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Exploring the Latest in Intellectual Property Law
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Carolina Calling: Sources of Proof Favor Transfer

by | Feb 8, 2024 |

The US Court of Appeals for the Federal Circuit vacated a district court order denying transfer, finding that the sources of proof, compulsory process and localized interest factors all favored transfer. In re Honeywell Int’l Inc., Case No. 23-152 (Fed. Cir. Jan. 26, 2024) (Dyk, Bryson, Taranto, JJ.) (per curiam) (nonprecedential)

Lone Star SCM Systems filed a lawsuit against Honeywell in the Western District of Texas, Waco Division (West Texas) asserting infringement of four patents related to radio frequency identification technology. Honeywell moved to transfer the suit to the Western District of North Carolina (West Carolina), where Hand Held Products, a Honeywell subsidiary that designed, manufactured, imported and sold certain accused products, is headquartered. Honeywell argued that it had identified five potential Hand Held witnesses who would be subject to the transferee’s subpoena power and that relevant and material evidence would be more likely to exist in the transferee district.

The district court denied Honeywell’s motion. The district court analyzed public- and private-interest factors outlined in the Fifth Circuit’s 2008 In re Volkswagen of Am. decision and concluded that although Lone Star could have brought its suit in West Carolina, Honeywell had failed to demonstrate that West Carolina was clearly more convenient. The district court acknowledged that the bulk of the evidence was located in West Carolina but ultimately concluded that the convenience to potential party witnesses favored West Texas, pointing to several Lone Star witnesses who resided in the Northern District of Texas. The court found that the public-interest factors were neutral or similarly offsetting. The district court also found that West Carolina’s local interest favored transfer, but judicial efficiency did not because a transfer would have required relocating this suit away from two co-pending Lone Star infringement suits.

Honeywell petitioned the Federal Circuit for a writ of mandamus. The Federal Circuit determined that the district court’s denial of Honeywell’s transfer motion was patently erroneous. The Federal Circuit explained that the district court’s findings regarding potential party witness convenience and judicial efficiency were contrary to recent Fifth Circuit and Federal Circuit precedent. Regarding the potential party witnesses, the Federal Circuit cited the Fifth Circuit’s 2023 In re TikTok decision, explaining that it was improper to place witnesses residing outside of West Texas but still within the state of Texas on par with those residing in West Carolina. Regarding judicial efficiency, the Federal Circuit found that Lone Star’s position differed little from the circumstances that the Federal Circuit considered in its 2021 In re Samsung Elecs. decision, where the other suits involved different defendants with different hardware and software. Consistent with Samsung, the Federal Circuit concluded that Lone Star’s co-pending suits did not favor West Texas because the other cases were likely to involve significantly different discovery, evidence and issues. The Federal Circuit vacated the district court’s decision and ordered the district court to grant Honeywell’s transfer motion.



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Golden State of Mind: Witness Convenience Isn’t Based Solely on Travel Distance

by | May 5, 2022 |

The US Court of Appeals for the Federal Circuit ordered a district court to transfer a patent infringement case from Texas to California because the district court had wrongly assessed facts relating to the convenience of witnesses when it originally denied a motion to transfer venue. In re: Apple Inc., Case No. 22-128 (Fed. Cir. Apr. 22, 2022) (Dyk, Reyna, Chen, JJ.) (non-precedential).

CPC Patent Technologies PTY Ltd. filed a lawsuit against Apple in the Western District of Texas, alleging that Apple’s mobile phones, tablets and computing products equipped with Touch ID, Face ID or Apple Card features infringed three of CPC’s patents relating to biometric security. Apple moved to transfer to the Northern District of California, arguing that its employees responsible for the design, development and engineering of the accused functionality resided either in California or outside of the United States, and that the employees most knowledgeable about the marketing, licensing and financial issues relating to the accused products resided in California. Apple explained that no employees with relevant information worked in Western Texas.

The district court denied Apple’s motion. After acknowledging that the action might have been brought in Northern California, the district court analyzed the private and public interest factors governing transfer determinations. The court determined that the factor concerning the convenience of willing witnesses slightly favored transfer. However, the court determined that the factor accounting for the availability of compulsory process weighed strongly against transfer. The district court also determined that court congestion and practical problems factors weighed against transfer based on its ability to quickly reach trial and the fact that CPC had another pending infringement suit in Western Texas. The district court recognized that Apple had identified seven relevant witnesses in California who would have to travel to Texas but found that inconvenience was counterbalanced by the presence of two Apple employees in Austin who CPC insisted had relevant information, and an Apple witness in Florida who would “find it about twice as inconvenient to travel to [Northern California] than to [Western Texas] because Texas sits halfway from Florida to California.” The district court also relied on its ability to compel the third-party Mac Pro manufacturer in Western Texas to attend trial. Finally, the Court noted that there was local interest in the dispute because Apple employs thousands of workers in Western Texas. Balancing these facts, the district court determined that Apple had failed to meet the burden of proving that Northern California was clearly more convenient that Western Texas, and thus denied the motion. Apple petitioned for mandamus review.

