MEMORANDUM OPINION AND ORDER
Bеfore the Court is a patent infringement action filed by MGT Gaming, Inc. (“MGT”) against the following defendants: WMS Gaming, Inc. (“WMS”) and its affiliated casino operators, Caesars Entertainment Corporation (“Caesars”) and MGM Resorts International, Inc. (“MGM”) (collectively the “WMS Defendants”); along with Aruze Gaming America, Inc. (“Aruze”) and its affiliated casino operator Penn National Gaming, Inc. (“Penn”) (collectively, the “Aruze Defendants”). The WMS Defendants have filed the following motions: 1) Motion to Dismiss; 2) Motion to Sever the Plaintiffs Claims Against All Defendants; 3) Motion to Stay Proceedings Against the Casino Defendants; and 4) Motion to Change Venue.. [Docket No. 22] The Aruze Defendants have filed a Motion to Dismiss [Docket No, 28] and a Motion to Change Venue [Docket No. 36]. The motions have been fully briefed and are ripe for review. For the reasons stated below, 1) the Motion to Dismiss is GRANTED IN PART with respect to the contributory and induced infringement claims and DENIED with respect to the direct infringement claim; 2) the Motion to Sever the Plaintiffs Claims Against All Defendants is GRANTED IN PART as to WMS, Caesars and MGM and DENIED as to Aruze and Penn; 3) the Motion to
I. FACTUAL AND PROCEDURAL BACKGROUND
On December 17, 2012, MGT filed its First Amended Complaint against the WMS Defendants and the Aruze Defendants alleging that they infringed United States Patent 7,892,088 (“the '088 patent”). The '088 patent is “directed to a gaming system in which a second game played on an interactive sign is triggered once a specific event occurs in a first game, e.g., a slot machine.” Docket No. 19 (“MGT Complaint”), at ¶ 7. Plaintiff alleges that the “defendants either manufacture and sell gaming systems in violation of plaintiffs patent rights or operate casinos that offer such gaming systems.” Id. More specifically, MGT asserts that the named defendants “have infringed and continue to infringe at least claims 1-3 and 6 of the '088 patent, either literally or under the doctrine of equivalents.” Id. at ¶ 17.
The case involves MGT, the owner of the patent at issue; two manufacturers of casino gaming machines, WMS and Aruze; and three casino operators, Caesars, MGM, and Penn. MGT is a Delaware corporation with its principal place of business in New York. WMS states that it is a Delaware corporation with its corporate headquarters in Waukegan, Illinois. WMS designs and develops games at its technology campus in Chicago, Illinois. Aruze is a Nevada corporation with its principal place of business in Las Vegas, Nevada. MGT alleges that WMS and Aruze infringe the '088 patent by making or selling certain gaming machines which utilize the invention covered under that patent.
Caesars, MGM and Penn (or their subsidiaries) (collectively, the “Casino Defendants”) operate casino properties throughout the United States, including in Mississippi. Caesars and MGM are both Delaware corporations with their principal headquarters in Las Vegas, Nevada. Penn is a Pennsylvania corporation with its principal place of business in Wyomissing, Pennsylvania. WMS has a business relationship with Caesars and MGM, and Aruze has a business relationship with Penn. MGT alleges that these Casino Defendants infringe the '088 patent by using the accused gaming machines provided by WMS and Aruze.
While no Defendant is chartered or headquartered in Mississippi, Plaintiff alleges that all of the Defendants have registered agents for service of process and are registered to do business in Mississippi. It is undisputed that they have also filed corporate annual reports with the Mississippi Secretary of State as recently as April 2012. WMS has a registerеd agent for service of process in Jackson, Mississippi, and a sales and distribution office in Gulfport, Mississippi. Aruze has a registered agent for service of process in Flo-wood, Mississippi. According to MGT, WMS’s and Aruze’s games are played in casinos throughout Mississippi, and both Defendants exhibited their games at the Southern Gaming Summit in Biloxi, Mississippi, in May 2012.
The Court will address each motion separately. Because there are common issues between WMS and Aruze, the Court addresses the common issues in relation to WMS’s motion and separately addresses issues unique to each defendant.
II. MOTION TO DISMISS
A. Legal Standard
“The question whether a Rule 12(b)(6) motion was properly granted is a purely procedural question not pertaining to patent law, to which this court applies the rule of the regional circuit.” CoreBrace LLC v. Star Seismic LLC,
When considering a motion to dismiss, courts look only to the allegations in the complaint to determine whether they are sufficient to survive dismissal. See Jones v. Bock,
In patent infringement cases, a plaintiff may bring three types of claims: direct infringement under 35 U.S.C. § 271(a), induced infringement under Section 271(b), and contributory infringement under Section 271(c). Induced and contributory infringement are considered forms of indirect infringement. In a complaint for direct infringement, Form 18 of the Federal Rules of Civil Procedure provides the pleading standard. In re Bill of Lading Transmission & Processing Sys. Patent Litig. (R+L Carriers, Inc. v. DriverTech LLC),
B. Analysis
1. Direct Infringement
35 U.S.C. § 271(a) provides liability for direct infringement. In relevant part, it
Form 18 provides the pleading standard for claims of direct infringement, not Twombly and Iqbal. R+L Carriers,
Thus, a patent complaint that complies with Form 18 will suffice to state a claim that is plausible on its face. See Fed.R.Civ.P. 84; Realtime Data, LLC v. Stanley,
MGT Gaming’s First Amended Complaint has met the Form 18 pleading standards. The complaint (1) alleges jurisdiction, MGT Complaint, at 2-3; (2)
WMS argues that it did not have sufficient notice of the games at issue because MGT’s First Amended Complaint “lumps all the Defendants and accused gaming machines together” and because it mentioned gaming machines elsewhere in its complaint but not in the same paragraph with the other infringement allegations.
