THIS CAUSE comes before this Court on an Order of Referral (DE 14). The

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1 Case 9:13-mc KLR Document 20 Entered on FLSD Docket 09/26/2013 Page 1 of 8 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA Case No MC-RYSKAMP/HOPKlNS VIRNETX, INC. et al., Plaintiffs, VS. APPLE lnc., Defendant. ' F j l E î - t h ' t Ck1 '? 0. <. L t œ. *.> ) t i.-.-. /'! jr! k+-'.! Ef'z 2 ṭ o i -, 1, / s-revel.k M.uAckt Mtpfît.! CLERIr u.s.dlsr. ct. s.d. of F'uA.- w, R B. $.! REPORT AND RECOMM ENDATION ON PLAINTIFF'S MOTION TO TM NSFER VENUE (DE 6) THIS CAUSE comes before this Court on an Order of Referral (DE 14). The Court has before it Plaintiff Virnetx's M otion to Transfer (DE 6). Nonparties Joel B. Rothm an and Schneider Rothm an Intellectual Property Law Group PLLC filed their M emorandum of Law in Opposition to Virnetx's M otion (DE 18), to which Virnetx filed a Response (DE 19). For the reasons stated below, it is RECOM M ENDED that Vimetx's Motion (DE 6) be GM NTED. BACKGROUND ln 2010, V irnetx tiled a law suit against Apple, lnc., am ong other Defendants, in the Eastern District of Texas, aleging patent infringement. A jury ultimately awarded Virnetx $358.2 milion for Apple's past infringem ent. Subsequently and in the sam e fonzm, Virnetx again sued A pple, a leging patent infringem ent of different products. Litigation is ongoing. In June of 2013, New Bay Capital, LLC, filed an inter partes review petition IPR Petition) with the United States Patent and Trademark Office to invalidate some of Virnetx's patents. Seeking to uncover the nature of N ew Bay Capital's business, V irnetx subpoenaed N ew 1

2 Case 9:13-mc KLR Document 20 Entered on FLSD Docket 09/26/2013 Page 2 of 8 Bay Capital and six other nonparties associated with it. Specificaly, Virnetx subpoenaed New Bay Capital and its parent com pany, Eastem Shore Capital, LLC, in the D istrict of D elaw are. V irnetx also subpoenaed the three M assachusets attorneys w ho filed the IPR petition for N ew Bay in the District of Massachusets. And relevant to the Motion in question, Virnetx subpoenaed atorney Joel B. Rothm an and Schneider Rothm an lnte lectual Property Law Group, LLP (SRIP Law) in the Southern District of Florida. These subpoenas are substantially similar and in each case, the subpoenaed parties filed nearly identical M otions to Quash. Notably, the subpoenas at issue here demand deposition testimony to occur in this District as wel as docum ent production. Virnetx now moves to transfer a1l Motions to Quash to the Eastern District of Texas, the forum of the underlying litigation. V irnetx argues that transfer of venue is appropriate because the dispute involves a complex issue that would be beter handled by the judge most familiar with the case, and also to promote faimess and judicial economy. ln opposition, nonparties Rothm an and SRIP Law argue that transfer is inappropriate because district courts have exclusive jurisdiction to quash or modify subpoenas they issued, and because the Eastem District of Texas is unable to assert personaljurisdiction over them. DISCUSSION Legal Standard The current Rule 45 of the Federal Rules of Civil Procedure states that a subpoena for production or inspection is to be issued çfrom the court for the distdct where the production or inspection is to be made.' Fed.R.CiV.P. 45(a)(2)(C). After a subpoena has issued, the current Rule gives the issuing court exclusive authority to quash or modify it. Fed.R.CW.P. 45(c)(3). W hether the issuing court has the authority to transfer a m otion to quash or m odify a subpoena is 2

3 Case 9:13-mc KLR Document 20 Entered on FLSD Docket 09/26/2013 Page 3 of 8 not addressed in the current rule. This issue has not been resolved in the 1 1th C ircuit, and courts outside of the 1 1th Circuit are split. Compare In re Sealed Case, 141 F.3d 337, 340 (D.C. Cir. 1998) (stating that the text of Rule 45 ûoffers no authorization to transfer a motion to quash and seems at least implicitly to forbid it') and Westernbank P.R. v. Kachkar, No. M 8-85X3 tpart 1), 2009 W L , at *3 (S.D.N.Y. M ar. 27, 2009) (declining to transfer a M otion to Compel where there was no indication that the transferee court would be able to assert personal jurisdiction over the nonparty) with In re Digital Equip. Corp., 949 F.2d 228, 231 (8th Cir. 1991) (holding that while the çdistrict court initialy has exclusive jurisdiction to rule on gthe objection to a subpoenaq, it may in its discretion remit the matter to the court in which the action is pending') and U S. v. Star Scientsc, Inc., 205 F. Supp. 2:1 482, 488 (D. M d. 2002) (granting transfer w here transfer w ould be convenient and w as sought by the subpoenaed nonparty, and w here the district cottrt w as in a beter position to evaluate the claim s given the com plexity and scope of the underlying litigation). Likely stem m ing from this conflict, on M ay 15, 2013, the U nited States Suprem e Court released am endm ents to Rule 45 that specifica ly address the issue of transfer. See FH.R.CiV.P. 45 advisory commitee note (as adopted on M ay 15, 2013). Several sections of the amended rule differ from the current rule, notably Rule 45(a)(2) and the new Rule W hereas the current Rule 45(a)(2) provides guidelines as to which court is best suited to issue a subpoena, the amended Rule 45(a)(2) provides simply that <&(a) subpoena must issue from the court where the action is pending.' Fed.R.CiV.P. 45(a)(2) (as adopted on M ay l5, 2013). Furthermore, once a subpoena has issued, the new Rule 45(9 states: W hen the court w here com pliance is required did not issue the subpoena, it may transfer a motion under this rule to the issuing court if the person subject to the subpoena consents or if the court tinds exceptional circum stances.... To 3