The Federal Circuit reversed, finding that Apple had shown clear entitlement to transfer to the Northern District of California. The Court found that the district court erroneously relied on two Apple employees in Austin whom CPC identified as potential witnesses and concluded that it was far from clear that either employee had relevant or material information. One employee had testified that he worked on authentication technology that was different from that accused by CPC, [...]

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California, I’m Coming Home: Transfer to Venue Where Products Were Designed Is Appropriate

by | Mar 10, 2022 |

The US Court of Appeals for the Federal Circuit denied a patent owner’s petition for writ of mandamus, finding that the district court properly transferred a case from the Eastern District of Virginia to the Northern District of California because the center of the alleged infringing activities occurred in California. In re: SunStone Information Defense, Inc., Case No. 2022-121 (Fed. Cir. Feb. 11, 2022) (Moore, Dyk, Stoll, JJ). (non-precedential).

SunStone filed a patent infringement suit against F5 Networks and one of its customers in the Eastern District of Virginia. F5 Networks moved to transfer the case to the Northern District of California pursuant to 28 U.S.C. § 1404(a), arguing that at the time of filing, SunStone was headquartered in Northern California, and the F5 Networks subsidiary that designed and developed the accused products was also located in the area. F5 Networks also noted that essentially all of the relevant documents and knowledgeable employees were in Northern California.

The district court granted F5 Networks’ motion, explaining that F5 Networks satisfied its burden of proving that transfer was warranted based on convenience of the parties and witnesses and because California was the “center of the alleged infringing activities.” The district court also noted that neither party disputed that the action “might have been brought” in the Northern District of California. SunStone petitioned for writ of mandamus.

The Federal Circuit applied the law of the regional circuit (the Fourth Circuit), which requires finding a clear abuse of discretion in order to overturn a district court’s transfer decision. The Court found that SunStone failed to meet this “stringent standard.” The Court also found that SunStone’s choice of forum was not entitled to significant weight because it was not SunStone’s home forum and had no specific connection to the infringement claims. The Court therefore denied SunStone’s petition.

Practice Note: This is another decision in a long line of recent Federal Circuit rulings relating to venue, which are summarized in an article related to a string of transfer denials in the Western District of Texas and our 2022 IP Outlook Report: The Developments Shaping Patent Law.



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Venue Manipulation Obviates Geographically Bounded Claims in Venue Analysis

by | Jul 8, 2021 |

The US Court of Appeals for the Federal Circuit issued a rare grant of two mandamus petitions directing the US District Court for the Western District of Texas to transfer the underlying patent infringement actions to the US District Court for the Northern District of California pursuant to 28 U.S.C. § 1404(a). In re: Samsung Elecs. Co., Ltd., Case Nos. 21-139, -140 (Fed. Cir. June 30, 2021) (Dyk, J.)

Ikorongo Technology owned four patents directed to functionalities allegedly performed by applications run on the accused mobile products sold by Samsung and LG. Ikorongo Technology assigned to Ikorongo Texas—an entity formed only weeks before—exclusive rights to sue for infringement of those patents within specified parts of the state of Texas, including certain counties in the Western District of Texas, while retaining the rights to the patents in the rest of the United States.

Ten days later, Ikorongo Texas sued Samsung and LG in the Western District of Texas. Although Ikorongo Texas claimed to be unrelated to Ikorongo Technology, the operative complaints indicated that the same five individuals owned both Ikorongo Texas and Ikorongo Technology, and that both entities shared office space in North Carolina.

The day after filing the initial complaints, Ikorongo Texas and Ikorongo Technology filed first amended complaints, this time naming both Ikorongo Technology and Ikorongo Texas as co-plaintiffs, noting that together Ikorongo Texas and Ikorongo Technology owned the entire right, title and interest in the asserted patents, including the right to sue for past, present and future damages throughout the United States and the world.

Samsung and LG separately moved under 28 U.S.C. § 1404(a) to transfer the suits to the Northern District of California, arguing that “three of the five accused third-party applications were developed in Northern California, where those third parties conduct significant business activities and no application was developed or researched in Western Texas.” Samsung and LG also argued that potential witnesses and sources of proof were located in the Northern District of California.

The district court first concluded that Samsung and LG failed to establish § 1404(a)’s threshold requirement that the complaints “might have been brought” in the Northern District of California. Because Ikorongo Texas’s rights under the asserted patents were limited to the state of Texas and could not have been infringed in the Northern District of California, the district court held that venue over the entirety of the actions was improper under § 1400(b), which governs venue in patent infringement cases. Alternatively, the district court analyzed the traditional public- and private-interest factors, finding that defendants had not met their burden to show cause for transfer. Samsung filed for mandamus to the Federal Circuit.

The Federal Circuit found that the district court erroneously disregarded Ikorongo Technology and Ikorongo Texas’s attempts to manipulate venue when analyzing venue under § 1404(b). While no act of infringement of Ikorongo Texas’s geographically bounded rights took place in the Northern District of California, the Federal Circuit determined that “the presence of Ikorongo Texas is plainly recent, ephemeral, and [...]

