Federal Circuit Transfers Case Out of Texas (Applying New Fifth Circuit Precedent)

In re TS Tech USA Corp. (Fed. Cir. 2008) (precedential order)

Responding to an interlocutory petition for a writ of mandamus, the Federal Circuit has ordered a patent case transferred from Judge Ward's courtroom in the Eastern District of Texas to the Southern District of Ohio. Both venues were "proper," but the appellate panel found the Ohio venue "far more convenient."

In 2007, Michigan based Lear Corp (not Lear Jets) sued TS Tech for infringing its patent covering a pivotable vehicle headrest. The accused TS headrest assemblies were supplied to Honda and used in the Civic and Accura RDX. TS is a Japanese company, but the defendants are TS's North American subsidiaries headquartered in Ohio and Canada.

In 2008, the Fifth Circuit (TX, LA, MS) decided another venue case on mandamus – finding that cases should be transferred from the Eastern District of Texas when the new venue is "clearly more convenient." In re VW (5^th Cir. 2008) (en banc)(cert petition pending). On mandamus, a lower court's refusal to transfer will only be reversed if it produces a "patently erroneous result."

Here, the lower court erred in its application of 5^th Circuit law in several ways:

• Plaintiff's Choice: The lower court gave too much ("inordinate") weight to the plaintiff's choice of venue.
• Distance from Home: When a defendant is more than 100 miles from home, "inconvenience to witnesses increases in direct relationship to the additional distance to be traveled." Here, all the witnesses are in Michigan, Ohio, and Canada. All of those witnesses "would need to travel approximately 900 more miles to attend trial in Texas than in Ohio."
• Physical Evidence: "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."
• Public Interest: Texas has no interest in handling this patent dispute since the only relevant connection to the venue is that some vehicles containing the accused headrest assembly were sold in the venue. "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." Thus, the "citizens of the Eastern District of Texas have no more or less of a meaningful connection to this case than any other venue."

Patently erroneous: Although "patentably erroneous" is difficult to define, the Federal Circuit found the errors sufficient to grant the writ. They reasoned that the 5^th Circuit VW case – where mandamus was also granted – was based on essentially identical errors.

Transfer Ordered.

Tags: Venue

Comments

[Alan McDonald]

Looks like Ward's personal fifedom on patent cases is about over.

Oh, woe to the trolls.

[Steve Sereboff]

This will probably have little impact on the trolls. How hard is it to form an LLC in Texas, and to have an office in Marshall? On the other hand, if you are Lear and you are seeking an injunction against a competitor, forming a Marshall subsidiary to hold the patent might not achieve your purpose.

I suspect that Judge Ward won't be so upset about this. His docket is stretching longer and longer. EDTX is no longer so fast, and it's not a good place for weak patents.

[West Coast Guy]

Hoteliers should reconsider their plans for constructing new hotels in Marshall.

[MaxDrei]

Help me folks, will you. I presume that the degree to which EDTX is a "better" jurisdiction for patent owners is not something that the appeal instance can take into account. So, it doesn't weigh, in the CAFC Decision. For commentators, on the other hand, it's the main thing that counts. They lament that cases are escaping from the only jurisdiction in the USA that dispenses robust and speedy justice in patent cases, while the CAFC remains unmoved, even judicially ignorant (?) of such pleading. Conversely, is the CAFC thinking that proper justice requires that BOTH sides get a fair trial, so any particular jurisdiction that has acquired a reputation for being "good for patent owners" is a bad'un anyway.

[Alan McDonald]

"I suspect that Judge Ward won't be so upset about this."

Have you ever heard Ward speak at AIPLA or ABA?

To listen to him, he thinks he should handle all patent trials (or at least run the "Patent Trial Circuit")in the US and answer only to the CAFC.

[West Coast Guy]

MaxDrei,

The issues lie in civil procedure law nd not patent law. Forum shopping by selecting the more favorable, patentee-friendly venue of EDTX is an issue of civil procedure law. When deciding the issue of forum non conveniens, the focus is on the burden of the alleged infringer to litigate in a forum in which he has no ties. Robust and speedy justice for patent cases is not a factor.

[MaxDrei]

So, WC Guy, I now wonder when Marshall Texas is ever NOT forum non-conveniens? I conclude that Alan McDonald (from Fife perhaps?), is spot on about Judge Ward's future docket length. What does MM have to say?

[Alan McDonald]

"Alan McDonald (from Fife perhaps?)"

MaxDrei - What's Fife?

[MaxDrei]

Sorry Mr McDonald for being so obtuse. Fife is a jurisdiction/county in Scotland. I had supposed you would know that, given your name. You wrote about a "fifedom" but I suppose you intended a "fiefdom"? Or is that actually spelt "fifedom", in American English?

