Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-02112/USCOURTS-cand-3_07-cv-02112-7/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

---

UNITED 

STATES 

DISTRICT 

COURT

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

UNITED 

STATES 

DISTRICT 

COURT

For the Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

PHOENIX SOLUTIONS, INC.,

Plaintiff,

v.

SONY ELECTRONICS, INC.,

Defendant.

_____________________________________/

No. C 07-02112 MHP

MEMORANDUM AND ORDER

Re: Sony’s Motion to Transfer

SONY ELECTRONICS, INC.,

Third-Party Plaintiff,

v.

INTERVOICE, INC.,

Third-Party Defendant.

_____________________________________/

Plaintiff Phoenix Solutions, Inc. (“Phoenix”) brought this action against defendant Sony

Electronics, Inc. (“Sony”) alleging patent infringement. Sony subsequently filed a third-party

complaint against Intervoice, Inc. (“Intervoice”) asserting a single cause of action for breach of

warranty of title and against infringement. Phoenix and Sony have settled the patent infringement

action, and the court has entered a stipulation and order dismissing all claims and counterclaims

between Phoenix and Sony. Now before the court is Sony’s motion to transfer its third-party action

against Intervoice to the United States District Court for the Middle District of Florida pursuant to

28 U.S.C. section 1404(a). Having considered the arguments and submissions of the parties, and for

the reasons stated below, the court enters the following memorandum and order. 

Case 3:07-cv-02112-MHP Document 101 Filed 12/11/07 Page 1 of 10
UNITED 

STATES 

DISTRICT 

COURT

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

UNITED 

STATES 

DISTRICT 

COURT

For the Northern District of California

Case 3:07-cv-02112-MHP Document 101 Filed 12/11/07 Page 2 of 10
UNITED 

STATES 

DISTRICT 

COURT

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

BACKGROUND

In late 2001, Sony purchased from Edify Corporation—which was later acquired by the

third-party defendant Intervoice—an interactive voice recognition system (“the IVR system”). 

Christopher Dec. ¶ 3, 9. The negotiations leading up to the sale of the IVR system took place in Ft.

Myers, Florida between Sony and Edify representatives who were and continue to be residents of

Florida. Id. ¶¶ 4–7. After the sale was formalized, Edify representatives went to Sony’s Customer

Information Service Center in Ft. Myers, Florida to meet with Sony employees and install the IVR

system. Id. ¶ 8. The IVR system was in fact installed in the Florida location and is currently

maintained and supported from there. Id. ¶¶ 10–12. 

In December 2006, Phoenix filed an action against Sony in the Central District of California,

alleging that Sony’s IVR system installed at its Florida call center infringed Phoenix’s patents for

speech recognition processes. Davison Dec., Exh. 1. Sony filed a third-party complaint against

Intervoice, Edify’s successor-in-interest, alleging a single cause of action for breach of warranty of

title and against infringement pursuant to Uniform Commercial Code section 2-312, as codified in

Florida Statutes section 672.312 and California Commercial Code section 2312. Bernstein Dec.,

Exh. 3. Sony alleged that Phoenix’s patent infringement claims cast a substantial shadow on Sony’s

title to the accused IVR system and that under the UCC, Intervoice was obligated to indemnify and

defend Sony against Phoenix’s action. Bernstein Dec., Exh. 3 ¶¶ 20, 24. To date, Intervoice has not

yet filed an answer to Sony’s third-party complaint. 

Judge Anderson of the Central District of California ordered Phoenix and Sony (Intervoice

had not yet appeared at that time) to show cause why the action should not be transferred to another

district. Davison Dec., Exh. 3 at 3–4. In response to the court’s order to show cause, Sony argued

that the most appropriate venue was the Middle District of Florida because the accused system and

any allegedly infringing activities were located there. Id., Exh. 4 at 1. Witnesses with knowledge of

the system as well as relevant documents were also located in Florida. Id. Sony argued moreover,

that in light of its third-party complaint against Intervoice for indemnification, the connection with

Case 3:07-cv-02112-MHP Document 101 Filed 12/11/07 Page 3 of 10
UNITED 

STATES 

DISTRICT 

COURT

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

Florida was even stronger because negotiations for the purchase and sale of the IVR system occurred

there. Id.

Phoenix argued in reply that the appropriate venue was the Central District of California and

urged the court to honor its initial choice of forum. Phoenix argued that it was a research and

development company that did not generate any revenue and was comprised solely of the inventor of

the patents-in-suit—Dr. Ian M. Bennett—and his wife. Id., Exh. 5 at 2. Phoenix’s only office and

principal place of business were in Palo Alto, California, in the Northern District of California. Id.

