United States District Court, S.D. New York
July 8, 2004.
HERBERT LIMITED PARTNERSHIP, Plaintiff,
ELECTRONIC ARTS INC.; SONY MUSIC ENTERTAINMENT, INC.; SONY COMPUTER ENTERTAINMENT AMERICA, INC.; RANDOM HOUSE, INC.; WAL-MART STORES, INC.; BEST BUY COMPANY, INC.; COMPUSA, INC.; ELECTRONICS BOUTIQUE, INC.; and KB TOYS, INC. Defendants.
The opinion of the court was delivered by: VICTOR MARRERO, District Judge
DECISION AND ORDER
Plaintiff Herbert Limited Partnership ("HLP") filed this action
asserting, among several claims, copyright and trademark
infringement in relation to several video games based on the
science fiction book Dune and movie of the same name, and their
written and film progeny (the "Dune Works"). Defendants now ask
this Court, borrowing from the advanced techniques of the works
at issue, to function as a space-folding navigator and transport
this case to the Northern District of California. Upon review of
the parties' submissions in this regard, the Court concludes that
the convenience of the witnesses, the location of the operative
facts, the preservation of judicial resources, and additional
considerations discussed below favor litigation of this case in
the Northern District of California. Accordingly, the motion to
transfer is granted. I. FACTS AND PROCEEDINGS
HLP, a Washington State limited partnership, owns certain
copyrights and trademarks in the Dune Works, a popular series of
science fiction books written by Frank Herbert ("Herbert"). The
works abound with incidents of political intrigue, adventure,
environmentalism and mysticism that are set thousands of years in
the future in a fictional universe featuring feuding noble
houses, futuristic technologies, and individuals possessing
In 1978 Herbert, then a resident of Washington State, granted
to Famous Films Productions the motion picture and merchandising
rights to the first book in the Dune series (the "Dune Novel")
pursuant to a contract expressly governed by the laws of
California (the "1978 Agreement"). The motion picture "Dune,"
based on the Dune Novel, was ultimately produced in 1984 (the
Universal City Studios, Inc. ("Universal"), a California-based
company, ultimately acquired the motion picture and merchandising
rights to the Dune Film. In 1989, Universal sublicensed to Virgin
Mastertronic, Inc. ("Virgin"), a California-based company, the
right to develop video games based on the Dune Film (the "1989
Agreement"). The 1989 Agreement provided that it would be
governed by the laws of the State of California and that "claims
and/or lawsuits may be brought in Los Angeles County in [Universal's] sole discretion
if both parties reside in the U.S.A." (1989 Agreement at 10,
attached as Ex. E to Declaration of Jacob J. Schatz dated March
23, 2004 ("Schatz Dec.")) Virgin ultimately produced one video
game under the 1989 Agreement.
In 1995, after the termination of the 1978 Agreement, HLP
entered into an agreement (the "1995 Agreement") with Universal
whereby HLP conveyed to Universal a limited, non-exclusive right
to exploit the Dune Film. As part of the 1995 Agreement, HLP
granted Universal merchandising rights in the Dune Novel to the
extent that the book was presented in the Film. The 1995
Agreement expressly prevented Universal from using the Dune Novel
in any other movie, television show or other derivative work. The
1995 Agreement provided that it was subject to California law and
that both parties to the agreement "consent[ed] to the
jurisdiction of the Courts of the State of California." (1995
Agreement at 4, attached as Ex. D to Schatz Dec.)
Defendant Electronic Arts, Inc. ("EA"), a Delaware Corporation
with its principal place of business in California, ultimately
acquired Virgin's rights to exploit the Dune Film for purposes of
producing video games. In 1998 EA released an updated edition of
Virgin's video game, now titled "Dune 2000," and in 2001, after
EA and Universal renegotiated their existing licensing agreement, EA released a new game,
titled "Emperor: Battle for Dune" (together with Dune 2000, the
EA and Prima Publishing ("Prima"), a California Corporation
with its principal place of business in California, entered into
an agreement in 1997 (the "Prima Agreement") under which Prima
would produce written strategy guides to the Video Games (the
"Strategy Guides"). The Prima Agreement and subsequent amendments
were negotiated in California and are expressly governed by
California law. The Prima Agreement also provides that "[t]he
exclusive venue for any action under this Agreement shall be the
county of the principal place of business of the defending
party." (Prima Agreement at 18, attached as Ex. H to Schatz Dec.)
