Progme Corporation v. Google LLC

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

PROGME CORPORATION,

Plaintiff, CASE NO. 18-11057

v. HON. DENISE PAGE HOOD

TWENTY-FIRST CENTURY FOX, et al.,

Defendant.

___________________________________/

PROGME CORPORATION,

Plaintiff, CASE NO. 18-11728

v. HON. DENISE PAGE HOOD

GOOGLE, LLC,

Defendant.

__________________________________/

ORDER GRANTING PLAINTIFF’S MOTION TO LIFT THE STAY,

DENYING PLAINTIFF’S MOTION TO TRANSFER, AND GRANTING

PLAINTIFF’S MOTION FOR LEAVE TO AMEND THE COMPLAINT

[ECF No. 18 in Case No. 18-11057 and ECF No. 15 in Case No. 18-11728]

I. INTRODUCTION

These are two patent cases, both originally assigned to the Honorable Avern

Cohn as companion cases before later being reassigned to the undersigned on January

2, 2020. In both cases, Progme claims infringement of U.S. Patent No. 8,713,425 (the

‘425 patent). In broad terms, the ‘425 patent, titled “Audio/Video Program-Related

Hyperlink Printer,” covers a system in which hyperlinked content broadcast on radio

or television programs can be printed. Progme claims that Defendants have used the

patented technology when transmitting program signals during broadcasting. In April

2018, Progme sued Defendant Twenty-First Century Fox, Inc. and other Fox entities

(collectively, Fox). Progme v. Fox, 18-11057 (the Fox Case). In June 2018, Progme

sued Defendant Google, LLC (Google). Progme v. Google, 18-11728 (the Google

Case). Both cases have been stayed pending reexamination and reissue proceedings

before the United States Patent and Trademark Office (PTO).

On December 4, 2019, Progme filed a Motion to Lift the Stay and Transfer or,

in the Alternative, for Leave to File an Amended Complaint in each case. See ECF

No. 18 in the Fox Case and ECF No. 15 in the Google Case. Both motions are fully

briefed. Because the motions present essentially the same arguments, they will be

considered together.

For the reasons set forth below, the Court GRANTS Progme’s request to lift the

stay; DENIES Progme’s request to transfer the cases; and GRANTS Progme’s request

for leave to file an amended complaint.

II. BACKGROUND

The named inventor of the ‘425 patent is David A. Reams, a former Michigan

attorney. Reams also prosecuted a series of applications leading to the ‘425 patent for

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nearly 13 years, until the ‘425 patent issued on April 9, 2014. In addition to being the

inventor and the prosecuting attorney, Reams is the President, Treasurer, Secretary,

and Director of Progme. Progme has a history of litigation regarding the ‘425 patent,

as set forth below.

In 2015, Progme sued a number of entities in this district, including Comcast,

claiming infringement of the ‘425 patent. Progme v. Comcast, 15-13935 (the Comcast

case). Within two weeks of filing the complaint, Progme filed a notice of voluntary

dismissal, “dismissing with prejudice” all defendants except for Comcast. See ECF

No. 4 in the Comcast Case. Comcast then filed a motion to transfer. The district court

granted the motion and transferred the case to the Eastern District of Pennsylvania.

See ECF No. 48 in the Comcast Case. On March 6, 2020, the Eastern District of

Pennsylvania dismissed the Comcast Case without prejudice. ECF No. 26, in the Fox

Case (Defendants’ Notification of Order from the Eastern District of Pennsylvania);

ECF No. 27 (Order from the Eastern District of Pennsylvania, which is ECF No. 63

in the Comcast Case).

During the pendency of the Comcast Case, Comcast filed a request for ex parte

reexamination of the ‘425 patent with the PTO. On May 1, 2018, the PTO ordered

reexamination based on Comcast’s ex parte reexamination request. In addition to

Comcast’s reexamination proceeding, on April 4, 2018, Progme filed a reissue

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application for the ‘425 patent with the PTO.