It argued, therefore, that transfer to the Middle District of Florida was inappropriate since that

district did not have personal jurisdiction over Phoenix, and Phoenix should not be forced to waive

personal jurisdiction there, subjecting it to counterclaims. Phoenix also argued that there were at

least six witnesses located in California who had first hand knowledge and discoverable information

relating to the development and prosecution of the patents-in-suit. Id. at 3. Five of these witnesses

resided in the Northern District of California. Id. at 3–4. Phoenix argued that the office of its legal

counsel was located in Beverly Hills, California, and therefore, litigation costs accruing to Phoenix

would be minimized by keeping the action in the Central District of California. Id. at 3. 

In its April 9, 2007 order, Judge Anderson found that relative to the Central District of

California, both the Northern District of California and the Middle District of Florida would be more

convenient venues. Bernstein Dec., Exh. 6 at 3. The court found that plaintiff’s initial choice of

forum, although usually given great weight, was entitled to less weight in the instant action because

other than the fact that Phoenix’s counsel was located in the Central District of California, there

were no other connections with that forum. Id. at 3–4. The court found that Sony’s allegedly

infringing activities were located in the Middle District of Florida and that most of Phoenix’s

witnesses lived or had a connection to the Northern District of California. Id. at 3. Although either

of those two forums would have been more appropriate than the Central District of California, the

court ordered the case transferred to the Northern District of California because it would minimize

travel costs to Phoenix’s counsel and because that district had developed specialized local rules for

adjudicating patent cases. Id. at 4–5. 

Case 3:07-cv-02112-MHP Document 101 Filed 12/11/07 Page 4 of 10
UNITED 

STATES 

DISTRICT 

COURT

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

Phoenix is incorporated in California and has its principal place of business in Palo Alto,

California. Davison Dec., Exh.1 ¶ 2. Phoenix has no contacts and with and has never transacted any

business in Florida. Id., Exh. 8 ¶ 2. Sony is incorporated in Delaware and has its principal place of

business in San Diego, California. Bernstein Dec., Exh. 3 ¶ 1. Sony sells consumer electronics in

Sony retail and outlet stores, including in the Northern District of California and the Middle District

of Florida. Davison Dec., Exh. 9 ¶ 23. Intervoice is incorporated in Texas and has its principal

place of business in Dallas, Texas. Bernstein Dec., Exh. 3 ¶ 2. Intervoice transacts business in the

both the Northern District of California and the Middle District of Florida. Id. ¶ 4. When Intervoice

acquired Edify it assumed all of Edify’s warranty obligations with respect to the IVR system that

Edify sold to Sony. Id. ¶ 8. 

Since the action was transferred to this district, Phoenix and Sony have settled the patent

infringement claim. This court has entered a stipulation and order dismissing all claims and

counterclaims between Phoenix and Sony. Docket No. 98. Based on essentially the same arguments

made before the Central District of California, Sony now moves to transfer its third-party claim

against Intervoice to the Middle District of Florida. Intervoice opposes Sony’s motion to transfer,

arguing that the action should remain in the Northern District of California. 

LEGAL STANDARD

Pursuant to 28 U.S.C. section 1404(a), a district court may transfer a civil action “for the

convenience of parties and witnesses [and] in the interest of justice . . . to any other district or

division where it might have been brought.” 28 U.S.C. § 1404(a); Straus Family Creamery v.

Lyons, 219 F. Supp. 2d 1046, 1047 (N.D. Cal. 2002) (Zimmerman, J.). A motion to transfer venue

lies within the broad discretion of the district court, and must be determined on an individualized

basis. Jones v. GNC Franchising, Inc., 211 F.3d 495, 498 (9th Cir.) (citing Stewart Org., Inc. v.

Ricoh Corp., 487 U.S. 22, 29 (1988)), cert. denied, 531 U.S. 928 (2000). The burden of showing

that transfer is appropriate is on the moving party. The Carolina Casualty Co. v. Data Broad. Corp.,

158 F. Supp. 2d 1044, 1048 (N.D. Cal. 2001) (Walker, J.). 

Case 3:07-cv-02112-MHP Document 101 Filed 12/11/07 Page 5 of 10
UNITED 

STATES 

DISTRICT 

COURT

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6

District courts use a two step analysis to determine whether a transfer is proper. The

threshold question under section 1404(a) requires the court to determine whether the case could have

been brought in the forum to which the transfer is sought. 28 U.S.C. § 1404(a); Hatch v. Reliance