[Alan McDonald]

Now I understand.

Spelling was never my best subject.

[Babel Boy]

Max, as Ward himself said, all the issues at bar are issues of federal patent law, so, theoretically, no federal court is any more capable than any other to enter judgment. I mean, hey, it's all "just" federal law. Plaitiff should have thrown in some Texas state law claim. The length of the docket queue is neutral as to venue determination, as is the judge's training, background, and shoe size.

But I'm not sure I'm clear -- in fact I'm sure I'm NOT clear -- on the CAFC's role in the venue determination. Maybe someone can help me on this.

As Ward and Rader both noted, this is not a patent issue determined by reference to patent law. It's plain ole' standard forum law; i.e., 28 U.S.C. § 1404(a) -- ergo, the local circuit case law applies.

Rader does not go through the "We have jurisdiction pursuant to ....," song and dance, so I don't know why they actually do have jurisdiction. Maybe it's just too obvious to state, and I need a refresher course on venue and writs of mandamus procedure.

Why didn't the 5CA decide this?

BTW -- when a statute like 1404(a) says that a district judge "may" do something (transfer the case), and then when he doesn't do it he gets reversed, he has really screwed up. Here, Ward had brand new, fresh of the presses, 5CA case law on the very issue (Volkswagen II) and still got it badly wrong.

A "clear abuse of discretion" is about as bad as it gets. The next step down is when a decision is so bad the judicial canons of ethics kick in. Maybe Ward knows his patent law better than most, but he apparently needs a brush-up course on mandamus and venue even more than I do.

[Babel Boy]

Max, as Ward himself said, all the issues at bar are issues of federal patent law, so, theoretically, no federal court is any more capable than any other to enter judgment. I mean, hey, it's all "just" federal law. Plaitiff should have thrown in some Texas state law claim. The length of the docket queue is neutral as to venue determination, as is the judge's training, background, and shoe size.

But I'm not sure I'm clear -- in fact I'm sure I'm NOT clear -- on the CAFC's role in the venue determination. Maybe someone can help me on this.

As Ward and Rader both noted, this is not a patent issue determined by reference to patent law. It's plain ole' standard forum law; i.e., 28 U.S.C. § 1404(a) -- ergo, the local circuit case law applies.

Rader does not go through the "We have jurisdiction pursuant to ....," song and dance, so I don't know why they actually do have jurisdiction. Maybe it's just too obvious to state, and I need a refresher course on venue and writs of mandamus procedure.

Why didn't the 5CA decide this?

BTW -- when a statute like 1404(a) says that a district judge "may" do something (transfer the case), and then when he doesn't do it he gets reversed, he has really screwed up. Here, Ward had brand new, fresh of the presses, 5CA case law on the very issue (Volkswagen II) and still got it badly wrong.

A "clear abuse of discretion" is about as bad as it gets. The next step down is when a decision is so bad the judicial canons of ethics kick in. Maybe Ward knows his patent law better than most, but he apparently needs a brush-up course on mandamus and venue even more than I do.

[TJ]

Babel Boy,

1. The Fed. Cir. has jurisdiction because the complaint is for patent infringement. Where ultimate appellate jurisdiction lies, so too mandamus jurisdiction. See, e.g., Seagate.

2. It is ironic for me to be defending the E.D. Tex., but Judge Ward didn't do much wrong here. If you didn't notice from the Federal Circuit order, the VW II case did not issue until after Ward had denied the transfer, and the petitioner did not seek reconsideration but rather went straight up to the Federal Circuit. So Ward never got a chance to consider the VW II case. Maybe he should have seen VW II coming, but given that it was 10-7 it was hardly unreasonable for Ward to think it might come out the other way.

[Alan McDonald]

TJ,

Do you know of any attempt to transfer out of Ward's court post Volkswagen and how he is ruling now?

[West Coast Guy]

Judge Ward is also the EDTX judge of the VW case.

Slammed by two Circuits.

[West Coast Guy]

More information about Judge Ward's VW case. From

http://texaslawyer.typepad.com/texas_lawyer_blog/2008/12/in-re-volkswagen-takes-a-road-trip-to-the-us-supreme-court.html

the following is quoted:

"In In Re: Volkswagen the full 5th Circuit granted a mandamus against U.S. District Judge T. John Ward of Marshall in a products liability case, transferring a case to Dallas, because that’s where the accident in the underlying case occurred."

