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SOLAIA TECHNOLOGY, INC. v. ROCKWELL AUTOMATION

United States District Court, Northern District of Illinois


September 2, 2003

SOLAIA TECHNOLOGY, INC., PLAINTIFF,
v.
ROCKWELL AUTOMATION, INC., ET AL. DEFENDANTS.

The opinion of the court was delivered by: Joan Gottschall, District Judge

ORDER

Before the court is defendants Rockwell Automation's and Rockwell Software's (hereinafter "Rockwell") Motion to Transfer Venue to the Eastern District of Wisconsin. For the reasons set forth below, the motion is granted.

The parties are plaintiff Solaia Technology ("Solaia"), an Illinois Limited Liability Company with its principal place of business in Chicago, Illinois. It is the owner of U.S. Patent No. 5,038,318 (the "`318 patent"). Rockwell Automation and Rockwell Software are Delaware corporations with their principal places of business in Milwaukee and West Allis, Wisconsin, respectively. OPC Foundation ("OPC") is a trade association in the industrial automation industry with its principal place of business in Scottsdale, Arizona. Defendant ArvinMeritor, Inc. has its principal place of business in Troy, Michigan. Defendant Conoco, Inc. has its principal place of business in Houston, Texas.

Solaia has initiated three patent infringement actions in the Northern District of Illinois alleging infringement of its `318 patent against ArvinMeritor, also a defendant in the instant action, Jefferson-Smurfit and American Honda. Subsequent to the filing of those actions, Rockwell, who is not a defendant in the patent infringement actions but a supplier of products utilized by the alleged infringers, sued Solaia, Solaia's law firm and Schneider Automation, Inc., a competitor of Rockwell's, in the United States District Court Page 2 for the Eastern District of Wisconsin, alleging in brief that Solaia's assertions of patent infringement are false and objectively baseless and are intended, along with efforts to coerce license agreements for use of its patent, to injure Rockwell's industrial automations system business which competes for the same customers. It is alleged that Solaia has made baseless claims of patent infringement against users of Rockwell's products and has generated millions of dollars in strike suit settlements at Rockwell's expense. Rockwell alleges that Solaia and its alleged coconspirators have brought suits against various Rockwell customers including Jefferson-Smurfit, Clorox Company, BMW and Konica. Rockwell asserts claims under the Sherman Act sections 1 and 2, the Lanham Act and various state law tort theories.

Subsequent to the filing of the Rockwell suit in the Eastern District of Wisconsin, Solaia filed this suit in the Northern District of Illinois. Solaia's complaint alleges that the defendants have engaged in a conspiracy to boycott and refuse to deal with Solaia in negotiating licenses under its patent. Solaia claims that Rockwell has used a trade magazine called Start to disparage Solaia and its attorneys and to make claims that Solaia's patent is worthless and its infringement claims baseless. OPC, which Solaia alleges is "led" by a Rockwell employee, has issued reports to the industry of the same character. Solaia claims that the Rockwell Wisconsin suit is "a further effort to harass, intimidate and destroy Solaia's business" and is a sham lawsuit. (First Amended Complaint ¶ 18.) Solaia makes claims under the Clayton Act, section 1 and 2 of the Sherman Act, the Lanham Act and various state law tort theories.

The emphasis of the two suits is slightly different. Rockwell's Eastern District of Wisconsin suit focuses on Solaia's initiation of patent suits and threats of doing so to injure Rockwell's ability to sell and license its systems. Solaia's Chicago suit is focused on various acts of alleged defamation and Page 3 disparagement, including the filing of the Wisconsin suit. But both cases rise or fall on the issue of whether Solaia has a colorable patent infringement claim and whether the claim of Solaia that it does, and the claim of Rockwell and its allies that it does not, are being used illegitimately through statements to participants in the industry and lawsuits illicitly to coerce an unjustified market advantage. Both suits center on the use of litigation and other means to obtain an unjustified commercial advantage.

