as an attempt to resolve the ITC infringement dispute without resort to litigation. See Defs.' Mem. at 7. 3M's argument now that Defendants' later trips to Minnesota had nothing to do with the ITC action is belied by their own directives that the ongoing exchanges regarding potential business prospects were to be held under the rubric of settlement. Even construing the facts in favor of 3M, the undisputed documentation of the parties' communications regarding Defendants' visits to Minnesota and contacts with 3M representatives reflects that 3M expressly provided and required that all discussions, including exploration of "the possibility of an acquisition of Kinik by 3M," be "for settlement purposes only." Sung Decl. Ex. C (letter from Wiens to Lin of 4/12/01 at 2, 1). In addition to linking acquisition talks to the ITC settlement, the April 12, 2001 letter from a 3M Vice President to Frank Lin ("Lin"), President of Kinik, noted that it was "expected that our discussions will occur over the next 6 to 12 months." Id. at 1. For 3M to now assert that Defendants directed their activities at 3M for reasons completely separate from the broad ITC settlement negotiations lacks fairness and credibility. As in Conwed, the contemplated business venture was "part of the compromise offer, it was not an independent solicitation of a business partner." Id. at 504.
3M relies on Minnesota Mining Manf. Co. v. Nippon Carbide Indus. Co., 63 F.3d 694 (8th Cir 1995), to argue that purposeful contacts with Minnesota, even for the purpose of legal settlement, subject Defendants to personal jurisdiction. See id. at 695-96, 698 (series of meetings led to agreement settling patent litigation). The instant matter, for purposes of addressing the patent counts, is distinguishable from Nippon, which was a breach of contract, not a patent infringement suit. Moreover, Nippon undisputedly involved settlement negotiations that led to a completed, binding agreement between the parties, which directly gave rise to plaintiff's breach of contract action. Id. at 696, 698. By contrast, in the present case 3M brings patent invalidity and non-infringement claims distinct from its contractual claim, and argues that the parties' potential business transactions unraveled and no settlement contract was executed. Accordingly, for purposes of assessing minimum contacts, Defendants' trips to Minnesota to engage in settlement discussions, even though the negotiations included a wide range of potential business ventures and the ITC action was not always explicitly mentioned, should not be given the same weight as deliberate availment of the privilege of doing business in Minnesota. See Conwed, 404 F. Supp. at 504-05 (finding settlement exchanges in Minnesota insufficient for personal jurisdiction in declaratory judgment patent suit); see also Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1360-61 (Fed. Cir. 1998) (noting policy against using settlement negotiations as minimum contacts; finding defendant's three letters insufficient to establish jurisdiction)
Sung's prior testimony that he believed a preliminary and subsequently modified agreement was reached, which 3M did not honor, does not help establish jurisdiction over 3M's patent claims.
However, unlike those of the Conwed and Red Wing cases, the contacts in the instant matter are extensive and included detailed discussions of collaborative business ventures, in which Defendants strongly encouraged the sale of Kinik to 3M. See generally, Shin Decl. Exs. E-I; Kummeth Decl. Ex. A. Moreover, since the time of oral argument, 3M has discovered and submitted evidence that Defendants are supplying their pad conditioners, the products at issue in the disputed patents, to a Minnesota corporation. Gagliardi Decl. ¶ 3. Additionally, 3M's declarant states that Kinik's U.S. distributor has offered Defendants' pad conditioners to other semiconductor fabricators located in Minnesota. Id. Considering this evidence, particularly in conjunction with the substantial and expansive nature of the settlement negotiations that occurred in Minnesota, Plaintiff has made a prima facie showing that Defendants directed their business activities at residents of Minnesota. See Aarotech Lab., 160 F.3d at 1378.
This declaration has been added to the record pursuant to 3M's request. See infra Conclusion ¶ 4.
