Proper venue is important in U.S. district court litigation; you can’t live without it. But successfully changing venue to a different district court can be even more important because transfer can seriously disrupt plaintiff’s strategy surrounding the initiation, progress and potential settlement of the litigation—to defendant’s distinct advantage. Indeed, even a strategic transfer of just those claims directed against your client, severed from like claims made against co-defendants or other parties in parallel co-pending cases, can result in your client’s separate case creating risk and becoming a distraction that allows for a quicker and less costly exit. Or, if settlement is not desired, transfer may permit a more fulsome defense by eliminating the burden of multiple parties sharing your precious court time.
Venue transfer is particularly important in patent cases, where moving a case out of plaintiff’s chosen jurisdiction to a more convenient forum can help level the playing field for an accused infringer. Perhaps even more significantly, the co-existence of parallel infringement claims in different courts can allow for multiple attacks on the patent with the same or different defenses, different and even inconsistent claim constructions, and procedural differences that can make it burdensome for plaintiff to simultaneously manage the different proceedings.
Many of these benefits can still be obtained even where related cases are coordinated for discovery and cost efficiency purposes. Moreover, in the all-too often context of non practicing entity (NPE) litigation, having an outlier case moved to a different forum can interfere with the NPE’s licensing program and objectives as parties or potential licensees sitting on the sidelines wait to see how different cases play out in different courts.
In a patent case, transfer can be especially beneficial because of the potential for a race to judgment in what may not be plaintiff’s preferred case. While not without certain incremental costs and inconveniences (especially in the rarer cases where evidentiary hearings are ordered), and while success is in part dependent on an ability to build a record and persuade the district court with facts most favorable to your client’s specific situation, the potential strategic benefits of a motion to transfer venue should be considered carefully and early in the case.
This article draws on the teachings of recent Federal Circuit jurisprudence and the authors’ real world experiences to distill some of the important tactical considerations that parties should account for in shaping a potential transfer strategy in patent cases. Despite the patent-oriented focus of this article, these same tactical considerations translate well for most civil actions in federal court.
Venue dictates the procedural rules to be applied, sets the pace of the litigation, and defines the jury pool. Venue can even impact determination of the substantive law that will govern the parties’ rights, especially with respect to ancillary claims based on state law. Venue considerations are particularly pronounced in patent litigation, where plaintiffs are prone to filing suit in a handful of select venues (which may have little or no specific connection to the parties or the merits of the case) in order to capitalize on fast-pace local patent rules, generous juries, and experienced jurists who are fond of patent litigation.[i] Indeed, these pressure points often operate to elicit risk-abating settlements in NPE cases that are divorced from the economic value of the infringement claim.
Whether to file a transfer motion is commonly one of the first strategic decisions confronting defense counsel. Venue motions often present the first serious show-down between the parties and provide an early opportunity to test an adversary’s mettle. In fact, the mere filing of a transfer motion may be sufficient to induce a patent owner to settle quickly and cheaply. The outcome of a successful venue motion can help set the tone of the litigation and may drastically alter the settlement calculus. But although venue motions should typically be filed quite early on in the proceedings, there is an inherent tension between the need to move promptly and the need to develop a factual record sufficient to satisfy the applicable burden in the district court—and if necessary, in the Federal Circuit.
Venue in patent cases is governed by the general federal venue statute, 28 U.S.C. § 1391, and by the patent-specific venue statute, 28 U.S.C. § 1404(b).[ii] Section 1404(b) provides that an action for patent infringement “may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.”
As in other civil cases, motions to transfer venue in patent cases are governed by 28 U.S.C. § 1404(a), which provides: “[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to another district court or division where it might have been brought.”[iii]
Despite its codification of convenience as the controlling standard, section 1404(a) provides less uniformity than one might expect. This is so because regional circuit law controls the procedural matter of application of section 1404(a),[iv] and there are substantial differences between the tests applied by certain regional circuits. For example, in Delaware and the Third Circuit, a plaintiff's choice of forum is “a paramount consideration in any determination of a transfer request,” and a district court should deny a motion to transfer unless the balance of convenience “strongly” favors transfer.[v] By contrast, in Texas and the Fifth Circuit, the plaintiff’s choice of forum is not considered as an independent factor in the transfer analysis, and a district court may transfer a case so long as the proposed transferee forum would be “clearly more convenient.”[vi] Interestingly, however, although the Third Circuit standard appears more onerous than the Fifth Circuit standard on paper, recent trends demonstrate that motions to transfer are generally more successful in the District of Delaware than in the Eastern District of Texas (two darlings of the plaintiffs’ bar). Orrick’s Research and Information Department surveyed the outcomes of such motions from January 2012 to December 2013 and found 73 grants to 36 denials in the District of Delaware, compared to 133 grants to 120 denials in the Eastern District of Texas.
