Venue Transfer in Patent Cases: Access to Sources of Proof and Deference to a Plaintiff's Chosen Forum | White & Case LLP International Law Firm, Global Law Practice
Venue Transfer in Patent Cases: Access to Sources of Proof and Deference to a Plaintiff's Chosen Forum

Venue Transfer in Patent Cases: Access to Sources of Proof and Deference to a Plaintiff's Chosen Forum

White & Case Technology Newsflash

There are a small number of preferred venues for patent infringement cases. Parties to cases filed in these districts—including the Eastern District of Virginia, the Northern District of California, the District of Delaware, and the Eastern District of Texas—often spend the first months after a case is filed battling over the most convenient forum for the case to be heard. Under 28 U.S.C. § 1404, "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought."

The convenience factor analysis often boils down to two important factors: the location of the accused infringer (along with its witnesses and documents) and the plaintiff's chosen forum. Two recent cases, one from the Eastern District of Virginia (Adiscov) and one from the District of Delaware (XPRT Ventures), shed light on how courts in these districts balance the convenience factors when adjudicating venue battles and show developing splits between the preferred forums.[1] Patent owners and accused infringers can use these cases as guidance in future venue battles.

Access to Sources of Proof: Location of Witnesses and Documents
The location of the accused infringer, including documents and witnesses, is often an important factor in the venue transfer analysis. Indeed, for some courts, "[t]he convenience of the parties and witnesses, and the location of relevant evidence, are the most important factors in the § 1404(a) analysis." See, e.g., Teleconference Sys. v. Proctor & Gamble Pharm., Inc., 676 F. Supp. 2d 321, 331 (D. Del. 2009) (emphasis added). In recent years, the Federal Circuit has placed significant emphasis on this factor, noting that "[i]n patent infringement cases, the bulk of the relevant evidence usually comes from the accused infringer." In re Genentech, Inc., 566 F. 3d 1338, 1345 (Fed. Cir. 2009).

In a June 8, 2011 decision, the Eastern District of Virginia considered the convenience factors in the context of a case brought by a Virginia-based non-practicing entity against two Northern District of California-based companies.See Memorandum Order at 1-4, Adiscov, L.L.C. v. Autonomy Corp., plc and Recommind, Inc., No. 2:11-cv-00201-RBS-DEM (E.D. Va. June 9, 2011) (No. 68) ("Adiscov Order"). Both defendants moved to transfer the case to the Northern District of California, based on the location in the transferee forum of documents and witnesses related to the accused products. The Eastern District of Virginia granted transfer, finding that, consistent with Genentech, "the overwhelming majority of the sources of proof in this case, both documentary and testimonial, are in the Northern District of California." Id. at 9, 12.

The Adiscov decision aligns with recent decisions in the Eastern District of Texas, another preferred patent litigation forum, where the Court, relying on Genentech and In re Volkswagen II, [2] has repeatedly and consistently placed substantial weight on the physical location of documents and witnesses. [3] This is true even when the documents are stored electronically, as is usually the case in patent litigation today. [4]

However, in the same week that the Eastern District of Virginia decidedAdiscov, the District of Delaware indicated it would have come to the opposite conclusion in its analysis of this factor in XPRT Ventures, LLC v. eBay Inc., et al., Memorandum Order at 6-7, No. 1:10-cv-00595-SLR (D. Del. June 8, 2011) (No. 62) ("XPRT Ventures Order"). In this multiple-defendant patent infringement case, the Delaware court denied transfer from Delaware to the Northern District of California primarily because all of the parties were incorporated in Delaware, even though all but one defendant had their principal places of business in California. Id. at 2-3, 6. However, after stating its reasoning, the court continued, expressing its view that "[i]n this electronic age, there are no substantial burdens associated with discovery or witness availability that support the need for transfer." Id. at 6-7. In the Court's opinion, the physical location of documents (and witnesses) is "outdated, irrelevant, and should be given little weight . . . ." Id. at 7. Although stated in what appears to be dicta, the Delaware Court implied that the physical location of documents and witnesses is completely superfluous.