In March 2001, defendant Random House, Inc. ("Random House"), a
Delaware Corporation with its principal place of business in New
York City, acquired Prima.
The Dune 2000 video game is designed for use with the Sony
PlayStation video game system, which was developed by Sony
Computer Entertainment America, Inc. ("SCEA"), a Delaware
corporation with its principal place of business in California.
The physical discs for the Dune 2000 game are produced by Sony
Disc Manufacturing ("SDM"), a division of defendant Sony Music
Entertainment, Inc. ("Sony"), a Delaware corporation with its principal place of business in New York
City. SDM's principal place of business is in Indiana.
The remaining defendants are Wal-Mart Stores, Inc.
("Wal-Mart"), a Delaware corporation with its principal place of
business in Arkansas; Best Buy Company, Inc. ("Best Buy"), a
Minnesota corporation with its principal place of business in
Minnesota; CompUSA ("CompUSA"), a Delaware corporation with its
principal place of business in Dallas, Texas; Electronics
Boutique, Inc. ("EB"), a Pennsylvania corporation with its
principal place of business in Pennsylvania; and KB Toys, Inc.
("KB"), a Delaware corporation with its principal place of
business in Massachusetts (collectively, the "Retail Defendants"
and together with the other defendants described above, the
"Defendants"). These Retail Defendants distribute and sell the
Video Games through retail stores in this District and across the
In June 2003, counsel for HLP, EA and Universal met to discuss
an ongoing dispute over whether the Video Games and Strategy
Guides violate HLP's copyrights and trademarks in the Dune Works.
These three entities entered into a Tolling and Standstill
Agreement (the "Tolling Agreement"), under which they agreed to
engage in good faith settlement discussions and "not to file any
legal claims or commence any legal action against the others in
any forum until October 31, 2003." (Tolling Agreement dated June 30, 2003, attached as Ex. B to
Schatz Dec.) The Tolling Agreement also provided that any
applicable statutes of limitations relating to the dispute that
had not yet expired by the date of the agreement would be tolled
for the duration of the Tolling Agreement. The parties to the
Tolling Agreement agreed to use the services of a mediator in
California. Finally, the Tolling Agreement provided that it was
to be construed under the laws of California and could be
enforced only in federal courts in California or, if a federal
court had no jurisdiction, then in California state courts.
On October 31, 2003, HLP filed a complaint in this district
against Sony, SCEA and Random House for copyright and trademark
violations, unfair competition, and violations of New York State
business law. On November 5, 2003, EA filed an action in the
Northern District of California (the "California Case") against
Herbert Enterprises, LLC ("HE"), which EA believed to be the
successor to HLP, seeking a declaration that the Video Games did
not infringe any of HE's trademarks or copyrights. On November 6,
HLP filed an amended complaint in this District which added EA
and the Retail Defendants as named defendants and added New York
State law claims for false advertising and deceptive business
Defendants now move to transfer this case to the Northern District of California.
A. LEGAL STANDARD FOR MOTION TO TRANSFER
Under 28 U.S.C. § 1404(a), "[f]or the convenience of parties
and witnesses, in the interest of justice, a district court may
transfer any civil action to any other district or division where
it might have been brought." A district court has broad
discretion when deciding a transfer motion, and should base its
ruling on "notions of convenience and fairness on a case-by-case
basis." In re Cuyahoga Equip. Corp., 980 F.2d 110, 117 (2d Cir.