WMS and Aruze also contend that MGT’s First Amended Complaint fails to allege sufficient facts showing what gaming machines are at issue because “it identifies other gaming machines as allegedly infringing ‘on information and belief.’ ” WMS Motion, at 25-26 (quoting MGT Complaint, at ¶ 17); Docket No. 29, at 8 (“Aruze MTD”) (arguing that “there is no direct factual allegation against Aruze” because MGT First Amended Complaint relies on phrase ‘on information and belief ”). To the extent that the Defendants argue that the phrase “on information and belief’ suggеsts that MGT does not have sufficient information or factual certainty to support its allegations, the Fifth Circuit held that “‘information and belief pleadings are generally deemed permissible un
MGT has met the standard for pleading direct infringement. Aruze’s arguments are misplaced as they fail to consider the Form 18 standard when evaluating MGT’s claim of direct infringement; instead, they apply the standard in Twombly and Iqbal, which applies to claims of indirect infringement. MGT has met the requirement of “pleadfing] facts sufficient to place the alleged infringer on notice as to what he must defend.” See McZeal,
2. Indirect Infringement
Claims of indirect infringement may allege induced and contributory infringement. Under 35 U.S.C. § 271(b), which provides a cause of action for induced infringement, “[w]hoever actively induces infringement of a patent shall be liable as an infringer.” Section 271(c) provides a cause of action for contributory infringement:
Whoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer.
In its reply, Plaintiff admits that it “did not specifically plead WMS’ knowledge of the patent in suit and its specific intent to induce infringement of it, as required for indirect infringement under 35 U.S.C. § 271(b).”
III. JOINDER
The Defendants have moved to sever the claims against them for improper joinder. For the reasons below, the motion is granted in part and denied in part.
A. Legal Standards
Joinder is normally governed by Federal Rule of Civil Procedure 20. However, in actions involving patents, the Leahy-Smith America Invents Act (AIA), 35 U.S.C. § 299, governs joinder. It sets a higher standard for joinder and prohibits joinder unless the claimed infringement by each defendant arises out of the same transactions relating to infringement of the patent-in-suit by the same accused product. Mednovus, Inc. v. QinetiQ Grp. PLC, No. 2:12-CV03487-ODW,
In relevant part, Section 299 reads:
(a) Joinder of Accused Infringers.— With respect to any civil action arising under any Act of Congress relating to patents ... parties that are accused infringers may be joined in one action as defendants or counterclaim defendants, or have their actions consolidated for trial ... only if—
(1) any right to relief is asserted against the parties jointly, severally, or in the alternative with respect to or arising out of thе same transaction, occurrence, or series of transactions or occurrences relating to the making, using, importing into the United States, offering for sale, or selling of the same accused product or process; and
(2) questions of fact common to all defendants or counterclaim defendants will arise in the action.
(b) Allegations Insufficient for Joinder. — For purposes of this subsection, accused infringers may not be joined in one action as defendants or counterclaim defendants, or have their actions consolidated for trial, based solely on allegations that they each have infringed the patent or patents in suit.
35 U.S.C. § 299.
“While transfer motions are governed by regional circuit law, motions to sever are governed by Federal Circuit law because joinder in patent cases is based on an analysis of the accused acts of infringement, and this issue involves substantive issues unique to patent law.” In re EMC Corp.,
B. Analysis
WMS argues that MGT improperly joined the Defendants in a single action because their alleged infringements do not arise out of the same transactions relating to the same accused products, as required by the AIA. It contends that the infringements arise out of different transactions with different accused products. WMS further contends that the Defendants cannot be joined because the defendants are competitors; WMS and Aruze are competitors in the gaming industry and Caesars, MGM, and Penn are competitors in the casino industry. As a result, WMS re
Aruze contends that MGT failed to allege a right to relief under theories of joint or several liability. Thus, it must satisfy the “same transaction or occurrence” test to meet the first prong of Section 299’s joinder standard. 35 U.S.C. § 299(a) (“[AJccused infringers may be joined in one action as defendants ... only if ... any right to relief is asserted against the parties jointly, severally, or in the alternative with respect to or arising out of the same transaction [or] occurrence ... ”).
Given the recent passage of Section 299 of the AIA in September 2011, the case law interpreting the statute is relatively limited. Although the Federal Circuit has yet to directly address 35 U.S.C. § 299, one case explains the requirements for joinder under Rule 20. In re EMC Corp.,
In In re EMC Corp., the Federal Circuit held that the same transaction or occurrence test requires a “logical relationship” between the claims.
[J]oinder is not appropriate where different products or processes are involved. Joinder of independent defendants is only appropriate where the accused products or processes are the same in respects relevant to the patent. But the sameness of the accused products or processes is not sufficient. Claims against independent defendants (i.e., situations in which the defendants are not acting in concert) cannot be joined under Rule 20’s transaction-oroccurrenee test unless the facts underlying the claim of infringement asserted against each defendant share an aggregate of operative facts. To be part of the “same transaction” requires shared, overlapping facts that give rise to each cause of action, and not just distinct, albeit coincidentally identical, facts.
