The Federal Circuit has issued another rebuke against Western District of Texas Judge Alan D. Albright over his approach to transfer timing. In the past few years, the appellate court has repeatedly ordered Judge Albright to consider transfer motions before turning to substantive issues like claim construction, leading him to modify his general case schedule to open venue discovery automatically upon the filing of a motion to transfer, with Markman hearings (typically scheduled early) often delayed. However, Judge Albright has argued that parties have since "beg[u]n abusing this process", "strategically wait[ing]" to file their transfer motions—prompting him to impose a modified scheduling order in three cases against Apple that pushed the consideration of its convenience transfer motions to after the close of fact discovery. Now the Federal Circuit has overturned that scheduling order, ruling in three decisions—one precedential—that Judge Albright abused his discretion by pushing forward on substantive matters without deciding Apple's transfer motions, and by denying its motions to stay pending appeal.
The underlying litigation against Apple has been waged by three plaintiffs: XR Communications, LLC (d/b/a Vivato Technologies), which filed its complaint in June 2021 (6:21-cv-00620), and Aire Technology Limited (6:21-cv-01011) and Scramoge Technology Limited (6:21-cv-01071), both associated with Dublin-based patent monetization firm Atlantic Services IP Limited, which brought their complaints that same October. Apple responded, in part, in each case, with a motion to transfer venue for convenience. A complicated back and forth, between XR Communications, Apple, and Judge Albright then took place over the summer, leading Judge Albright to deny the motion to transfer in the XR Communications case and to announce the new scheduling framework in early September, moving consideration of the transfer motion in the XR Communications case until after the close of fact discovery, claim construction to be considered thereafter.
Denials of Apple's motions to transfer in all three cases led the defendant to petition the Federal Circuit for mandamus review (2022-0162, 2022-0163, 2022-0164) and to seek stays of the district court action in the meantime. The company noted in its petition that a "full year" would have passed by the time the district court planned to address its transfer motion, as the revised scheduling order provided for 30 weeks of fact discovery followed by six weeks of briefing on a "replacement" transfer motion. During that time, Apple underscored, the parties would have reached a variety of other substantive milestones: They would have "served final infringement and invalidity contentions, narrowed the asserted claims and prior art, and even exchanged their preliminary exhibit and witness lists for trial—all in an inconvenient forum that should not try this case".
In late September, Judge Albright then issued a "Supplemental Consolidated Opinion Denying Motion to Stay" that extended the scheduling framework to the Scramoge Technology and XR Communications cases and raised various objections to the declaration and testimony of an Apple finance manager cited in support of the company's venue allegations. Judge Albright asserted that even if the Federal Circuit were to overturn his scheduling order, he would "order supplemental, expanded venue discovery and supplemental briefing to achieve its goal of having the parties present reliable evidence before this Court rules on the transfer motion".
Apple cited that opinion in supplemental briefing filed in its Federal Circuit appeal, emphasizing that Judge Albright had chosen not to resolve its motions to transfer until after the close of full fact discovery—which, per Apple, fails to give its motions to transfer "top priority". The company also flagged Judge Albright's plan to order supplemental venue discovery and related briefing as "merely a restatement of the improper delay the district court's scheduling order already accomplishes". Apple also contended that it has "repeatedly demonstrated" that "the district court has identified nothing inaccurate or unreliable about Apple's venue evidence".
The Federal Circuit granted Apple's three mandamus petitions on November 8, laying out most of its reasoning in a precedential decision issued in the Aire Technology case. Like Apple, the court emphasized the year-long period that would have passed by the time Judge Albright would rule on its transfer request and "agree[d] with Apple that the district court's scheduling order goes too far". Here, the court cited its own recent precedent requiring that transfer motions be "prioritized", also noting a Third Circuit decision from 1970 (McDonnell Douglas v. Polin) establishing that it is "not proper to postpone consideration of the application for transfer under § 1404(a) until discovery on the merits is completed". The Federal Circuit ruled that the same holds true under the present circumstances:
Where, as here, the parties agree that no additional discovery or briefing is necessary and there are clearly less time-consuming and more cost-effective means for the court to resolve the motion (including considering whether the court should give less weight to certain evidence), it is a clear abuse of discretion to require the parties to expend additional party and court resources litigating the substantive matters of the case while Apple's motion to transfer unnecessarily lingers on the docket.
The Federal Circuit also rejected Judge Albright's argument that "full fact discovery and re-briefing" was needed to provide a more solid foundation for the lower court's venue decision, concluding instead that venue discovery would be enough: "Discovery on the transfer motion itself is sufficient to allow decision of that motion". The court also remarked—after observing that Aire Technology had consented to the prompt resolution of the motion, absent certain delays caused by a stay—that "[i]n light of the parties' concessions, further venue discovery is unnecessary here".
Additionally, the Federal Circuit cited Polin's characterization of why courts must avoid undue delays in resolving a Section 1404(a) transfer motion: the principle of judicial economy requires both that the court that will end up transferring a case not "burden itself with the merits of the action", and also that "the court which ultimately decides the merits of the action should also decide the various questions which arise during the pendency of the suit instead of considering it in two courts" (quoting Polin).
As a result, the Federal Circuit concluded that Judge Albright "clearly abused [his] discretion in issuing [his] scheduling order", vacating that order from the Aire Technology case and directing him to "postpone fact discovery and other substantive proceedings until after consideration of Apple's motion for transfer". The court did not address "whether and the extent to which merits discovery may proceed pending discovery for a decision on a transfer motion", as that question had not been presented in this case. In two parallel orders issued in the Scramoge Technology and XR Communications suits, the court applied that same reasoning, also vacating the scheduling order and ordering Judge Albright to push back any consideration of non-transfer matters.
For more on the back-and-forth over Judge Albright's just-vacated scheduling order, see "Tangle Around Judge Albright's Transfer Scheduling Framework Tightens" (October 2022). Further coverage of his dispute with the Federal Circuit over transfer timing can also be found here.
Finally, a recent change in the Western District of Texas has threatened Judge Albright's position as the nation's top patent judge by ending defendants' ability to pick his courtroom. While filing rules previously allowed plaintiffs to select Judge Albright by filing directly in the Waco Division, where he is the only district judge, a standing order issued by Chief Judge Orlando L. Garcia on July 25 now requires that all patent cases filed there be randomly assigned among a group of 12 judges from throughout the district, including Judge Albright. However, that change appears to have had less of an impact than some were anticipating—for while NPE filing levels dipped in the wake of the order, they have since largely rebounded.
See RPX's third-quarter report for further analysis on the order's impact as well as a variety of other key litigation trends.
Original publication date: November 11, 2022
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