When deciding a § 1404(a) motion to transfer, therefore, the
initial inquiry is whether the case could have been brought in
the proposed transferee district, here the Northern District of
California. See Mattel, Inc. v. Robarb's, Inc., 139 F. Supp.2d 487,
490 (S.D.N.Y. 2001). Once the defendant overcomes that
threshold, courts generally consider nine factors to determine
whether transfer is warranted: (1) the convenience of witnesses;
(2) the convenience of parties; (3) the location of relevant
documents and the relative ease of access to sources of proof;
(4) the locus of the operative facts; (5) the availability of
process to compel the attendance of unwilling witnesses; (6) the
relative means of the parties; (7) the comparative familiarity of each district
with the governing law; (8) the weight accorded to plaintiff's
choice of forum; and (9) judicial economy and the interests of
justice. See Hutton v. Priddy's Auction Galleries, Inc.,
275 F. Supp.2d 428, 441 (S.D.N.Y. 2003); Ayala-Branch v. Tad Telecom,
Inc., 197 F. Supp.2d 13, 15 (S.D.N.Y. 2002).
It is undisputed that HLP could have brought this action in the
Northern District of California.
B. TRANSFER FACTORS
1. Convenience of Witnesses
Courts typically regard the convenience of witnesses as the
most important factor in considering a § 1404(a) motion to
transfer. See Mears v. Montgomery, No. 02 Civ. 0407, 2004 WL
964093 (S.D.N.Y. May 5, 2004); Kiss My Face Corp. v. Bunting,
No. 02 Civ. 2645, 2003 WL 22244587 (S.D.N.Y. Sept. 30, 2003);
Pilates, Inc. v. Pilates Inst., Inc., 891 F. Supp. 175, 183
(S.D.N.Y. 1995). When assessing the convenience of witnesses, a
court does not merely tally the number of witnesses who reside in
the current forum in comparison to the number located in the
proposed transferee forum. Instead, the court must qualitatively
evaluate the materiality of the testimony that the witnesses may
provide. See Foley v. Sammons Preston, Inc., No. 03 Civ.
5485, 2004 WL 35438 (S.D.N.Y. Jan. 6, 2004); DealTime.com Ltd.
v. McNulty, 123 F. Supp.2d 750, 755 (S.D.N.Y. 2000); American Alliance Ins. Co. v. Sunbeam Corp.,
No. 98 Civ. 4703, 1999 WL 38183 (S.D.N.Y. Jan. 28, 1999).
Defendants, as they were obligated to do, see Pilates,
891 F. Supp. at 183, submitted a list of likely witnesses who would be
inconvenienced by the continued litigation of this case in the
present forum, together with a general statement of each witness'
Defendants identify eighteen witnesses who are likely to
testify and who would be inconvenienced by the forum in this
District. Eleven of those witnesses are party witnesses or
employees of parties. Of these eleven party witnesses and
employees of parties, eight reside in northern California, two
reside in Los Angeles, which is in the Central District of
California, and one resides in Indiana. Defendants also indicate
that no probable witness from EA, SCEA, Prima, or Universal
resides in New York. The convenience of non-party witnesses
generally carries more weight than the convenience of party
witnesses. See Transatlantic Reinsurance Co. v. Continental
Ins. Co., No. 03 Civ. 3227, 2003 WL 22743829 (Nov. 20, 2003).
HLP argues that Defendants' witnesses are cumulative, and that
the witness list conveys the impression that many more witnesses
would be inconvenienced by the current forum than would actually
be necessary at trial. A party seeking to transfer venue "may not artificially inflate the number of
witnesses to be inconvenienced absent transfer by listing
witnesses whose testimony is not material." NBA Properties, Inc.
v. Salvino, Inc., No. 99 Civ. 11799, 2000 WL 323257, at *7
(S.D.N.Y. March 27, 2000). Defendants' witness list contains,
with some overlap, five current or former EA employees who would
testify about the development of the Video Games, four current or
former EA employees who would testify about Universal's approval
process for the Video Games, and three current or former EA
employees who would testify about the marketing and promotion of
the Video Games. Defendants argue that because the scope of
several licenses is at issue, the testimony of several
individuals who negotiated the licenses is relevant to
determining the licenses' meaning.