Id. at 1359.
The Federal Circuit has also directed courts to consider pertinent factual consid
This case involves two sets of relationships: 1) the relationship between the manufacturer defendants WMS and Aruze; and 2) the relationship between the manufacturers and their principal licensed casino defendants. These include WMS and its casino clients, Caesars and MGM; and Aruze and its casino client, Penn. Each of these relationships will be addressed in turn.
1. WMS and Aruze
MGT’s claims against WMS and Aruze do not relate to the same accused products. MGT alleges that “Defendants WMS and, on information and belief, Aruze directly infringe by manufacturing, selling and offering for sale the products described and claimed in the '088 patent.” MGT Complaint, at ¶ 17. MGT does not allege that WMS and Aruze sell the same products. They do not jointly make, offer to sell, or sell any of the accused gaming machines, as required for liability under 35 U.S.C. § 299(a)(1). They do not have any relationship at all with respect to the design, manufacture, or distribution of their respective gaming machines at issue in this case. In its First Amended Complaint, MGT identifies at least thirteen potentially accused gaming machines, including: “Pirate Battle,” “Battleship,” “Clue,” “Monopoly,” “Wizard of Oz Journey to Oz,” “Great and Powerful Oz,” “Rich Life,” “Paradise Fishing,” “Amazon Fishing Competition,” “Good Catch Competition,” “Massive Fishing Competition,” “Big Game Competition,” and “Jackpot Battle Royal.” MGT Complaint, at ¶¶ 11-17. WMS independently designed, manufactures, and distributes the first six accused gaming machines without any involvement or participation from Aruze. Aruze independently designed, manufactures, and distributes the remaining seven accused gaming machines without any involvement or participation from WMS. Each machine is a different product; the only similarity is that they involve the same patent, which is insufficient to allow jоinder of the claims. 35 U.S.C. § 299(b) (“[Ajceused infringers may not be joined in one action ... based solely on allegations that they each have infringed the patent ... in suit.”); Mednovus,
While MGT argues that they have sued WMS and Aruze jointly, it does not allege that they sell the same products or processes. Thus, the claims of infringement against the defendants’ products do not share an “aggregate of operative facts.” WMS and Aruze’s status as direct competitors also indicates that joinder would be inappropriate. IpVenture, Inc. v. Acer, Inc.,
MGT argues that Aruze and WMS should not be severed because separating issues such as patent claim construction or obviousness into different cases could lead to “disparate rulings on identical issues.” Docket No. 38, MGT Resp. to WMS, at 3. MGT also suggests that allowing the two groups of defendants to proceed together would promote “judicial efficiency.” Id. However, judicial efficiency may be minimal because WMS and Aruze developed the accused products separately and their positions may diverge given that they did not act in concert. See GameTek LLC v. Gameview Studios, LLC, No. 12-cv-00499 BEN (RRB),
2. WMS Defendants and Aruze Defendants
Despite denying the motion to sever WMS and Aruze, the allegations surrounding the WMS Defendants and the Aruze Defendants are markedly different. In this case, there is a critical and substantive factual connection within each identified manufacturer-casino(s) group. MGT alleges that the WMS and Aruze carried on with their casino clients an ongoing arrangement in which they would split the revenues from the games. Docket No. 38, MGT Resp. to WMS, at 3; see also Ex. 1, Kilby Declaration at ¶¶6-7. MGT also alleges that “[t]he casino and manufacturer also typically share responsibility for maintenance, servicing, repair and replacement of the slot machines at issue.” Docket No. 38, MGT Resp. to WMS, at 6; Kilby Deck at ¶ 5. Thus, MGT contends that the alleged revenue splitting arrangement between the WMS Defendants and the Aruze Defendants and the ongoing play of each gaming machine “constitutes a series of transactions.” Docket No. 38, MGT Resp. to WMS, at 3.
a. Aruze Defendants
In the case of the Aruze Defendants, MGT has met the requirements of Section 299 for joinder. MGT has asserted a “right to relief ... arising out of the same ... series of transactions.” 35 U.S.C. § 299(a). Aruze manufactures gaming machines and allegedly provides them to Penn under a revenue sharing agreement in which Aruze provides ongoing assistance for the upkeep of the machine. Thus, the offering for sale and sale of each accused machine from Aruze to Penn constitutes a series of transactions. Penn’s use of the machine in an ongoing relationship with Aruze constitutes a series of related transactions. Cf. Omega Patents, LLC v. Skypatrol, LLC, 2012 WL
In litigation, the “common questions of fact common to all defendants [Aruze and Penn] ... will arise in the action.” Id. at 299(b). Section 299 of the AJA has preserved the requirement in Rule 20 that the claims against the parties must arise out of the “same transaction or occurrence.”
b. WMS Defendants
WMS has admitted that it does have a revenue sharing arrangement with the casino defendants. According to WMS, the revenue sharing arrangement to which MGT refers is the fact that WMS’s accused machines are “participation” machines. Docket No. 46 (‘WMS Rebuttal”), at 4. “WMS owns the machines and leases them to its casino customers.” Id. (citing WMS Rebuttal, Jaffe Deck, Ex. G, ¶ 3.). The leases are based upon any of the following payment methods: (i) a percentage of the amount wagered into the machine, (ii) a percentage of the net win for the machine, which is the earnings generated by casino patrons playing the machine; (iii) a fixed daily fee; or (iv) a combination of (i) and (iii). WMS Rebuttal, at 4.