Ins. Co., 758 F.2d 409, 414 (9th Cir. 1985). If venue would be appropriate in the transferee court,

then the court must make an “individualized, case-by-case consideration of convenience and

fairness.” Jones, 211 F.3d at 498. Among the factors that a district court may consider in deciding

whether a transfer is appropriate are: (1) the location where the relevant agreements were negotiated

and executed; (2) the state that is most familiar with the governing law; (3) the plaintiff's choice of

forum; (4) the respective parties' contacts with the forum; (5) the contacts relating to the plaintiff's

cause of action in the chosen forum; (6) the differences in the costs of litigation in the two forums;

(7) the availability of compulsory process to compel attendance of unwilling nonparty witnesses; (8)

the ease of access to sources of proof and (9) any relevant public policy of the forum state. Jones,

211 F.3d at 498-99 (citing Stewart, 487 U.S. at 29-31 and Lou v. Belzberg, 834 F.2d 730, 739 (9th

Cir. 1987)). 

DISCUSSION

I. Where the case could have been brought

Sony’s action against Intervoice could have been brought in the Middle District of Florida

because that district (1) had proper subject matter jurisdiction, (2) had personal jurisdiction over the

defendant Intervoice, and (3) was a proper venue. The Middle District of Florida had subject matter

jurisdiction based on diversity. 28 U.S.C. § 1332(a). Complete diversity exists because Sony is a

citizen of both Delaware and California, and Intervoice is a citizen of Texas. Moreover, the amount

in controversy exceeds $75,000. The Middle District of Florida also had personal jurisdiction over

Intervoice because Intervoice transacts business there. Fla. Stat. § 48.193. Venue was proper

because in an action founded only on diversity, venue is proper in a judicial district in which any

defendant resides or where a substantial part of the events giving rise to the claim occurred. 28

U.S.C. § 1391(a). Intervoice resides in the Middle District of Florida because it is subject to

Case 3:07-cv-02112-MHP Document 101 Filed 12/11/07 Page 6 of 10
UNITED 

STATES 

DISTRICT 

COURT

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

7

personal jurisdiction in that district and in addition, the sale of the allegedly infringing IVR system

took place in that district. 

 

II. Factors relating to convenience and fairness

Having concluded that Sony, although it chose not to, could have filed its complaint against

Intervoice in the Middle District of Florida, the court now proceeds to analyze the factors relevant to

convenience and fairness. First and perhaps most importantly, the court notes that this is Sony’s

motion to transfer an action it chose to assert initially in the Central District of California. 

Notwithstanding the fact that Sony’s complaint against Intervoice was related to Phoenix’s patent

infringement claim against Sony, which Phoenix had originally filed in the Central District of

California, Sony remained free to file its complaint in the Middle District of Florida. Sony had an

opportunity at the outset to file its claim against Intervoice in the Middle District of Florida and, as a

matter of fairness, should not now be heard to complain about this venue. Inherent.com v.

Martindale-Hubbell, 420 F. Supp. 2d 1093, 1101 (N.D. Cal. 2006) (Patel, J.) (“Plaintiff can hardly

complain of the failure to transfer this case to Oregon since it could have brought the action there in

the first place. Having chosen not to do so, it lost its opportunity to litigate this case in Oregon.”). 

Additional factors weigh against transferring this case to Florida. Sony has asserted a single

cause of action against Intervoice for breach of warranty of title and against infringement under

UCC section 2-312. The California statutory enactment of this UCC provision states,

Unless otherwise agreed a seller who is a merchant regularly dealing in goods of

the kind warrants that the goods shall be delivered free of the rightful claim of

any third person by way of infringement or the like but a buyer who furnishes

specifications to the seller must hold the seller harmless against any such claim

which arises out of compliance with the specifications.

Cal. Com. Code § 2312. Although Intervoice has not yet filed an answer to Sony’s complaint,

Intervoice argues in its opposition to this motion to transfer that issues related to the validity and

enforceability of Phoenix’s patents will be dispositive of Sony’s claim for breach of warranty. In

particular, Intervoice argues that it will defend against Sony’s claim by asserting that (1) no

Case 3:07-cv-02112-MHP Document 101 Filed 12/11/07 Page 7 of 10
UNITED 

STATES 

DISTRICT 

COURT

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

8

Intervoice products that are covered by the UCC warranty obligation infringe the Phoenix patents 

and/or (2) the Phoenix patents are invalid and unenforceable. In reply, Sony argues that it will not

be necessary to prove that Intervoice’s products actually infringed or that Phoenix’s patents are

indeed valid. Sony argues instead that it has a valid claim against Intervoice under UCC section 2-

312 because Phoenix, by asserting its patent infringement claim against Sony, created a cloud on

Sony’s rightful enjoyment of the IVR system. Sony asserts that as the seller of the IVR system,

Intervoice did not deliver the good “free of the rightful claim of any third person by way of

infringement.” 

