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December 29, 2008

Get Out of Town

Lear sued TS Tech for patent infringement in the Eastern District of Texas. Judge T. John Ward denied TS Tech's transfer motion. In a ruling of thin logic, failing to explain its reasoning beyond trivial convenience, Lear's interlocutory petition for writ of mandamus is granted by the CAFC. Is this the beginning of the end for efficient patent justice in this country?

In Re TS Tech (CAFC 2009-M888) [If there was any logic to case numbering, it would have been '666', not '888'.]

TS Tech argued the convenience of evidence. That's all they needed to argue.

On December 27, 2007, TS Tech filed a motion pursuant to § 1404(a) to transfer venue of the case to the Southern District of Ohio. TS Tech argued that the Southern District of Ohio was a far more convenient venue to try the case because the physical and documentary evidence was mainly located in Ohio and the key witnesses all lived in Ohio, Michigan, and Canada.

The burden for granting a writ is "clear and indisputable," though, as we'll see, the CAFC ignored that requirement in its ruling.

The writ of mandamus is available in extraordinary situations to correct a clear abuse of discretion or usurpation of judicial power. In re Calmar, Inc., 854 F.2d 461, 464 (Fed. Cir. 1988). A party seeking a writ bears the burden of proving that it has no other means of obtaining the relief desired, Mallard v. U. S. Dist. Court for S. Dist. of Iowa, 490 U.S. 296, 309 (1989), and that the right to issuance of the writ is "clear and indisputable," Allied Chem. Corp. v. Daiflon, Inc., 449 U.S. 33, 35 (1980). Because this petition does not involve substantive issues of patent law, this court applies the laws of the regional circuit in which the district court sits, in this case the Fifth Circuit. Storage Tech. Corp. v. Cisco Sys., Inc., 329 F.3d 823, 836 (Fed. Cir. 2003).

The appeals court applied Fifth Circuit law, not Federal Circuit, because the petition did "not involve substantive issues of patent law." It is hard to imagine how any venue transfer motion could involve "substantive issues of patent law" for compelling argument. In other words, according to this CAFC ruling, prevailing regional appellate court law will always apply, not Federal Circuit precedent. In this we are back to the very reason the CAFC came into existence: the disparate and often conflicting case law bases of the different regional circuits. This ruling's lack of legal consistency is thus antithetical to the CAFC's very reason for existence.

The case law backdrop takes us back to the recent Volkswagen product liability case, which had nothing to do with patent law, only with where witnesses were located.

Change of venue in patent cases, like other civil cases, is governed by 28 U.S.C. § 1404(a). Pursuant to § 1404(a), "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to another district court or division where it might have been brought." 28 U.S.C. § 1404(a). Under Fifth Circuit law, a motion to transfer venue should be granted upon a showing that the transferee venue is "clearly more convenient" than the venue chosen by the plaintiff. In re Volkswagen of Am., Inc., 545 F.3d 304, 315 (5th Cir. 2008) (en banc) ("Volkswagen II").

The Fifth Circuit applies the "public" and "private" factors for determining forum non conveniens when deciding a § 1404(a) venue transfer question. Volkswagen II, 545 F.3d at 314 n.9. The "private" interest factors include: (1) the relative ease of access to sources of proof; (2) the availability of compulsory process to secure the attendance of witnesses; (3) the cost of attendance for willing witnesses; and (4) all other practical problems that make a trial easy, expeditious and inexpensive. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241 n.6 (1981). The "public" interest factors to be considered are: "(1) the administrative difficulties flowing from court congestion; (2) the local interest in having localized interests decided at home; (3) the familiarity of the forum with the law that will govern the case; and (4) the avoidance of unnecessary problems of conflicts of laws [or in] the application of foreign law." Volkswagen II, 545 F.3d at 315.

The burden of compulsion for a venue transfer motion was supposedly the highest. The CAFC murked that.

[B]ecause TS Tech is requesting extraordinary relief in the form of a petition for a writ of mandamus, it must meet an even higher burden of demonstrating that the denial was a "clear" abuse of discretion such that refusing transfer produced a "patently erroneous result." Volkswagen II, 545 F.3d at 310.

