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Transfer out of Eastern District of Texas Denied as Trial Courts Receive Considerable Discretion in Venue Determinations

December 15, 2010

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Last Month at the Federal Circuit - January 2011

Judges: Gajarsa, Schall (author), Moore

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

In In re Vistaprint Ltd., No. 10-M954 (Fed. Cir. Dec. 15, 2010), the Federal Circuit denied Vistaprint Limited (“Vistaprint”) and OfficeMax Incorporated’s (“OfficeMax”) petition for a writ of mandamus to transfer the case, upholding the trial court’s determination of venue.

ColorQuick, L.L.C. (“ColorQuick”), a New Jersey limited liability company, brought suit in the Eastern District of Texas, charging Vistaprint and OfficeMax with infringement of its patent relating to preparing production data for printing.  Vistaprint is a foreign corporation with a wholly owned subsidiary, Vistaprint USA, Inc., which is not a party to these proceedings.  OfficeMax is a Delaware corporation with its principal place of business in Illinois.  Vistaprint operates the accused OfficeMax services for OfficeMax.

Vistaprint and OfficeMax moved to transfer the case to the federal district court in Massachusetts, where Vistaprint USA, Inc. has a large presence.  ColorQuick opposed the motion.  The district court denied the motion to transfer the case.

Considering Vistaprint and OfficeMax’s petition for a writ of mandamus, the Federal Circuit concluded that it was not plainly incorrect for the district court to conclude that having the same magistrate judge handle this and a copending case involving the same patent would be more efficient than requiring another magistrate or trial judge to start from scratch.  The Court noted that mandamus is an extraordinary remedy, available only upon demonstration by the petitioner of a “clear and indisputable” right to the relief sought.  Slip op. at 3 (citing Allied Chem. Corp. v. Daiflon, Inc., 449 U.S. 33, 35 (1980)).  The Court reminded that petitioners must show that the court’s denial of transfer was so patently erroneous as to amount to a clear abuse of discretion.

Because the petition did not raise issues unique to the Federal Circuit’s jurisdiction, the Court applied the law of the regional circuit in which the district court sits—in this case, the law of the Fifth Circuit.  The Fifth Circuit applies the public and private factors used in forum non conveniens analysis to determine the most convenient venue.  According to 28 U.S.C. § 1404(a), a trial court has broad discretion in transfer decisions.  Nevertheless, the Federal Circuit warned that this does not mean a trial court may accord weight simply as it pleases.  Rather, the Court’s recent decision in In re Zimmer Holdings, Inc., 609 F.3d 1378 (Fed. Cir. 2010), makes clear that where the convenience factors strongly weigh in favor of the transferee venue, a decision to deny transfer based solely on “negligible” judicial efficiencies may be such a clear abuse of discretion as to warrant extraordinary relief.

In the present case, the Federal Circuit concluded that the weight the district court afforded judicial economy did not amount to a “patently erroneous result.”  Slip op. at 4 (citing In re Volkswagen of Am., Inc., 545 F.3d 304, 310 (5th Cir. 2008) (en banc) (“Volkswagen I”)).  The Court rejected the petitioners’ argument that it is always improper for a district court to deny transfer based on judicial economy when all of the convenience factors clearly favor transfer, as well as petitioners’ argument that, under § 1404(a), the convenience factors are deserving of “most importance.”  None of the cases cited by Vistaprint and OfficeMax presented the Court with a showing of judicial economy comparable to that in this case.  The Court noted that in the cited cases, considerations of judicial administration were neutral or were otherwise inapplicable to the outcome of the petition. 

According to the Federal Circuit, § 1404(a) balances a number of case-specific factors, not just convenience.  Further, § 1404(a) commits the balancing determination to the sound discretion of the trial court based not on per se rules, but rather on “individualized, case-by-case consideration of convenience and fairness.”  Id. at 6-7 (citing Van Dusen v. Barrack, 376 U.S. 612, 622 (1964); Volkswagen I, 545 F.3d at 312 n.7).  The Court noted, “Our reluctance to interfere is not merely a formality, but rather a long-standing recognition that a trial judge has a superior opportunity to familiarize himself or herself with the nature of the case and the probable testimony at trial, and ultimately is better able to dispose of these motions.”  Id. at 7 (citing A. Olinick & Sons v. Dempster Bros., 365 F.2d 439, 444 (2d Cir. 1966)).  Invalidating another of Vistaprint and OfficeMax’s arguments, the Court emphasized that it has repeatedly rejected the use of per se rules in forum non conveniens analyses, despite the resultant lack of uniformity and predictability.

In deciding whether the trial court improperly balanced judicial economy against convenience in this specific case, the Federal Circuit found that the gain in judicial economy from keeping this case in the Eastern District of Texas was more than negligible.  The trial court became very familiar with the only asserted patent and the related technology during a prior litigation.  That, coupled with the copending litigation before the trial court involving the same patent and underlying technology, provided a substantial justification for maintaining suit in the Eastern District of Texas.  In addition, the Court concluded that, although some potential witnesses and sources of proof located in the transferee venue warrant weighing convenience factors in favor of transfer, no defendant party was actually located in the transferee venue and the presence of the witnesses in that location was not overwhelming. 

The Federal Circuit noted that a meaningful application of the factors often creates a reasonable range of choice.  The Court reminded that, as long as there is plausible support of record for the district court’s conclusion, the Federal Circuit will not second guess that determination, even if the convenience factors call for a different result.  Accordingly, the Federal Circuit affirmed the district court’s ruling because the Court did not find that the district court’s balancing was so unreasonable as to warrant the extraordinary relief of mandamus.


Summary authored by Rebecca H. Duttry, Esq.