Prior Litigation Involving the Same Patent Cannot Override a Compelling Showing That Transfer Is Warranted Under 28 U.S.C. § 1404(a)
March 23, 2011
Last Month at the Federal Circuit - April 2011
Judges: Lourie, Gajarsa, Linn (author)
[Appealed from: E.D. Tex., Judge Ward]
In In re Verizon Business Network Services Inc., No. 10-M956 (Fed. Cir. Mar. 23, 2011), the Federal Circuit granted a petition for writ of mandamus to overturn the trial court’s denial of transfer under 28 U.S.C. § 1404(a).
This petition arises out of a patent infringement suit brought by Red River Fiber Optic Corporation (“Red River”) against Verizon Services Corp., Verizon Business Network Services Inc., Verizon Enterprise Delivery LLC, AT&T Corp., Qwest Corporation, and Qwest Communications Corporation (collectively “the petitioners”). Red River brought this suit in the Eastern District of Texas, Marshall Division (“Marshall”), but the petitioners moved to transfer this case to the Northern District of Texas, Dallas Division (“Dallas”). While a number of party witnesses resided within 100 miles of Dallas, none resided within 100 miles of Marshall.
The petitioners’ motion for transfer was initially denied by a Magistrate Judge, who although agreed with the petitioners that Dallas would likely be more convenient for the parties and the witnesses, nevertheless held that judicial economy favored maintaining this suit in Marshall. The Magistrate Judge noted that the court had previously handled a lawsuit, which settled over five years ago, involving the same patent and had construed a number of the patent’s terms. The district court later affirmed the Magistrate Judge’s decision, rejecting the petitioners’ contention that the length of time between the previous suit and this case and a more recent reexamination warranted a different result.
Upon petition, the Federal Circuit noted that the principal question was whether the trial court could plausibly justify denying transfer to a far more convenient venue based solely on its previous handling of a lawsuit involving the same patent that settled over five years before this suit was filed. The Court acknowledged that a trial court has great discretion in deciding a motion to transfer under § 1404(a), but noted that a mandamus may issue when the trial court’s decision is patently erroneous. The Court analogized the current case to In re Volkswagen of America, Inc., 545 F.3d 304, 310 (5th Cir. 2008) (en banc), where the Fifth Circuit held that the trial court’s denial of transfer from Marshall to Dallas was patently erroneous, in part because every witness would be required to expend significant time and cost to attend trial. The Court explained that, as in In re Volkswagen, there is a stark contrast in convenience and fairness with regard to the identified witnesses in this case. The Court reasoned that because many witnesses resided within 100 miles of Dallas and would also be subject to the Northern District’s subpoena powers, and no witness resided within 100 miles of Marshall, maintaining trial in Marshall rather than Dallas would be far less convenient, requiring witnesses to expend significant costs, time, and expense of travel.
The Court rejected Red River’s conclusion that denial of transfer was plausible based on the fact that the trial court previously handled a lawsuit involving the same patent that settled over five years before the current suit was filed. The Court noted that the Eastern District of Texas would have to relearn a considerable amount based on the lapse in time between the two suits and would likely have to familiarize itself with reexamination materials that were not part of the previous record. The Court stated that “[t]o interpret § 1404(a) to hold that any prior suit involving the same patent can override a compelling showing of transfer would be inconsistent with the policies underlying § 1404(a).” Slip op. at 5-6. The Court advised against such ironclad rules in In re Vistaprint Ltd., 628 F.3d 1342, 1347 n.3 (Fed. Cir. 2010), even though in that case, the Court denied mandamus to overturn a denial of transfer based on the district court’s previous experience construing claims of the patent at issue and copending litigation before the district court involving the same patent and underlying technology. The Court reasoned that unlike In re Vistaprint, there was no assertion in this case of a copending lawsuit in the Eastern District involving the same patent and technology. Absent that, the Court deemed “the Eastern District’s previous claim construction in a case that settled more than five years before the filing of this lawsuit to be too tenuous a reason to support denial of transfer.” Id. at 6.
Thus, the Court granted the petition for a writ of mandamus to overturn the trial court’s denial of transfer to the Northern District of Texas, Dallas Division.
Summary authored by Angela Y. Dai, Esq.