[Michael R. Thomas www.worldsonlyinventorofsignificancearguably.com]

This decision sounds ok in this situation but not in a patent reform legislation as other situations need to be considered such as jury prejudis in local venues due to area involved buisness economic impact and the areas gratitude or lack of it to inventors in general.

[Babel Boy]

Thanks, TJ.

Even in the absence of the VWII clear abuse of discretion opinion, it seems to me like a real stretch to hold that forcing the Defendant to transport 20+ witnesses 900 miles for trial is trumped by some fictitious special interest of Texans to hear the case. What if Lear had filed in Hawaii?

It just seems way out of line, until the CAFC or USSCt holds that a judge's experience in patent cases carries some weight in venue determination, thereby establishing a de facto patents court and an admission that all the judges don't know all the law all the time. Heresy!!

What the CAFC did was to bust up a de facto patents court.

[TJ]

Alan, I have no info on those matters.

[anonymous]

It'll be interesting to see if this opens the floodgates to more mandamus petitions by defendants who want transfers out of districts where they don't want to litigate.

1404 gives district courts *lots* of discretion, and between that and the standard for succeeding on a mandamus petition, it should be next to impossible to succeed on a mandamus petition challenging a district court's refusal to order a discretionary transfer.

My guess is that there's little hope of success for defendants who are stuck somewhere other than the Eastern District of Texas, unless and until some other district court starts showing signs of being essentially the next E.D.Tex.

Here's the last extended patentlyo post on the VW case:
http://www.patentlyo.com/patent/2008/03/ed-texas-venue.html

[anonymous]

I'm no expert in Supreme Court practice, but I imagine that this order will show up in the Singletons' reply brief to the Supreme Court in the Volkswagen case.

From a brief skim, the cert petition is very well written. Cert petitions are always longshots, as has been discussed in the comments to the posts on the Biomedical Patent Management Corp. v. California case, but this one may have more than the usual 0.33% chance.

[Lars]

Where did you find the cert petition in the Volkswagon case? Can you post a link?

[anonymous]

I searched Google for a while before giving up and pulling it off of Westlaw. If you have free Westlaw, just enter the docket number (08-574) into the sct-petition database and that should be the only result.

Sorry not to be more helpful than that.

[Paul F. Morgan]

Some commentators has expressed a valid concern that the tactic some trolls have already been using of setting up a mere empty shell corporation in E.D.TX [with no relevant local witnesses or evidence or any business other than litigation venue] may avoid their suits being transferred.
Perhaps, but perhaps not. The issue here is not about valid venue [all these suits already have unchallenged statutory venue under 28 USC 1391(c)*(see below)] Nor [as the [controlling] 5th Cir. Volkswagen case noted en banc], is even the old case law on forum non conveniens controlling. Rather, this is about appropriate current standards for 28 USC 1412 transfers of cases from one legally valid venue to another legally valid venue where almost all, or all, of the witnesses and evidence are located, and thus where trial is so much more appropriate in that other venue that it is an abuse of discretion not to order the requested case transfer.
But, as others have noted, would another less "famous" district court in another Circuit even get mandamus consideration of the latter?

*thanks only to a dubious 1990 Federal Circuit decision in VE Holding, 917 F.2d. 1574, holding [contrary to normal statutory interpretation] that that this Section 1391(c)General venue statute amendment had overruled and rendered completely moot the Specific venue statute 28 USC 1400(b) for patent suits requiring "a regular and established place of business" even though there is not a shred of evidence that Congress [illogically] intended to render 1400(b) completely moot but still leave it on the books. [But no one so far has apparently ever even tried to challenge that strange CAFC decision.]

[Paul F. Morgan]

Re the value of the extensive experience of a judge with patent cases, it sounds logical, but note the prior posting by Prof. Crouch [not that long ago] of a detailed statistical study showing that there was NOT a good correlation with CAFC reversal rates.

[smashmouth football]

My gut tells me that the 5th Circuit majority in Volkswagen stretched mandamus and substituted their judgment for that of Judge Ward. 155 miles is just not that big of a deal in Texas. Pretty clearly the majority wanted to give defendants more leverage in the forum shopping struggle.

In the CAFC case, it seems there's a better case that Judge Ward clearly abused his discretion.

I hope the Supremes grant cert in Volkswagen and give some guidance in this area.

[smashmouth football]

08-754
SINGLETON, RICHARD, ET AL. V. VOLKSWAGEN OF AM., ET AL.
(5th Circuit case)

Cert. denied

[Arya Eddings]

If you're curious as to whether the judge ruled the infringement case correctly or not, you can do your own research and analysis at http://www.patentability.com. It's also a great way to do your research to make sure that no one will come after you for infringement after you've submitted your patent.