For most of this decade the Eastern District of Texas has had the reputation for almost routinely denying motions to transfer a patent infringement action for the convenience of the parties under 28 U.S.C. § 1404(a). Indeed, the E.D. Texas court appeared willing to transfer an infringement action only in the limited circumstance where the transfer would achieve judicial economy because the proposed transferee forum had an infringement action addressing the same patent or a related patent pending before it or had recently adjudicated such an action.1 The unusual number of transfer motions denied by the E.D. Texas court over the years has drawn heat from several quarters. Venue provisions specifically targeted to combat the perceived practice of the E.D. Texas have been included in the various versions of the proposed legislative patent reform. Further, in 2008 and early 2009 both the Fifth Circuit and the Federal Circuit granted the extraordinary remedy of mandamus to reverse the E.D. Texas court's denials of motions to transfer on several occasions2

Whether as a direct consequence of TS Tech, Volkswagen, and Genentech, or as a combination of these opinions and the practical effects of managing a patent docket that is becoming over burdened, if not already over burdened, recent transfer opinions from the E.D. Texas court show that the court is granting more transfer motions. Further, the court is deciding § 1404(a) motions in a manner that appears consistent with how other federal district courts handle transfer motions in patent actions. For example, based on opinions posted in Westlaw, it appears that the court only granted four transfer motions in 2008, and each of these motions was granted to achieve judicial economy as the transferee court had a pending related action. In contrast, so far in 2009, the E.D. Texas court has granted at least thirteen transfer motions, including several transfers that were not based on considerations of judicial economy.3 Shortly, after the Federal Circuit handed down TS Tech at the end of 2008, the E.D. Texas began to transfer patent cases characterizable as being a regional dispute. Hence, if the patentee and accused infringer both resided on the West coast, the court appeared willing to transfer the action to the West coast.4 In other cases, however, the E.D. Texas court denied transfer if the Texas forum appeared to be centrally located because the patentee and accused infringer were located on both the East and West coasts of the country.5

A more recent case from the E.D. Texas suggests that the court's attitude on transferring patent cases is softening even more. In Vasudevan Software, Inc. v. Int'l. Business Machines Corp., 2009 WL 3784371, *2-*3 (E.D. Tex. Nov. 10, 2009), Judge Ward granted a motion to transfer venue of a patent infringement action to the N.D. of California. Interestingly, the parties were scattered across the nation. The patentee resided in North Carolina. The first accused infringer resided in New York. The second accused infringer resided in California. The accused products had been designed and developed in California. On these facts, Judge Ward found that the E.D. Texas forum had no connection with the suit. Without giving weight to the E.D. Texas forum being centrally located among the various relevant forums, and giving little weight to the fact that one of the accused infringers had a training facility in Plano, Texas (N.D. of Texas) where it trained personnel on using the accused product, Judge Ward granted the motion to transfer.

If Vasudevan came from any court other than the E.D. of Texas it would not be that noteworthy of a patent-transfer opinion. The rationale of the opinion effectively follows (without citing) the general rule in patent cases that if the patentee does not bring suit in its home forum, then the action should be transferred to the forum that is the "center of gravity" of the accused activity, i.e., where the accused product is made or had been developed.6 But as a transfer case from the E.D. Texas, Vasudevan shows a marked departure from prior E.D. Texas opinions, including some handed down earlier this year, that effectively refused to give credence to the "center of gravity" doctrine.7

Digital-Vending Services, Intern. LLC v. Univ. of Phoenix, Inc., 2009 WL 3161361, *3-*5 (E.D. Tex. Sept. 30, 2009), presents another transfer opinion of Judge Ward showing that the geographic centrality of the Eastern Texas forum to an infringement dispute is having less force to support a refusal to transfer. In Digital-Vending, the accused infringers, who resided in Arizona and Minnesota, moved to transfer the case to Washington D.C. In view of the patentee's opposition to the transfer motion, Judge Ward refused to transfer the action to Washington D.C. But instead of denying the transfer, Judge Ward granted the patentee's alternative motion to transfer the case to the E.D. Virginia, the patentee's home forum. Judge Ward found that transfer was proper since the E.D. Texas forum had no ties to the litigation as the accused infringers were in Arizona and Minnesota, and the Virginia forum was a more convenient forum than D.C. since some of the identified witnesses lived in the Virginia forum.