HLP counters that not only are the witnesses that Defendants
identify cumulative, but they also do not possess material
information. HLP argues that its copyright claims can be resolved
by this Court as a matter of law by interpreting the scope of
HLP's grant of rights to Universal, and therefore EA's five
witnesses who would testify to the development of the Video Games
are essentially irrelevant. Defendants respond that the testimony
of their witnesses is necessary to determine the scope of the
grant of rights. But, more importantly, they point out that HLP
alleges willful infringement of its copyrights in the Dune Works, and that HLP
should receive enhanced damages because of these willful actions.
On that added basis Defendants stress that the testimony of their
proposed witnesses would be material to any determination of the
willfulness of Defendants' conduct.
It may be true that not every witness identified on Defendants'
list is material to the litigation. But even if five witnesses
are not needed to testify about the development of the Video
Games, the Court considers at least one of those five individuals
necessary, and all of them apparently reside in California.
In its initial disclosures made pursuant to Fed.R.Civ.P.
26(a)(1), HLP identifies 31 individuals likely to have
discoverable information that HLP may use in its case. HLP
provides New York City addresses for eleven of these potential
witnesses and California addresses for ten of them. HLP asserts
that its non-party, New York-based witnesses, including its
publisher, film, television and merchandising producer, and
publicity and promotional personnel, will be necessary to
establish its claims for trademark infringement, unfair
competition, and false advertising, and that these witnesses will
be inconvenienced should the Court transfer this case to
California. HLP argues that its witnesses will testify as to the
strength of the trademarks in the Dune Works, the distinctiveness of the trademarks, and the degree of
protection that the marks are due.
Although HLP correctly notes that to succeed in its trademark
infringement claim it must establish elements such as the
strength of the trademarks in the Dune Works and the likelihood
of confusion as to the source of the Video Games in the eyes of
consumers, it is not clear how material the testimony of the
witnesses HLP identifies as New York-based would be to those
inquiries. The strength of a trademark and the likelihood of
confusion are often established by objective survey evidence or
other indications of recognition by the general public rather
than by typically self-serving testimony from a plaintiff's own
agents (although surveys are certainly not required). See
1-800 Contacts, Inc. v. WhenU.com, 309 F. Supp.2d 467, 499
(S.D.N.Y. 2003); Citigroup Inc. v. City Holding Co., No. 99
Civ. 10115, 2003 WL 282202, at *25 (Feb. 10, 2003); Friesland
Brands, B.V. v. Vietnam Nat'l Milk Co., 221 F. Supp.2d 457, 459
(S.D.N.Y. 2002). The testimony of HLP's own literary agents and
promotional personnel may shed light on the advertising efforts
exerted to promote the Dune Works, but a plaintiff's or
plaintiff's agent's self-serving statements about the strength of
the plaintiff's own trademark and the likelihood of confusion
created by an allegedly infringing work will usually carry
limited weight in the resolution of a trademark infringement claim.
Perhaps more importantly, although this litigation is styled
principally as an action for trademark and copyright
infringement, HLP's case essentially stands or falls on contract
issues. It appears that ultimately, resolution of the dispute
over Defendants' liability will turn on the scope of the grant of
rights in the Dune Works to Universal. If the Video Games and
Strategy Guides did not exceed the scope of the grant of rights,
then the sales figures for books in the Dune series about which
two of HLP's New York-based witnesses would apparently testify,
for example would be irrelevant. The witnesses HLP identifies
as having knowledge of the negotiation of the 1995 Agreement are
located in California and Seattle, Washington. Moreover, although
HLP identifies as New York-based individuals the two principals
of HLP individuals who have knowledge of HLP licensed works,
the relevant licensing agreements, and the strength of the
relevant marks closer scrutiny reveals that the address
provided for these two individuals is in fact that of HLP's New
York counsel. HLP's two principals actually reside in Washington
Given that this case will proceed either in New York or
California, and that the parties have identified witnesses in
both states, it is clear that some witnesses party as well as non-party will need to undergo the inconvenience of
traveling across the country to testify at trial. On the whole,
the Court concludes that more witnesses with more material
testimony reside in California than in New York.