4 Case 9:13-mc KLR Document 20 Entered on FLSD Docket 09/26/2013 Page 4 of 8 enforce its order, the issuing court m ay transfer the order to the court w here the motion was made. Fed.R.CW.P. 45(9 (as adopted on M ay 15, 2013). Thus,whereas the current rule does not m ention transfer, the am ended rule clearly addresses the issue and provides tw o situations in which transfer is appropriate. The note to the am ended rule m akes clear that the tdprim e concem should be avoiding burdens on local nonparties subject to subpoenas,' and places the burden of transfer on the proponent to show that such exceptional circum stances are present. Fed.R.CiV.P. 45 advisory commitee note (as adopted on M ay 15, 2013). An example given as to when an exceptional circumstance might justify transfer is <to avoid disnzpting the issuing court's management of the underlying litigation, as when that court has already ruled on issues presented by the m otion or the snme issues are likely to arise in discovery in many districts.' 1d. Generaly, çtransfer is appropriate only if such interests outw eigh the interests of the nonparty served w ith the subpoena in obtaining local resolution of the m otion.' 1d. Because it is clear that the amendments to the rule would allow, and even encourage transfer in certain cases, the rem aining issue is whether this Court should apply the current or am ended rule. Rule 86 of the Federal Rules of Civil Procedure provides that am endm ents to the Rules take effect at the time specified by the Supreme Court.' Fed.R.CiV.P. 86(a). According to the Suprem e Court, the am endm ents to Rule 45 are not ordered to take effect until Decem ber 1, 2013, but may be applied, ûtinsofar as just and practicable, gtoj all proceedings then pending.ê' Order from Chief Justice John G. Roberts, Jr., April 16, The Suprem e C ourt's pow er to retroactively apply amended rules stems from 28 U.S.C.A. j 2074, and is only limited if applying an amendment retroactively would tinot be feasible or would work injustice, in which

5 Case 9:13-mc KLR Document 20 Entered on FLSD Docket 09/26/2013 Page 5 of 8 event the former rule applies.' 28 U.S.C.A j 2074 (W est 2013). As further guidance in detenuining retroactivity of amendments, numerous courts have applied amended rules in pending cases. See, e.g., Hill v. U.S. Postal kvcrv., 961 F.2d 153, 155 (11th Cir. 1992)., Long v. Simmons, 77 F.3d 878, 879 (5th Cir. 1996) (citing Skoczylas v. Fctf Bureau ofprisons, 961 F.2d 543, 546 (5th Cir. 1992)) (tiamendments to the Federal Rules of Civil Procedure should be given retroactive application çto the maximum extent possible.''). Analysis In compliance with Rule 45 at the time of filing, Virnetx properly sought to obtain subpoenas for nonparties R ot h m an and SRIP Law in the Southern D istrict of Florida.l Subpoenas were in fact issued by this Courton July 16th, 2013, well before the December 1st, 2013, applicability date of the amended rule. A l subsequent filings on both the M otion to Quash and Motion to Transfer have similarly been filed and the matter of transfer is currently ripe for adjudication. Because the nm endm ents are not currently in effect, the first issue is w hether the current or nm ended Rule 45 is applicable. Based on the foregoing discussion on retroactivity, an amended rule can be applied tinsofar as just and practicable.' In light of the fact that the current Rule 45 does not provide an answ er to the question of w hether transfer is appropriate by the issuing court, and that courts are almost evenly split on the question, the most just and practicable outcome would seemingly be to apply the amended Rule 45, which serves as the clearest resolution of the transfer dilem m a. See Boliden M etech, Inc. v. U S., 140 F.R.D. 254, 258 (D.R.I. 1991) (çtglqt would be inequitable for this Court to ignore the intent of the Advisory ' Had the subpoenas been sought after D ecem ber 1sț 2013, the Eastern District of Texas, where the underlying litigation is pending, would have been the required issuing court, thus rendering nugatory the argum ents discussed herein.