In yet another recent transfer opinion of note handed down in November, Deep Nines, Inc. v. McAfee, Inc., 2009 WL 3784372, *1 (E.D. Tex. Nov. 10, 2009), the court instructed that "It is clear that where there is no connection with Texas or the Eastern District of Texas, venue is improper..." Although denying the motion to transfer in Deep Nines, the court arrived at its decision only after painstakingly identifying the numerous contacts the action had with the forum. Specifically, the court found that one accused infringer maintained an office in the Eastern Texas forum, and that witnesses within the court's subpoena power resided in Dallas. Additionally, the court noted that it had previously adjudicated a related dispute between the parties and the terms of the settlement agreement, governed by Texas law, were at issue in the current case, which gave the court an advantage in applying Texas law over the proposed transferee forum in Minnesota.

In one other surprising opinion, the E.D. Texas court showed some backbone against a patentee's transparent attempt to manufacture a tenuous connection to the E.D. Texas. In Balthasar Online, Inc. v. Network Solutions, LLC, 2009 WL 2952230 (E.D. Tex. Sept. 15, 2009), the court severed some accused infringers so it could transfer a case to California.8 In the suit, the patentee sued several accused infringers who resided in California, and some who resided elsewhere. After the accused infringers moved to transfer, the patentee obtained leave to amend its complaint to add additional accused infringers, including some who resided in the E.D. Texas forum. In considering the transfer motion, the court determined that the Texas defendants were small businesses who were not major players in the accused infringement. Accordingly, the court severed the Texas defendants from the case, and stayed the infringement claims against the Texas defendants. It then granted the accused infringers' motion to transfer the case to California. Id. at *5. The court concluded that the patentee had "failed to show a sufficient connection to this district to override the conveniences gained by transferring the case to the NDCA." Id.

The foregoing suggests that the E.D. Texas is now applying standards to motions to transfer venue of patent infringement actions that are consistent with the standards other district courts usually apply. As such the E.D. Texas court is granting more motions to transfer venue than it has in the past. Merely showing that the accused infringer performed some of the accused infringing activity in the forum will not allow the patentee to keep the suit in the E.D. Texas forum if the suit has no other ties to the forum.9 Showing that the E.D. Texas forum is centrally located among the various relevant forums has little weight in the analysis.10 If the patentee can show that the E.D. Texas forum is the patentee's home forum, even if the patentee is a non-practicing entity, that will weigh heavily in supporting the patentee's efforts to keep the case in the forum.11 Considerations of judicial economy still have a paramount role, and hence it is unlikely that the court will transfer an infringement action if it has a related action pending before it.12 Similarly, if another forum has a suit pending on the same or related patent and/or technology, the E.D. Texas court will likely transfer the case if judicial economy can thereby be achieved.

The foregoing first appeared in the December 2009 issue of Patent Happenings available at www.PatentHappenings.com. Other case summaries from that issue include:

  • Eastern District of Virginia imposes tougher requirements for a patentee to obtain a preliminary injunction by requiring the patentee to make a "clear showing" of entitlement to relief
  • Tafas saga concludes, but Federal Circuit may have raised roadblocks for future litigants to obtain vacatur as part of settling a patent litigation
  • Federal Circuit rules that unclaimed effectiveness level could not save method claim from a finding of anticipation
  • While excluding evidence of pending reexamination proceeding under F.R.E. 403, district court also excludes evidence of the "presumption of validity"

About the Author

Robert A. Matthews, Jr. provides patent-law consulting services to corporate counsel and trial counsel. Specifically, he helps counsel analyze and brief the myriad of substantive and procedural legal issues arising in patent infringement litigations. Matthews authors the Annotated Patent Digest, an eight-volume patent treatise published by West and available on Westlaw, the Patent Jury Instruction Handbook, and the monthly newsletter Patent Happenings®. Matthews has assisted clients with patent matters before the U.S. Supreme Court (KSR and Bilski), the Federal Circuit, the ITC and numerous federal district courts. Further information on the patent-law consulting services Matthews offers, plus a collection of patent-litigation resources, can be found at www.MatthewsPatentLaw.com.