The second element of the personal jurisdiction test requires that 3M's claims arise out of or relate to Defendants' forum state activities. See id. Though not arising out of Defendants' Minnesota contacts, 3M's patent counts relate to Sung and Kinik's activities in this state. Defendants do not challenge 3M's assertions that the parties' pad conditioner businesses were a key component of the business plans proposed during negotiations, and that the pad conditioner technology is the subject of the patents-in-suit. Neither do they dispute that based on his experiences in Minnesota, Sung received a great deal of information about 3M's pad conditioner manufacturing, both from first-hand touring of the facilities and informational briefings. The potential infringement of the named patents by the processes practiced at 3M's Minnesota plant, in addition to Kinik's sale of its pad conditioners to at least one Minnesota corporation, links Defendants' forum state activities to the claims of non-infringement and invalidity of the '198, '243, and '498 Patents.
Lastly, the Court must assess whether the exercise of jurisdiction under the circumstances would be reasonable and fair. See id. Given the nature of the settlement discussions and Defendants' attendant expectations of substantial business involvement with a Minnesota company, as well as the evidence of Defendants' purposeful direction of their pad conditioner product at Minnesota, assertion of jurisdiction over this claim does not offend due process.
2. Contract Claim
3M's Complaint also requests a declaration that it has neither entered nor breached any enforceable agreement or contract with Defendants. Am. Compl. ¶¶ 56-59. Because of shared facts underlying this claim and Defendants' substantial contacts with 3M for settlement discussions, 3M has presented a prima facie case of personal jurisdiction over Kinik and Sung for the contract claim.
Like the breach of contract action in the Nippon case, 3M's request for a declaratory judgment of non-breach relates to and arises out of Sung and Kinik's activities in Minnesota. 63 F.3d at 698. Defendants' multiple trips to Minnesota to discuss the ITC action and the potential acquisition of Kinik, "were directed toward the consummation of the contract in dispute." Nippon, 63 F.3d at 698. Sung and Kinik executives "came voluntarily to Minnesota with the business purpose of terminating on-going litigation" and discussed a possible agreement to this end. Id. at 697. Because 3M's contract claim derives directly from Defendants' assertion that the parties reached a binding agreement during the settlement talks in St. Paul, this claim is analogous to the fact pattern of Nippon. Thus, Defendants' purposeful contacts with 3M for negotiation of the alleged agreement provide the requisite connection between Defendants, Minnesota, and the contract claim. The numerous meetings of the parties and their integral relationship to this contract claim are sufficiently strong to justify assertion of jurisdiction over the Defendants for this claim without offending notions of fairness and justice. See id.
Though not as strong a case for personal jurisdiction asNippon, in which it was undisputed that a final, effective agreement was executed, the aforementioned breadth and number of the parties' negotiations, and Defendants' continuing reference to a completed settlement contract with 3M support personal jurisdiction over Sung and Kinik for this claim. See Nippon, 63 F.3d at 698; Defs.' Mem. at 9.
B. Subject Matter Jurisdiction
3M asserts that the potential for a contract or infringement suit by Defendants looms over its pad conditioner business causing uncertainty and insecurity sufficient to warrant declaratory relief. Defendants contend no jurisdiction exists over 3M's declaratory judgment action because none of the claims presents an "actual controversy." 28 U.S.C. § 2201(a). The Constitution limits federal jurisdiction to actual cases and controversies. The fundamental requirement is "a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment."Maryland Cas. Co. v. Pac. Coal Oil Co., 312 U.S. 270, 273 (1941). The Federal Circuit has articulated a two-part test for determining whether a patent suit presents an actual, justiciable controversy:
There must be both (1) an explicit threat or other action by the patentee, which creates a reasonable apprehension on the part of the declaratory plaintiff that it will face an infringement suit, and (2) present activity which could constitute infringement or concrete steps taken with the intent to conduct such activity.Sierra Applied Scis., Inc. v. Advanced Energy Indus., Inc., 363 F.3d 1361, 1373 (Fed. Cir. 2004) (internal quotation omitted). Whether a declaratory judgment plaintiff reasonably apprehends a law suit is an objective assessment based upon the totality of the circumstances presented. Arrowhead Indus. Water, Inc. v. Ecolochem, Inc., 846 F.2d 731, 736 (Fed. Cir. 1988). Even where a live controversy exists, there is no absolute right to a declaratory judgment, and the courts retain discretion to decline the case. Id.; EMC Corp. v. Norland Corp., 89 F.3d 807, 810, 813 (Fed. Cir. 1996); see 28 U.S.C. § 2201(a). Since the actual controversy analysis depends upon the specific facts underlying each requested declaratory judgment, the court must address the plaintiff's complaint on a claim-by-claim basis. Cf. Zumbro, 861 F. Supp. at 779.
