Court Opinion

ID: 2671010
Source: CourtListenerOpinion
Date Created: 2014-04-23 17:23:02.290107+00
Date Added: 2024-06-11T09:19:26.008542
License: Public Domain

Case: 14-107     Document: 23       Page: 1    Filed: 04/23/2014

               NOTE: This order is nonprecedential.

   United States Court of Appeals
       for the Federal Circuit
                   ______________________

                IN RE WMS GAMING INC.,
                         Petitioner.
                   ______________________

                          2014-107
                   ______________________

    On Petition for Writ of Mandamus to the United
States District Court for the Southern District of Missis-
sippi in Nos. 3:13-cv-00691-CWR-FKB and 3:13-cv-00692-
CWR-FKB, Judge Carlton W. Reeves.
                  ______________________

                       ON PETITION
                   ______________________

     Before LOURIE, DYK, and REYNA, Circuit Judges.
LOURIE, Circuit Judge.
                          ORDER
    WMS Gaming Inc. seeks a writ of mandamus to va-
cate the decision of the United States District Court for
the Southern District of Mississippi denying its motion to
transfer this patent infringement case to the United
States District Court for the Northern District of Illinois.
Because we conclude that the decision denying transfer
amounted to a clear abuse of discretion, we grant man-
damus.
Case: 14-107   Document: 23      Page: 2   Filed: 04/23/2014

2                            IN RE WMS GAMING INC.

                            I.
    This transfer dispute arose out of a complaint filed by
New York-based MGT Gaming, Inc. at the District Court
for the Southern District of Mississippi, alleging in-
fringement of U.S. Patent No. 7,892,088. That patent, in
general terms, covers gaming systems linked to an inter-
active sign, such that an event in the first game may
allow the player to play a second bonus game via the
interactive sign.
    MGT’s original complaint names two gaming machine
manufacturers, WMS and its competitor, Azure Gaming,
Inc., accusing each of manufacturing, selling, and offering
to sell, products that infringe the patent. MGT’s original
complaint also named as defendants Caesars Entertain-
ment Corp. and MGM Resorts International, Inc., which
both lease from WMS the accused gaming systems for
their casino properties, and Penn National Gaming Inc.,
which received accused gaming systems from Azure.
    As is relevant here, WMS moved to sever the claims
against it from the remaining defendants, and stay the
actions against the casino defendants. WMS also moved
to transfer the claims against it pursuant to 28 U.S.C.
§ 1404(a) to the Northern District of Illinois, where WMS
maintains its principal place of business and relevant
documentary sources of proof, and where it designs and
manufactures the accused products.
    While the district court severed the claims against
Azure from the claims against WMS, it did not sever the
claims against WMS from the claims against MGM and
Caesars. Instead, it held only that Caesars and MGM
could not be co-defendants in the same action and the
Case: 14-107    Document: 23       Page: 3   Filed: 04/23/2014

 IN RE WMS GAMING INC.                                     3

claims against Caesars and MGM should be stayed pend-
ing the outcome of the litigation against WMS. *
    The district court denied WMS’s motion to transfer.
The court found that “focus on the ‘making’ of the games
is more appropriate” for considering this transfer motion
and that all of WMS’s documents and witnesses were
located in the Northern District of Illinois where it de-
signed and manufactured the accused products. But it
concluded based on the court’s ability to more quickly
resolve the case and to subpoena non-party casino man-
agers in Mississippi that WMS had failed to establish the
Northern District of Illinois was a clearly more convenient
forum than the Southern District of Mississippi. That
was so even though the court found that information
related to game play and the collection of revenue at the
casinos “will likely be irrelevant to the core of [the] patent
infringement action[.]”
                             II.
    Applying Fifth Circuit law in cases from district
courts in that circuit, this court has granted writs of
mandamus to correct denials of transfer that were clear
abuses of discretion under governing legal standards. See
In re Microsoft Corp., 630 F.3d 1361 (Fed. Cir. 2011); In re
Nintendo, Co. Ltd., 589 F.3d 1194 (Fed. Cir. 2009); In re
Genentech Inc., 566 F.3d 1338 (Fed. Cir. 2009); In re TS
Tech USA Corp., 551 F.3d 1315 (Fed. Cir. 2008); accord In
re Volkswagen of Am., Inc., 545 F.3d 304 (5th Cir. 2008)
(en banc).
   Section 1404(a) serves to “prevent the waste of time,
energy and money and to protect litigants, witnesses and
the public against unnecessary inconvenience and ex-
pense[.]” Van Dusen v. Barrack, 376 U.S. 612, 616 (1964)