The day before filing the reissue application, on April 3, 2018, Progme filed the

Fox Case. Two months later, on June 1, 2018, Progme filed the Google Case. Shortly

thereafter, in early August 2018, Judge Cohn stayed the Fox and Google cases

pending the outcome of the PTO proceedings, including both the ex parte

reexamination and the reissue application. See ECF No. 14 in the Fox Case and ECF

No. 11 in the Google Case.

On August 6, 2019, the PTO mailed a notice of allowance for the reissue

application of the ‘425 patent. On November 19, 2019, the PTO issued the reissue

patent, RE47,735, which generally allows claims 1-25 of the ‘425 patent. On

December 4, 2019, following the conclusion of the PTO proceedings, Progme filed

the instant motions to lift the stay in both cases. See ECF No. 18 in the Fox Case and

ECF No. 15 in the Google Case.

III. APPLICABLE LAW

A. Lift Stay

Where a court has already granted a stay pending the outcome of PTO

proceedings, the court also has the inherent power and discretion to lift that stay when

appropriate. See Lear Corp. v. TS Tech USA Corp., No. 2:09-CV-993, 2013 WL

12178111, at *3 (S.D. Ohio Mar. 12, 2013).

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B. Transfer Venue

A civil action may be transferred from one district court to another pursuant to

28 U.S.C. § 1404:

(a) 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.

C. Amend Complaint

In a case where a responsive pleading has been filed, “a party may amend its

pleading only with the opposing party’s written consent or the court’s leave. The court

should freely give leave when justice so requires.” F. R. Civ. P. 15(a)(2). It is within

the Court’s discretion whether to grant Plaintiff’s motion for leave to file an amended

complaint. The factors a court is to consider when determining whether to permit a

plaintiff to file an amended complaint are:

(1) the delay in filing the motion,

(2) the lack of notice to the other party,

(3) bad faith by the moving party,

(4) repeated failure to cure deficiencies by previous amendments,

(5) undue prejudice to the opposing party, and

(6) futility of the amendment.

Wade v. Knoxville Utilities Bd., 259 F.3d 452, 460 (6th Cir. 2001); Perkins v. Am.

Elec. Power Fuel Supply, Inc., 246 F.3d 593, 605 (6th Cir. 2001). A district court

may deny a plaintiff leave to amend his complaint when the proposed amendment

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would be futile. See, e.g., Yuhasz v. Brush Wellman, Inc., 341 F.3d 559, 569 (6th Cir.

2003) (citing Foman v. Davis, 371 U.S. 178 (1962)). An amendment is deemed futile

when it would not withstand a Rule 12(b)(6) motion to dismiss. Rose v. Hartford

Underwriters Ins. Co., 203 F.3d 417, 420-21 (6th Cir. 2000).

IV. ANALYSIS

A. Subject Matter Jurisdiction

As an initial matter, Google argues that the case should be dismissed for lack

of subject matter jurisdiction, contending that because the ‘425 patent no longer exists,

the complaint no longer presents a case or controversy, i.e. that the Fox and Google

cases are moot.

Under Federal Circuit law, “when a claim is cancelled, the patentee loses any

cause of action based on that claim, and any pending litigation in which the claims are

asserted becomes moot.” Fresenius USA, Inc. v. Baxter Intern., Inc., 721 F.3d 1330,

1340 (Fed. Cir. 2013). “Suits based on cancelled claims must be dismissed for lack

of jurisdiction.” See SHFL Entertainment, Inc. v. DigiDeal Corp., No. 2016-2705,

2018 WL 2049238, at *3 (Fed. Cir. May 2, 2018). See also Foster v. Carson, 347 F.3d

742, 745 (9th Cir. 2003) (“Mootness is a jurisdictional issue, and federal courts have

no jurisdiction to hear a case that is moot, that is, where no actual or live controversy

exists. If there is no longer a possibility that an appellant can obtain relief for his

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claim, that claim is moot and must be dismissed for lack of jurisdiction.”) (internal

citations and quotation marks omitted).