To view Patent Happenings, December, 2009 in full please click here (www.matthewspatentlaw.com/documents/PH-2009-12.pdf).

Footnotes

1. E.g., Chi Mei Optoelectronics Corp. v. LG Philips LCD Co., Ltd., 2008 WL 901405, *2 (E.D. Tex. Mar. 31, 2008); Kinetic Concepts, Inc. v. Bluesky Med. Gp., Inc., 2008 WL 151276, *2 (E.D. Tex. Jan. 15, 2008); Kinetic Concepts, Inc. v. Medela AG, 2008 WL 112120, *2 (E.D. Tex. Jan. 9, 2008); LG Elecs., Inc. v. Hitachi, Ltd., 2007 WL 4411035, *1-*5 (E.D. Tex. Dec. 3, 2007).

2. In re Genentech, Inc., 566 F.3d 1338, 1348 (Fed. Cir. 2009) (granting a mandamus petition and reversing E.D. Texas court's denial of accused infringer's motion to transfer infringement action to N.D. Cal., the home forum of one of the accused infringers, and closer to where the second accused infringer resided); In re TS Tech USA Corp., 551 F.3d 1315, 1318-23 (Fed. Cir. Dec. 29, 2008) (granting mandamus petition and reversing E.D. Texas court's denial of accused infringer's motion to transfer infringement action to Ohio, the accused infringer's home forum, where neither the patentee, nor accused infringer had any offices in the forum); In re Volkswagen of America Inc., 545 F.3d 304, 317-18 (5th Cir. 2008) (en banc) (in an automobile product liability action, granting petition for mandamus and reversing denial by the E.D. Texas. of defendant's motion to transfer venue). But see In re Volkswagen of Am., Inc., 566 F.3d 1349, 1351 (Fed. Cir. 2009) (denying accused infringer's mandamus petition seeking to overturn the E.D. Tex. court's denial of a motion to transfer venue and ruling that where the plaintiff had two other infringement suits on the same patents pending in the forum against different defendants, the district court could reasonably conclude that judicial efficiency favored not transferring any of the suits so that only one court had to address the patents); In re Telular Corp., Misc. No. 899, 2009 WL 905472, *2-*3 (Fed. Cir. Apr. 3, 2009) (nonprecedential) (denying accused infringer's mandamus petition seeking to overturn the E.D. Texas court's denial of a motion to transfer venue, the Federal Circuit noting that the accused infringer's delay in seeking mandamus weighed against its grant and that the facts did not show that the district court clearly abused its discretion where the patentee resided in Dallas, and therefore litigating in the E.D. of Texas was rationally more convenient for the patentee than litigating in the proposed transferee forum of Chicago).

3. See Robert A. Matthews, Jr., Annotated Patent Digest § 36:183.60 Eastern District of Texas Cases Granting Motion to Transfer Patent Action (collecting opinions posted on Westlaw) [hereinafter APD] {note this section has been recently added to APD and will be posted to Westlaw in the near future, in the meantime the cases can be found in the prior version of § 36:182}.