    * The district court also dismissed MGT’s induced and
contributory infringement claims without prejudice.
Case: 14-107    Document: 23     Page: 4    Filed: 04/23/2014

4                             IN RE WMS GAMING INC.

(internal quotations omitted).     Consistent with that
purpose, both this court and the Fifth Circuit have made
clear that “[a] motion to transfer venue pursuant to
§ 1404(a) should be granted if ‘the movant demonstrates
that the transferee venue is clearly more convenient[.]’”
In re Radmax, Ltd., 720 F.3d 285, 288 (5th Cir. 2013)
(quoting Volkswagen, 545 F.3d at 315); Nintendo, 589
F.3d at 1197.
     In addressing the transfer motion, the district court
found that a number of factors weighed in favor of trans-
fer. In particular, the court found that the cost of attend-
ance of willing witnesses favored the Northern District of
Illinois. The court also weighed in favor of transfer the
ease of access to sources of proof because MGT’s docu-
ments related to its accused products are located in the
Northern District of Illinois, including all sources of proof
relevant to the design, development, manufacture, mar-
keting, advertising, and use of the accused products. In
addition, the district court found that the local interest
factor favored transfer because the alleged acts of in-
fringement giving rise to this action occurred at WMS’s
corporate headquarters.       These conclusions are well
supported by the record.
     The district court found that two factors–the compul-
sory process and court congestion factors–weighed against
transfer. In support of those conclusions, MGT contends
that non-party casino managers who live in Mississippi
can be compelled to testify about “the placement of ac-
cused gaming machines and information about the play of
the games, [and] the revenues therefrom[.]” MGT further
contends that, when compared to the Northern District of
Illinois, the Southern District of Mississippi has “superior
numbers” in “median time from filing case until trial; the
percentage of civil cases that are more than three years
old; the average number of pending cases per judge; and
the average number of trials completed within a year.”
Case: 14-107    Document: 23     Page: 5    Filed: 04/23/2014

 IN RE WMS GAMING INC.                                    5

    But these are insufficient reasons to discount the
compelling case for transfer. For one thing, we do not
regard the prospective speed with which this case might
be brought to trial to be of particular significance here.
MGT does not dispute that it does not practice the patent
and therefore MGT is not in need of a quick resolution of
this case because its position in the market is threatened.
Nor has MGT pointed to any other reason that a more
rapid disposition of the case in the Southern District of
Mississippi would be important enough to be assigned
significant weight in the transfer analysis. See generally
Genentech, 566 F.3d at 1347 (noting that the court con-
gestion factor “appears to be the most speculative”).
    For another thing, even on its own terms the district
court’s analysis indicates that inconvenience clearly
favors transfer. The witnesses that have the information
that the district court characterized as being at the core of
the case against the manufacturers all reside in the
Northern District of Illinois. Keeping the case in Missis-
sippi would thus require those witnesses to incur signifi-
cant expenses and loss in productivity. By contrast, MGT
has no connection on its own to the Southern District of
Mississippi. In addition, as between the transferor and
transferee venues, the only identified sources of proof are
located in the Northern District of Illinois.
    The only suggested connection to the cause of action
and the plaintiff’s chosen forum are casino managers, not
identified by name, who are unlikely to have information
beyond the use of the product. To the extent that the
district court felt compelled to keep the case on that basis
that determination was incorrect. Cf. In re Microsoft
Corp., 630 F.3d 1361, 1363-4 (Fed. Cir. 2011) (granting
mandamus where only locally identified individuals
merely had knowledge of use of product and had no
knowledge of patent or the issues in the suit). As the
district court acknowledged, this information is largely
irrelevant to the case against the manufacturers and all
Case: 14-107     Document: 23   Page: 6    Filed: 04/23/2014

6                            IN RE WMS GAMING INC.

documentary information concerning use of the games is
kept in Illinois. If actually needed, WMS notes that the
transferee court can compel testimony from a casino
manager in Illinois regarding use of the products.
    For these reasons, we conclude that WMS has estab-
lished the right to mandamus in directing the district
court to transfer. The district court should revisit and
clarify its severance rulings concerning WMS and the
casino defendants, keeping in mind that WMS has a clear
right to transfer, and that severance is particularly ap-
propriate in peripheral claim cases to facilitate transfer.
      Accordingly,
      IT IS ORDERED THAT:
    The petition for a writ of mandamus is granted, the
portion of the order denying transfer is vacated, and the
district court is directed to conduct further proceedings
consistent with this order.

                                   FOR THE COURT

                                   /s/ Daniel E. O’Toole
                                   Daniel E. O’Toole
                                   Clerk of Court
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