The analysis above would also apply for WMS with respect to Caesars and MGM. The case against the WMS Defendants, however, requires severance of Caesars and MGM as co-defendants.
WMS argues that Caesars and MGM cannot be joined in the same action because they are direct competitors. The Court agrees. Direct competitors may not be joined in the same action because their acts do not arise out of the same transaction or occurrence and they do not share an “aggregate of operative facts.” IpVenture,
MGT attempts to suggest that all of the Defendants can be joined because there is a “cross-over of games and casinos ...
For the reasons below, the Court finds that claims against WMS and Aruze should be severed. However, WMS and Aruze will remain joined with their casino clients.
IV. MOTIONS TO SEVER and STAY CLAIMS AGAINST CASINO DEFENDANTS
Given that the Court has determined the proper joinder of the parties, it must answer the following threshold questions: whether (i) to sever the causes of action against properly joined parties, (ii) stay the cause as to defendants determined to be “peripheral;” and (iii) to transfer the cause as to the other defendants. See Mobil Oil Corp. v. W.R. Grace & Co.,
A. Severance
Courts that have considered the question of severing defendants in patent cases and granting a stay have generally found that “severance is appropriate where: (1) the claim to be severed is peripheral to the remaining claims; (2) the adjudication of the remaining claims is potentially dispositive of the severed claim; and (3) the transfer of the remaining claims otherwise is warranted under § 1404(a).” See, e.g., Koh v. Microtek Int’l, Inc.,
MGT directs its substantive claim against WMS and Aruze, which manufacture the gaming machines which allegedly infringe on the '088 patent. The Casino Defendants allegedly use the accused machines and have entered into a revenue sharing arrangement based on the use of the accused machines in their casino properties. WMS argues that MGT’s claims against the Casino Defendants are “peripheral in nature” and compares the Casino Defendants with case law which has severed and stayed actions against retailers, distributors, and customers of infringing products based on this ground. Docket No. 23, WMS Motion, at 17-19. In reply, MGT distinguishes these cases from the allegations of this case, which involves “a gaming manufacturer that jointly uses the infringing product with gambling casinos to continuously earn revenue from the jointly infringing use.” Docket No. 38, MGT Reply to WMS, at 12.
1. Peripheral Nature of Claims
A patent infringement claim against a retailer, distributor, or customer of infringing products is peripheral to a claim against a manufacturer. See LG Elecs.,
It is also directly related to doctrines in patent law regarding purchasers of products accused of patent infringement. As WMS points out, the “customer suit exception” to the “first-to-file” rule provides that “litigation against or brought by the manufacturer of infringing goods takes precedence over a suit by the patent owner against customers of the manufacturer.” Katz v. Lear Siegler, Inc.,
Under Corry, the Casino Defendants are only secondarily involved in the infringement as customers of the accused machines from WMS and Aruze. The object of the lawsuit is to secure MGT’s intellectual property rights and to enjoin the manufacturing, use, and sale of products in derogation of MGT’s patent rights. Ultimately, the infringement claim against the manufacturer is more likely to restore contested property rights nationwide than securing an injunction enjoining a purchaser from using the infringing products. See LG Elecs.,
2. Outcome of Adjudication of Manufacturer’s Claim
Adjudication of MGT’s patent infringement claim against WMS or Aruze will dispose of any claims against the Casino Defendants.
S. Transfer of the Remaining Claims
As will be detailed below, it is not appropriate under 28 U.S.C. § 1404(a) to transfer the claims against WMS to the Northern District of Illinois and Aruze to the District of Nevada.
V. VENUE
Motions to transfer venue under 28 U.S.C. § 1404(a) will be considered only as to the Defendants in the severed case, namely WMS and Aruze, but not as to all Defendants in the pretrial consolidated case. The WMS and Aruze Defendants have each filed separate motions to transfer venue; these motions set out the facts regarding the transfer factor analysis as applied to the filing Defendants. Given that the Court has severed the cases against the Casino Defendants, only the claims against WMS and Aruze will be considered. See Oasis Research, LLC v. Carbonite, Inc., No. 4:10-cv-435,
Change of venue in patent cases, like other civil cases, is governed by 28 U.S.C. § 1404(a). Under § 1404(a), “[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to another district court or division where it might have been brought.” 28 U.S.C. § 1404(a). This Court must apply the law of the Fifth Circuit rather than the Federal Circuit. Storage Tech. Corp. v. Cisco Sys., Inc.,
When deciding a venue transfer question under § 1404(a), this Court applies the “public” and “private” factors for determining forum non conveniens. Volkswagen II,
The plaintiffs choice of venue is not a distinct factor in this analysis. Volkswagen II,
B. Application of the Factors
1. WMS
When analyzing a case’s eligibility for 1404(a) transfer, the threshold inquiry is “whether the judicial district to which transfer is sought would have been a district in which the claim could have been filed.” Volkswagen I,
Unquestionably, venue is proper in Mississippi against both WMS and Aruze. Both WMS and Aruze have allegedly committed acts of infringement in Mississippi by selling, offering for sale, or jointly using the '088 patent in its accused machines. Both also have registered agents for service of process in Mississippi and file annual corporate reports with the Mississippi Secretary of State. They have both exhibited their games at the Southern Gaming Summit in Biloxi, Mississippi, and they have sold their games to casinos across the state, including many in the Southern District of Mississippi. In fact, it is undisputed that WMS has a sales and distribution office in Gulfport, Mississippi, which is within this district. However, the question is not whether this Court has personal jurisdiction over the Defendants, or whether venue is proper — this Court can answer both of those questions in the affirmative. The question is whether the transferee venues are “clearly more convenient” for the cases to be litigated there.
