August 27, 2013

Releasing the Waters from the Gorge of East Texas: The Federal Circuit Discharges the Dam of Patent Litigation - ABA YLD 101 Practice Series

By Jessica L. Hannah

Jessica L. Hannah is an attorney with Capshaw DeRieux LLP.  J.D. Golden Gate University School of Law, May 2008; B.S. General Engineering, University of Illinois at Urbana-Champaign, May 2005. 

In just over twelve months, the Federal Circuit issued orders on seven petitions, each requesting a writ of mandamus on a section 1404(a) venue transfer order from the Eastern District of Texas in a patent case. 1  Despite the onerous burden a petitioner faces in seeking a writ of mandamus, four of these seven petitions were granted based on the Federal Circuit’s determination that the district court “clearly abused its discretion” in denying the underlying motions to transfer venue. 2 

I.      Opening the Floodgates: Volkswagen II and In re TS Tech
While patent litigators across the country focus much time and energy on opinions from the Federal Circuit, when it comes to the issue of section 1404(a) venue transfer in the Eastern District of Texas, the Fifth Circuit is arguably just as important—if not more. 3  The Federal Circuit reviews petitions for writs of mandamus in patent cases filed in the Eastern District of Texas, but the Federal Circuit is charged with applying Fifth Circuit law in these cases. 4  So although TS Tech was the first mandamus petition granted on this issue by the Federal Circuit, the Fifth Circuit’s en banc decision in Volkswagen II was both the means and foundation for TS Tech. 5 

Yet, Volkswagen II is important for a number of reasons—not just because it preceded TS Tech.  First, Volkswagen II unequivocally reaffirmed that “ mandamus is an appropriate means of testing a district court’s [section] 1404(a) ruling.” 6  In other words, a dissatisfied party can file a petition for a writ of mandamus and argue that the appellate court should order the district court to rule otherwise.  Second, on this issue in the Fifth Circuit, Volkswagen II is the controlling precedent—not only because it is an en banc decision, but also because the Supreme Court has never decided mandamus in the context of section 1404(a). 7  The Supreme Court has provided parameters for mandamus petitions generally, but never within the context of 1404(a) venue transfer. 8  Third, it set forth the proper role a plaintiff’s choice of venue has in the 1404(a) context. 9  This is important because there is an interesting interplay between the permissive and broad patent venue statute and the venue transfer statute, which allows for transfer “for the convenience of parties and witnesses, in the interest of justice.” 10

Purporting to apply Volkswagen II, the Federal Circuit granted the petition for a writ of mandamus in TS Tech based on a finding that the district court clearly abused its discretion by making four main errors in ruling on the transfer motion. 11  The Federal Circuit found that the district court: 1) gave too much weight to plaintiff’s choice of venue, which may be afforded deference, but may not be treated as a separate factor in the venue transfer analysis; 2) ignored the Fifth Circuit’s 100-mile rule in assessing the cost of attendance for witnesses; 3) read out the ease of access to sources of proof factor by concluding that documents were stored electronically and therefore readily accessible; and 4) improperly concluded that residents of the Eastern District of Texas had a localized interest in deciding the case because the infringing products were sold nationwide. 12 

None of these four errors came as an unexpected surprise— TS Tech did not change the law, nor did it purport to apply any changes to regional circuit law. 13  What is interesting about TS Tech is its almost exclusive reliance on Volkswagen II and prior opinions in that case as a basis for its holding, despite the Federal Circuit’s explicit suggestion that “[ Volkswagen II] did not change any aspect of the law regarding the trial court's § 1404(a) analysis, but instead confirmed that mandamus is an appropriate means to review a district court’s ruling on a venue transfer motion.” 14  Accepting that Volkswagen II did not change venue transfer law and merely confirmed the use of mandamus for reviewing venue transfer orders, there are legions of Fifth Circuit precedent on the issues involved in TS Tech—some of which were even cited in Volkswagen II. 15  Yet, aside from Volkswagen II and prior opinions in that case, TS Tech citedonly two Fifth Circuit cases pertinent to the issues of 1404(a) transfer or mandamus. 16

II.     Watching the Waters Stream By: Genentech, Hoffman-La Roche, & Nintendo
Just five short months after the Federal Circuit issued TS Tech, it followed up with a similar opinion in Genentech.  There, the Court noted a number of problems with the district court’s analysis, including (among others) that: 1) the district court improperly required identification of “key witnesses” within the transferee venue; 2) the district court rigidly and improperly applied the 100-mile rule; 3) the district court required a showing that transfer be convenient for all witnesses; 4) the district court erred in considering a case previously filed by Genentech in the Eastern District in concluding that Genentech cannot now “complain” that the forum is inconvenient; and 5) the district court improperly noted that it was a “critical” problem that the transferee forum lacked jurisdiction over the plaintiff. 17  There, again, the Federal Circuit relied almost exclusively on Volkswagen II and TS Tech in outlining the relevant Fifth Circuit law on venue transfer and mandamus. 18

