Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-00709/USCOURTS-caed-2_06-cv-00709-4/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 17:501 Copyright Infringement

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1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

EXPERT MICROSYSTEMS, INC., and

INTELLECTUAL ASSETS, LLC,

 2:06-CV-0709-MCE-DAD

Plaintiffs,

v. MEMORANDUM AND ORDER

SMARTSIGNAL CORPORATION,

JAMES P. HERZOG, an Individual, and

STEPHEN W. WEGERICH, an Individual,

Defendants.

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Through the present suit, Plaintiffs Expert Microsystems,

Inc., and Intellectual Assets, LLC, (“Plaintiffs”) allege that

SmartSignal Corp., James P. Herzog, and Stephen W. Wegerich

(“Defendants”) violated the Copyright Act, 17 U.S.C. § 501,

misappropriated trade secrets and implemented unlawful and/or

fraudulent business acts or practices.

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Case 2:06-cv-00709-MCE -DAD Document 53 Filed 10/11/06 Page 1 of 11
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Because oral argument will not be of material assistance, 1

the Court orders this matter submitted on the briefs. E.D. Cal.

Local Rule 78-230(h). 

2

In bringing the present Motion, Defendants seek to change venue

pursuant to 28 U.S.C. § 1404a. For the reasons set forth below,

Defendants’ Motion for Change of Venue is granted. 

1

BACKGROUND

In June 1994, California based Plaintiff Expert Microsystems

formed a joint venture with Nevada based Plaintiff Intellectual

Assets for the purpose of procuring contracts to conduct research

and development on behalf of NASA. In preparing their proposal

for NASA, the Plaintiffs developed proprietary software,

technology, technical data, and trade secret information

(“Proprietary Confidential Information”). On December 20, 1995,

the Plaintiffs and Argonne National Laboratory (“ANL”) entered

into a Non-disclosure Agreement for Evaluation of Proprietary

Data, which included the evaluation of the Proprietary

Confidential Information. On July 30, 1996, Plaintiffs and ANL

entered into a Cooperative Research and Development Agreement

(“CRADA 9600901”) wherein ANL would act as a subcontractor in

Plaintiffs’ projects with NASA. In October 1996, the joint

venture dissolved and Expert Microsystems assumed all of the

joint venture’s responsibilities. The relationship between

Plaintiff Expert Microsystems and ANL continued through 2001,

during which time four more agreements were executed with ANL

acting as a subcontractor for continuing projects with NASA.

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3

In the course of performing under CRADA 9600901, ANL and

Plaintiff Expert Microsystems co-authored confidential computer

software (“Confidential Computer Software”). On March 21, 2001,

the University of Chicago, on behalf of ANL, entered into an

Exclusive Intellectual Property Licensing Agreement with

Plaintiff Expert Microsystems whereby Expert Microsystems was

granted an exclusive right to and license in Licensed Materials

developed under CRADA 9600901. The Licensed Materials included

the Confidential Computer Software. On March 22, 2001, Expert

Microsystems registered three works, one or more portions of

which allegedly included the Confidential Computer Software.

Defendants Wedgerich and Herzog were employed by ANL until

May 1999, and July 2000, respectively. Both traveled to

California from Illinois to attend design reviews and meetings

with Plaintiffs’ personnel, all of which focused in part on the

Proprietary Confidential Information and the Confidential

Computer Software. After leaving the employ of ANL, Defendants

Wedgerich and Herzog came to be employed by Defendant

SmartSignal. As a result of Defendant Wedgerich and Herzog’s

former employment with ANL, Expert Microsystems claims that

SmartSignal has wrongfully come into possession of the protected

Proprietary Confidential Information and the Confidential

Computer Software. Further, Expert Microsystems alleges that

Defendant SmartSignal’s past and present products contain the

Proprietary Confidential Information and the Confidential

Computer Software.

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4

Concurrently with the present action, Defendant SmartSignal

has a pending patent infringement suit in the Northern District

of Illinois against Plaintiffs. In that action, Defendant

SmartSignal claims that the patents registered by Expert

Microsystems were created by Wedgerich and Herzog as a result of

the professional relationship between ANL and Expert

Microsystems. The majority of party-witnesses, non-party

witnesses, and evidence for this case and the patent infringement

case reside in Illinois. 