It is undisputed that WMS’s corporate headquarters is in Waukegan, Illinois, and the technology campus where WMS designs and develops its games is in Chicago, Illinois. Waukegan and Chicago are both within the Northern District of Illinois. Accordingly, WMS is subject to personal jurisdiction in the Northern District of Illinois, and MGT could have filed this action against WMS in that district.
2. Aruze
As an initial matter, Aruze’s extensive contacts in the District of Nevada also make it a venue in which this patent infringement suit could have been brought. It is undisputed that Aruze is a Nevada corporation whose principal place of business is located in Las Vegas, Nevada. Docket No. 37, Aruze Venue Motion, at 3. While the research and development of Aruze’s gaming machines occurs in Japan and the Philippines, the majority of Aruze’s operations relating to the Accused Games takes place in Nevada. Id. Aruze also directs its business development, marketing, and sales efforts from Nevada, and its gaming machines are tested, loaded with software, and prepared for distribution in Nevada. Id. Thus, Aruze is subject to personal jurisdiction in the District of Nevada, and MGT could have filed this action against Aruze in Nevada.
C. Private Factors
1. Access to sources of proof
Despite technological advances that certainly lighten the relative inconvenience of transporting large amounts of documents across the country, this factor remains a part of the transfer analysis. Volkswagen II,
a. WMS
WMS affirms that its documents related to its accused gaming machines are located in Waukegan and Chicago in the Northern District of Illinois. These documents include those related to the design, development, manufacture, marketing, advertising, and financial-related information for its accused gaming machines. Docket No. 23, WMS Motion, at 11. MGT alleges, however, that “the relevant witnesses and evidence are spread all over the United States, especially in Mississippi,” and that they are “not clearly concentrated” in Illinois. Docket No. 38, MGT Reply to WMS, at 6. MGT’s assertion reflects an underlying disagreement about the theory of the case between MGT and the Defendants that is apparent in MGT’s other arguments in its responses to the motions to transfer venue. MGT focuses on the “use,” the placement and operation, of the accused gaming machines in casinos as the main source of the infringement of the '088 patent. See 35 U.S.C. § 271(a). It alleges that venue in Illinois is improper because none of the accused games are played in Illinois. WMS and Aruze focus on the “making” of the accused gaming machines, which purportedly include the '088 patent. Thus, the locus of the action for MGT takes place in the defendant casinos, where the manufacturer and casino clients “jointly use” the accused machines. For WMS and Aruze, the center of the action is their corporate headquarters, which is where the development and manufacture of the accused games takes place. For the purposes of this factor in the venue transfer analysis, the Defendants’ focus on the “making” of the games is more appropriate. It also comports with the case law for transfer to be made to the venue where the accused infringer conducts the research and development of the infringing product and where it keeps those documents. See In re Genentech,
In this case, WMS affirms that its documents related to its accused gaming machines are located in Waukegan and Chicago in the Northern District of Illinois. These documents include those related to the design, development, manufacture, marketing, advertising, and financial-related information for its accused gaming machines. Docket No. 23, WMS Motion, at 11. While MGT has argued that the documents which it believes will be relevant, such as information related to game play and the collection of revenue at the casinos, are at the properties of the Casino Defendants in Mississippi, this information will likely be irrelevant. to the core of a patent infringement action: the research, development and manufacture of the accused machines. To the extent that it will be relevant, WMS affirms that it has the same information at its corporate headquarters in Illinois.
b. Aruze
Aruze also argues that its relevant sources of proof are in Nevada and not in this district. Docket No. 37, Aruze Venue Motion, at 12. It also raises the argument that transfer is proper because its source code is “particularly burdensome to bring to Mississippi.” Id
Thus, WMS and Aruze have shown that the Northern District of Illinois and the District of Nevada, respectively, would have easier access to sources of proof than the Southern District of Mississippi. Accordingly, this factor weighs in favor of transfer.
2. Availability of compulsory process to secure witnesses
Federal Rule of Civil Procedure 45 governs the issuance of subpoenas in civil cases. See Fed.R.Civ.P. 45. Subject to certain limitations, a subpoena may be served at any place: “(A) within the district of the issuing court; (B) outside that district but within 100 miles of the place specified for the deposition, hearing, trial, production, or inspection ...” Fed.
Both WMS and Aruze argue that none of the likely party witnesses appear to be located in Mississippi and most of them are in Illinois, Nevada, and New York, MGT’s resident state. While convenience to party witnesses is an important consideration, “it is the convenience of non-party witnesses, rather than of party witnesses, that is more important and is accоrded greater weight in a transfer of venue analysis.” Remmers v. United States, No. 1:09-CV-345,
To the extent that their testimony,may be relevant to establish “use” for the direct infringement claim, the Southern District of Mississippi has absolute subpoena power over the only non-party witnesses identified, while the transferee districts do not. On the other hand, WMS affirms that it has the relevant information about the use of its accused machines at casinos nation
WMS and Aruze have not met their burden of showing that any compulsory process available in the Northern District of Illinois or the District of Nevada, respectively, would aid in securing non-party witnesses. Thus, the availability of compulsory process in the Southern District of Mississippi weighs against transfer.