While Progme may not proceed on the ‘425 patent as it existed prior to the PTO

proceedings, claims were allowed on reexamination and a new version of the ‘425

patent was reissued. Progme has also moved for leave to amend the complaint to

incorporate the outcome of the PTO proceedings, i.e. the reissuance of the ‘425 patent.

Courts have granted leave in similar circumstances, thereby curing any mootness

issues. See Lotes Co., Ltd. v. Hon Hai Precision Industry Co., Ltd., 2017 WL 282583,

at *6 (N.D. Cal. 2017) (granting leave to amend complaint to reflect outcomes of

concluded reexaminations of patents in suit); ZiLOG, Inc. v. Quicklogic Corp., No.

C03-03725 JW, 2006 WL 563057, at *1 (N.D. Cal. Mar. 6, 2006) (allowing leave to

amend initial disclosures of asserted claims to add an additional claim in the patent

after ex parte reexamination proceeding). See also MyGo, LLC v. Mission Beach

Indus., LLC, No. 16-CV-2350-GPC-RBB, 2018 WL 3438650, at *3 (S.D. Cal. July

17, 2018) (“the Court finds that a motion for leave to amend is required in order to add

previously unasserted claims in the first instance after ex parte reexamination”).

The cases cited by Google where the courts dismissed cases after PTO

proceedings concluded are inapposite. In Fresenius, supra, the Federal Circuit

addressed the question of whether, under the reexamination statute, the cancellation

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of claims by the PTO is binding in pending district court infringement litigation. The

Federal Circuit stated that a patentee loses any cause of action based on claims that

were cancelled during reexamination proceedings, but it did not consider the situation

where a plaintiff seeks leave to amend after PTO proceedings in a case that was

specifically stayed pending the outcome of PTO proceedings. In Target Training

Intern., Ltd. v. Extended Disc. North America, Inc., 645 F. App’x 1018 (Fed. Cir.

2016), the Federal Circuit considered whether claims newly added to a patent during

a reexamination that cancelled asserted claims were automatically added to pending

infringement litigation. The Federal Circuit affirmed the district court’s dismissal of

the newly added claims because: (1) Target did not allege infringement on the new

claims at the time the complaint was filed as the newly added claims did not exist; and

(2) Target was bound to its preliminary infringement contentions issued prior to the

reexamination. See id. at 1024.

The Court declines to dismiss the case on jurisdictional grounds.

B. Lift Stay

Neither Fox nor Google oppose Progme’s request to lift the stay. The Court,

therefore, lifts the stay.

C. Venue

1. Forum Shopping

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Before considering the factors for transfer, Fox argues that the motion is an

improper attempt at forum shopping. It is well established that Ҥ 1404(a) should not

create or multiply opportunities for forum shopping.” Ferens v. John Deere Co., 494

U.S. 516, 523 (1990).

Fox notes that the request to change venue comes from Progme, the plaintiff.

Another judge in this district has commented on such a situation:

The plain language of section 1404(a) provides for transfer for the

convenience of the parties and witnesses, and in the interest of justice.

There is no requirement that the request come from any particular party

or that reasons for transfer arise after the complaint is filed. However, it

seems unlikely that the drafters intended to permit plaintiffs to bring a

motion for forum nonconveniens without some very good reason. The

presumption against changing a plaintiff's choice of forum still applies

when the plaintiff makes the motion to transfer.

Ortho-McNeil Pharm., Inc. v. Caraco Pharm. Labs., Ltd., No. 04-CV-73698, 2005

WL 8154955, at *3 (E.D. Mich. June 13, 2005) (Steeh, J.) (emphasis added).