STANDARD

Under Section 1404a a district court has “discretion to

adjudicate motions for transfer according to ‘an individualized,

case-by-case consideration of convenience and fairness.’” Jones

v. GNC Franchising, Inc., 211 F.3d 495, 498 (9th Cir. 2000);

(quoting Stewart Org. v. Ricoh Corp., 487 U.S. 22, 29 (1988)). 

On a motion to transfer venue, the moving party must make “a

strong showing of inconvenience to warrant upsetting the

plaintiff’s choice of forum.” Hope v. Otis Elevator Co., 389

F.Supp.2d 1235, 1243 (E.D. Cal. 2005) (quoting Decker Coal Co. 

v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986)). 

The Court is required to balance multiple public and private

interests which are categorized into the following four factors:

(1) the convenience of the witnesses; (2) the convenience of the

parties; (3) the plaintiff’s choice of forum; and (4) the

interests of justice. DeFazio v. Hollister Employee Share

Ownership Trust, 406 F.Supp.2d 1085, 1089 (E.D. Cal. 2005).

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5

As a threshold matter, it is undisputed that the Northern

District of Illinois is a proper venue in light of Title 28

U.S.C. § 1400(a), which provides that “an action arising under

the Copyright Act may be brought in the district where the

defendant resides.”

ANALYSIS

1. Conveniences of the Witnesses 

The convenience of the witnesses is said to be the most

important factor in considering a transfer motion. L.A. Mem’l

Coliseum Comm’n v. Nat’l Football League, 89 F.R.D. 497, 501

(C.D. Cal. 1981). In considering this factor, “courts consider

the effect of a transfer on the availability of certain witnesses

and their live testimony at trial.” DeFazio, 406 F.Supp.2d at

1090 (citing L.A. Mem’l Coliseum Comm’n, 89 F.R.D. at 501). 

Affidavits or declarations are required to identify key witnesses

and a generalized summary of their expected testimony. E. & J.

Gallo Winery v. F. & P. S.p.A., 899 F. Supp. 465, 466 (E.D. Cal.

1994). The moving party is required to provide the Court a means

of evaluating the role of witnesses and the impact of a venue

change on their function. Id. at 467.

The Defendants claim that this forum is inconvenient for the

majority of witnesses involved. Specifically, of the thirty-four

potential witnesses, thirty-one reside in Illinois rendering this

an inconvenient forum as to them. This Court agrees.

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6

The Defendants provided the Court with a declaration from counsel

in the companion patent infringement suit identifying the names

of potential key witnesses, the location of such witnesses and a

brief summary of their expected testimony. The testimony of key

non-party witnesses from ANL and the University of Chicago

directly relates to whether the Defendants had knowledge of the

alleged copyrighted information and whether SmartSignal’s

products infringed on the Plaintiffs’ copyrighted work. The vast

majority of these witnesses, and other party and non-party

witnesses identified in the declaration reside in the Northern

District of Illinois. The Court finds it would be unduly

burdensome to require these witnesses to travel to this forum

particularly in light of the concurrent patent infringement trial

underway in Illinois. Consequently, this factor favors the

granting Defendants’ Motion for Change of Venue.

2. Convenience of the Parties

This factor should favor the non-moving party if it merely

shifts inconveniences from the defendants to the plaintiffs. 

DeFazio, 406 F.Supp. 2d at 1090. When considering this factor,

the Court may take into account the residence of the parties and

the party witnesses. L.A. Mem’l Coliseum Comm’n, 89 F.R.D. at

501. The Court may also consider the financial strength of each

of the Parties. DeFazio, 406 F.Supp. 2d at 1090 (citing Jones,

211 F.3d at 499).

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7

It is undisputed that the Northern District of Illinois is a

more convenient forum for Defendants because Defendants’

operations, employees and records are situated exclusively in

Illinois. Conversely, the Plaintiffs would not suffer further

inconvenience if forced to litigate this action in the Northern

District of Illinois given Plaintiffs concurrent involvement in

the companion patent infringement suit. 

In addition, and more importantly, the Defendants assert

that the vast majority of party witnesses are located within the

Northern District of Illinois. Defendant SmartSignal’s Vice

President of Product Development, Manager of Software Development

and fifteen of Defendant SmartSignal’s programmers, all of whom

were involved in the programming of the allegedly infringing

software products, are Illinois residents. Conversely, the three

known witnesses for the Plaintiffs reside in California and

Massachusetts. As a result, the vast majority of party

witnesses, including one of the Plaintiffs’ witnesses, would be

inconvenienced by litigating this case in this forum. 