1. Non-infringement and Invalidity of the '498 Patent
In support of a reasonable apprehension of a suit for infringement of the '498 Patent, 3M references Sung's deposition testimony that he believed 3M to be infringing the '498 Patent. Defendants argue that because this patent is currently subject to reexamination, the parties cannot know what claims will be allowed, and therefore any dispute regarding the scope of, and legal rights conferred by, the patent is purely conjectural. They further assert that ruling on this claim risks creating a conflict with the final determination of the PTO. All claims as stated in the original patent have been amended or rejected. Thus far, the PTO has allowed 15 amended claims.
An express charge of infringement is sufficient, but not required, to present an actual controversy. See id. Less explicit conduct by the patent holder falling short of a threat may also create a reasonable apprehension of litigation when viewed in light of the totality of the circumstances. Id. Factors such as a history of infringement suits or foreign litigation by the defendant may be considered in the equation.See id. at 737; Teva Pharms. USA, Inc. v. Abbott Labs., 301 F. Supp.2d 819, 822 (N.D. Ill. 2004).
Defendants cite no authority holding that reexamination of a patent divests the court of jurisdiction. In fact, the court's discretion to stay or to proceed with litigation involving a patent in reexamination counsels that a patent remains enforceable during reexamination. See Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988).
In this case, Sung stated in deposition that 3M's ongoing business activities infringed the '498 Patent. The Texas action and Kinik's infringement suit against 3M in Taiwan, based on the Taiwanese counterpart of the '498 Patent, also provide an objectively reasonable basis to suspect a future U.S. suit asserting this patent. Thus, Defendants' conduct and 3M's present, potentially infringing activities create a controversy.See Sierra Applied, 363 F.3d at 1373. However, because the claims are currently subject to a reexamination proceeding and do not exist as originally filed, the precise scope of the '498 Patent is unknown and a determination of its validity and infringement under the present status could create inconsistencies or be mooted by the PTO's final decision. Thus, entertaining this declaratory judgment request at this time does not appear to be an efficient use of judicial resources, and the Court declines to exercise jurisdiction over this claim. See EMC, 89 F.3d at 813-14; Minnesota Mining Manf. Co. v. Norton Co., 929 F.2d 670, 672-73 (Fed. Cir. 1991).
2. Non-infringement and Invalidity of the '198 Patent
To substantiate its claimed apprehension of litigation involving the '198 Patent, 3M relies solely on the "parties' litigious relationship." Pl.'s Mem. at 22. Although this is one appropriate consideration when reviewing Defendants' conduct "in toto," 3M offers no precedent where this fact standing alone has been found to support jurisdiction over a patent about which the holder has made no threat or reference. See Arrowhead, 846 F.2d at 737. Accordingly, 3M has demonstrated no explicit or implicit threat of litigation on this patent and therefore dismissal of this claim is appropriate.
3. Non-infringement and Invalidity of the '243 Patent
Defendants initially conceded the existence of subject matter jurisdiction over this claim, but now, relying on GAF Bldg. Materials Corp. v. Elk Corp. of Dallas, 90 F.3d 479 (Fed. Cir 1996), argue there was no justiciable controversy at the time 3M filed its Complaint because the '243 Patent had not yet issued.See id. at 483 (reciting rule that "jurisdiction must be determined on the facts existing at the time the complaint under consideration was filed") (quotation omitted, emphasis added).GAF is inapposite because the plaintiff's complaint in that case alleged a dispute over "a possible future patent," and the court denied its attempt to supplement the original pleadings without the requisite leave of court. Id. Here, after issuance of the '243 Patent, 3M amended the Complaint as a matter of right to add a claim related to this patent. The Amended Complaint is the operative document from which to determine jurisdiction here. See id. At the time the Amended Complaint was filed and the '243 invalidity/non-infringement claim was first asserted, the patent was in existence and questions of its validity and infringement were not hypothetical. See id. Accordingly, the '243 Patent, already asserted by Defendants in the Texas action, presents an actual controversy.