4. E.g. Orinda Intellectual Properties USA Holding Group, Inc. v. Sony Corp., 2009 WL 3261932, *4 (E.D. Tex. Sept. 29, 2009) (granting accused infringers' motion to transfer venue to the N.D. of Cal., as the parties had their principal offices in California and Japan, no sources of proof were in the forum, the forum had no connection with the suit other than that some infringing activity was done in the forum, and therefore the convenience factors favored transfer); Abstrax, Inc. v. Sun Microsystems, Inc., 2009 WL 2824581, *1-*2 (E.D. Tex. Aug. 28, 2009) (granting renewed motion to transfer venue to N.D. of Cal., since the infringement case had little, if any, connection with the Texas forum, as the accused infringer had its operations in California and Oregon, and the patentee was located in Arizona); Aten Intern. Co. Ltd. v. Emine Technology Co., Ltd., 2009 WL 1809978, *9-*11 (E.D. Tex. June 25, 2009) (granting accused infringer's motion to transfer where patentee was a Taiwanese corporation, with its principal place of business in Taiwan, its subsidiary co-plaintiff was a California corporation with its principal place of business in the proposed transferee forum of the C.D. of Cal, the accused infringer retailer seller had its principal place of business in California, and the accused infringer supplier was a Taiwanese corporation with its principal place of business in Taiwan, the court finding that transfer was warranted since the majority of documents and fact witnesses were located in California, no fact witnesses were located in Texas, and the dispute was of national scope without any special ties to Texas); PartsRiver, Inc. v. Shopzilla, Inc., 2009 WL 279110, *2 (E.D. Tex. Jan. 30, 2009) (granting motion to transfer to ND Cal. where plaintiff and six of the defendants resided in California and the remaining defendant resided in Washington); Odom v. Microsoft Corp., 596 F. Supp. 2d 995, 1003-04 (E.D. Tex. Jan. 30, 2009) (granting motion to transfer venue to Oregon, the patentee's home, where the accused infringer resided in Washington, and ruling that where the majority of key witnesses resided in the Northwest transfer was warranted).

5. E.g., Novartis Vaccines and Diagnostics, Inc. v. Bayer HealthCare LLC, 2009 WL 3157455, *5 (E.D. Tex. Sept. 28, 2009) (denying accused infringers' motion to transfer case to the N.D. of Cal., even though both the plaintiff and one accused infringer had California offices, and the accused product was made in California, the court finding that due to the presence of other accused infringer residing in New York, Denmark, and Germany, Texas was a more convenient forum, also, while agreeing with the accused infringers that the mere fact that accused product was sold in the forum did not provide a significant tie to keep the case in the forum, judicial economy weighed heavily in favor of denying transfer where the court had a second case pending involving the same patent but a different accused infringer); Centre One v. Vonage Holdings Corp., 2009 WL 2461003, *5-*8 (E.D. Tex. Aug. 10, 2009) (denying motion to transfer infringement action to New Jersey, home forum of two of the accused infringers, because the court found that the action was a national in scope with the accused infringers spread through out the nation and the accused infringers that requested the transfer failed to show litigating in New Jersey would be more convenient); Motiva LLC v. Nintendo Co Ltd., 2009 WL 1882836, *6 (E.D. Tex. June 30, 2009); MHL Tek, LLC v. Nissan Motor Co., 2009 WL 440627, *4-*7 (E.D. Tex. Feb. 23, 2009), denying mandamus petition sub nom. In re Volkswagen of Am., Inc., 566 F.3d 1349, 1351 (Fed. Cir. 2009); Invitrogen Corp. v. General Elec. Co., No. 6:08-CV-113, 2009 WL 331889, *2-*5 (E.D. Tex. Feb. 9, 2009); Novartis Vaccines and Diagnostics, Inc. v. Hoffman-La Roche Inc., 597 F. Supp. 2d 706, 711-14 (E.D. Tex. Feb. 3, 2009).

6. Estate of Antonious v. Yonex Corp. USA, 2009 WL 1346617, *2-*3 (D.N.J. May 13, 2009) ("[I]n patent infringement cases 'the preferred forum is that which is the 'center of gravity' of the accused activity."). See generally, APD § 36:171 "Center of Gravity of the Infringing Activity."