Although the same set of standard convenience factors articulated in Gulf Oil Corp. v Gilbert, 330 U.S. 501 (1947) (“Gilbert”) generally apply to all section 1404(a) motions, nuanced differences in circuit precedent can result in different outcomes on the same or similar facts—a point highlighted by the Federal Circuit’s recent opinion in In re Barnes & Noble, as discussed below. Thus, in advising clients whether to file transfer motions, practitioners should explain the applicable regional circuit law and its implications on the odds of success.
Courts generally look to the private and public interest factors attendant to forum non conveniens analysis under Gilbert in evaluating transfer motions under section 1404(a).[vii] The private interest factors are: (1) the relative ease of access to sources of proof; (2) the availability of compulsory process to secure the attendance of witnesses; (3) the cost of attendance for willing witnesses; and (4) all other practical problems that make trial of a case easy, expeditious and inexpensive.
The public interest factors are: (1) the administrative difficulties flowing from court congestion; (2) the local interest in having localized interests decided at home; (3) the familiarity of the forum with the law that will govern the case; and (4) the avoidance of unnecessary problems of conflict of laws or in the application of foreign law.
Whether you can adduce sufficient evidence to tilt the balance of these factors in your favor will determine whether a motion to transfer has a reasonable chance of success and is worth the cost and time involved.[viii]
Following its 2008 decision in In re TS Tech.,[ix] the Federal Circuit handed down a series of published opinions granting mandamus relief directing district courts to transfer patent cases to more convenient forums.[x] Eventually, however, the Federal Circuit’s receptiveness to venue challenges cooled, and the success rates of venue-related mandamus petitions fell into decline. In May 2013 remarks to the Delaware Federal Bar Association, Chief Judge Rader commented that the Federal Circuit had “passed the baton” back to district courts to decide transfer motions.[xi]
On February 27, 2014, the Federal Circuit issued two opinions denying mandamus petitions regarding transfer motions, In re Barnes & Noble, 2014 U.S. App. LEXIS 3788 (Fed. Cir. 2014) and In re Apple Inc., 2014 U.S. App. LEXIS 3787 (Fed. Cir. 2014). In both cases, the Federal Circuit emphasized the moving parties’ failure to carry their respective burdens in the district court. The Federal Circuit denied another venue mandamus petition on March 13, 2014, again noting the movant’s failure to adduce sufficient evidence in the district court to require transfer. In re Emerson Electric Co., 2014-108.
In Barnes & Noble, the named inventor of the patent in suit brought an action against Barnes & Noble in his home jurisdiction, the Western District of Tennessee. The week after it answered plaintiff’s complaint, Barnes & Noble moved to transfer the case to the Northern District of California. Barnes & Noble pointed to the fact that much of the design and development work for the accused products was performed in Palo Alto, California, and that potentially relevant documents were located in Palo Alto as well. The district court held that Barnes & Noble’s evidence was insufficient to satisfy its burden, emphasizing that Barnes & Noble failed to identify any specific witnesses located in California or even to state the number of witnesses that would be required to travel to Tennessee to testify at trial.
Applying Sixth Circuit law, the Federal Circuit approved of the district court’s reasoning that Barnes & Noble did not make an adequate showing of convenience. The record simply did not contain sufficient evidence to disturb the district court’s conclusion on mandamus. See In re Barnes & Noble, 2014 U.S. App. LEXIS 3788, at *3. The Federal Circuit distinguished its prior Fifth Circuit-based precedent, noting that under Sixth Circuit law, plaintiff’s choice of forum loomed large in the transfer analysis.
Similarly, in Apple, the Federal Circuit refused to disturb the district court’s denial of a transfer motion under Fifth Circuit law because “the evidence before the court was so general in nature that the court was unable to evaluate its relevance in the transfer analysis.” In re Apple Inc., 2014 U.S. App. LEXIS 3787, at * 5. The Federal Circuit criticized Apple’s evidence as “sparse” and “general” and further ruled that the district court did not abuse its discretion in refusing to permit Apple to supplement its record with evidence available to it at the time it initially filed its transfer motion.