Both sides also identify witnesses who reside in neither state
and who would have to travel regardless of the venue. The
convenience of witnesses who reside in neither the current nor
the transferee forum is irrelevant when considering a motion to
transfer. See NBA Properties, 2000 WL 323257, at *6;
Wechsler v. Macke Int'l Trade, Inc., No. 99 Civ. 5725, 1999 WL
1261251, at *6 (S.D.N.Y. Dec. 27, 1999).
2. Convenience of the Parties
HLP is a Washington State limited partnership. HLP's general
partner, Brian Herbert, handles day-to-day administrative
activities of HLP from his home in Seattle. HLP asserts that it
conducts virtually all of its business, including publishing,
motion picture, and other commercial activities, from New York.
HLP's literary agent, publisher, and motion picture production
company are based in New York.
Defendants EA, which developed the Video Games, and SCEA, which
developed the Sony PlayStation game system on which the Video
Games can be operated, are Delaware corporations with their
principal places of business in California. EA maintains a
six-person regional sales office in New York, from which it manages business relationships with East Coast-based
retailers. EA targeted New York, San Francisco and Los Angeles
for a promotional campaign upon the debut of the Video Games.
Defendants Sony and Random House are Delaware corporations with
their principal places of business in New York. But although Sony
and Random House are headquartered in New York, no individuals in
the New York offices of either corporation apparently have any
information relevant to this lawsuit. Instead, the witnesses with
material information appear to work for SDM, the Indiana-based
division of Sony that manufactures the game discs, and Prima, the
California-based division of Random House that created the
Strategy Guides largely before it was acquired by Random House.
None of the Retail Defendants are incorporated or headquartered
in New York or California. All the Retail Defendants have stores
that sell the Video Games and/or Strategy Guides in New York and
HLP argues that it selected New York as the venue for this
action in part because it conducts much of its business
operations from New York, and because Sony and Random House are
Although several parties are located across the country and
would have to travel regardless of the venue, more of them and more of their relevant divisions are located in California
than in New York. Sony and Random House are the only two parties
unquestionably located in New York, but the relevant witnesses
from those parties are located in Indiana and California,
respectively. Furthermore, although HLP obviously opposes this
transfer motion, the Court notes that HLP's own principals reside
in Seattle, which is thousands of miles and three time zones
closer to California than to New York.
3. Location of Relevant Evidence
Defendants argue that the location of the relevant evidence
supports transferring this case to California because the vast
majority of the documents and other evidence concerning HLP's
claims are located in California and none of that evidence is in
New York. HLP correctly notes, as have many courts, that modern
technologies such as photocopying and faxing permit any documents
in California to be transported to New York with presumably
minimal difficulty, and Defendants have made no showing of any
particular burden that transferring the documents would entail.
See United States v. Nature's Farm Products, Inc., No. 00
Civ. 6593, 2004 WL 1077968 (S.D.N.Y. May 13, 2004); Coker v.
Bank of America, 984 F. Supp. 757, 766 (S.D.N.Y. 1997).
Nonetheless, common sense suggests that retaining this case in
New York imposes some incrementally greater burden, however
slight, on Defendants to copy or transport documents that they would not incur if the case
proceeded in California. See Nature's Farm Products, 2004 WL
1077968, at *4. Accordingly, this factor weighs slightly in favor
4. Locus of Operative Facts
Courts in this District have repeatedly held that "[i]n an
action for trademark infringement and unfair competition, the
initial forum is the locus of the operative facts if the
allegedly infringing products are sold in that forum, even though
the defendant manufactures the allegedly infringing product in
the transferee forum." NBA Properties, 2000 WL 323257, at *4.