Although not prohibited, it is unusual that Progme, a Michigan corporation,

seeks to transfer cases from its chosen forum that have been pending for over 20

months. It appears, based on Reams’ affidavit, that the request is largely based on two

events. First, Reams’ expressed desire to combine the Fox Case, the Google Case, and

the Comcast Case (which has now been dismissed) in a single forum. See Affidavit

of David A. Reams, ECF No. 18-3 in the Fox Case, PageID.428. Second, Reams has

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relocated from Michigan to Washington, D.C. See id. at PageID.429. Progme’s

additional asserted reasons for transfer appear to be based on circumstances that

existed at the time the complaint was filed. In other words, nothing has changed since

filing these two cases, except for Reams’ location and a desire to consolidate the cases

in Delaware. Although the Court declines to find that Progme has engaged in forum

shopping as a basis to deny its motions to transfer, Fox’s argument is not lacking in

merit.

2. Factor Analysis

Progme requests that both cases be transferred to the District of Delaware under

section 1404(a). The determination of whether a case should be transferred under this

section involves balancing of the following factors: (1) convenience of the parties; (2)

convenience of the witnesses; (3) ease of access to sources of proof; (4) availability

of process to compel attendance of witnesses; (5) costs of obtaining witnesses; (6)

expense and expeditiousness of trying matter; and (7) interests of justice. Kepler v.

ITT Sheraton Corp., 860 F. Supp. 393 (E.D. Mich. 1994).

a. Convenience of the Parties

Progme argues that Delaware is a more convenient forum for the parties

because it is closer to where Reams now lives and both Fox and Google are

incorporated in Delaware. This argument does not carry the day. Progme does not

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explain how Fox or Google would benefit from a transfer based on their state of

incorporation. Rather, as Google points out, a more convenient forum for Google

would be in California, where it is headquartered. As to Fox, it retained and has been

working with local (Detroit, Michigan) counsel since the beginning of the case. At

best, Progme has shown that Delaware would be more convenient for Reams, a non-

party but someone clearly with an interest in the litigation. This factor does not weigh

in favor of transfer. See B.E. Tech., LLC v. Sony Computer Enm’t Am, LLC, No. 12-

CV-02826, 2013 WL 3804030, at *12 (W.D. Tenn. July 19, 2013) (denying motion

to transfer in part where “Sony has shown that the Northern District of California

would be a more convenient forum for it, but it has not shown that the Northern

District of California is a more convenient forum for both parties.”).

b. Convenience of the Witnesses/Availability of Process to Compel/Costs

Progme has not identified a single witness who is located in Delaware. Progme

instead relies on witnesses it alleges are located in Washington, D.C. and says it would

subpoena them for trial in Delaware. As explained below, Progme has not met its

burden.

First, Progme says that it intends to subpoena the Federal Communications

Commission (FCC) custodian of records to appear as a fact witness and to call three

FCC employees (James Miller, Walter Johnston, and Pete Cole) as expert witnesses.

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There are significant problems with calling these witnesses. First, because the FCC

is not a party in this proceeding, the FCC witnesses would be non-party governmental

witnesses subject to the Touhy regulations that limit the availability of governmental

witnesses. U.S. ex rel. Touhy v. Ragen, 340 U.S. 462, 71 S. Ct. 416, 95 L. Ed. 417

(1951) (holding promulgated into an administrative regulation and was subsequently

codified at 32 C.F.R. § 97.6); see 47 C.F.R. § 0.463. Progme has not indicated that

it requested or received approval from the General Counsel of the FCC to authorize

the proposed FCC witnesses to produce records or speak on behalf of their work

conducted during the course of business as present FCC personnel, as required by 47

C.F.R. § 0.463. There is no indication that Progme will be successful in compelling

the FCC witnesses to testify in either forum.

Second, contrary to Progme’s assertions that James Miller is “the Senior

Attorney Advisor” at the FCC, “has been and continues to supervise said additional

testing at the FCC...in Washington, DC,” and he is “within 100 miles of the United

States District Court for the District of Delaware,” James Miller appears to have left

his position at the FCC in February 2019 and now resides in Japan – beyond the

Court’s subpoena power, regardless of forum. See Affidavit of David Reams, ECF

No. 18-3 in the Fox Case, PageID.431, Exhibit H to Davis Declaration, ECF No. 21-9,

PageID.527. This fact suggests that Progme has not made reasonable inquiries as to

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whether any of these FCC witnesses would be available to it, even if this case were

transferred to Delaware. Because it is very unlikely that Miller will be a witness in

this forum or Delaware, Miller’s purported convenience is irrelevant to the transfer

analysis.

