Finding that two corporate litigants' common legal domicile in Delaware was outweighed by other factors, including the caseload and staffing of Delaware's federal district court, a judge has moved to Utah a federal lawsuit over alleged theft of trade secrets and patent infringement.

U.S. District Judge Colm Connolly of the District of Delaware said factors advanced by the Third Circuit for ascertaining proper venue favored moving the case, even though he could not use forum non conveniens grounds.

Connolly, weighing all of the factors, also set aside Delaware public policy favoring litigation of disputes between corporate citizens in the state, even though there was no countervailing policy in Utah law or policy.

The complaint in Applied Predictive Technologies v. MarketDial included two counts of misappropriation of trade secrets and one count of patent infringement.

“The software sold by MarketDial that APT accuses of infringing APT's patent was developed in Utah, using computers located in Utah,” Connolly said.

Connolly, in a 30-page opinion issued Monday, was considering defense motions to transfer or dismiss for lack of personal jurisdiction

The plaintiff, Applied Predictive Technologies, a business-analytic software company based in Arlington, Virginia, and the corporate defendant, MarketDial, based in Salt Lake City, offers testing systems for brick-and-mortar businesses. An individual defendant in the case, John Stoddard, who works at MarketDial and holds an equity stake in the company, is a Utah resident, Connolly said.

Connolly said the factors limned out in Section 1404(a) for weighing motions for transfer of venue—the convenience of parties and witnesses and the interests of justice—are not the only criteria used by federal courts in the Third Circuit. The 1995 decision of the U.S. Court of Appeals for the Third Circuit Jumara v. State Farm Insurance identified six private and six public interests that can drive a court's decision.

Weighing against transfer was APT's choice as the plaintiff filing the complaint, as well as Delaware public policy favoring resolution of disputes among entities incorporated in Delaware in the state, with no countervailing Utah policy.

But those two factors were outweighed, Connolly said, by six others. 

Favoring transfer was MarketDial's choice of venue as defendant, the fact that the claim arose in Utah.

Connolly also pointed out that the convenience of litigants favored Utah over Delaware, even though Delaware is closer to APT's Virginia headquarters. Utah-based MarketDial and Utah-based resident Stoddard stand in contrast to APT, which is a multinational company with  greater resources. Further, Connolly questioned whether the Delaware federal court could effectuate personal jurisdiction over Stoddard and make any judgement enforceable.

Connolly appeared to strongly devalue the fact that Delaware, as both companies' state of incorporation, created proper venue, writing that practical considerations strongly favored transfer. 

“Neither APT nor MarketDial has a connection with Delaware other than its incorporation status,” he said, pointing out also that witnesses and evidence were located in Utah, not Delaware. 

Connolly summarized the balance of considerations as Delaware's legal domicile versus practical considerations.

“Delaware has one—and only one—connection to this case: it is the legal domicile of the cases' two corporate parties,” Connolly wrote. “None of the alleged tortious conduct or infringement is alleged to have occurred in Delaware. Neither MarketDial nor Mr. Stoddard have conducted business in Delaware. Mr. Stoddard has never been in Delaware. No witness is alleged to have any Delaware ties; and no relevant evidence is alleged to be or have been in Delaware.”

Connolly also made a case that Delaware's caseload and lesser number of federal judges also justified a transfer to Utah.

Citing data from the Administrative Office of the U.S. Courts, Connolly said 2,279 civil cases were filed in the District of Delaware in the one-year period ending March 30, with 1,012 of them being intellectual property cases. Connolly observed that Delaware has four active federal judges, no senior judges and four magistrate judges.

By contrast, during the same time span, 1,183 civil cases were filed in the U.S. District Court for the District of Utah, with just 87 involving intellectual property issues. Utah, Connolly said, has more judicial personnel: four active judges, seven senior judges and six magistrate judges.

“Given the districts' relative caseloads and number of judicial officers, this factor favors transfer,” he said.

Karen Jacobs and Michael J. Flynn of Morris, Nichols, Arsht & Tunnell in Wilmington, and Dentons lawyers Kirk Ruthenberg, Eric Sophir, Nicholas Jackson and Eric Wu in Washington, D.C.; Jennifer Bennett in San Francisco; and Patrick Doll in Dallas were listed as the attorneys for Applied Predictive Technologies.

Herbert Mondros, Krista Reale Samis and Helene Episcopo of Margolis Edelstein in Wilmington, and Goodwin Procter lawyers Neel Chatterjee and Andrew Ong in Redwood City, California, Samuel Sherry in Boston, and Cindy Chang in New York represented MarketDial and individual defendant John Stoddard, court documents said.

Messages to Jacobs and Mondros seeking comment were not immediately returned