7. E.g. Motiva LLC v. Nintendo Co Ltd., 2009 WL 1882836, *6 (E.D. Tex. June 30, 2009) ("[T]he simple fact that one of the Defendants operates primarily in the transferee venue cannot, standing alone, show clear convenience. If that were so, most cases could only be tried where the parties had their principal places of business. That result is clearly in conflict with a plaintiff's right to file a case in a district where jurisdiction and venue are proper." – where patentee, a resident of Ohio, brought suit against a Japanese parent corporation and its manufacturing U.S. subsidiary, denying accused infringer's motion to transfer infringement suit to Washington, the home forum of the subsidiary, the court finding that while the local interest strongly favored transfer, as Texas had little connection with the dispute, the remaining factors were neutral, and therefore the accused infringers failed to show that transfer would be clearly more convenient); Novartis Vaccines and Diagnostics, Inc. v. Hoffman-La Roche Inc., 597 F. Supp. 2d 706, 711-14 (E.D. Tex. Feb. 3, 2009) (where patentee, a California resident, had not brought suit in its home forum, denying accused infringers' motion to transfer infringement action to North Carolina where accused drug product was developed and distinguishing over TS Tech by finding that where the patentee had sued several entities relating to the accused product including the developer of the drug product who resided in North Carolina); Sybase, Inc. v. Vertica Sys., Inc., 2008 WL 2387430, *2 (E.D. Tex. June 9, 2008) (denying accused infringer's motion to transfer action to Massachusetts where the patented technology and the accused product were developed since accused infringer did not deny that some accused activity was done in the forum); FCI USA, Inc. v. Tyco Elecs. Corp., 2006 WL 2062426, *3 (E.D. Tex. July 24, 2006) (Ward, J.) (denying accused infringer's motion to transfer infringement action to Pennsylvania, even though patentee and accused infringer both had their principal place of business in Pennsylvania, since plaintiff's choice of forum had weight, and even though Pennsylvania may have had a greater private interest in the dispute, Texas still had an interest since there were offer for sales made in Texas based on accused infringer's sales catalog and website, and Texas had an interest in stopping potential infringement within the district, and rejecting argument that Pennsylvania was the center of accused infringing activity since the products were offered nationwide, the court concluding therefore that there was no "center of accused infringing activity").

8. But cf. Adrain v. Genetec Inc., 2009 WL 3063414, *2-*3 (E.D. Tex. Sept. 22, 2009) (denying accused infringer's motion to sever and transfer the claims against it to its home forum where the court deemed the movant's accused product to be sufficiently similar to the accused products of the other accused infringers, and therefore to promote judicial economy denying motion to sever and transfer).

9. See In re TS Tech USA Corp., 551 F.3d 1315, 1321 (Fed. Cir. 2008) (presence in the forum of accused products, which are sold nationwide, does not provide a "meaningful" connection with the forum).

10. See In re Genentech, Inc., 566 F.3d 1338, 1344 (Fed. Cir. 2009) (ruling that E.D. Texas court "improperly used its central location as a consideration in the absence of witnesses within the plaintiff's choice of venue").

11. E.g., ICHL, LLC v. NEC Corp. of Am., 2009 WL 1748573 (E.D. Tex. June 19, 2009); Aloft Media, LLC v. Yahoo!, Inc., 2009 WL 1650480, *7 (E.D. Tex. June 10, 2009) (denying accused infringers' motion to transfer venue to their home forum in the N.D. of Cal, where the patentee, a holding company, brought suit in its home forum); see also Acceleron, LLC v. Egenera, Inc., 634 F. Supp. 2d 758, 764-68 (E.D. Tex. June 9, 2009). See generally, APD § 36:168.40 Patent-Holding Company Bringing Suit in Its Home Forum.

12. See e.g., Novartis Vaccines and Diagnostics, Inc. v. Bayer HealthCare LLC, 2009 WL 3157455, *5 (E.D. Tex. Sept. 28, 2009) (denying accused infringers' motion to transfer case and noting that judicial economy weighed heavily in favor of denying transfer where the court had a second case pending involving the same patent but a different accused infringer); but cf. Abstrax, Inc. v. Sun Microsystems, Inc., 2009 WL 2824581, *1-*2 (E.D. Tex. Aug. 28, 2009) (granting renewed motion to transfer venue to N.D. of Cal., since the infringement case had little, if any, connection with the Texas forum, as the accused infringer had its operations in California and Oregon, and the patentee was located in Arizona, even though the patentee had a second suit against a different accused infringer pending in the forum, where that second suit was in a different and more advanced procedural stage as the present suit, the two suits had not been consolidated, and the accused infringers agreed to be bound by the claim construction ruling in the first case in the second suit when it was transferred).