4. Non-Breach of Contract
Defendants claim that during the 2001 negotiations the parties reached a settlement agreement on April 4, 2001, which called for development of an ongoing business relationship between the two parties and thus prompted the continued discussions. See Defs.' Mem. at 9. During discovery in the Texas action, Sung testified under oath that he believes 3M committed a breach of this contractual relationship. Neither Sung nor Kinik has filed a breach of contract suit against 3M and Lin, Kinik's president, asserts that he has no "present intention to pursue such a case." Lin Decl. ¶ 12. However, Defendants have not submitted or offered to submit a covenant of non-liability releasing any contractual claim against 3M. See Amana Refrigeration, Inc. v. Quadlux, Inc., 172 F.3d 852, 855-56 (Fed. Cir. 1999) (defendant's promise not to assert any infringement claims "removed any reasonable apprehension" of impending suit on that patent).
Subject matter jurisdiction over this claim is lacking. 3M relies on Sung's statement that he believed 3M had breached an agreement with Kinik. Sung Dep. at 257. However, Sung, in response to the next question at the deposition stated that Kinik had not proceeded with any legal action because 3M was "too big." Furthermore, this statement was not a threat of litigation, but an answer to 3M's questioning as to whether or not Sung knew if Kinik believed 3M violated an agreement between the entities. When placed in context, the testimony reveals Sung thought an understanding was reached and that 3M did not act in good faith with the proposed acquisition, but admits the document and the terms were constantly changing. Id. at 257-259, 293. 3M points to no threats or explicit action by Defendants indicating an intention to make such a claim. Concerns of impending litigation must be immediate and real. Caldwell v. Gurley Refining Co., 755 F.2d 645, 649-50 (8th Cir 1985). This lone statement made approximately a year and a half after the alleged breach, even when viewed in light of a history of litigation between these parties, does not create such a "definite and concrete" controversy to warrant declaratory relief. Id. at 649.
With respect to the sole surviving '243 claim, the Court must assess Defendants' remaining arguments that venue is improper and transfer to Texas is warranted.
C. Venue
In support of their improper venue allegation, Defendants argue that there is no substantial connection between Minnesota and 3M's claims, and that the filing of this action represents a preemptive strike designed to usurp Defendants' choice of forum.
In pertinent part, 28 U.S.C. § 1391 provides that an action may be brought in "a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of the property that is the subject of the action is situated." Id. § 1391(b)(2).
3M avers that the patents at issue in this suit are process patents that are purportedly infringed by 3M's pad conditioner business, based in Minnesota and that its patent claims therefore arise from events occurring in this state. Defendants do not challenge 3M's assertion that 3M's Minnesota facilities are the only place where the relevant processes are employed. As part of due diligence, Sung toured 3M's pad conditioner laboratory and manufacturing areas and participated in technical discussions regarding this product and process in Minnesota. Though the parties have yet to argue with specificity about the '243 Patent and its relation to 3M's business, accepting 3M's uncontested facts, Sung's claim of infringement of the '243 Patent is based upon 3M's Minnesota pad conditioner engineering and manufacturing, which provides the requisite nexus between 3M's '243 claim and events that transpired in Minnesota.See Pl.'s Mem. at 27-28; Harts Decl. Ex. 1 ¶ 52, Ex. C. The occurrence of the alleged infringement in Minnesota renders venue in this district proper. 28 U.S.C. § 13(b)(2).
D. Transfer
Defendants aver that even if venue is statutorily permitted, the Court should defer to the Texas action for adjudication of the '243 dispute based on the interests of judicial economy and Defendants' rights as the natural plaintiffs.