HLP argues that because sales of the Video Games and Strategy
Guides occurred in New York and because EA targeted New York as
well as Los Angeles and San Francisco for promotional campaigns
to increase sales of the Video Games, New York is the locus of
the operative facts in this litigation.
Defendants acknowledge the general standard governing the locus
of operative facts in trademark disputes, but they emphasize that
other than sales of the Video Games and Strategy Guides, none of
the events surrounding this action, such as the creation of the
Video Games or Strategy Guides, Universal's approval of the
games, and the negotiation and drafting of all relevant
contracts, occurred in New York, and that in fact nearly all of those events transpired in California.
Because the allegedly infringing products were sold in this
District, this Court must conclude that New York is the locus of
operative facts. But because, other than sales of the Video Games
and Strategy Guides which were also conducted in California
no other relevant facts appear to have occurred in New York and
the great bulk of those facts occurred in California, this factor
will carry little weight in the Court's consideration of the
transfer motion. See Nabisco, Inc. v. Brach's Confections,
Inc., No. 00 Civ. 5875, 2000 WL 1677935 (S.D.N.Y. Nov. 8, 2000).
5. Availability of Process to Compel Attendance of Unwilling
Defendants state that their list of probable witnesses includes
many individuals located in California, which is outside the
subpoena power of this Court. They argue that this factor
strongly supports transfer because many of their witnesses are
mere employees of parties rather than officers, and pursuant to
Fed.R.Civ.P. 45(c)(3)(A)(ii), those employees should be
treated no differently from ordinary nonparty witnesses who must
be subpoenaed to testify if they are unwilling to appear
In relevant part, Rule 45 instructs a court to quash or modify
a subpoena if that subpoena "requires a person who is not a party or an officer of a party to travel to a place more
than 100 miles from the place where that person resides, is
employed or regularly transacts business in person, except that,
subject to the provisions of clause (c)(3)(B)(iii) of this rule,
such a person may in order to attend trial be commanded to travel
from any such place within the state in which the trial is held."
Fed.R.Civ.P. 45(c)(3)(A)(ii) (emphasis added). Several courts
have interpreted this provision to mean that non-officer
employees of a party are not considered to be parties but instead
are non-party witnesses. See Price Waterhouse LLP v. First
American Corp., 182 F.R.D. 56, 62 n. 4 (S.D.N.Y. 1998); St.
Paul Fire and Marine Ins. Co. v. Royal Ins. Co. of America, No.
91 Civ. 6151, 1993 WL 267347, at *1 (S.D.N.Y. July 12, 1993).
Alternatively, other courts have simply stated, without any
reference to Rule 45(c)(3)(A)(ii), that employees of a party are
available in any venue by virtue of the employment relationship,
and therefore the reach of a court's subpoena power over
employees who do not reside in the forum is essentially
irrelevant to a motion to transfer. See Race Safe Sys., Inc.
v. Indy Racing League, 251 F. Supp.2d 1106, 1111 (N.D.N.Y.
2003); Praxair, Inc. v. Morrison Knudsen Corp., No. 00 Cv. 892E,
2001 WL 118585 (W.D.N.Y. Feb. 6, 2001); Citigroup Inc. v. City
Holding Co., 97 F. Supp.2d 549, 561 (S.D.N.Y. 2000).
The Court need not delve further into whether non-officer
employees must be subpoenaed to testify, because Defendants have
made no representation that any of their non-New York witnesses,
whether or not they are employees of parties, are unwilling to
testify in New York should the case remain here. See
Transatlantic Reinsurance Co., 2003 WL 22743829, at *5; Kiss
My Face Corp., 2003 WL 22244587, at *4. Accordingly, this factor
6. Relative Means of the Parties
The relative means of the opposing parties may support or
discourage transfer of venue if there is a significant financial
disparity between the parties. Defendants concede they are all
large corporations, and they argue that HLP's means are not
materially different from their own. They therefore assert that
this factor has no bearing on the transfer motion. HLP argues
that its resources are no match for those of the Defendants.