3. Cost of attendance for witnesses
This factor is analyzed giving broad “consideration [to] the parties and witnesses in all claims and controversies properly joined in a proceeding.” Volkswagen I,
In Volkswagen II, the Fifth Circuit noted that “[additional distance [from home] means additional travel time; additional travel time increases the probability for meal and lodging expenses; and additional travel time with overnight stays increases the time which these fact witnesses must be away from their regular employment.”
When applying the 100-mile rule, the threshold question is whether the transfer- or and transferee venues are more than 100 miles apart. See Volkswagen II,
As a threshold matter, the distance between Mississippi and Illinois or Nevada is certainly more than 100 miles. WMS’s party witnesses reside and work in the Chicago area, in the Northern District of Illinois. Aruze’s party witnesses reside and work in the Las Vegas area, in the District of Nevada.
In this Court’s view, given that this case now proceeds only against manufacturers WMS and Aruze and the claims will primarily involve establishing that WMS and Aruze have infringed the '088 patent by making, selling and offering for sale the accused games, see 35 U.S.C. § 271(a), the witnesses on those claims from WMS will likely be more numerous in the Northern District of Illinois and those from Aruze will be more numerous in the District of Nevada. Nonetheless, the relevance of the witnesses and the likelihood of calling certain witnesses is not to be assessed at this stage. In re Genentech,
I. Other Practical Problems
The parties have not indicated that there are any practical problems that would weigh in favor or against transfer other than the issues involving the other factors. Thus, this factor is neutral.
D. Public Interest Factors
1. Administrative Difficulties Flowing from Court Congestion
The speed with which a case can come to trial and be resolved is a factor in the transfer analysis. In re Genentech,
a. WMS
WMS argues that the Northern District of Illinois is clearly more convenient because cases reach disposition in that dis
MGT counters with different indicators that show the Southern District of Mississippi in a more favorable light vis-a-vis the subject district in Illinois. The statistics indicate that the Southern District of Mississippi has lower and better numbers in the following areas: median time from filing cases 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.
b. Aruze
MGT provides similar statistics to establish that the Southern District of Missis
Aruze, however, has not provided any specific evidence of the effect of the Patent Pilot Program on reducing the time period from filing to disposition by trial. Even if it did, that evidence may not be a sufficient basis on its own to support transfer. Both courts are capable of applying patent law appropriately, regardless of their participation in the Patent Pilot Program
2. Local Interest in Having Localized Interests Decided at Home
The Fifth Circuit has explained that “[j]ury duty is a burden that ought not to be imposed upon the people of a community which has no relation to the litigation.” Volkswagen I,
WMS argues that it does not have any “meaningful connection” with this “Division.”
WMS and Aruze, however, have allеgedly committed acts of infringement at their corporate headquarters in the making, selling and offering to sell the accused gaming machines; their corporate headquarters are in the transferee venues, respectively. Thus, the Court finds that this factor weighs slightly in favor of transfer.
3. Familiarity With the Governing Law and (F) Conflict of Law Issues
Courts regularly note that the ‘conflict of law1 factor does not apply to patent infringement lawsuits because federal law will govern regardless of the venue. See Professional Drug,
E. The Court Denies WMS’s and Aruze’s Motions to Transfer
The movants have the burden to show that the Northern District of Illinois and the District of Nevada, respectively, are “clearly more convenient” than the Southern District of Mississippi. Volkswagen II,
VI. CONCLUSION
For the reasons stated above, it is hereby ORDERED that:
1) the Defendants’ Motiоns to Dismiss is GRANTED IN PART with respect to the claims of contributory and induced infringement and DENIED with respect to the claim of direct infringement;
2) the Defendants’ Motions to Sever for improper joinder of parties is GRANTED IN PART with respect to the WMS Defendants. WMS and Caesars and WMS and MGM should remain joined; however, the action against WMS, Caesars and MGM is severed. The Aruze Defendants’ Motion to Sever is DENIED;
3) the Plaintiffs claims against the Casino Defendants is STAYED pending the outcome of the litigation against WMS and Aruze because the claims against the Casino Defendants are peripheral to this suit; and
4) that the Defendants’ Motions to Transfer is DENIED. On balance, the
Notes
. Joel Jaffe has submitted a sworn affidavit stating that "WMS did not exhibit the WMS accused, gaming machines at the Southern Gaming Summit in Biloxi, Mississippi on May 8-10, 2012." Docket No. 46, WMS Rebuttal, Jaffe Declaration, Ex. G, ¶ 6 (emphasis added). It should be noted, however, that Jaffe has stated that the Defendant did not exhibit the games in question at the summit, not that WMS did not attend or exhibit any of its games at the summit. Presumably, this statement is in response to MGT's allegation in its First Amended Complaint, which lists the accused games and the Mississippi casinos
. Federal Rule of Civil Procedure 84 provides that "[t]he forms contained in the Appendix of Forms are sufficient under the rules and are intended to indicate the simplicity and brevity of statement which the rules contemplate.” As for the difference in numbering, what McZeal refers to as Form 16 is the previous name for what is now Form 18. See R+L Carriers,
. See 35 U.S.C. § 287 ("Patentees, and persons making, offering for sale, or selling within the United States any patented article for or under them ... may give notice to the public that the same is patented ... Filing of an action for infringement shall constitute such notice.”)
