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United States District Court, S.D. New York

July 6, 2004.

MALIBU TOYS, INC., Defendant.

The opinion of the court was delivered by: SHIRA SCHEINDLIN, District Judge


Roland Caville brings this suit against Malibu Toys, Inc. ("Malibu") alleging infringement of one or more claims of Caville's patent*fn1 through the sale and distribution of a product called the "Flashin' Lix" ("Malibu's product"). Malibu now moves for a change of venue to the Central District of California pursuant to section 1404(a).*fn2 For the following reasons, Malibu's motion to transfer is denied. I. BACKGROUND

  A. The Parties

  Caville is a French citizen residing and principally doing business in Hong Kong, China.*fn3 Caville owns the rights to the '606 Patent, which is an invention to hold and simultaneously illuminate translucent lollipops or other similar candies.*fn4 Caville distributes his candy products embodying the '606 Patent through Yanova, Inc. ("Yanova"), a company incorporated and principally doing business in New York City.*fn5 Yanova's co-owners and only employees are New York residents Lance Kushner and Glenn Rudin.*fn6

  Malibu is a California corporation with its principal place of business in Chatsworth, California.*fn7 All of Malibu's employees reside in the Central District of California.*fn8

  Malibu is in the business of purchasing and selling candy.*fn9 Although its 2003 calendar year sales were slightly more than $1,000,000, it ended the year with a net loss.*fn10 All of its products are manufactured in China and then shipped to a warehouse in California, from which they are then delivered to Malibu's customers.*fn11 Two such purchasers, Target and Toys 'R Us, have retail stores that allegedly sell Malibu's products in New York.*fn12 In addition, Malibu exhibited but did not sell any of its products at the annual International Toy Fair in February of 2004, which was held in New York City.*fn13 B. Facts

  In his Complaint, Caville alleges that Malibu's product embodies and thus infringes the '606 Patent.*fn14 Caville further avers that because Malibu had "knowledge of the '606 [P]atent," Malibu's infringement was "deliberate, willful, and wanton."*fn15

  To prove his claim, Caville intends to call the following witnesses: Mark Merryweather, an independent consultant who resides in Connecticut, to describe "the sales and marketing of [Malibu's allegedly] infringing products;"*fn16 Kushner, co-president of Yanova, to describe "the extent of damages [Yanova] and Caville have suffered;"*fn17 Rodolfo Fernandez and Blas Castor Perez, inventors of the '606 Patent who reside in North Carolina, to "testify about the scope of the patent-in-suit;"*fn18 and representatives of Frankford Candy & Chocolate Company ("Frankford"), located in Philadelphia, Pennsylvania, "to testify at trial on the issue of damages incurred. . . ."*fn19

  Malibu also expects to-call various witnesses to testify in its defense:*fn20 Helene Bartels, Malibu's Vice President of Sales, will "testify about sales and claimed damages;"*fn21 Winnie Lam, Malibu's Director of Operations, will "testify about the qualities of the subject item; about when and where items were shipped out of the warehouse and purchasing of [Malibu's] products;"*fn22 Brad Thayer, an employee of a warehouse used by Malibu, will testify "as to what was received and where and when it was shipped to customers;"*fn23 Andrew Lewis and Bob Kelly, Malibu's accountant and bookkeeper respectively, will testify on the issue of damages;*fn24 and Daryoush Aryapour, owner of Aryapour Designs, will testify on the issue of "design and packaging."*fn25 With the exception of Thayer (who appears to reside elsewhere in California), all of Malibu's witnesses reside within the Central District of California.*fn26


  Section 1404 provides: "For the convenience of the parties and witnesses, in the interests of justice, a district court may transfer any civil action to any other district or division where it might have been brought."*fn27 The defendant must make a "convincing showing" that the action would be better litigated elsewhere.*fn28 Relevant factors include the: (1) deference accorded to plaintiff's choice of forum; (2) convenience to witnesses and parties; (3) situs of operative facts; (4) interests of justice and judicial economy; (5) relative ease of access to sources of proof; (6) availability of process to compel unwilling witnesses; (7) relative means of the parties; and (8) forum's familiarity with the governing law.*fn29 Of these factors, plaintiff's choice of forum is usually given the greatest weight, but when the plaintiff is a nonresident and the operative facts bear little connection to the chosen forum, plaintiff's choice is shown less deference.*fn30


  Although this action could have been brought in the Central District of California,*fn31 for the reasons that follow, Malibu has not made a sufficient showing to justify transfer.