HLP's average annual revenues for each of the past ten years have
been under $750,000. Each Defendant's annual revenue for 2003
exceeded $1 billion. Given that the smallest Defendant's annual
revenue appears to have exceeded HLP's annual revenue by a factor
of more than one thousand in 2003, the Court recognizes that HLP
may feel the pinch of litigating this action in California more
than Defendants would if the case remains in New York.
7. Forum's Familiarity With Governing Law
HLP raises federal copyright and trademark claims and New York
State statutory claims. The federal court in the Northern
District of California is certainly as familiar with the law
governing the federal claims as is this Court. See Intria
Corp. v. Intira Corp., No. 00 Civ. 7198, 2000 WL 1745043, at *7
(S.D.N.Y. Nov. 27, 2000). HLP's assertion of New York-based
claims supports the retention of this case in this District,
because this Court is presumed to be more familiar with New York
law than a federal court in California, see NBA Properties,
2000 WL 323257, at *9, but that support is not as strong as HLP
would like. Defendants assert, and HLP does not deny, that HLP
has indicated to Defendants that if the Court transfers this case
to the Northern District of California, HLP will abandon its New
York claims and substitute analogous California state law claims.
8. Plaintiff's Choice of Forum
A court generally accords significant weight to a plaintiff's
choice of forum. See Intria, 2000 WL 1745043, at *8; NBA
Properties, 2000 WL 323257 at *9. However, the plaintiff's
choice of forum receives less deference when that forum is not
the plaintiff's home district and there is no material connection
between either the plaintiff or the underlying transactions and the chosen forum. See Intria,
2000 WL 1745043, at *8; NBA Properties, 2000 WL 323257 at *9.
New York is not the home judicial district of HLP. HLP
emphasizes its connections to New York by asserting that it
conducts all of its business operations through agents and
business associates in New York. HLP's publisher, marketing
promoter, and television and motion picture production company
are located in New York. That said, given that New York is not
HLP's home district, and that apart from some sales of the
allegedly infringing products none of the operative facts in this
case occurred in New York, HLP's choice of forum will receive
relatively little weight. See NBA Properties, 2000 WL 323257
9. Judicial Economy and Interests of Justice
Defendants argue that this case should be transferred to
California in the interests of judicial economy because, they
claim, it is likely that HLP will name Universal as a defendant,
and the agreements between Universal and EA provide that
California is the exclusive venue for disputes arising under
those agreements. Defendants argue that this Court's retention of
the case will result in judicial inefficiency because a separate
litigation on the same subject matter will have to be initiated
in California to resolve Universal's liability. But the Court
cannot assume that additional parties will subsequently be added to this litigation. Universal
is not now a party to this case, and the Court must decide the
motion to transfer based on the situation now before it.
Both sides invoke the first-filed rule in support of their
arguments to transfer this case to California or preserve it in
New York. It is well settled that "where proceedings involving
the same parties and issues are pending simultaneously in
different federal courts, the first-filed of the two takes
priority, absent `special circumstances' or a balance of
convenience in favor of the second." Transatlantic Reinsurance,
2003 WL 22743829, at *1.
HLP filed its complaint in the case at bar on October 31, 2003,
several days before EA filed the California Case. HLP's initial
complaint listed as defendants SCEA, Random House, and Sony. HLP
amended the complaint on November 6, 2003 to add EA and the
Retailer Defendants. HLP argues that the present case is the
first action filed involving the alleged trademark and copyright
infringements at issue.
Defendants maintain that the California Case, which EA filed
against HE (who it believed to be the successor to HLP), is the
first filed case between EA and HLP involving the alleged
trademark and copyright infringements because HLP did not add EA
as a defendant in the instant case until after EA filed the California Case.
Courts do not mechanically apply the first-filed rule "where
the first suit constitutes an `improper anticipatory filing' or
was motivated solely by forum shopping." Reliance Ins. Co. v.
Six Star, Inc., 155 F. Supp.2d 49, 54 (S.D.N.Y. 2001). Because
the Court is persuaded that both of those situations exist here,
the first-filed rule is not particularly helpful in resolving the
motion to transfer.
