MPI LLC v. Sorting Robotics, Inc.

• Court: District Court, C.D. California
• Decided: October 13, 2022
• Docket: 2:22-cv-07464
• Status: Unknown

Opinion

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2 UNITED STATES DISTRICT COURT 3 DISTRICT OF NEVADA 4 MPI LLC, Case No. 2:21-cv-02042-ART-DJA 5 Plaintiff, ORDER 6 v.

7 SORTING ROBOTICS, INC.,

8 Defendant.

9 Before the Court is Defendants Sorting Robotics, Inc. (“Sorting Robotics”) 10 and Harrison Bard d/b/a Custom Cones USA’s (“Custom Cones”) Motion to 11 Dismiss for improper venue under 28 U.S.C. § 1400. (ECF No. 22.) After the 12 Motion to Dismiss was filed, Plaintiff MPI LLC (“MPI”) voluntarily dismissed 13 Custom Cones, and MPI now argues that transfer to the Central District of 14 California (“C.D. Cal.”), not dismissal, is appropriate since venue would now be 15 proper in C.D. Cal. Because transfer of venue is legally proper and the interests 16 of justice and convenience of the parties favor transfer, the Court orders that this 17 case be transferred to C.D. Cal. for all future proceedings. 18 I. BACKGROUND 19 MPI brought this civil action for patent infringement under the Patent Act, 20 35 U.S.C. § 100 et seq., against Sorting Robotics and Harrison Bard d/b/a 21 Custom Cones. (ECF No. 1.) According to the Complaint, MPI is a company 22 dedicated to building technologies to assist manufacturing and packaging 23 companies make and deliver high quality pre-rolled cones and other packages. 24 (Id. at ¶ 3.) MPI’s technology is currently being used in connection with the 25 creation of folded packages and pre-rolled cones containing hemp. (Id. at ¶ 4.) 26 Defendant Sorting Robotics is incorporated in Delaware and has its principal 27 place of business in Van Nuys, California. (Id. at ¶ 7.) Defendant Custom Cones 28

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1 does business in in Kent, Washington. (Id. at ¶ 8.) The Complaint alleges that 2 venue is proper in the District of Nevada because Custom Cones commits acts of 3 infringement in Nevada, including exhibiting infringing technology at the 4 MJBIZCON convention held at the Las Vegas Convention Center, and Sorting 5 Robotics contributes to and induces that infringement as well as directs 6 advertising to Nevada. (Id. at ¶¶ 12-15.) 7 In Defendants’ Motion to Dismiss, Defendants argue that venue is not 8 proper in the District of Nevada because neither Sorting Robotics nor Custom 9 Cones have a regular place of business in Nevada and their sporadic business 10 activities in Nevada, such as convention attendance, do not suffice for venue 11 under the patent venue statute, 28 U.S.C. § 1400. (ECF No. 22.) In MPI’s 12 response, MPI advised it would voluntarily dismiss Custom Cones and requested 13 that this Court transfer venue to C.D. Cal. where Sorting Robotics resides and is 14 subject to jurisdiction. (ECF No. 23.) MPI stated that while “jurisdictional 15 discovery may reveal that both defendants have a multitude of customers who 16 reside in this district[,]” it nonetheless “may not rise to the level established by 17 the Federal Circuit” necessary for patent venue. (ECF No. 23.) On February 8, 18 2022, MPI filed a Notice of Voluntary Dismissal of Custom Cones. (ECF No. 24.) 19 Following dismissal of Custom Cones, Sorting Robotics, the only remaining 20 defendant, replied, arguing that dismissal of the case, not transfer of venue, is 21 proper because the requirements for transfer cannot be met. (ECF No. 27.) 22 II. DISCUSSION 23 Venue in patent infringement cases is governed by 28 U.S.C. § 1400(b), 24 which provides that “[a]ny civil action for patent infringement may be brought in 25 the judicial district where the defendant resides, or where the defendant has 26 committed acts of infringement and has a regular and established place of 27 business.” Residence means only the state of incorporation. TC Heartland LLC v. 28 Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514, 1521 (2017). Because Sorting

