The cracks in the dam holding patent litigations in the Eastern District of Texas from being transferred to other more convenient jurisdictions may be spreading. The first cracks were created in late 2008 with In re TS Tech v. USA Corp., when the Federal Circuit began issuing writs of mandamus to transfer cases out of the Eastern District of Texas because it found that motions to transfer had been improperly denied. Since then, there occasionally have been successful motions to transfer, but those have been few and far between and limited to cases where one of the following conditions applied: (a) no party had a strong presence in Texas; (b) there was a localized interest in another part of the country; and/or (c) a related lawsuit was already underway in a different district.

Against this backdrop, Judge Folsom's recent order in WIAV Networks, LLC v. 3Com Corp., et al., Case No. 5:09-CV-101 (E.D. Tex. July 15, 2010), is particularly significant. This is the first multi-party patent litigation involving Texas defendants where a District Court Judge has applied the standard public and private interest factors test and concluded that a motion to transfer should be granted as to all defendants, including those based in Texas. Judge Folsom granted the movants' request to transfer this case to the Northern District of California, where many (although not all) parties and potential witnesses were located.

This decision is significant for two reasons:

First, the decision reflects the Eastern District's acceptance and application of recent Federal Circuit decisions. In previous multi-party litigations, none of which involved as many parties as the WIAV litigation, judges in the Eastern District denied transfer on the grounds that Texas was a central location for litigation between parties located in different parts of the country. See, e.g., Novartis Vaccines and Diagnostics, Inc. v. Hoffmann-LaRoche Inc., 597 F. Supp. 2d 706, 709 (E.D. Tex. 2009). However, this reasoning has now been rejected by the Federal Circuit. See, e.g., In re Genentech, Inc., 566 F. 3d 1338, 1344 (Fed. Cir. 2009). In granting this motion to transfer, Judge Folsom specifically noted that "this Court does not hypothesize...that the Eastern District could serve as a 'centralized location.'" It appears that in multi-party litigation where the defendants are scattered across the country and around the world, as in this case, the Eastern District recognizes that the "centralized location" argument is no longer sufficient to keep litigation in Texas.

Second, although no defendants in this case were based in the Eastern District of Texas, there were several defendants with a significant Texas presence. These defendants did not join nor did they oppose the motion to transfer. The plaintiff argued that both the presence of defendants in Texas (although not in the Eastern District) and their absence from the motion favored denying transfer. The Court rejected both of these arguments, finding that potential witnesses in the state of Texas are not sufficient and that the "Texas defendants' silence is telling."

The Eastern District of Texas is likely to remain an important forum for patent litigation and we expect new cases will continue to be filed here. We can also expect the court to continue to deny motions to transfer in some cases, such as when judicial economy would be served because the court is already familiar with the technology at issue based on prior litigation. See, e.g., Memorandum Opinion and Order, Red River Fiber Optic Corp. v. Verizon Svcs. Corp., et al., Case No. 2:08-CV-215-TJW-CE (E.D. Tex. Aug. 3, 2010). However, the potential for transfer out of the Eastern District is becoming a more realistic possibility. Plaintiffs without a true connection to the Eastern District should think twice about filing cases there because they may face an increasing danger that their chosen forum will be rejected. Defendants, meanwhile, should explore all of their options for having a case transferred out of the Eastern District of Texas if there is a more convenient forum, as there was in this case.

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