In deciding whether to transfer a case under 28 U.S.C. § 1404(a), the court evaluates the convenience of parties, witness, and the interests of justice. Terra Int'l, Inc. v. Miss. Chem. Co., 119 F.3d 688, 691 (8th Cir. 1997). Transfer determinations are not limited to these factors, but are made on a case-by-case basis in light of all relevant circumstances. Id.
Defendants offer no explanation why Texas would be a more convenient forum for the parties or for the witnesses, many of whom presumably would be 3M employees located in Minnesota. They instead rely on the pending Texas action, arguing that it is related litigation, since the '243 Patent claims the process by which the product described in the '641 Patent is made. Therefore, it is averred, judicial economy would be best served by consolidating the cases. Defendants contend that because the parties have exchanged approximately 30,000 documents and undertaken extensive discovery in the Texas action, and Judge Ward has issued a claim construction order regarding the '641 Patent, it would be wasteful to litigate the '243 Patent in another court. Defendants also urge that transfer is proper because 3M's suit amounts to unfair forum shopping and an attempt to usurp their rights as the natural plaintiffs. 3M responds that the lone substantive ruling of the Texas court concerned the meaning of a term of the '641 Patent that does not appear in the '243 Patent and little transpired prior to the entry of the stay in that case. It stresses that the Federal Circuit does not countenance dismissal of a first-filed patent suit based upon the "natural plaintiff" argument.
The Federal Circuit has clearly articulated that in patent cases a court may not "dismiss a declaratory judgment action merely because a parallel patent infringement suit was subsequently filed in another district." EMC, 89 F.3d at 813. To do so without other reason would violate "the general rule [that] the forum of the first-filed case is favored, unless considerations of judicial and litigant economy, and the just and effective disposition of disputes, require otherwise." Id.;Genetech, Inc. v. Eli Lilly Co., 998 F.2d 931, 937 (Fed. Cir. 1993) vacated and remanded on other grounds by Regents of Univ. of Cal. v. Genetech, Inc., 527 U.S. 1031 (1999).
Thus, the case law makes clear that the Court should not disfavor 3M's claim simply because it is brought under the Declaratory Judgment Act and "anticipated" Defendants' infringement suit. However, it is equally apparent that reasons such as convenience and "the possibility of consolidation with related litigation" may supply sound reason for transfer of a patent suit. Genetech, Inc, 998 F.2d at 938; see also § 1404(b). In this case, given that the only remaining count in the Amended Complaint subsequent to this Motion will be the '243 claim, transfer to the Eastern District of Texas is efficient and logically the simplest way to proceed, as the pending litigation involves a related patent and the parties have already begun discovery. Kinik, through counsel, has stipulated to the Court that it will submit to jurisdiction in the Texas action. Without discounting 3M's valid interests in the '243 Patent litigation, the Court finds that transfer of this claim to be adjudicated with the pending Texas action furthers judicial economy and does not place an undue burden on 3M, which is already involved in that suit.
IV. CONCLUSION
Based on the foregoing, and all the files, records and proceedings herein, IT IS HEREBY ORDERED that:
1. Defendants' Motion to Dismiss [Docket No. 12] is GRANTED as to all claims except invalidity and non-infringement of the '243 Patent;
2. The claims for declarations of non-breach of contract, invalidity and non-infringement of the '198 Patent and invalidity and non-infringement of the '498 Patent, Amended Complaint [Docket No. 4] Counts 1-3, are DISMISSED WITHOUT PREJUDICE;
3. The Motion to Transfer Venue [Docket No. 12] is GRANTED and the claim of invalidity and non-infringement of the '243 Patent is transferred to the Eastern District of Texas to be adjudicated in now-pending Civil Action No. 2:02-CV-191; and
4. 3M's request to supplement the record [Docket No. 34] is GRANTED and the Declaration of John J. Gagliardi, dated May 24, 2004, [Docket No. 35] was considered for disposition of this matter.