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1 Robotics admits that “Sorting Robotics conducts its business from a leased office 2 space located in Van Nuys, California[,]” that “each of Sorting Robotics [sic] eight 3 employees are located in California[,]” and that “[a]ll of the design, development, 4 and final assembly of Sorting Robotics’ products, including the accused Jiko 5 Machine, is completed in California[,]” the Court finds that venue would be proper 6 as to Sorting Robotics in C.D. Cal. because it has a regular and established place 7 of business in Van Nuys and has allegedly committed acts of infringement there. 8 (ECF No. 22.) 9 Change of venue in patent cases, like in other civil cases, is governed by 28 10 U.S.C. § 1404(a), which provides that “[f]or the convenience of parties and 11 witnesses, in the interest of justice, a district court may transfer any civil action 12 to another district court or division where it might have been brought.” In re TS 13 Tech USA Corp., 551 F.3d 1315, 1319 (Fed. Cir. 2008). MPI argues that transfer 14 to C.D. Cal., not dismissal, is appropriate since venue would be proper in C.D. 15 Cal. as to Sorting Robotics and Sorting Robotics is the only remaining defendant 16 in this case. Sorting Robotics argues that since Custom Cones was originally 17 included in the Complaint, this case could not have been originally properly filed 18 in C.D. Cal. and thus cannot be transferred there under the “might have been 19 brought” provision of 28 U.S.C. § 1404(a). 20 The Court finds that the “might have been brought” inquiry is to be 21 undertaken with respect to the parties in the case at the time of the request for 22 transfer and rejects Sorting Robotics’ arguments to the contrary. Sorting Robotics 23 cites to In re SK hynix Inc., 847 F. App’x 847, 852 (Fed. Cir. 2021) and In re EMC 24 Corp., 501 F. App’x 973, 976 (Fed. Cir. 2013) for the proposition that the Court 25 may not consider the voluntary dismissal of Custom Cones in the “might have 26 been brought” inquiry under § 1404(a). These cases contain some broad language 27 which states that courts may only look to the situation as it existed when the 28 complaint was filed in the “might have been brought” analysis. However, these

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1 cases did not decide the precise issue now before the Court. In SK hynix, the 2 defendants were a foreign entity, SK hynix, Inc., and a domestic entity 3 headquartered in the Northern District of California, SK hynix America, Inc. SK 4 hynix, 847 F. App’x at 850. The defendants moved to transfer the case to C.D. 5 Cal., which would be proper as to the foreign entity but not as to the domestic 6 entity headquartered in the Northern District. The Federal Circuit stated that 7 “[n]otably, SK hynix moved to transfer the entire case. It neither sought severance 8 of SK hynix Inc. (a foreign entity, to which the venue requirement of 28 U.S.C. § 9 1400(b) is inapplicable) nor sought transfer of the case against SK hynix Inc. even 10 if there was no transfer of the case against SK hynix America, Inc.” Id. The Federal 11 Circuit upheld the district court’s decision to deny transfer based on the fact that 12 “SK hynix did not differentiate between the foreign and domestic SK hynix entities 13 for purposes of its transfer motion” and the “might have been brought” analysis. 14 Id. at 852. 15 Sorting Robotics points to the following language from SK hynix: “We do 16 not see how the conduct of a defendant after suit has been instituted can add to 17 the forums where it might have been brought. In the normal meaning of words 18 this language of Section 1404(a) directs the attention of the judge who is 19 considering a transfer to the situation which existed when suit was instituted.” 20 Id. (citing Hoffman v. Blaski, 363 U.S. 335, 343–44, (1960)). However, this 21 language was directed at SK hynix’s alternative argument regarding a defendant’s 22 post-filing consent to transfer. Specifically, the Federal Circuit stated that “the 23 ‘might have been brought’ alternative is not met by the defendant asserting that 24 it would consent to venue in the proposed transferee forum.” Id. This language 25 did not pertain to the propriety of transfer if SK hynix had only moved to transfer 26 the foreign entity to C.D. Cal., instead of including the domestic entity for which 27 venue was only proper in the Northern District. In the present case, however, it 28 appears that MPI has done exactly what SK hynix fatally failed to do, which is to