  A. Deference Accorded to Plaintiff's Choice of Forum

  In general, a court should not disturb a plaintiff's choice of forum "unless the balance of the factors weighs strongly in favor of transfer."*fn32 Where, as here, the forum selected by the plaintiff is not where he resides,

the degree of deference given to plaintiff's choice of a non-home forum depends on the motivations behind that choice. A court must give greater deference to a plaintiff's choice of a non-home forum where that choice was "motivated by legitimate reasons, including plaintiff's convenience and the ability of [plaintiff] to obtain jurisdiction over the defendant." Courts should give "diminishing deference" to a plaintiff's choice of a non-home forum "to the extent that it was motivated by tactical advantage," such as forum shopping.*fn33
  There are several legitimate reasons for Caville to bring suit in New York. First, he frequently travels to New York for business.*fn34 Second, Yanova, Caville's distributor of products embodying the '606 Patent, resides and principally does business in New York.*fn35 Third, the majority of Caville's witnesses are within the subpoena power of this Court. Thus, although he is a foreign plaintiff, these reasons establish the legitimacy of Caville's choice of New York. There is no basis for concluding that his selection of this forum is motivated by tactical advantage and, thus, some deference is warranted. B. Convenience of the Witnesses and Parties*fn36

  Although Malibu and its witnesses will undoubtedly be inconvenienced by litigation in New York, careful consideration of the needs of both parties and their respective witnesses advises against transfer.

  1. Inconvenience to Witnesses

  Caville names several key witnesses who, as residents of New York, Connecticut, and Pennsylvania, will be inconvenienced by litigation in California.*fn37 That Caville's witnesses are located either in or within relatively close proximity to New York counsels against transfer.

  Moreover, Caville expects that Fernandez and Perez, inventors of the '606 Patent and residents of North Carolina, will "testify to the scope of the patent-in-suit."*fn38 Although Malibu correctly states that courts have accorded less significance to the inconvenience of witnesses who reside outside both the current and transferee forums,*fn39 the convenience of Fernandez and Perez lends mild support to Caville's choice of forum. The testimony of these witnesses is critical to Caville's case and travel from North Carolina to New York is somewhat more convenient than travel from North Carolina to California.

  Malibu counters with its own list of witnesses who, it claims, will be inconvenienced by litigation in New York.*fn40 However, transfer of this action to California would merely shift the inconvenience from Malibu to Caville. Because "exchanging the burdens of inconvenience from one party to the other is not a basis for transfer,"*fn41 Malibu's argument fails. Thus, this factor slightly favors Caville.

  2. Convenience of the Parties

  The convenience of the parties also favors denying transfer. Because Caville frequently does business in New York, there is a strong possibility that his appearances for this litigation could be combined with business trips. New York is thus more convenient for Caville than California. New York is also more convenient for Yanova, because Yanova resides and principally does business in this jurisdiction. Moreover, Yanova only employs two people, both of whom are its owners. Because litigation in California would require both of these employees to travel, that inconvenience could significantly impact its business.

  On the other hand, Malibu is a California company and claims that defending this action in New York would be burdensome. While this may be so, Malibu has chosen to exhibit and sell its product in New York, which makes suit in this district reasonably foreseeable.

  C. The Situs of Operative Facts

  Courts have held that the situs of operative facts in an infringement action is the jurisdiction where the product was designed, developed, and marketed.*fn42 Because Malibu's product was designed and developed in China and because Malibu markets its product throughout the United States, most of the operative facts occurred in China and, thus, this factor favors neither party.