Third, Progme has not clearly explained how the testimony of FCC employees

would be relevant to any issue in the case. Aside from vague statements relating to

the alleged roles of the FCC employees in “additional testing” pursuant to the “FCC

Speed App” and general assertions that they are “key witnesses,” Progme has not

explained the specific subject matter of the proposed testimony or how said testimony

relates to the infringement allegations made in the complaint. This weighs against

transfer. See Crestmark Fin. Corp. v. Omo Sci., Energy & Tech., Inc., No. 10-11795,

2010 WL 3702371, at *4 (E.D. Mich. Sept. 16, 2010) (weighing the witnesses’

convenience factor against the movant where the court “fail[ed] to see how the[]

witnesses would play a role in the defense of this action” and “how the Complaint has

anything to do with [the proposed witnesses].”).

Fourth, the witnesses would still need to travel from their residences in

Washington, D.C. regardless of the chosen forum, and it would be no more convenient

for them to drive to Delaware than to fly to Michigan. This too weighs against

transfer. See Silberg v. Zotec Sols., Inc., No. 05-CV-73822, 2006 WL 1007635, at *4

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(E.D. Mich. Apr. 17, 2006) (“‘Inconvenience’ is more than just being upset or

reluctant about having to drive a few hours in a car or travel one hour by plane.”);

Bestop, Inc. v. Tuffy Sec. Prod., Inc., No. 2:13-CV-10759, 2013 WL 4496257, at *5

(E.D. Mich. Aug. 21, 2013) (“[I]t seems more convenient for Defendant to fly to

Detroit than to drive to the District of Colorado’s courthouse, since it will take a

shorter period of time to fly.”).

Progme further identifies as a potential witness Dr. Maria Constantinescu (Dr.

Constantinescu), who is characterized as “a non-party located in Washington, DC”

and who operates Progme’s website, Progme.live. Reams’ Affidavit, ECF No. 18-3

in the Fox Case, PageID.431. However, it appears that Dr. Constantinescu (who

appears to also be known as Dr. Maria Kristofer) is most likely an employee of either

Progme or David Reams’s law firm. See Exhibits I-K of Davis Declaration in the Fox

Case. Although Reams’s Affidavit refers to Dr. Constantinescu as “a colleague,”

Progme’s motion and Dr. Constantinescu’s declaration fail to explain her role and her

employment status. Downplaying her ties to Progme would be misleading, as party

employees are treated differently from non-party witnesses in the convenience

analysis. Performance Contracting, Inc. v. DynaSteel Corp., No. 12-10165, 2012 WL

1666394, at *4 (E.D. Mich. May 9, 2012) (citing Steelcase, Inc. v. Smart

Technologies, Inc., 336 F. Supp. 2d 714, 721 (W.D. Mich. 2004)) (“[I]t is the

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convenience of non-party witnesses, rather than employee witnesses . . . that is

accorded greater weight.”). At a minimum, Dr. Constantinescu does not appear to be

a true non-party witness but is rather associated with Progme and working on its

behalf.

As with the proposed FCC witnesses discussed above, Dr. Constantinescu is

also a Washington, D.C. resident, such that it would be no more convenient for her to

travel to Delaware than to Michigan. Although Dr. Constantinescu states she is

unable and unwilling to travel to Michigan, this alone does not mean it is inconvenient

for purposes of a transfer analysis.