Comparison of Apple and Barnes & Noble with the Federal Circuit’s most recent grant of mandamus in a venue dispute, In re TOA Techs., Inc., 2013 U.S. App. LEXIS 20226 (Fed. Cir. Oct. 3, 2013) (unpublished), highlights the critical importance of marshalling the facts available to support transfer and making a detailed, specific evidentiary showing in the district court regarding as many of the Gilbert factors as possible. For example, in TOA Techs., the movant identified specific party trial witnesses for whom the transferee forum was more convenient, named multiple non-party witnesses subject to the compulsory process of the transferee court but not the transferor forum, provided testimony about specific items of documentary evidence located only in the transferee forum, and adduced evidence regarding the comparative costs of travel to the competing forums. This evidence was sufficient to meet the high standard for obtaining mandamus under Fifth Circuit law.
Apple, Barnes & Noble, Emerson, and TOA Techs. illustrate the importance of developing a detailed, robust record in the district court. If it is worth it to your client to file a motion to transfer, it is worth it for you to set your client up for success.
While not every case is going to be appropriate for transfer, it makes sense to at least explore the specific facts relevant to the transfer analysis because of the benefits that can be obtained by a successful move.[xii]
Access to Sources of Proof. Because courts generally assume that the bulk of relevant evidence will come from the accused infringer,[xiii] it can be tempting to rely on precedent rather than evidence to establish that the location of relevant documents favors transfer. But this is a mistake. Particularly where a moving party maintains its documents in several locations, or where many company documents are cloud-based, it is important to establish by way of competent evidence that specific categories of documents that are likely to be relevant to the case are located in the proposed transferee forum. This type of a showing makes it difficult for the court to conclude that the location of documents does not favor transfer, or to diminish the weight of this factor.
Compulsory Process. The ability of the court to exercise compulsory process over potential witnesses, party and non party alike, weighs heavily in the balance of convenience analysis.[xiv] But in this regard, merely identifying categories of potential third party witnesses—such as former employees, customers, suppliers, or investors—that are located in the transferee forum may not be sufficient to swing the compulsory process factor in favor of transfer. On the other hand, business considerations often militate against identifying specific persons or entities as discovery targets, even though such parties may be inevitably disclosed in discovery. Certainly some third-party witnesses will need to be identified at some juncture in the case, so it is important to work with your client early on to identify (and perhaps provide a heads-up to) specific potential third-party witnesses in the transferee forum that can be used to support a transfer motion. Doing so will provide the opportunity to make a specific showing regarding third party witnesses and the topics such witnesses are relevant to.
Costs and Convenience of Travel. Although courts often consider distance in assessing the relative ease of travel to each competing venue,[xv] geography isn’t everything. Put on specific evidence regarding travel times, airfare, travel logistics, and the number of available flights to and from each relevant location. Plaintiff’s chosen venue might be more difficult and expensive to travel to, even if it happens to be physically closer to where the parties and identified witnesses are located. People who must travel overseas and have long flights to attend trial may not hold much sway because they already have long inconvenient travel times, and somewhat longer travel times will not be persuasive.
Other Practical Problems. Courts generally look to the interests of judicial economy in evaluating “other practical problems” raised by transfer motions,[xvi] but there are other considerations to account for as well. Issues related to jurisdiction and enforceability of a judgment may also be considered.[xvii] For example, although plaintiff’s forum might have jurisdiction over the parties, it might lack jurisdiction over corporate affiliates, presenting practical problems (or even due process problems) with respect to enforcing injunctive relief. Whether there are related cases pending (or the patent was previously litigated) in either of the competing forums can be an important factor in the convenience analysis. But the pendency of related cases in plaintiff’s forum is not necessarily a “no transfer” trump card. Even in a situation where a plaintiff has filed a flock of cases consolidated in one district court, you may be able to fly the coop by making a persuasive case for transferring your client’s specific case to a more convenient forum. Some district courts have become increasingly receptive to severing out and transferring claims against individual defendants where the convenience test can be met, particularly given the impact of the Leahy-Smith America Invents Act on joinder and severance in patent cases.[xviii] As one district court noted in granting a motion to sever and transfer notwithstanding plaintiff’s judicial economy arguments, “where the plaintiff initiates patent infringement litigation against multiple, unrelated defendants located in different districts, the problem of litigating in multiple forums can be one of its own making.”[xix]
Administrative Difficulties. It may be helpful to present statistics on the average time to disposition of a patent case in the transferee forum. These statistics are available from the Administrative Office of the U.S. Courts and may be subject to judicial notice.