The district court had considered bench quality a wash, upholding the fiction that any district court handles patent cases with equal proficiency.

As the district court noted, "[p]atent claims are governed by federal law," and as such "both [courts are] capable of applying patent law to infringement claims." Lear Corp., No. 2:07-CV-406, slip op. at 6.

Lip service about plaintiff choice of venue being "accorded deference," but not really, as it can't be "a factor."

First, the district court gave too much weight to Lear's choice of venue under Fifth Circuit law. While the plaintiff's choice of venue is accorded deference, In re Horseshoe Entm't, 337 F.3d 429, 434-35 (5th Cir. 2003), Fifth Circuit precedent clearly forbids treating the plaintiff's choice of venue as a distinct factor in the § 1404(a) analysis. Volkswagen II, 545 F.3d at 314 n.10. Rather, the plaintiff's choice of venue corresponds to the burden that a moving party must meet in order to demonstrate that the transferee venue is a clearly more convenient venue. Id. Here, the district court weighed the plaintiff's choice as a "factor" against transfer and afforded Lear's choice of venue considerable deference. Lear, No. 2:07-CV-406, slip op. at 3. In doing so, the court erred in giving inordinate weight to the plaintiff's choice of venue.

In applying the factors, the appeals court was singular in its reasoning: what was geographically closest to the defendant. Harkening back to horse-and-buggy days, a "100-mile" rule applies. Ironic that an auto product liability case spawned the rule, and that, as often as not, people regularly take planes for distances much greater than 100 miles, making hundreds of miles rather insignificant.

Turning to the facts of this case, we initially note that TS Tech's extensive contacts in the Southern District of Ohio indisputably make it a venue in which the patent infringement suit could have been brought.

Second, the district court ignored Fifth Circuit precedent in assessing the cost of attendance for witnesses. It goes without saying that "[a]dditional distance [from home] means additional travel time; additional travel time increases the probability for meal and lodging expenses; and additional travel time with overnight stays increases the time which these fact witnesses must be away from their regular employment." In re Volkswagen AG, 371 F.3d 201, 205 (5th Cir. 2004) ("Volkswagen I"). Because it generally becomes more inconvenient and costly for witnesses to attend trial the further they are away from home, the Fifth Circuit established in Volkswagen I a "100-mile" rule, which requires that "[w]hen the distance between an existing venue for trial of a matter and a proposed venue under § 1404(a) is more than 100 miles, the factor of inconvenience to witnesses increases in direct relationship to the additional distance to be traveled." 371 F.3d at 204-05.

The district court's order here completely disregarded the 100-mile rule. All of the identified key witnesses in this case are in Ohio, Michigan, and Canada. See Lear, No. 2:07-CV-406, slip op. at 4. Thus, the witnesses would need to travel approximately 900 more miles to attend trial in Texas than in Ohio. Despite this distance and added cost to the witnesses, the district court "was not persuaded to give great weight" to this inconvenience. Id. The district court's disregard of the 100-mile rule constitutes clear error. Furthermore, because the identified witnesses would need to travel a significantly further distance from home to attend trial in Texas than Ohio, the district court's refusal to considerably weigh this factor in favor of transfer was erroneous.

Third, the district court erred by reading out of the § 1404(a) analysis the factor regarding the relative ease of access to sources of proof. As acknowledged in the district court's order, the vast majority of physical and documentary evidence relevant to this case will be found in Ohio, Michigan, and Canada, and none of the evidence is located in Texas. Id. at 5. Concluding that this factor was neutral as to transfer, the district court explained that since many of the documents were stored electronically, "the increased ease or storage and transportation" makes this factor "much less significant." Id. However, as the Fifth Circuit explained in Volkswagen II, the fact "that access to some sources of proof presents a lesser inconvenience now than it might have absent recent developments does not render this factor superfluous." 545 F.3d at 316. Because all of the physical evidence, including the headrests and the documentary evidence, are far more conveniently located near the Ohio venue, the district court erred in not weighing this factor in favor of transfer.