An improper anticipatory filing is one "made under the apparent
threat of a presumed adversary filing the mirror image of that
suit in a different [court]." Ontel Prods., Inc. v. Project
Strategies Corp., 899 F. Supp. 1144, 1150 (S.D.N.Y. 1995). An
anticipatory filing is improper when "it attempts to exploit the
first-filed rule by securing a venue that differs from the one
that the filer's adversary would be expected to choose." Id.
Here, HLP initially filed the present action in this District
against several parties, but not against EA, on the day before
the Tolling Agreement expired. While that agreement remained in
effect, HLP could not name EA as a defendant, nor could EA
initiate a suit for declaratory judgment against HLP. After the
Tolling Agreement expired, EA filed the declaratory judgment
action in California, and the next day HLP amended its complaint
in this District to add EA as a defendant. The Court will
consider the California Case to be an improper anticipatory filing
although it was technically filed after the present case, because
it appears to have been filed with the knowledge that HLP was
about to add EA as a defendant in New York. (See Declaration of
Ralph Sutton dated April 23, 2004 at ¶ 5.)
But HLP was no mere observer of this procedural chess match.
HLP filed the present action in New York to take advantage of the
longer New York statute of limitations applicable to unfair
competition claims for Lanham Act violations. HLP has requested
that if this Court transfers this case to California, it
condition the transfer on a stipulation from Defendants that New
York's statute of limitations apply to HLP's Lanham Act claims in
California. The Court would no more reward this instance of forum
shopping by HLP than it would EA's improper anticipatory filing.
Accordingly, the Court finds the first-filed rule unhelpful in
this case, and in the final analysis resolves the motion to
transfer on the basis of the balance of conveniences that the two
fora present. See Reliance Ins. Co., 155 F. Supp.2d at 54;
Citigroup, 97 F. Supp.2d at 555.
C. BALANCING TEST RESULTS
Upon consideration of all of the above nine factors, the Court
concludes that the proper course of action is to transfer this
case to the Northern District of California. Two factors particularly guide the Court. First, more witnesses
with more material information reside in California than in New
York. Second, the bulk of the material operative facts pertaining
to the parties' relationships, transactions and product
development at issue in this case occurred in California, and
except for sales of the allegedly infringing products which
also occurred in virtually every judicial district in this
country none of the operative facts occurred in New York.
Essentially, the Court concludes that this case is a
California-based action that, although permissibly filed in this
District, should more appropriately proceed in California in the
interests of convenience and fairness.
The Court notes two additional considerations that, although
not assigned any particular weight in this assessment, may have
some bearing on the proper forum for adjudication of this action.
First, prior to resorting to litigation in full throttle and
gear, the parties commenced mediation proceedings in California,
which efforts may still have some standing and prospects as
alternative means to resolve this dispute. Should greater wisdom
and prudence eventually prevail upon the parties during the
course of litigation, and they then choose to pursue the
mediation path, that option would likely occur more expeditiously
and fare better were the litigation to proceed now in the forum where the
framework for its alternative already exists. Second, were this
action to continue in this District, in the event Defendants do
decide to add Universal to the California Case a greater
likelihood would exist of parallel litigation being conducted on
two coasts over essentially the same dispute. Transfer to
California would enable one forum to adjudicate all existing and
potential claims; retaining the action in this District leaves
open the prospect of additional litigation over still-looming
disputes that could not be resolved here.
For the reasons discussed above, it is hereby
ORDERED that the motion of defendants Electronic Arts, Inc.,
Sony Music Entertainment, Inc., Sony Computer Entertainment
America, Inc., Random House, Inc., Wal-Mart Stores, Inc., Best
Buy Company, Inc., CompUSA, Inc., Electronics Boutique, Inc., and
KB Toys, Inc. to transfer venue of this case to the Northern District of California
pursuant to 28 U.S.C. § 1404(a) is granted.
The Clerk of Court is directed to close this case.
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