AlexSam, Inc. v. WageWorks, Inc.

Background

AlexSam alleged that WageWorks directly, indirectly, and intentionally infringed Claims 32 and 33 of U.S. Patent No. 6,000,608, which concerns a multifunction card system. AlexSam had filed a similar patent-infringement case against HealthEquity, Inc. in the District of Utah before filing this case. HealthEquity later acquired WageWorks, and both companies used the same counsel and filed substantially identical motions to dismiss arguing that the patent claims covered subject matter that could not legally be patented.

AlexSam moved to transfer this case to Utah so the two cases could potentially be coordinated or consolidated. The court had previously stayed this case while the Utah court considered HealthEquity’s dismissal motion. After the Utah court denied that motion, the court considered AlexSam’s transfer motion and WageWorks’ still-pending motion to dismiss.

Transfer Analysis

Under 28 U.S.C. § 1404(a), a court may transfer a civil case to another federal district where the case could originally have been filed if transfer would be more convenient for the parties and witnesses and would serve the interests of justice. In a patent case, the court also had to determine whether Utah was a proper venue under 28 U.S.C. § 1400(b).

The parties agreed that WageWorks was incorporated in Delaware and therefore did not reside in Utah for patent-venue purposes. The court instead examined whether WageWorks had committed potential acts of infringement in Utah and maintained a regular and established place of business there.

The court considered evidence that WageWorks administered flexible-spending and health-savings accounts for customers in Utah. It also considered a document stating that WageWorks administered the TexFlex program and that the program was managed from offices in Salt Lake City, Utah. The court concluded that AlexSam had adequately alleged potential acts of infringement in Utah and that WageWorks had not meaningfully rebutted those allegations.

For the business-location requirement, AlexSam presented a Utah government registration listing a WageWorks address, a WageWorks filing stating that the company had additional facilities in Utah under leases extending for periods that could reach April 2023, state business-registration filings, and the TexFlex document referring to offices in Salt Lake City. WageWorks submitted a declaration stating that it did not own or lease office space or maintain property in Utah. The court found AlexSam’s evidence sufficient, noting that WageWorks’ responses were vague and did not adequately explain the conflicting information.

The court then weighed convenience and fairness. It found that the convenience of the witnesses, convenience of the parties, and possibility of coordinating the cases favored transfer. Three witnesses identified in WageWorks’ disclosures appeared to work and live in Utah, and WageWorks did not provide contrary evidence. The court also emphasized judicial efficiency because the cases involved the same patent claims, similar technology and services, the same counsel, and substantially identical dismissal motions. Other factors were neutral or did not outweigh these considerations.

Ruling

The court held that AlexSam met its burden under both the patent-venue statute and § 1404(a). It granted AlexSam’s motion to transfer the case to the District of Utah. As a result, it denied WageWorks’ motion to dismiss without prejudice. The order did not resolve whether the patent claims were valid or whether WageWorks infringed them.