There was nothing extraordinary about the TS Tech case with regard to witnesses. A vanilla patent matter. Contrast that with Volkswagen, a product liability case coming from an auto accident, where there were many witnesses.

Extensive physical evidence may provide a reason for convenience, except that, in patent cases, the physical evidence typically comprises props: evidence display in the courtroom. Shipping would likely be involved regardless of location. Documents are entirely now in electronic form, rendering distance completely irrelevant. The district court absolutely got it right in ruling this factor neutral. The CAFC utterly failed to give reasonable factual consideration to this entirely factual factor.

There is nothing particular about patent cases. "The fact that this is a patent case as opposed to another type of civil case does not in any way make the district court's rationale more logical or make the factor weigh against transfer."

The CAFC then trashed public interest factors. The fact that infringing products were sold in Texas carried no weight. Back to witness and evidence convenience, private interest factor, as the sole basis for deciding public interest.

None of the companies have an office in the Eastern District of Texas; no identified witnesses reside in the Eastern District of Texas; and no evidence is located within the venue. Instead, the vast majority of identified witnesses, evidence, and events leading to this case involve Ohio or its neighboring state of Michigan. Nevertheless, the district court concluded, in direct contradiction of Fifth Circuit precedent, that this factor weighed against transfer.

The CAFC erases the line between "mere" and "clear," replacing it with what is merely "near."

There is no easy-to-draw line separating a "clear" abuse of discretion from a "mere" abuse of discretion in all cases. Volkswagen II, 545 F.3d at 310. Nevertheless, we conclude that TS Tech has met its difficult burden of demonstrating a clear and indisputable right to a writ. As in Volkswagen II, the district court clearly abused its discretion in denying transfer from a venue with no meaningful ties to the case. In granting mandamus, the en banc Fifth Circuit found that the court's denial of transfer was a clear abuse of discretion because it (1) applied too strict of a standard to demonstrate transfer, (2) misconstrued the weight of the plaintiff's choice of venue, (3) treated choice of venue as a § 1404 factor, (4) misapplied the forum non conveniens factors, (5) disregarded Fifth Circuit precedent, including the 100-mile rule, and (6) glossed over the fact that not a single relevant factor favored the plaintiff's chosen venue. Id. at 318. Because the district court's errors here are essentially identical, we hold that TS Tech has demonstrated a clear and indisputable right to a writ.

This ruling appears political in nature, the appeals court preemptively responding to corporate lobbyist pressure in Congress against efficiently adjudging patents. Texas, particularly the Eastern District, has become famous for its sturdy and efficient dispatch of patent cases. One can only wonder if jealousy breeds contempt from a court less apt in that area of law.

Posted by Patent Hawk at December 29, 2008 11:51 AM | Case Law


Why do you think AIPLA filed a brief in Volkswagen?

It's about time Ward loses his personal ownership of patent cases. As long as Congress refuses to act to get rid of basically national jurisdiction for patent owners it had to be done in another way.

Posted by: Alan McDonald at December 30, 2008 6:41 AM

Wow, Hawk -- a real plaintiffs' lawyer.

Forcing the defendant to pay the travel costs to fly 20 witnesses 900 miles from Ohio to Texas to testify is, in your opinion, an inconvenience outweighed by some special right that Texans have (but Ohioans don't)to have the case heard locally. Yeah, sure, right. No brainer, eh?

What if Lear had filed in Hawaii to force TS to fly their witnesses 6000 miles? Under your theory do Hawaiians have the same special right to have their jury decide the case that Texans have, or are Texans somehow more entitled than both Hawaiians and Ohioans?

Or did Ward screw up real bad here, as Rader concluded?

Posted by: Pahoo-Ka-Ta-Wah at December 30, 2008 11:07 AM

There's no denying that Judge Ward wrote a slapdash ruling that precipitated the CAFC ruling. It is likely that careful balancing, as demonstrated by Oregon Judge Brown, can buck the trend. In Brown's case it was granting a permanent injunction.

Posted by: Patent Hawk at January 3, 2009 3:23 PM