Next came Hoffman-La Roche, where the Federal Circuit found that the district court erred in 1) considering documents sent electronically to Texas in anticipation of litigation to be “Texas” documents; 2) giving too much weight to its ability to compel a single witness’s attendance at trial, absent the ability to compel attendance at a deposition; and 3) not giving enough weight to the localized interest in the transferee venue resulting from the connections to that venue, among other errors. 19  Most recently, there was Nintendo.  There Federal Circuit held that the district court erred 1) in finding the convenience of the witnesses only slightly favored transfer; 2) in considering access to sources of proof as a neutral factor because the “centralized location” of Texas was a suspect conclusion; and 3) in giving deference to the plaintiff’s choice of venue. 20  Again, despite the clear precedent requiring that Fifth Circuit law apply to these cases and despite the legions of Fifth Circuit law on these issues, the only Fifth Circuit case even cited in these two opinions was Volkswagen II. 21   

III.     Discharging the Dam with Illegal Homemade Dynamite: A Deficient Application of Fifth Circuit Law
  TS Tech, Genentech, Hoffman-La Roche, and Nintendo may have reached the proper result.  However, this doesn’t negate the improper application of precedent—or in these cases the lack of application of pertinent precedent.  The Federal Circuit is unique as the only court of the thirteen Circuit Courts of Appeals with nationwide jurisdiction over certain subject matter, but exclusive jurisdiction is not synonymous with chief sovereign on all issues within that exclusive jurisdiction. 22