6 Case 9:13-mc KLR Document 20 Entered on FLSD Docket 09/26/2013 Page 6 of 8 Com mitee on Civil Rules, the United States Supreme Court, and Congress by deciding this issue based on the requirements of a soon to be obsolete rule of civil procedure.'). The second issue is whether, if the am ended Rule 45 is applied, transfer is appropriate. Per the am ended Rule 45, transfer is appropriate if either the nonparties consent or if the court finds exceptional circumstances. Because the nonparties in this case are objecting to transfer, the only alternative method of justifying transfer is if this Court finds exceptional circumstances. According to the committee note to the amended Rule 45, Vimetx, as the proponent of the transfer, bears the burden of show ing that exceptional circum stances are present and sufficient to justify transfer. Despite not briefing this Court on the Rule 45 amendments, Virnetx has m ade a sufficient show ing of exceptional circum stances. A s stated in the facts, virtually identical subpoenas, m otions to quash, and m otions to transfer are pending in three different districts: the Southem D istrict of Florida, the D istrict of M assachuse ts, and the District of D elaw are. Therefore, the sam e issues are likely to arise in m any districts, and the potential for disparate rulings is great. A dditiona ly, Virnetx argues that the underlying litigation is highly com plex and therefore transfer w ould be the m ost efticient use of lim ited court resources. The com m ittee notes do not specitk ally address com plexity as a factor relevant to the exceptional circum stances analysis, but the note does state that çtransfer m ay be w arranted in order to avoid disrupting the issuing court's m anagem ent of the underlying litigation.' Fed.R.CiV.P. 45 advisory com m ittee note (as adopted on M ay 15, 2013). Although the issuing court in this case is the instant court, it is likely that ruling on the nonparties' M otion to Quash would disnzpt the Eastern District of Texas' m anagem ent of the underlying litigation. The underlying litigation has been ongoing for m ore than three years and involves num erous parties and issues', denying transfer in this D istrict 6

7 Case 9:13-mc KLR Document 20 Entered on FLSD Docket 09/26/2013 Page 7 of 8 while the other districts with pending m otions m ay or m ay not do the sam e would only add to the confusion and com plexity of the underlying litigation. Nonparties Rothman and SRIP Law claim that they would be burdened if transfer is granted. W hile it is possible that the nonparties might be subject to additional burdens by litigating their M otion to Quash in Texas, the committee note provides solutions to common transfer problem s, such as perm itting telecom m unications m ethods to reduce physical appearances. Furthermore, the amended Rules 45(c) and 45(d)reduce potential burdens on subpoenaed parties by limiting travel and production requirements. See Fed.R.CiV.P. 45(c) and 45(d). ln sum, the note to the amended Rule 45 suggests that courts weigh the interests of the nonparties served w ith subpoenas in obtaining local resolution of the relevant m otions against the interests of efficiency and continuity. FH.R.CW.P. 45 advisory commitee note (as adopted on M ay 15, 2013). In this case, because the judge handling the underlying litigation is in the best position to m ake a cohesive nzling on the identical m otions pending in three distlict courts, and because other nonparty protections exist, transfer w ould be the m ost efficient and effective resolution of the pending m otions. Because no clarification of the issues is needed, V inw tx's M otion for Oral Argum ent is DENIED.

8 % Case 9:13-mc KLR Document 20 Entered on FLSD Docket 09/26/2013 Page 8 of 8 RECOMMENDATION TO THE DISTRICT COURT ln conclusion, IT IS HEREBY RECOMM ENDED THAT the District Court GRANT V irnetx's M otion to Transfer. NOTICE OF RIGHT TO OBJECT A party shal serve and file writen objections, if any, to this Report and Recommendation w ith the H onorable K elm eth L. R yskam p, Senior United States D istrict Court Judge for the Southern District of Florida, within fourteen (14) days of being served with a copy of this Report and Recommendation. See 28 U.S.C. j 636(b)(1) (providing that tdwithin fourteen days aûer being served with a copy, any party may serve and file writen objections to such proposed findings and recommendations as provided by rules of court.'); sec also Fed. R. Civ. P. 72(b) (dw ithin 14 days after being served with a copy of the recommended disposition, a party may serve and file specific writen objections to the proposed findings and recommendations. A party may respond to another party's objections within 14 days after being served with a copy'). Failure to timely file objections shal bar the parties from attacking on appeal the factual findings contained herein. See Loconte v. Dugger, 847 F.2d 745 (11th Cir. 1988), cert. denied, 488 U.S. 958 (1988); RTC v. HallmarkBuilders, Inc, 996 F.2d 1144, 1149 (11th Cir. 1993). DONE and SUBMITTED this âk day of Sepyember, 2013, at West Palm Beach in the Southern D istrict of Florida. Copies to: xmes M. Hopo s. X > IJNITED STATES MXGISTRATE JIJDGE The H on. K enneth L. Ryskmnp, Senior U nited States D istrict Court Judge for the Southern D istrict of Florida Counsel of record