Petition to Transfer from the Eastern District of Texas to the Western District of Washington Granted
January 05, 2011
Last Month at the Federal Circuit - February 2011
Judges: Newman, Friedman, Lourie (per curiam)
[Appealed from: E.D. Tex., Judge Davis]
In In re Microsoft Corp., No. 10-M944 (Fed. Cir. Jan. 5, 2011), the Federal Circuit granted Microsoft Corporation’s (“Microsoft”) petition for a writ of mandamus, directing the U.S. District Court for the Eastern District of Texas to transfer the case to the U.S. District Court for the Western District of Washington.
Allvoice Developments U.S., LLC (“Allvoice”) brought suit for patent infringement against Microsoft in the Eastern District of Texas. Although Allvoice maintains an office in the Eastern District of Texas, it does not employ any individuals in that office or anywhere else in the United States. Allvoice’s website directs requests and inquiries to its Texas office, which are then answered from the United Kingdom, the location of Allvoice’s operations.
Microsoft moved to transfer the case to the Western District of Washington, where it maintains its corporate headquarters and where a substantial portion of its employees and operations are located, including all of its witnesses and relevant documents relating to the sales, marketing, development, and design of the accused products. The district court denied the motion to transfer, finding that Allvoice’s maintenance of a Texas office, storage of its documents in that office, incorporation under the laws of Texas, and the convenience to witnesses in other jurisdictions such as New York, Massachusetts, and Florida, weighed in favor of maintaining the action in Texas.
On appeal, the Federal Circuit reiterated that a motion to transfer under 28 U.S.C. § 1404(a) calls upon the trial court to weigh a number of case-specific factors relating to the convenience of the parties and witnesses, and the proper administration of justice, based on the individualized facts on record. Moreover, the Court noted that, on several occasions in the past, its application of Fifth Circuit law in cases arising from district courts in that circuit resulted in a writ of mandamus to transfer when the trial court’s application of those factors amounted to a clear abuse of discretion.
The Federal Circuit found the facts of this case analogous to those in In re Genentech, Inc., 566 F.3d 1338 (Fed. Cir. 2009). The Court noted that, as in Genentech, there is a stark contrast in convenience and fairness with regard to the identified witnesses. All individuals identified by Microsoft as having material information resided within 100 miles of the Western District of Washington, would not have to undergo considerable cost and expense to testify, and would be subject to that district’s subpoena powers. Allvoice identified fourteen witnesses, only two of whom resided in Texas, but failed to represent that either of the two Texas-based witnesses had knowledge of the patent or issues of the suit. Thus, maintaining trial in Texas would similarly require the majority of Allvoice’s witnesses to undergo the cost, time, and expense of travel to attend trial.
The Court squarely rejected Allvoice’s attempt to distinguish Genentech based on Allvoice’s alleged “established presence” in the Eastern District of Texas. The Federal Circuit stated that “Allvoice’s argument . . . rests on a fallacious assumption: that this [C]ourt must honor connections to a preferred forum made in anticipation of litigation and for the likely purpose of making that forum appear convenient.” Slip op. at 5. The Federal Circuit indicated that it has diligently followed Supreme Court precedent to ensure that the purposes of jurisdictional and venue laws are not frustrated by a party’s attempt at manipulation. In particular, the Court pointed to its decisions in In re Hoffmann-La Roche Inc., 587 F.3d 1333 (Fed. Cir. 2009), and In re Zimmer Holdings, Inc., 609 F.3d 1378 (Fed. Cir. 2010). In Hoffman-La Roche, the Court held that transferring documents to litigation counsel in Texas and then asserting that those documents were “Texas” documents was a fiction that appeared to be created to manipulate the propriety of venue and was therefore entitled to no weight in the venue analysis. Furthermore, in Zimmer, the Court held that transferring documents to a company’s office in anticipation of litigation rather than to litigation counsel was a distinction without a difference, particularly where the office did not have any employees, was recent and ephemeral, and appeared to be undertaken for no other purpose than to manipulate venue.
Applying those principles here, the Federal Circuit found that Allvoice’s maintenance of documents in its Texas office and its incorporation under the laws of Texas a mere sixteen days before filing suit were no more meaningful, and no less in anticipation of litigation, than the factors the Court rejected in In re Hoffmann-LaRoche and In re Zimmer Holdings. The Federal Circuit concluded that the realities made clear that the Western District of Washington was comparatively the only convenient and fair venue in which to try the case. Additionally, the Court found unpersuasive Allvoice’s argument that Microsoft’s attempt to transfer the case to the U.S. District Court for the Southern District of Texas should be weighed against mandamus. The Court found that because the thrust of that motion was to transfer the case to a court that had previous experience adjudicating the patent-at-issue, the Court could not say that “any asserted inconsistency” should “preclude transfer to a venue that is far more convenient and fair.” Slip op. at 7.
Accordingly, the Federal Circuit granted Microsoft’s writ of mandamus and directed the district court to vacate its order denying Microsoft’s motion and to transfer the case to the Western District of Washington.
Summary authored by Jessica C. Hill, Esq.