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Federal Circuit Orders Transfer from Eastern District of Texas Yet Again

December 17, 2009

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Last Month at the Federal Circuit - January 2010

Judges: Rader (author), Clevenger, Dyk

[Appealed from: E.D. Tex., Judge Davis]

In In re Nintendo Co., No. 09-M914 (Fed. Cir. Dec. 17, 2009), the Federal Circuit granted Nintendo Co., Ltd. (“NCL”) and Nintendo of America Inc.’s (“NOA”) (collectively “Nintendo”) petition for a writ of mandamus holding that the district court clearly abused its discretion in denying Nintendo’s motion to transfer venue under 28 U.S.C. § 1404(a). 

Motiva, LLC (“Motiva”) filed suit in the U.S. District Court for the Eastern District of Texas against Nintendo alleging that the Nintendo Wii infringed Motiva’s U.S. Patent No. 7,292,151 (“the ’151 patent”).  NCL is a Japanese corporation with headquarters in Kyoto.  NOA is a Washington corporation, with its principal place of business in Redmond.  Motiva is an Ohio limited liability company, with its principal place of business in Dublin.  At the time of Nintendo’s transfer request, four witnesses lived in Washington, three lived in Japan, and the two inventors lived in Ohio and New York; none of the parties were incorporated in Texas or had offices in Texas; no witnesses resided in Texas; and no evidence was located in Texas.

The district court denied Nintendo’s motion to transfer.  Nintendo timely moved for reconsideration of the district court’s order and filed a petition for a writ of mandamus.

The Court noted that application of the “public” and “private” factors, as recited in In re TS Tech USA Corp., 551 F.3d 1315, 1319 (Fed. Cir. 2008), determine forum non conveniens when deciding a § 1404(a) motion to transfer venue in the Fifth Circuit.  The private interest factors include “(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 a trial easy, expeditious and inexpensive.”  Slip op. at 4.  The public interest factors include “(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 conflicts of law or in the application of foreign law.”  Id.  Of these, the Federal Circuit agreed with the district court that private interest factors (2) and (4), and public interest factors (1), (3), and (4) were neutral, and thus entitled to no weight in the § 1404(a) analysis. 

The Federal Circuit agreed with the district court that, due to Nintendo’s extensive contacts, the local interest of the Western District of Washington was high, while the Eastern District of Texas had little relevant interest in the dispute.  The Court found that no parties, witnesses, or evidence had any material connection to the venue chosen by the plaintiff, and held that the local interest in Washington clearly favored transfer. 

In considering the cost of attendance for willing witnesses, the Court acknowledged the Fifth Circuit’s 100-mile guideline that, beyond 100 miles, the factor of inconvenience to witnesses increases in direct relationship to the additional distance to be traveled.  The Court observed that four of the identified witnesses lived in Washington, the four Japanese witnesses would each have to travel an additional 1,756 miles or 7 hours by plane to Texas as compared with Washington State, and the remaining six witnesses would have to travel approximately an additional 700 miles more to Texas than Washington.  The Court held that the cost of attendance for willing witnesses clearly favored transfer to Washington.

In considering the relative ease of access to sources of proof, the Court observed that neither Motiva nor Nintendo had any relevant documentation or any other evidence in the Eastern District of Texas and that the majority of NOA’s relevant documents were located in Washington.  The Federal Circuit disagreed with the district court’s assumption that Nintendo’s relevant documents were equally spread between headquarters in Japan and Washington, and satellite offices in California and New York, and with the district court’s hypothesis that the Eastern District of Texas could serve as a centralized location.  The Federal Circuit held that the district court erred in not weighing this factor heavily in favor of transfer.  The Federal Circuit also concluded that the district court gave the plaintiff’s choice of venue too much deference. 

For these reasons, the Court concluded that Nintendo had met its difficult burden of demonstrating a clear and indisputable right to a writ. 

In determining that granting the writ was appropriate, the Court concluded that Nintendo had shown that it has no other means for obtaining relief.  The Court noted that Nintendo had already presented facts showing entitlement to a transfer, and reasoned that it was not required to wait for the district court’s decision on the motion for reconsideration because the district court clearly had abused its discretion when deciding the original motion.  The Court further noted that Nintendo would not have an adequate remedy for an improper failure to transfer the case by way of an appeal from an adverse final judgment because it would not be able to show that it would have won the case had it been litigated in the other venue.

Summary authored by Sulay D. Jhaveri, Ph.D., Esq.