  Malibu argues that California is the situs of the operative facts, because the "allegedly infringing products were indisputably designed, developed, packaged, and marketed" in California.*fn43 This argument fails for a number of reasons. First, it is not clear that Malibu's product was in fact designed and developed in California. Malibu does not even suggest that the factories in China are manufacturing its product pursuant to its instructions. Indeed, Malibu readily admits that it is in the business of "purchasing and selling candy."*fn44 Second, it is not clear that the candy is packaged in California. Malibu states that its product is shipped to a warehouse, from which it is then shipped to its customers. Malibu makes no mention of packaging or re-packaging the product it sells. Third, while it is likely true that Malibu markets its product in California, Malibu also does so in many other markets. For example, Malibu concedes that it attended the International Toy Fair to exhibit, and thus market, its product in New York. It also admits that Toys 'R Us and Target may have sold its product in New York.

  D. Judicial Economy

  This factor is also neutral. Malibu claims that the Southern District of New York is overburdened.*fn45 Caville presents evidence that more cases were filed in the Central District of California than in the Southern District of New York in 2003.*fn46 It is thus not clear that trial efficiency favors either forum.

  Malibu asserts that judicial economy favors it because "there is a pending litigation between the parties on the patent-in-suit in the Central District of California."*fn47 This argument, however, lacks merit. "Where two courts have concurrent jurisdiction over an action involving the same parties and issues, courts will follow a `first filed' rule whereby the court which has possession of the action decides it."*fn48 Malibu filed its action on March 2, 2004 — well after Caville filed his action in New York.*fn49 It would be illogical and unfair to allow the moving party to shore up its motion to transfer by filing a subsequent action in anticipation of making a transfer motion.

  E. Interests of Justice

  This factor does not favor either party. California has an interest in rendering a judgment relating to Malibu which principally does business and is incorporated in California. Because Malibu sells its product in New York, New York also has an interest in rendering a judgment in favor of or against Malibu. Although New York has little interest in rendering a judgment in favor of or against Caville, a foreign plaintiff, this state does have such an interest in doing so with regard to Yanova, a company that principally does business and is incorporated in New York.

  F. Relative Ease and Sources of Proof

  This factor again does not favor either party. "The location of relevant documents and ease of access to sources of proof is typically dependent on the locus of the operative facts."*fn50 The circumstances in this case are no exception. First, the situs of the operative facts is predominately China. Second, Caville states that all of his documents regarding the '606 Patent will come from either Hong Kong or Yanova's offices in New York. While Malibu's documents are undoubtedly located in California, substituting one convenience for another cannot support a transfer of venue.

  G. Availability of Process to Compel Unwilling Witnesses

  Although this factor slightly favors Malibu because it has more unwilling witnesses than Caville, it does not overcome all of the previously discussed factors favoring the denial of transfer. Kelly, Lewis, and Aryapour, have stated that they will not voluntarily appear in New York.*fn51 By the same token, Kushner, co-owner of Yanova, suggests he would not voluntarily travel to California.*fn52

  H. Relative Means of the Parties

  A court should consider the relative means of the parties "[w]here a disparity exists between the means of the parties in determining venue."*fn53 While this factor again mildly favors Malibu, it similarly does not rise to the level of warranting transfer. Although Malibu was founded in 2000 and had a net loss in 2003, Malibu has exhibited and sold its product in New York.*fn54 This fact weakens Malibu's argument that it does not have the means to conduct litigation in New York.

  I. Forum's Familiarity with the Governing Law

  "Patent law is federal law and any district court may handle a patent case with equal skill."*fn55 This factor is therefore neutral.

  J. Summary of Venue Issues

  Malibu has failed to meet its burden to demonstrate that this action would be better litigated in the Central District of California. Although the availability of process to compel unwilling witnesses and the relative means of the parties slightly favor Malibu, these factors are outweighed by the deference accorded to Caville's choice of forum and the convenience that conducting litigation in New York will afford Caville and his witnesses.


  For the foregoing reasons, Malibu's motion to transfer this action to the Central District of California is denied. The Clerk of the Court is directed to close this motion [#19 on the docket sheet]. A conference is scheduled for July 14, 2004, at 4:30 p.m. in Courtroom 15C.


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