Section 1404(a) governs the transfer of an action from one federal district to another. A transfer is appropriate if venue is proper in both districts, transfer promotes the convenience of the parties and witnesses and transfer is in the interests of justice. Law Bulletin Publishing Co. v. LRP Publications, Inc., 992 F. Supp. 1014, 1017 (N.D. Ill. 1998). Solaia asserts that it has made a motion to dismiss in the Wisconsin case based on the absence of personal jurisdiction over it in that district, but nothing has been presented to this court which would permit it to conclude that that motion should or will be granted; nor does Solaia's claim that the Wisconsin court lacks personal jurisdiction over it in Rockwell's suit suggest that the Wisconsin court would not be an appropriate venue for Solaia's action against Rockwell.*fn1 With respect to the convenience of the parties and the witnesses, the court sees convenience and inconvenience as balanced. Chicago is apparently more convenient for Solaia, although its principal is a resident of Texas, and Milwaukee is more convenient for Rockwell. The other parties are equally inconvenienced by both fora. Moreover, the two districts are geographically so close that no party or witness will be significantly inconvenienced, regardless of the district chosen. The material events as far as Solaia's Page 4 allegations are concerned appear to have taken place throughout the United States. The allegedly sham litigation by Rockwell at issue in Solaia's suit is the Eastern District of Wisconsin litigation in Milwaukee, and witnesses whose states of mind may be important to that issue are Rockwell employees in the Eastern District of Wisconsin. This Milwaukee connection, however, is equally balanced by the fact that both cases raise the issue of the good faith of the Solaia patent litigation, which appears to be sited entirely or at least largely in Chicago.

One factor relevant to the convenience analysis is the plaintiff's choice of forum, which is entitled to substantial deference, particularly when the chosen forum is the plaintiff's home state. Id. at 1017. To the extent this factor is considered, it obviously favors the Northern District of Illinois. But the court does not find this factor entitled to great weight in this case for a number of reasons. First, to some significant extent, Solaia's Chicago litigation is about Rockwell's Milwaukee litigation. To the extent these two actions are seen as related, Rockwell sued first and its choice of forum was the Eastern District of Wisconsin. This court sees no reason why Solaia could not have filed its action as a counterclaim in the Rockwell litigation, in which case the plaintiff's choice of forum would have been the Eastern District of Wisconsin. Further, the geography proximity of the two districts lessens considerably the inconvenience to the plaintiff if its choice of forum is not honored.

Regardless of the issue of convenience, which appears to be evenly balanced, the factor which this court views as of overwhelming significance is the "interest of justice," an issue of the efficient functioning of the court system. Coffey v. Van Dorn Iron Works, 796 F.2d 217, 221 (7th Cir. 1986). One of the factors given great weight in the interest of justice analysis is the feasibility of consolidation if the transfer motion is granted. These cases appear to this court to be related cases which should be consolidated under Page 5 Rule 42(a). Their key issues — the validity of the `318 patent, the respective parties' good faith basis in taking the position they have taken on the issue of the validity of the patent, and the competitive injury, if any, the parties have wreaked on each other by the conduct they have engaged in to advance their positions on the validity issue — are largely overlapping. Other common issues are likely to be the definition of the relevant market and the definition of "sham litigation" as an anticompetitive tool. Besides the significant overlap of issues, there is, as well, a significant risk that the separate trial of these two cases could lead to inconsistent results and inconsistent decrees. Moreover, if these cases proceed in different districts, there is little if any possibility of consolidating them for discovery, settlement negotiations or trial. The parties have not argued that either district is more likely to provide an efficient disposition than the other, nor that a transfer will result in the application of substantively different law. The court therefore finds dispositive the likelihood that if these cases are tried in one district, they can be consolidated, eliminating duplicative preparation and trial and avoiding the risk of inconsistent decrees. Rockwell's action was filed first, and it is therefore appropriate that Solaia's later-filed action should be transferred to the Eastern District of Wisconsin.

The motion to transfer is granted.


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