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1 remove the party that would make the transferee district improper for the “might 2 have been brought” analysis under § 1404(a). 3 In re EMC Corp. also does not control this issue. EMC Corp. involved a 4 district court considering, as part of the judicial economy considerations for 5 transfer, the court’s own familiarity with the case which it gained, by definition, 6 after the case was filed. EMC Corp., 501 F. App'x at 976. The Federal Circuit held 7 that such consideration was improper, stating that “the relevant inquiry is the 8 state of affairs at the time when the suit was instituted.” Id. (internal quotations 9 omitted). It did not decide that dismissal of a party by the plaintiff could not be 10 considered in the “might have been brought” analysis. Likewise, the United States 11 Supreme Court case cited by these Federal Circuit cases, Hoffman, did not 12 squarely hold that dismissal of a party by the plaintiff could not be considered, 13 only that “the wish or waiver of the defendant” cannot be considered, nor can 14 post-filing conduct of the defendants such as moving to a new forum. Hoffman v. 15 Blaski, 363 U.S. 335, 343–44, (1960). 16 Right now, this case is for patent infringement between MPI and Sorting 17 Robotics. Under the plain language of § 1404(a), a patent infringement action 18 between MPI and Sorting Robotics might have been brought in C.D. Cal. The 19 Third Circuit reached a very similar issue, except that certain defendants had 20 settled instead of been voluntarily dismissed, and the Third Circuit found that 21 the “might have been brought” inquiry is to be undertaken with respect to the 22 parties in the case at the time of the transfer motion. In re Fine Paper Antitrust 23 Litig., 685 F.2d 810, 818–19 (3d Cir. 1982). The Third Circuit declined to read 24 Hoffman so strictly as to preclude any inquiries of any kind into post-filing 25 activities. Id. at 819. The Court adopts the reasoning of the Third Circuit and 26 holds that the “might have been brought” analysis is to be undertaken with 27 respect to the parties in the action at the time transfer is requested. See also 28 Gronholz v. Sears, Roebuck & Co., 836 F.2d 515, 518 (Fed. Cir. 1987) (stating, in

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1 || the context of Federal Circuit appellate jurisdiction, that “[the plaintiff's] 2 || dismissal of the patent claim constituted an amendment of his complaint.”). 3 Having decided that transfer to C.D. Cal. is not improper as a matter of 4 || law, the Court must now consider whether transfer is in the interests of justice 5 || and the convenience of the parties. Sorting Robotics has stated that all of its 6 || employees and operations are located in C.D. Cal. It is apparent that it would be 7 || convenient to litigate this case in C.D. Cal. because most of Sorting Robotics’ 8 || witnesses and allegedly infringing acts occurred there. Sorting Robotics argues 9 || that MPI should be penalized for filing this lawsuit in the District of Nevada. (ECF 10 || No. 27.) However, MPI has acted to streamline further proceedings by voluntarily 11 || dismissing Custom Cones. The Court finds that the interests of justice and 12 || convenience of the parties and witnesses favor transfer. 13 |} Ill. CONCLUSION 14 It is therefore ordered that Sorting Robotics’ motion to dismiss (ECF No. 15 || 22) is denied. 16 It is further ordered that this case be transferred to the United States 17 || District Court, Central District of California. 18 19 20 DATED THIS 13t# day of October 2022. 21 22 en x Apes Vowtet

24 UNITED STATES DISTRICT JUDGE 25 26 27 28