A recent Federal Circuit decision explains that a transfer
motion is to be decided "based on the situation which existed
when suit was instituted...Any subsequent familiarity gained by the
district court is therefore irrelevant." In re EMC
Corp., No. 13-142 (Fed. Cir. Jan. 29, 2013) (citation
omitted). The district court denied defendants' motions
to transfer, in part, because judicial economy weighed heavily
against transfer. The court found that other courts
"would have to spend significant resources to familiarize
[themselves] with the patents, prosecution history, claim
construction, and other issues in th[ese]
case[s]." The district court's decision on the
motions to transfer came more than two years after the complaint
was filed, causing the Federal Circuit to observe that "[t]his
case is a prime example of the importance of addressing motions to
transfer at the outset of litigation."
In August 2010, Oasis Research LLC filed a complaint in
the Eastern District of Texas against 18 defendants for allegedly
infringing its online backup and storage patents. Defendants
moved to sever and transfer the claims to various venues shortly
thereafter in November 2010. In May 2011, Magistrate Judge
Amos Mazzant issued a Report and Recommendations denying the
motions. Judge Mazzant found that Rule 20 of the Federal
Rules of Civil Procedure was not met because "the
Defendants' allegedly infringing products are not dramatically
different" and therefore determining liability would involve
substantially overlapping questions of law and fact. The
Report and Recommendations were adopted by the district court in
July 2011. Defendants then petitioned for a writ of mandamus
in September 2011. The Federal Circuit granted mandamus and,
in an order issued in May 2012, rejected Judge Mazzant's test
for severance. The Federal Circuit held that, in pre-AIA
cases such as this one, claims against independent defendants could
not be joined under the transaction-or-occurrence test of FRCP 20
"unless the facts underlying the claim of infringement
asserted against each defendant share an aggregate of operative
facts." The court did not express an opinion on the
issue of venue and remanded to the district court.
Judge Mazzant severed the matter into four separate cases and
consolidated the cases for pretrial proceedings. The motions
to transfer were denied in separate orders in August 2012, on the
basis that the defendants had failed to show that the transferee
venues were clearly more convenient, and that judicial economy
weighed heavily against transfer. By this time the court had
already held a Markman hearing. Defendants sought
mandamus again, this time asking the Federal Circuit to consider
the district court's decision to deny transfer in part on
consideration of judicial economy. Defendants argued that
there was no "legitimate judicial economy factor" in this
case because the district court's familiarity with the case was
based on its earlier decision to deny severance, a decision which
was found to be in error.
The Federal Circuit agreed that "subsequent familiarity
gained by the district court" is irrelevant, but was also
careful to note that "any judicial economy benefits which
would have been apparent at the time the suit was
filed" were proper for the district court to consider
(emphasis added). For example, courts can "properly
consider the benefits to judicial economy" where the same
judge is already handling a case involving the same patents and
technology for which a transfer is not sought.
Defendants in the Eastern District of Texas have become
accustomed to a lengthy delay between submitting a motion to
transfer and receiving an order. In an order issued last
year, Judge Davis noted that he had approximately 40 pending
motions to transfer venue. See Norman IP Holdings, LLC v.
Lexmark Int'l, Inc., No. 6:12cv508, 2012 WL 3307942 (E.D.
Tex. Aug. 10, 2012) (Davis, J.) ("Venue motions are important,
but not any more important than everything else this court has to
do. The court rules on these motions as soon as it
can.") The Federal Circuit's decision may not
shorten the time it takes a district court to rule on a motion to
transfer, but it does place some limits on the factors the court
can use in weighing judicial economy. A court cannot put off
a ruling on a motion to transfer and subsequently cite its own
familiarity with the case as a reason to deny transfer.
However, in the post-AIA landscape of severed and consolidated
cases involving multiple defendants, any effect this new guidance
will have remains to be seen. In the meantime, contrary to
Judge Davis' wishes (and no doubt the other judges in the
Eastern District of Texas), defendants will continue to challenge
venue and engage in this "extremely expensive and
time-consuming matter, not only for the Court but for the parties
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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