Local Interest. The local interest factor is another consideration that parties may be tempted to rely on precedent for, rather than evidence. But again, it is best to make a full evidentiary record. Evidence including local press about the moving party, community demographics, employment statistics, growth impact and civic involvement can solidify a showing of strong local interest in favor of transfer.
Familiarity With Applicable Law, Conflicts of Law. Courts routinely hold that all federal courts are sufficiently familiar with patent law so as to render the familiarity factor neutral.[xx] However, consider whether there are counterclaims at issue that might arise under the law of the transferee court’s forum state. Similarly, counterclaims (particularly counterclaims sounding in tort law) might present conflicts of law issues that weigh in favor of transfer to the relevant district court.[xxi]
Generally, the earlier in a case a motion to transfer venue is filed, the better the chances of success, because the interest of judicial economy begins to weigh against transfer the longer a case proceeds in the plaintiff’s chosen forum. Also, as the Federal Circuit once noted, where the district court has progressed in the management of the case, transfer might be denied, or perhaps delayed until after the original court rules on claim construction, because judicial economy warrants completion of the work the court has already begun.[xxii] However, because a court’s convenience analysis focuses on the state of affairs at the time the transfer motion is filed,[xxiii] some small measure of tactical delay in bringing a transfer motion might bolster the odds of success. For example, filing a motion to transfer after the pleadings are set may be advantageous to the extent certain counterclaims weigh in favor of transfer due to the state law under which such claims arise or the location of evidence relevant to such claims. As another example, filing after initial disclosures under Federal Rule of Civil Procedure 26 are tendered, or after an early round of discovery is taken, may help to establish the relevancy of documents or witnesses located in a competing venue.
However, significant delay can lead to a situation where the underlying litigation proceeds apace to claim construction and perhaps summary judgment under the court’s local patent rules before the transfer motion is decided (or the court determines that venue specific discovery and an evidentiary hearing is needed to make that decision). As a result, the judicial economy factor may end up overriding the other convenience factors.
Venue strategy is an important element of any patent case, and can be a key factor driving an early settlement. So it is important to consider a transfer motion at the outset. A transfer motion can be particularly useful in defending against an NPE where no other leverage is available. In order to provide informed advice, it is critical to promptly investigate the factual circumstances bearing on transfer analysis, and to have a firm grasp on the controlling regional circuit law. It is also important to be aware of recent trends regarding transfer motions in your particular district court. For example, some district courts are more likely than others to order evidentiary hearings and expedited discovery in response to transfer motions.[xxiv] Experience with the local bench, and working with local counsel, can be indispensible to assessing the odds of prevailing on a transfer motion. Happy trails.
Orrick, Herrington & Sutcliffe LLP has a leading patent litigation practice with deep experience in the Federal Circuit. Notable Federal Circuit victories related to the issues presented in this article include In re Nintendo Co., 589 F.3d 1194 (Fed. Cir. 2009), In re EMC Corp., 677 F.3d 1351 (Fed. Cir. 2012), and In re TOA Techs., Inc., 2013 U.S. App. LEXIS 20226 (Fed. Cir. 2013).
[ii] See, e.g., Invensense, Inc. v. STMicroelectronics, Inc., 2014 U.S. Dist. LEXIS 3311, at * 7 (E.D. Tex. Jan. 10, 2014) (citing VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1580 n.17 (Fed. Cir. 1990)).
[iii] A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(3) on the grounds of forum non conveniens is another mechanism for challenging venue. See also 28 U.S.C. § 1406. Counsel should carefully consider a Rule 12(b)(3) motion before responding to a complaint, because this avenue of relief is subject to waiver. See Fed. R. Civ. P. 12(h). However, the burden under Rule 12(b)(3) is more onerous than the burden imposed by section 1404(a). See, e.g., Piper Aircraft Co. v. Reyno, 454 U.S. 235, 253 (1981). In all but the clearest cases, section 1404(a) provides a tactical advantage because it affords additional time to create a winning record to present to the court.
[iv] In re TS Tech United States Corp., 551 F.3d 1315, 1319 (Fed. Cir. 2008).
[v] Shutte v. Armco Steel Corp., 431 F.2d 22, 23 (3d Cir. 1970).
[vi] “Fifth Circuit precedent clearly forbids treating the plaintiff's choice of venue as a distinct factor in the § 1404(a) analysis.” TS Tech, 551 F.3d at 1320(citing In re Volkswagen of Am., Inc., 545 F.3d 304, 314 n.10 (5th Cir. 2008)).