. "The infringing products manufactured, distributed, used, sold and/or offered for sale by defendants in this district include at least those identified under the trade names: PIRATE BATTLE and BATTLESHIP and, on information and belief, one or more of the games identified by the following names:
CLUE, MONOPOLY, RICH LIFE, PARADISE FISHING, AMAZON FISHING COMPETITION, GOOD CATCH COMPETITION, MASSIVE FISHING COMPETITION, BIG GAME COMPETITION and JACKPOT BATTLE ROYAL.” MGT Complaint, ¶ 17.
."For example, in paragraph 11 of the First Amended Complaint, Plaintiff identifies WMS's 'Wizard of Oz Journey to Oz’ as an accused gaming machine, yet Plaintiff does not identify that machine in its infringement allegation in paragraph 17.” WMS Motion, at 26 (citing MGT Complaint, at ¶¶ 11, 17).
. MGT attached the Declaration of Steven Brandstetter, MGT Resp. to WMS, Exhibit 11 ("Brandstetter Declaration”) to its response to the defendants’ motions. Brandstetter is one of the inventors of the '088 patent. MGT states that the Brandstetter Declaration “very clearly established WMS’s knowledge of the patent in suit” before the accused activity took place because the patent-in-suit was published in 2003 and Brandstetter “expressly notified” WMS of the patent’s issuance in 2011. MGT Resp. to WMS, at 22. MGT expressed an interest in incorporating the allegation that WMS intentionally induced infringement and Brandstetter’s declaration into the complaint to comply with Section 271(b)’s requirements. Id. Alas, it would be improper for the Court to consider an affidavit attached to a response to a motion to dismiss. See Streit v. Bushnell,
. See George D. Medlock Jr. and David Frist, Joinder over A Year After the America Invents Act, 5 Landslide 44 (2013) (“[T]he Federal Circuit’s rejection of the minority’s position in In re EMC appears to have finally resolved the split among district courts regarding the proper standard for joinder for pre-AIA cases. In re EMC appears to have adopted the majority standard that, while not the same as the AIA, inspired a modified joinder provision under the AIA. Moving forward, the AIA and In re EMC will shape the ability of a plaintiff to join or maintain the joinder of multiple defendants.”).
. This case is distinguishable from In re EMC because the Aruze Defendants’ alleged infringement stems from their ongoing financial relationship and use of the same accused products, which unlike the services offered by the defendants in In re EMC, did not result by chance or coincidence but rather through an established relationship between the Aruze Defendants. Like in Omega Patents, WMS has a close working relationship related to the same accused products with Caesars and with MGM. Aruze also has a similarly close working relationship with Penn. Omega Patents,
. Compare Fed.R.Civ.P. 20(a)(2)(A) (requiring that “any right to relief is asserted against them jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences”) with 35 U.S.C. § 299(a)(1) (requiring that "any right to relief is asserted against the parties jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences”); David O. Taylor, Patent Misjoinder, 88 N.Y.U.L.Rev. 652, 713 n. 268 (2013).
.Professor David O. Taylor has suggested that the courts consider the presence or absence of "concerted action” in determining whether joinder is appropriate. David O. Taylor, Patent Misjoinder, 88 N.Y.U.L.Rev. 652 (2013). He compares the search for concerted action to the “shared aggregate of operative facts” inquiry in In re EMC. Id. at 713, n. 268. While he applies the test to determining whether accused products and processes are similar, it also applies to this case, in which there is an allegation of jointly infringing use of a patent. The Court finds that the activities of the WMS Defendants and Aruze Defendants are sufficiently interrelated that joinder would provide "increased efficiencies and a lack of undue hardship on the accused infringers. ” Id. at 715.
. As for the other factors, MGT has not directly alleged that the defendants use “identically sourced components” and it does not apply given that there is no allegation or indication that Aruze and Penn used a component taken from the same source, or that this factor applies to this analysis. See Novartis Vaccines & Diagnostics, Inc. v. MedImmune, LLC, No. 11-084-SLR,
. In Digitech Image, the court severed both the manufacturers and retailers. This case, however, is distinguished from that case because the manufacturers and retailers engaged in entirely separate transactions with each other and there was no allegation that the manufacturers and retailers engaged in an ongoing relationship of sale and use of the accused products as MGT has alleged here.
. Both WMS and Aruze are defending and indemnifying the Casino Defendants in this action. See Docket No. 23, WMS Motion, at 2 (citing Ex. C, Jaffe Deck, ¶ 14); Docket No. 37, Aruze Venue Motion, at 5 (citing Ziems Deck, ¶ 16). Thus, WMS and/or Aruze would ultimately satisfy any claims or recovery due against the Casino Defendants with respect to this lawsuit and they remain peripheral. See Ferri v. United Aircraft Corp.,
. Where necessary, the Court will first analyze the factors as they apply to WMS and provide a summary application to Aruze, incorporating the analysis from WMS since the facts and arguments for WMS and Aruze are very similar.
. “WMS is the only entity that has records regarding the use of its accused machines across the 241 casino properties nationwide where the machines have been placed. WMS keeps those records in Illinois.” Docket No. 46, WMS Rebuttal, at 8 (citations to the record omitted).