Finally, Plaintiffs argue that a transfer of venue will

result in a disproportionately higher financial burden on them as

contrasted with Defendants. Plaintiffs aver that, due to their

minimal staff, sending witnesses to appear in an Illinois based

proceeding will impose a considerable financial hardship. While

the Court appreciates Plaintiffs’ position, this inconvenience is

insufficient to tip this factor in their favor.

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8

The Court finds that permitting both actions to be litigated in

the Northern District of Illinois is not a mere shifting of the

inconveniences from the Defendants to the Plaintiffs. Rather,

the Court finds that centralizing these proceedings will neither

shift the convenience to Plaintiff nor from Defendant weighing in

favor of granting Defendants’ Motion.

3. Plaintiff’s Choice of Forum

Generally, a plaintiff’s choice of forum is given great

weight. Lou v. Belzberg, 834 F.2d 730, 739 (9th Cir. 1987). 

When judging the Plaintiffs’ choice of forum, consideration must

be given to the extent of both Parties’ contacts with the forum,

including those relating to the Plaintiffs’ cause of action. Id.

(internal citations and quotations omitted.) If the operative

facts did not occur within the forum and the forum has no

interest in the parties or subject matter, the Plaintiffs’ choice

of forum is entitled to minimal consideration. Id. In addition,

the operative facts in copyright infringement cases usually

relate to the design, development and production of an infringing

product. AEC One Stop Group, Inc. v. CD Listening Bar, Inc., 326

F.Supp. 2d 525, 530 (S.D.N.Y. 2004) (citation omitted.)

As an initial matter, both Parties concede that the

operative facts, including SmartSignal’s design, development and

production of the allegedly infringing products, occurred in the

Northern District of Illinois. In addition, Defendant

SmartSignal has limited contacts with California in relation to

Plaintiffs’ claims further favoring transfer of venue.

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9

Despite the foregoing, Plaintiffs contend that Defendants’ Motion

should be denied in that the Court’s interest in protecting

California residents from the tortious acts of non-residents

supports retaining this action. While the Court clearly agrees,

only one of the two Plaintiffs in this action is a California

resident, duly mitigating Plaintiffs’ argument.

Given that Illinois is the location of the operative facts

together with the Defendants’ minimal contacts with the forum,

this factor favors granting Defendants’ Motion.

4. Interests of Justice

When judging the interests of justice, the Court must

consider public and private interests. Chicago, Rock Island &

Pac. R.R. Co. v. Igoe, 220 F.2d 299, 303 (7th Cir. 1955). 

Private factors include the relative ease of access to sources of

proof; availability of compulsory process for attendance of

unwilling witnesses; and all other practical problems that make

trial of a case easy, expeditious and inexpensive. Shropshire v.

Fred Rappoport Co., 294 F.Supp. 2d 1085, 1095 (N.D. Cal. 2003). 

Public interests include administrative difficulties flowing from

court congestion; the local interest in having localized

controversies decided at home; the avoidance of unnecessary

problems in conflict of laws, and the unfairness of burdening

citizens in an unrelated forum with jury duty. Id.

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10

In the interests of judicial economy, a court may transfer to

another court that has become familiar with the technical issues

of a case. Regents of the Univ. of Cal. v. Eli Lilly and Co.,

119 F.3d 1559, 1565 (Fed.Cir. 1997).

This case undoubtedly entails consideration of highly

technical facts present in both previously-filed actions pending

in the Northern District of Illinois. Additionally, many of the

government contracts alleged and described by Plaintiffs in their

Complaint are the same contracts that are involved in the two

Illinois cases. (Pipke Decl., ¶¶ 11-15). To be sure,

transferring the Plaintiffs’ suit to the Northern District of

Illinois will make the trial of this case more expeditious than

if adjudicated in this forum.

Further, four of the six claims in this matter are pursuant

to either Federal or Illinois state law. (Complaint, Counts 1-3,

5.) Additionally, CRADA 9600901 and the Intellectual Property

Licensing Agreement contain a choice of law provision that

establishes Illinois as the governing state law. (Bickford

Decl., Ex.C at 13; Bickford Decl., Ex.E at 9). Consequently,

this factor also supports a transfer of venue in this case.

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CONCLUSION

For the foregoing reasons, Defendants’ Motion to Transfer

this action to the Northern District of Illinois is GRANTED.

IT IS SO ORDERED.

DATED: October 10, 2006

_____________________________

MORRISON C. ENGLAND, JR

UNITED STATES DISTRICT JUDGE

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