[vii] See, e.g., Norwood v. Kirkpatrick, 349 U.S. 29, 32 (U.S. 1955) (noting relationship between Gilbert factors and section 1404(a) motions).
[viii] Note that as a threshold matter, you must establish that plaintiff could have properly brought suit in the transferee forum. See 28 U.S.C. § 1404(a). Where the transferee district is where the accused infringer resides or is alleged to infringe, this is almost never a problem because suit could have been filed there. Interestingly, in the case of a declaratory judgment action where the patent owner seeks to transfer the case to its home forum, perhaps to consolidate it with related cases pending there, this factor also is satisfied.
[ix] TS Tech United States Corp., 551 F.3d 1315.
[x] See In re Genentech, Inc., 566 F.3d 1338 (Fed. Cir. 2009); In re Nintendo Co., 589 F.3d 1194 (Fed. Cir. 2009); In re Hoffmann-La Roche Inc., 587 F.3d 1333 (Fed. Cir. 2009); In re Zimmer Holdings, Inc., 609 F.3d 1378 (Fed. Cir. 2010); In re Acer Am. Corp., 626 F.3d 1252 (Fed. Cir. 2010); In re Microsoft Corp., 630 F.3d 1361 (Fed. Cir. 2011).
[xii] Of course, the authors caution that while the perceived benefits of a successful transfer are generally realized, that is not always the case. In one case, your authors were brought in after an adversary had succeeded in transferring the case from the Eastern District of Virginia’s “rocket docket” to the Central District of California. But our adversary was denied the benefit of the much slower time to trial in California when the assigned judge adopted the Eastern District of Virginia’s speedy case schedule.
[xiii] Innovative Automation, LLC v. Audio Video & Video Labs, Inc., 2012 U.S. Dist. LEXIS 114503, at * 22-23 (E.D. Tex. May 30, 2012) (citing Genentech, 566 F.3d at 1345).
[xiv] E.g., Teleconference Sys. v. Proctor & Gamble Pharms., Inc., 676 F. Supp. 2d 321, 333 (D. Del. 2009) (citing, inter alia, Genentech, 566 F.3d at 1343).
[xv] See In re Volkswagen of Am., Inc., 545 F.3d 304, 317 (5th Cir. 2008) (“when the distance between an existing venue for trial of a matter and a proposed venue under § 1404(a) is more than 100 miles, the factor of inconvenience to witnesses increases in direct relationship to the additional distance to be traveled.”).
[xvi] See, e.g., Eidos Display, LLC v. AU Optronics Corp., 2011 U.S. Dist. LEXIS 155936, at * 23-24 (E.D. Tex. Dec. 21, 2011) (collecting cases).
[xvii] Southeastern Consulting Group v. Maximus, Inc., 387 F. Supp. 2d 681, 686 (S.D. Miss. 2005).
[xviii] See, e.g., In re EMC Corp., 677 F.3d 1351, 1355-1356 (Fed. Cir. 2012) (discussing changes to joinder and severance analysis in post-AIA cases).
[xix] Secured Mail Solutions, LLC v. Advanced Image Direct, LLC, 2013 U.S. Dist. LEXIS 150785, at *17 (C.D. Cal. Jan. 30, 2013) (citation omitted); see also Serverside Group Ltd. v. CPI Card Group - Minn., Inc., 2012 U.S. Dist. LEXIS 20489, at *18 (D. Del. Feb. 17, 2012) (severing and transferring cases against two defendants).
[xx] Affinity Labs of Tex. v. Samsung Elecs. Co., Ltd., 2013 U.S. Dist. LEXIS 142915, at * 20 (E.D. Tex. Sept. 17, 2013).
[xxi] See Hamilton v. Accu-Tek, 47 F. Supp. 2d 330, 348 (E.D.N.Y. 1999) (transferring cases due to complex conflicts of law issues applicable to tort claims).
[xxii] In re Wyeth & Wyeth Pharms., Inc., 406 Fed. Appx. 475, 477 (Fed. Cir. 2010).
[xxiii] In re EMC Corp., 501 Fed. Appx. 973, 976 (Fed. Cir. 2013) (unpublished) (citation omitted).
[xxiv] In 2013, district courts in the Eastern District of Texas ordered several evidentiary hearings in connection with venue motions. Your authors participated in one such hearing, which involved live testimony from four witnesses. That venue motion culminated in the Federal Circuit’s order of mandamus in TOA Techs.