. "WMS has placed 405 accused machines in 241 different casino properties in 26 different states. Only 21 of those 405 machines have been placed in Mississippi casinos. The fact that a handful of WMS's accused machines have been used in Mississippi does not weigh against transfer in this case.” WMS Rebuttal, at 6 (citations omitted).
. Source code is "[t]he non-machine language used by a computer programmer to create a program. If it is not included with the software sold to the public, source code is protected by trade secret laws as well as copyright and patent laws. Source code may be deposited with the U.S. Copyright Office but, because of the need to protect a trade secret, and because a skilled programmer could figure out how to duplicate the source code’s functions without necessarily copying it, strategic parts may be blacked out.” Black’s Law Dictionary (9th ed.2009).
. A district court in this circuit has found that the location of source code is neutral since it is stored electronically and it may be transported to different locations using various media, including laptops, CD or a flash drive. See Odom v. Microsoft Corp.,
. But see Two-Way Media LLC v. AT & T, Inc.,
. As to Aruze, MGT argues that transfer is inappropriate because "the dozens of nonAruze casino employees and officers in Mississippi that would be beyond the subpoena power of the District of Nevada.” Docket No. 40, at 7. The Court agrees, as the same analysis set forth above for WMS applies.
. Aruze contends that some of its employees involved in the research and development of the accused games may be required to travel from Japan and the Philippines. See Docket No. 37, Aruze Venue Motion, at 3; 11-12. Under Genentech, these witnesses would be traveling a "significant distance” regardless of the venue. Thus, they are properly discounted.
. The parties relied on statistics available up to September 2012. See MGT Resp. to WMS, at 17 (citing Ex. 6). The Court has reviewed more recent statistics and will rely on them for greater accuracy. These statistics are not materially different from those that the parties have cited and they support the same conclusion. The most recent statistics from the Administrative Office of the U.S. Courts for the 12-month period ending June 30, 2013 indicate that:
• the median time from filing to trial in civil cases is 23.1 months in the Southern District of Mississippi ("S.D. of Mississippi") versus 31.5 months in the Northern District of Illinois ("N.D. of Illinois”);
• the S.D. of Mississippi had 85 civil cases over 3 years old which is 4.5% of all its cases. In contrast, the N.D. of Illinois had 1,002 cases over 3 years old, representing 9.8% of its cases;
• There are an average of 365 pending cases per judge in the S.D. of Mississippi, but each judge in the N.D. of Illinois handles an average of 557 pending cases;
• Judges in the S.D. of Mississippi completed an average of 25 trials in the 12-month period ending June 30, 2013, while judges in the N.D. of Illinois averaged 13 completed cases over the same time period.
Federal Court Management Statistics: June 2013, Admin. Office of the U.S. Courts, http ://www.uscourts .gov/Statistics/F ederal CourtManagementStatistics/district-courtsjune-2013.aspx, at 33, 47 (last visited Oct. 22, 2013) (select "All District Courts” and PDF version).
. See, e.g., Texas Data Co., L.L.C. v. Target Brands, Inc.,
. MGT and Aruze also relied on statistics available up to September 2012. Docket No. 40, at 9-10. The Court, however, has reviewed a more recent set of statistics and will rely on them to ensure greater accuracy. Just as in the case of WMS, these statistics are not materially different from those that the parties have cited and they support the same conclusion. The most recent statistics from the Administrative Office of the U.S. Courts ■ for the 12-month period ending June 30, 2013 show the following:
• the median time from filing to trial in civil cases is 23.1 months in the Southern District of Mississippi ("S.D. of Mississippi”) versus 39.6 months in the District of Nevada ("D. Nev.”);
• the S.D. of Mississippi had 85 civil cases over 3 years old which is 4.5% of all its cases. In contrast, D. Nev. had 309 cases over 3 years old, representing 9.3% of its cases;
• There are an average of 365 pending cases per judge in the S.D. of Mississippi, but each judge in D. Nev. has an average of 647 pending cases;
• Judges in the S.D. of Mississippi completed an average of 25 trials in the 12-month period ending June 30, 2013, while judges in D. Nev. averaged 21 completed cases over the same time period.”
Federal Court Management Statistics: June 2013, Admin. Office of the U.S. Courts, http ://www.uscourts. gov/Statistics/F ederal CourtManagementStatistics/district-courtsjune-2013.aspx, at 33, 73 (last visited Oct. 22, 2013) (select “All District Courts” and PDF).
. Courts appear to be divided on the proper weight to give to a district’s participation in the Patent Pilot Program in the venue transfer analysis. See, e.g., Lewis v. Grote Indus., Inc.,
. WMS's reference to "divisions” instead of the Southern District of Mississippi as a whole is rather disingenuous and misleading. The Southern District of Mississippi currently has five divisions. This case has been filed in the Jackson Division. However, all of the WMS accused gaming machines that MGT listed in its first amended complaint are allegedly played at casinos in the Southern and Western Divisions of this judicial district, and in the Oxford Division of the Northern District of Mississippi. It also has a sales and distribution office in Gulfport, which is in this judicial district. However, all of these casinos are within 100 miles of the Southern District of Mississippi, which is the relevant Fifth Circuit test. Even as it relates to divisions, it also has a "meaningful connection” to this division because its registered agent for service of process is in Jackson.