1 These seven cases include 1) In re TS Tech USA Corp. (“TS Tech”), 551 F.3d 1315 (Fed. Cir. Dec. 29, 2008); 2) In re Telular Corp. (“Telular”), 319 Fed.Appx. 909, 2009 WL 905472 (Fed. Cir. Apr. 3, 2009); 3) In re Genentech, Inc. (“Genentech”), 566 F.3d 1338 (Fed. Cir. May 22, 2009); 4) In re Volkswagen of Am., Inc. (“Volkswagen III”), 566 F.3d 1349 (Fed. Cir. May 22, 2009); 5) In re Hoffman-La Roche Inc. (“HLR”), 587 F.3d 1333 (Fed. Cir. Dec. 2, 2009); 6) In re Nintendo Co., Ltd. (“Nintendo”), ---F.3d ---, 2009 WL 4842589 (Fed. Cir. Dec. 17, 2009); 7) In re VTech Comm., Inc. (“VTech”), Misc. No. 909 (Fed. Cir. Jan. 6, 2010).  This number does not include In re Yahoo! Inc., Misc. No. 906, 2009 WL 2903593 (Fed. Cir. Sept. 1, 2009), as the petition was withdrawn—not resolved on the merits.  For comparison, in that same period of time all of the other circuit courts combined issued a total of only three orders on similar petitions.  In re DRC, Inc., No. 09-5083, 2009 WL 5125602 (D.C. Cir. Dec. 8, 2009); In re Kissi, No. 09-3425, 2009 WL 4250420 (3rd Cir. Nov. 30, 2009); In re Rondeau, No. 09-5229, 2009 WL 3713603 (D.C. Cir. Aug. 18, 2009).
2 TS Tech, 661 F.3d at 1318; Genentech, 566 F.3d at 1348; HLR, 587 F.3d at 1333; Nintendo, 2009 WL 4842589 at *1.
3 See Illumina, Inc. v Affymetrix, Inc., No. 3:09-cv-277 (W.D. Wis. Sept. 21, 2009) (noting that “Federal Circuit patent law is not controlling on procedural issues, such as defendant’s motion to transfer” and concluding that “Genentech’s interpretation of the law of the Fifth Circuit is persuasive, at best”).
4 TS Tech, 661 F.3d at 1319 (“[b]ecause this petition does not involve substantive issues of patent law, this court applies the laws of the regional circuit in which the district court sits, in this case the Fifth Circuit”); see also Midwest Ind., Inc. v. Karavan Trailers, Inc., 175 F.3d 1356, 1358-61 (Fed. Cir. 1999) (en banc in relevant part) (holding that the law of the regional circuit applies on issues not unique to patent law).
5 In re Volkswagen of Am., Inc. (“Volkswagen II”), 545 F.3d 304 (5th Cir. 2008) (en banc); see generally TS Tech, 551 F.3d 1315 (citing Volkswagen II throughout the opinion).
6 Volkswagen II, 545 F.3d at 309.
7 See Volkswagen II, 545 F.3d at 309 (noting that the Supreme Court has never decided mandamus in this context).
8 See, e.g., Volkswagen II, 545 F.3d at 309 (citing Cheney v. U.S. Dist. Ct., 542 U.S. 367, 380 (2004)).
9 Volkswagen II, 545 F.3d at 315 (“This ‘good cause’ burden reflects the appropriate deference to which the plaintiff's choice of venue is entitled.”).
10 28 U.S.C. § 1400(b); 28 U.S.C. § 1404(a); see generally Volkswagen II, 545 F.3d at 312-13 (discussing similar interplay between section 1404(a) and the general venue statute).
11 TS Tech, 551 F.3d at 1320-22.
12 Id.
13 Id. at 1315, 1322 (“the Fifth Circuit's recent en banc decision [in Volkswagen II] did not change any aspect of the law regarding the trial court's § 1404(a) analysis, but instead confirmed that mandamus is an appropriate means to review a district court's ruling on a venue transfer motion”).
14 Id. at 1322.
15 See, e.g., Volkswagen II, 545 F.3d at 310 n.5 (citing In re Estelle, 516 F.2d 480, 483 (5th Cir. 1975) (mandamus)); id. at 311 (citing In re U.S. Dept. of Homeland Sec., 459 F.3d 565, 571 (5th Cir. 2006) (mandamus)); id. at 311 (citing Balawajder v. Scott, 160 F.3d 1066, 1067 (5th Cir. 1998) (transfer)); id. at 312 n.7 (citing ACF Indus., Inc. v. Guinn, 384 F.2d 15, 19-20 (5th Cir. 1967) (mandamus)); id. (citing In re Oswalt, 607 F.2d 645, 647 (5th Cir. 1979) (mandamus)); id at 314 (citing Veba-Chemie A.G. v. M/V Getafix, 711 F.2d 1243, 1247 (5th Cir. 1983) (transfer)); id. at 314 n.9 (citing Humble Oil & Ref. Co. v. Bell Marine Serv., Inc., 321 F.2d 53, 56 (5th Cir. 1963) (transfer)). 
16 TS Tech, 551 F.3d at 1320 (citing In re Horseshoe Entertainment, 337 F.3d 429, 434-35 (5th Cir. 2003) (transfer)); id. (citing In re Volkswagen AG (“Volkswagen”), 371 F.3d 201, 205 (5th Cir. 2004) (transfer)).  The Court did cite to Broussard v. State Farm Fire & Cas. Co., 523 F.3d 618, 631 (5th Cir.2008) regarding the abuse of discretion standard and In re Volkswagen of Am., Inc. (“Volkswagen I”), 506 F.3d 376 (5th Cir. 2007)—the prior Fifth Circuit opinion in Volkswagen II.  Further, Volkswagen is unrelated to Volkswagen I and Volkswagen II, with the exception that it also involved a petition for writ of mandamus filed with the Fifth Circuit on a venue transfer petition from Judge Ward in the Eastern District of Texas.
17 Genentech, 566 F.3d at 1343-46.
18 Id. at 1341 (citing TS Tech, 551 F.3d at 1319); id. (citing Volkswagen II, 545 F.3d); see also id. at 1342 (both), 1343 (Volkswagen II), 1346 (Volkswagen II), 1347 (Volkswagen II), 1348 (both).  Genentech did rely on Supreme Court precedent, in addition to other circuit and district court cases.
19 HLR, 587 F.3d at *5-*9.
20 Nintendo, 2009 WL 4842589 at *2-*4.
21 See, e.g., HLR, 587 F.3d at *5-*9 (citing Volkswagen II, TS Tech, and Genentech); Nintendo, 2009 WL 4842589 at *2-*4 (citing Volkswagen II, TS Tech, Genentech, and HLR).  Assuming that TS Tech, Genentech, and Hoffman-La Roche each consist of a proper application of Fifth Circuit law, they are relevant precedent applicable to Nintendo.  However, the proper application of regional circuit law seems tenuous when only a single circuit law opinion is cited in support of numerous mandamus opinions.  Additionally, it is interesting to note that the Federal Circuit has now granted a petition for a writ of mandamus for every Article III Judge that takes patent cases in the Eastern District of Texas.  TS Tech, 551 F.3d 1315 (Ward, J.); Genentech, 566 F.3d 1338 (Clark, J.); HLR, 587 F.3d 1333 (Folsom, J.); Nintendo, 2009 WL 4842589 (Davis, J.).  Moreover, Volkswagen III is the only published decision from the Federal Circuit denying a petition for a writ of mandamus regarding 1404(a) transfer from the Eastern District of Texas.  566 F.3d 1349; see also Telular, 319 Fed.Appx. 909; VTech, No. 909. 
22 See Midwest Ind., 175 F.3d at 1358-61 (“we apply our own law with respect to patent law issues, but with respect to nonpatent issues we generally apply the law of the circuit in which the district court sits”).  In Midwest Industries, the Federal Circuit went on to note: 

[W]e think that as the sole appellate exponent of patent law principles this court should play a leading role in fashioning the rules specifying what patent law does and does not foreclose by way of other legal remedies. If we simply follow regional circuit law in deciding questions involving the interaction between patent law principles and other legal remedies, other courts will not have the benefit of our analysis of the substance and scope of patent law in such cases.

Id. at 1361.

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