Finally, Progme also identifies Reams as a witness. Reams is clearly a party

witness. It is well-established that the location of such a party witness is entitled to

minimal weight, if any, in the transfer analysis. Steelcase, 336 F.Supp.2d 714 at 721;

Pharmerica Corp. v. Crestwood Care Ctr., L.P., No. 3:12-CV-00511-CRS, 2013 WL

5425247, at *2 (W.D. Ky. Sept. 26, 2013) (“the convenience of party witnesses is

generally not a significant factor in determining whether transfer is appropriate”).

c. Ease of Access to Sources of Proof

Progme has not identified any activities in Delaware and has only discussed

“testing” activities occurring in Washington, D.C. Progme, however, does not explain

how the “testing” activities in Washington, D.C. make it easier to access sources of

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proof in Delaware. As Fox and Google point out, their sources of discoverable

evidence are likely to be located where they are headquartered, in New York and

California, respectively. This factor does not weigh in favor of transfer.

d. Expense and Expeditiousness

Progme says that it will be more expensive for Reams to travel to Michigan, and

it will be more expedient to have all three cases in a single forum in Delaware. As

discussed above, Reams’ convenience is entitled to little weight. Regarding the

expediency of trial, Progme has not explained how the District of Delaware is better

equipped to adjudicate the Fox Case and the Google Case. Both cases have been

pending in this district for over a year and have involved substantive motion practice.

Progme has not shown that this factor militates in favor of transfer. Progme also has

not demonstrated how the Comcast case, pending in the Eastern District of

Pennsylvania, would be tried in the District of Delaware, especially as it has now been

dismissed.

e. Interests of Justice

The interests of justice weigh against transfer. The District of Delaware has no

connection to Progme, and no prior experience with the ‘425 patent. This Court, on

the other hand, has experience with the ‘425 patent, the PTO proceedings, and has

invested judicial resources in both the Fox Case and the Google Case. In addition,

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Progme’s allegations of infringement are based on a theory of “infringing activities

nationwide,” ECF No. 18 in the Fox Case, PageID.410, so Delaware is of no

particular significance. Progme has not shown that its initial choice of forum in the

Eastern District of Michigan should be disturbed. The Court denies the request to

transfer.

D. Leave to Amend

Progme requests that if the Court declines to transfer the cases, leave to amend

the complaint should be granted to incorporate the reissuance of the ‘425 patent. Fox

does not oppose this request other than to require that Progme be instructed to identify

with particularity the accused devices and infringing activity. Fox suggests that if the

amended complaint merely substitutes the ‘425 patent with the reissue patent number,

it will suffer from failing to meet the basic pleading requirements, and the amendment

will be futile. Google opposes granting Progme leave to amend, arguing that the

complaint cannot withstand a motion to dismiss because of Progme’s inequitable

conduct.

The complaint is not a model of clarity. Fox’s concern that if Progme files an

amended complaint in a similar form, it will not withstand a motion to dismiss is well-

founded. Google’s concern regarding inequitable conduct raises an issue that requires

more robust briefing and consideration of matters outside the pleadings. Under the

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circumstances of the case and in keeping with the rule that leave should be freely

granted, the Court finds that the better course is to permit amendment. Both Fox and

Google will have the right to file any motion they deem appropriate following the

filing of the amended complaint.

The Court grants Progme’s request for leave to amend the complaint.

V. CONCLUSION

Accordingly, for the reasons stated above,

IT IS HEREBY ORDERED that Progme’s Motions to Lift the Stay and

Transfer or, in the Alternative, for Leave to File an Amended Complaint [ECF No. 18

in the Fox Case and ECF No. 15 in the Google Case] are GRANTED IN PART and

DENIED IN PART.

IT IS FURTHER ORDERED that Progme’s Motion to Lift Stay is GRANTED;

Progme’s Motion to Transfer is DENIED; and Progme’s Motion for Leave to Amend

the Complaint is GRANTED.

IT IS FURTHER ORDERED that Progme shall file an amended complaint

within twenty days of this Order.

IT IS ORDERED.

s/Denise Page Hood

Dated: March 25, 2020 United States District Judge