As is apparent, the parties disagree as to whether and to what extent adjudication of Sony’s

breach of warranty claim against Intervoice will implicate issues related to infringement and

invalidity of the underlying patents held by Phoenix. In ruling on Intervoice’s motion to dismiss, the

court has already held that it is sufficient for Sony to assert that the goods provided by Intervoice

“gave rise to a colorable claim of patent infringement,” thereby exposing Sony to suit by Phoenix. 

Docket No. 99 at 5. While a “colorable claim” may be sufficient to overcome a motion to dismiss, it

may not be sufficient for plaintiff to ultimately prevail on the merits. Currently, there is little

precedent to assist the court in resolving the questions of whether and to what extent issues relating

to patent infringement and invalidity will be relevant for adjudicating the merits of Sony’s breach of

warranty claim, and the court does not decide those questions now. See e.g., 84 Lumber Co. v.

MRK Technologies, Ltd., 145 F. Supp. 2d 675 (W.D. Pa. 2001). The court, instead, simply observes

that there is a likelihood that such issues will be pertinent. 

Accordingly, in deciding the present motion to transfer, the court will take into account the

possibility that evidence and witnesses pertaining to the underlying patent issues will be relevant for

adjudicating Sony’s claim. The same contacts that Judge Anderson evaluated in his order

transferring the case to this district from the Central District of California, therefore, remain relevant

despite the fact that Phoenix and Sony have settled. For example, Phoenix identified five non-party

witnesses from the Northern District of California who have knowledge of the underlying patents

and would have discoverable information regarding the patents. Phoenix itself is a citizen of

Case 3:07-cv-02112-MHP Document 101 Filed 12/11/07 Page 8 of 10
UNITED 

STATES 

DISTRICT 

COURT

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

9

California whose principal place of business is in Palo Alto, California. Moreover, if the court

eventually finds that Phoenix should be joined as a necessary party under Federal Rule of Civil

Procedure 19(a)(2)(i) because “the disposition of the action in [Phoenix’s] absence may as a

practical matter impair or impede [Phoenix’s] ability to protect” its intellectual property interests,

this argues against transfer to Florida. Joinder of Phoenix as a necessary defendant would not be

feasible in Florida because that state does not have personal jurisdiction over Phoenix. Under

Federal Rule of Civil Procedure 19(b), therefore, a Florida court would be forced to dismiss the

action if it found that Phoenix was an indispensable party. In contrast, this district has proper

personal jurisdiction over Phoenix. If Phoenix must be joined as a necessary party under Rule 19(a),

therefore, joinder of Phoenix is feasible in this district. This district, accordingly, need not reach the

question of whether Phoenix is an indispensable party under Rule 19(b) and therefore, whether the

action should be dismissed. 

Sony argues that the underlying facts giving rise to its cause of action for breach of warranty

all occurred in Florida. Negotiations for the sale of the IVR system occurred in Florida, Sony and

Edify representatives who participated in the negotiations reside in Florida, and the IVR system

itself is installed in Sony’s Florida call center. As the court has already noted, however, despite

these contacts with Florida, Sony did not choose to file its complaint against Intervoice in a Florida

venue. Had Sony desired to avoid the inconvenience of litigating this action in a forum other than

Florida, it should have, from the outset, filed its complaint there. Sony’s present motion to transfer

has been brought approximately one year after this case was filed and more than eight months after

Judge Anderson transferred the case to this district from the Central District of California. This

court finds that it would be untimely and inefficient to involve yet another district in this matter. 

This court is already familiar with the parties and the issues involved, and judicial resources would

be conserved by keeping the action in this district. 

Case 3:07-cv-02112-MHP Document 101 Filed 12/11/07 Page 9 of 10
UNITED 

STATES 

DISTRICT 

COURT

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

10

CONCLUSION

For the foregoing reasons, Sony’s motion to transfer its third-party action against Intervoice

is DENIED.

IT IS SO ORDERED.

Dated: December 11, 2007 _______________________________

MARILYN HALL PATEL

United States District Court Judge

Northern District of California

Case 3:07-cv-02112-MHP Document 101 Filed 12/11/07 Page 10 of 10