Originally published October 15, 2008
Keywords: Volkswagen, patent, infringement, product liability, Marshall division, venue, Gilbert factors
On October 10, 2008, the United States Court of Appeals for the Fifth Circuit issued an en banc opinion in In re Volkswagen of America on an issue that has affected many corporations – the filing of actions in the Marshall Division of the Eastern District of Texas despite no party to the action having any meaningful connection to that district.
The Marshall Division of the Eastern District of Texas is familiar to the patent world as one of the most popular courts for plaintiffs in which to file patent infringement suits, and especially so for patent holding company plaintiffs or so-called "patent trolls." The combination of "rocket docket" local rules and a perceived friendliness to plaintiffs has vastly increased the number of such suits filed in this Division since 2001, when the local rules specific to patent cases were adopted. While numerous attempts have been made by defendants to have cases transferred out of the Marshall Division, successful motions have been very rare.
In a 10-7 decision, the Fifth Circuit granted a petition for writ of mandamus in a product liability action originally filed in the Eastern District of Texas. The case had been assigned to Judge T. John Ward, who hears the majority of patent actions filed in the Marshall Division and who authored the "rocket docket" local patent rules. The Fifth Circuit's decision carries a harsh rebuke of the district court's refusal to transfer venue: "Concluding that the district court gave undue weight to the plaintiffs' choice of venue, ignored our precedents, misapplied the law, and misapprehended the relevant facts, we hold that the district court reached a patently erroneous result and clearly abused its discretion in denying the transfer." (p. 5 of the opinion).
Like many of the patent cases filed in the Marshall division, this products liability case had no real connection to the Eastern District other than the plaintiff's choice to file the suit there. Judge Ward's application of the Gilbert factors — used in weighing whether to transfer venue — was similar to the typical approach seen in the past in order to avoid transferring the case out of the Marshall Division. The court rejected his application of the facts on every factor.
Whether this changes the behavior of the Eastern District judges in venue transfer requests remains to be seen. Past successful venue transfer motions have typically been cases where the accused infringer did not make, sell, or offer for sale the accused product in the Eastern District. We suspect this might well still be the case even after Volkswagen. In patent infringement cases, plaintiffs often argue that the sale or offer for sale of the accused product in the Eastern District means that the wrongful act is in fact occurring in the Eastern District. Given the Marshall Division's proven reluctance to transfer patent cases to another venue, this distinction may well result in Volkswagen changing very little in the patent arena.
Nonetheless, Volkswagen provides a clear statement as to the weight given by the Fifth Circuit to the plaintiffs' choice of forum and rejects the Marshall Division's commonly used reasoning to refuse to transfer cases. As a result, it may no longer be the near-pointless exercise it used to be to file a motion to transfer venue out of the Marshall Division, and such motions should be seriously considered in situations where there is only the barest of personal jurisdiction, based only on minimum contacts, and where no plaintiff, defendant, or witness is located in the Eastern District. If nothing else, it is now clear that a refusal to transfer venue out of Marshall can be appealed under a writ of mandamus. Cases where the accused product is not even sold in the Eastern District should now be even more clear candidates for transfer.
We will continue to monitor the Marshall Division for its application of Volkswagen to venue transfer motions in patent cases.
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