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Case Transferred from the Eastern District of Texas to the Northern District of California

10-M942
December 03, 2010

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Last Month at the Federal Circuit - January 2011

Judges: Gajarsa, Schall (author), Moore

[Appealed from: E.D. Tex., Magistrate Judge Everingham]

In In re Acer America Corp., No. 10-M942 (Fed. Cir. Dec. 3, 2010), the Federal Circuit granted a petition for writ of mandamus directing the United States District Court for the Eastern District of Texas to vacate its orders denying the petitioners’ motion to transfer venue, and to direct transfer to the United States District Court for the Northern District of California.

MedioStream, Inc. (“MedioStream”), a company headquartered in the Northern District of California, brought suit in the Eastern District of Texas against twelve companies (“the petitioners”), five of which are also headquartered in the Northern District of California.  The petitioners moved to transfer venue to the Northern District of California pursuant to 28 U.S.C. § 1404(a).  The district court denied the motion, largely because one of the petitioners, Dell, Inc. (“Dell”), was headquartered in Texas, albeit outside the Eastern District.

Applying Fifth Circuit law for the forum non conveniens analysis, the Court found that the witness convenience factor clearly favored the transfer.  The Court observed that a substantial number of party witnesses, in addition to the inventor and prosecuting attorneys, reside in or close to the Northern District of California.  The Court stated that if all of these witnesses were required to travel to the Eastern District of Texas, the parties would likely incur significant expenses for airfare, meals, and lodging, as well as losses in productivity from time spent away from work.  MedioStream maintained that the trial court correctly determined that this factor weighed in neither venue’s favor because of the potential for more than one Dell employee testifying.  The Court responded by observing that the number of Dell witnesses, even if greater than one, would be insignificant, given that the allegation of infringement against Dell is largely based on integrated software of other defendants with headquarters outside of Texas.

The Court then found that the Northern District of California’s ability to compel testimony through subpoena power also favored transfer.  The Court stated that to the extent, if any, that the subpoena powers of the Eastern District of Texas pursuant to Fed. R. Civ. P. 45(b)(2) may be invoked with respect to Dell employees, those powers will be of little other use in the case.  The Court noted, however, that the subpoena powers of the Northern District of California may be invaluable in the event process is required to hale relevant witnesses into court.

The Court also found that the likely location of significant sources of evidence would be located within the Northern District of California, thus favoring transfer.  In comparison, no party identified any likely source of proof in the Eastern District of Texas.  The Court noted that, while Dell may be a significant source of evidence, Dell’s headquarters lie outside the Eastern District of Texas.  The Court concluded that it was unreasonable to suggest that Dell’s evidence alone could outweigh the convenience of having the evidence from multiple defendants located within the transferee venue.

Lastly, the Court found that the local interest factor favors transfer.  The Court first noted that, while the sale of an accused product offered nationwide does not give rise to a substantial interest in any single venue, if there are significant connections between a particular venue and the events that gave rise to a suit, this factor should be weighed in that venue’s favor.  The Court stated that, unlike the Eastern District of Texas, the Northern District of California has a localized interest in this matter.  In this case, the company asserting harm and many of the companies alleged to cause that harm are all residents of that district, as are the inventor and patent prosecuting attorneys whose work may be questioned at trial.

The Court concluded that, in sum, the convenience of the parties and witnesses, the sources of proof, the local interest, and the compulsory process factors all significantly favor transfer.  The Court stated that no factor remotely favored keeping the case in the Eastern District of Texas, and that the district court’s denial of transfer was a clear abuse of discretion.

 

Summary authored by Charles D. Cathey, Ph.D., Esq.