An April 3, 2014, decision by the Court of Appeals for the
Federal Circuit sheds a little more light on how to apply the Fifth
Circuit's test for determining whether a case should be
transferred from the district in which it was filed to another.
In re Toyota Motor Corporation, et al., Appeal No.
2014-113. This decision is particularly important in the context of
patent infringement litigation given the number of patent cases
filed in the Fifth Circuit and the frequency with which defendants
sued there (particularly in the Eastern District of Texas) file
motions to transfer.
Toyota asked the Federal Circuit to issue an order commanding the
transfer of its case pursuant to 28 U.S.C. §1404, arguing that
the district court erred in refusing Toyota's transfer request.
American Vehicular Sciences LLC v. Toyota Motor Corporation et
al., Case No. 6:12-cv-00404-MHS-JDL, Document 131 (E.D. Tex.
June 12, 2013). The Federal Circuit agreed with Toyota,
articulating a new gloss on the Fifth Circuit standard for venue
transfer.
The district court refused transfer because, as characterized by
the Federal Circuit, it did not believe the relevant public and
private factors rendered Toyota's proposed forum
"far more convenient." (Opinion at 5,
emphasis in original). The district court essentially
reasoned that because only two of the relevant considerations
weighed in favor of transfer, Toyota's preferred venue was only
marginally more convenient than the Eastern District of
Texas.
The Federal Circuit emphasized that Toyota simply needed to
establish that the transferee forum is clearly more
convenient, a lower burden than that imposed by the district court.
(Opinion at 5.) Given that the district court had found that
none of the factors weighed in favor of keeping the lawsuit in the
Eastern District of Texas, two of the factors weighed in favor of a
transfer (ease of access to evidence; local interest), and the
other factors were all neutral, the Federal Circuit concluded that
the Fifth Circuit's "clearly more convenient"
standard was met. Because the district court had in effect applied
too high a convenience standard, amounting to "a clear abuse
of discretion," the Federal Circuit issued mandamus
relief.
Importantly, the Federal Circuit suggested that, at least in the
Fifth Circuit, transfer should always occur whenever "several
factors favor the transferee forum" and there is "nothing
on the transferor-forum side of the ledger." (Opinion at
5.) This is a significant development, especially with
respect to non-practicing entity (NPE) suits where there are
commonly no percipient witnesses or other meaningful evidence
located in the NPE's chosen forum, and where there often are
multiple defendants, not all of whom join in the transfer
motion.
In this regard, Toyota's motion also had sought to sever the
claims against it (and a group of related Toyota defendants) from
claims against co-defendant Gulf States Toyota, over whom the
transferee court had no jurisdiction. The district court had denied
the motion to sever as moot because it denied the transfer motion.
The Federal Circuit accordingly remanded the case to the district
court to decide the motion to sever, noting that "if the
district court severs the claims against Gulf States, the remainder
of the case [against Toyota] must be transferred." (Opinion at
6.)
Venue enthusiasts might note the following events of interest.
After a Magistrate Judge denied Toyota's motion to transfer and
sever in June 2013, Toyota timely filed a motion for
reconsideration. On November 22, 2013, the District Judge adopted
the Magistrate Judge's order and denied the motion for
reconsideration (Case 6:12-cv-00404-MHS-JDL Docket 179). On January
8, 2014, Toyota's motion to stay the case pending an inter
partes review of asserted claims was denied without prejudice
because the PTO had not decided whether to grant review on all the
asserted claims (Case 6:12-cv-00404-MHS-JDL Docket 179), and on
February 19, 2014, a stay was granted as to those claims where the
PTO had granted review (Case 6:12-cv-00404-MHS-JDL Docket 221).
Meanwhile, the case (including discovery) has proceeded apace on
the remaining asserted claims with updated infringement and
invalidity contentions exchanged, a first Markman hearing held on
March 6, 2014, a second Markman hearing set for May 8, 2014, and a
motion for summary judgment of invalidity filed by Toyota. Despite
all this activity, as well as the passage of about 21 months since
the case (actually several consolidated cases) was filed on June
25, 2012, and about 18 months since Toyota first moved for transfer
on October 4, 2012, the case is now poised for transfer to the
Eastern District of Michigan.
In granting the mandamus petition, the Federal Circuit did not
impose any constraints on the district court, now in the midst of
further claim construction and summary judgment activities, as to
when it must reconsider the severance issue, and if appropriate
actually transfer the case. Certainly, district courts are left to
manage their calendars, which probably explains why the Federal
Circuit typically does not address timing in its decisions on
mandamus petitions. As an aside, we note that in February 2014, CBS
Corporation petitioned for a writ of mandamus to order a district
court to decide a motion to transfer that CBS filed on June 28,
2013, and for which an evidentiary hearing was held in August 2013.
See In Re CBS Corporation, Et Al., Appeal Case No.
2014-117. That petition was dismissed as moot on April 3, 2014,
because the district court had finally issued a decision denying
the transfer motion, Personal Audio, LLC v. CBS
Corporation, Case No. 2:13-cv-270-JRG-RSP, Document 41 (E.D.
Tex. March 20, 2014).
In making the In re Toyota decision precedential (compare
In re TOA Technologies, Inc., a non-precedential decision
involving a transfer motion handled by the authors), the Federal
Circuit appears to be reiterating that where there is no logical
connection to the transferor forum, district courts in the Fifth
Circuit exercising their discretion need to fairly consider and
weigh the factors and let cases go where the "clearly more
convenient" standard is met.
Those interested in more information about venue strategy in patent
infringement cases are invited to review our article "
How to Get Out of Dodge: Winning Patent Venue Transfer Strategies
and the Federal Circuit."
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.