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First-to-File Rule Requires That Action Could Have Been Brought in Transferee Forum

by | Mar 11, 2021 |

After issuing a rare grant of a mandamus petition directing a district court to stay proceedings until ruling on a pending motion to transfer, the US Court of Appeals for the Federal Circuit denied a subsequent mandamus petition to compel transfer after that district court denied the transfer. In re SK hynix Inc., Case No. 21-114 (Fed. Cir. Feb. 25, 2021) (Taranto, J.) (non-precedential). The Federal Circuit found that the doctrine of forum non conveniens and the first-to-file rule did not establish a basis for transfer because the action could not have initially been brought in the transferee forum and the patentee’s prior filings in that forum did not give consent for subsequently filed actions.

Netlist and SK hynix are competitors in the memory semiconductor space. Netlist sued SK hynix for patent infringement in the US District Court for the Western District of Texas. SK hynix moved to transfer the case to the US District Court for the Central District of California. With no ruling after eight months (while the case continued to move forward), SK hynix sought mandamus from the Federal Circuit to compel the district court to transfer the case. The Federal Circuit declined to transfer the case and instead stayed the district court proceedings until the district court ruled on the transfer motion. The district court then denied the transfer motion, rejecting SK hynix’s arguments that the doctrine of forum non conveniens and the first-to-file rule required transfer to the Central District of California. The district court also advanced the Markman hearing and trial dates. SK hynix again sought mandamus from the Federal Circuit to compel transfer and requested a stay of the district court proceedings because of the advanced Markman and trial dates.

Applying Fifth Circuit law, the Federal Circuit denied the mandamus petition, concluding that SK hynix had not shown that the district court clearly abused its discretion in denying the transfer motion. On the forum non conveniens issue, the Court found no clear abuse in the district court’s determination that SK hynix did not meet the threshold conditions for transfer under 28 USC § 1404(a), namely that the action “might have been brought” in the Central District of California or that, in the alternative, all the parties had consented to that venue for the action. As to the “might have been brought” inquiry, the Court found that the district court properly focused on whether the action might have been brought against SK hynix America, a domestic entity subject to the venue requirements of 28 USC § 1404(b) and headquartered in the Northern District of California, rather than SK hynix, a foreign entity not subject to the same venue requirements. The Court also found that SK hynix did not differentiate between the foreign and domestic SK hynix entities in its transfer motion. This was not an action that might have been brought against SK hynix in the Central District of California because SK hynix America lacked sufficient presence there to confer venue under [...]

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Eight-Month Delay on Transfer Motion Ruling Is “Egregious,” Warrants Stay

by | Feb 11, 2021 |

The US Court of Appeals for the Federal Circuit issued a rare grant of a mandamus petition directing a district court to stay proceedings until ruling on a pending motion to transfer, stating that the district court’s eight-month delay in ruling on the motion while allowing substantive issues to proceed “amounted to egregious delay and blatant disregard for precedent.” In re SK hynix Inc., Case No. 21-113 (Fed. Cir. Feb. 1, 2021) (Moore, J.) (non-precedential). The district court denied the transfer request the following day, and the petitioner asked the Federal Circuit to again stay the proceedings until it completed briefing on a new mandamus petition to compel transfer, which the Federal Circuit denied without prejudice. In re SK hynix Inc., Case No. 21-113 (Fed. Cir. Feb. 3, 2021).

Netlist and SK hynix are competitors in the memory semiconductor space. Netlist sued SK hynix for patent infringement in the US District Court for the Western District of Texas. SK hynix moved to transfer the case to the US District Court for the Central District of California. The parties completed briefing on the transfer motion in May 2020. The district court ordered the parties to engage in extensive discovery and scheduled a Markman hearing for March 2021. On January 6, 2021, after SK hynix moved to stay proceedings pending the motion to transfer, the district court instructed the parties to proceed with all deadlines while jurisdictional issues were resolved in parallel. SK hynix then filed the mandamus petition seeking to direct the district court to transfer the case, or alternatively, to rule on SK hynix’s pending motion to transfer. The district court soon issued an order setting a hearing on the transfer motion for February 2, 2021.

On February 1, 2021, the Federal Circuit granted the mandamus petition and directed the district court to stay all proceedings concerning the substantive issues in the case, including discovery, until the district court issued a ruling on the transfer motion. In its Order, the Court recognized that mandamus may be used to correct an “arbitrary refusal to act” by a district court on a transfer request. Although a district court has discretion in handling its docket, a motion to transfer “should unquestionably take top priority.” The Court characterized the district court’s handling of the transfer motion as amounting to “egregious delay and blatant disregard for precedent,” finding that the motion “lingered unnecessarily on the docket” while the parties were instructed to proceed with the merits of the case.

The next day, the district court issued an order denying SK hynix’s transfer request. The district court’s order also moved up the trial date from December 6, 2021, to July 6, 2021, and the Markman hearing from March 19, 2021, to March 1, 2021. SK hynix immediately notified the Federal Circuit of the denial and its intention to file a new mandamus petition to compel transfer. In the interim, SK hynix requested that the Federal Circuit extend the stay of the district court proceedings until briefing [...]

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