Delaware is not the only court to adopt this logic. California courts have by no means taken a consistent approach, but the Northern District of California has occasionally drawn on similar reasoning. Several California courts have viewed access to sources of proof with diminished importance in light of the ease with which evidence can easily be transmitted electronically. [5] On the other hand, some California courts refuse to relinquish ties to Genentech: despite the "electronic age" touted by some courts, others hold that the physical location of documents and witnesses is still relevant to convenience and cost and therefore, consider this factor important. [6], [7]

Deference to Plaintiff's Choice of Forum
A second factor courts often consider is the plaintiff's choice of forum. Generally, there is a "strong presumption in favor of the plaintiff's choice of forum." Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255 (1981). In patent cases, where non-practicing entities frequently seek to enforce patent rights in states foreign to the defendants, courts may question whether the plaintiff is deserving of such a strong presumption, since it may have few connections to the chosen forum.

Both Adiscov and XPRT Ventures analyzed the deference that should be given to a plaintiff's choice of forum in circumstances where the plaintiff was a non-practicing entity. The Eastern District of Virginia in Adiscov found that Adiscov was a "non-practicing entity, formed only for the purpose of protecting the intellectual property rights of the [patent-in-suit]," and that while its members might live in the district, there was "little connection between the forum and the cause of action." Adiscov Order at 7 (emphasis added). Building on its recent decision in Pragmatus AV, LLC v. Facebook, Inc., [8] the Eastern District of Virginia gave the plaintiff's choice of forum less weight because the forum had little connection to the cause of action and the plaintiff's contacts within the forum were tenuous. Id. at 7.

The District of Delaware, in XPRT Ventures, again reached the opposite conclusion. The plaintiff in XPRT Ventures was a non-practicing entity that had been incorporated in Delaware but whose principal place of business was in Connecticut. XPRT Ventures Order at 3. The defendants argued that the plaintiff's chosen forum (Delaware) should be given less deference, since Delaware was not the plaintiff's "home turf" and the companies had entered into an agreement containing a forum-selection clause selecting the Northern District of California. Id. at *3, 6. While recognizing that "transfer of an action is usually considered as less inconvenient to a plaintiff if the plaintiff has not chosen its 'home turf,'" the Court maintained that "the plaintiff's choice of forum is still of paramount consideration." Id. at *5.

Conclusion: Implications for Patent Plaintiffs and Defendants
For plaintiffs, these trends should influence where the plaintiff brings suit. This is especially true for non-practicing entities, whose forum choice may not be given as much deference as a practicing entity's choice would have received. Reasoning in cases like Adiscov ought to give non-practicing entities pause. However, it should be noted that it seems unlikely that future courts will adopt an approach any stricter than Adiscov's because by allocating less deference to a non-practicing entity's forum selection, the Court is, in effect, permitting defendants to choose the forum in any such case. See Texas Data Co., L.L.C. v. Target Brands, Inc. et al., 2011 U.S. Dist. LEXIS 2917, at *14 (E.D. Tex. Jan. 12, 2011). If anything, if a court does not want to give full deference to a non-practicing entity's forum selection, then the court will likely only grant that factor less weight, rather than eliminate it entirely.

For defendants, with a plaintiff's choice of forum remaining a relevant factor, this keeps the burden with the defendant to prove that the chosen forum is inconvenient. Any defendant should have an intimate knowledge of the current trends of the forum in which the case was brought before developing a strategy for approaching venue transfer. Knowing something as simple as a judge's interest in electronic versus physical documentation can dictate the outcome of a venue challenge, and with many historically "plaintiff-friendly" forums, the success of a motion to transfer venue can make or break a case.

In the end, the two factors (ease of access to sources of proof and status as a non-practicing entity) are undoubtedly interrelated: a defendant's burden to show that the selected forum is inconvenient will be eased when the plaintiff's ties to that forum are weak. Certainly, trends are emerging within the preferred patent forums, and although these trends still may be muddy, they continue to evolve. Practicing attorneys who stay abreast of these developments will be better able to anticipate the weight a court will grant certain convenience factors in a venue transfer challenge, and be better able to strengthen their positions, based on new case law.

 

Thomas Flynn is an associate in the Silicon Valley office. Natalie Dana, a summer associate contributed research assistance to this article.

[1] - Perhaps it is not surprising that different courts would reach results that seem inconsistent, or even that the same court would reach different results in different cases. As courts note, the decision to grant transfer to another forum under 28 U.S.C. § 1404(a) is left to the discretion of the district courts, according to an "individualized, case-by-case consideration of convenience and fairness." Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988). 
[2] - 545 F.3d 304 (5th Cir. 2008). 
[3] - See, e.g., Transunion Intel. LLC, et al. v. Search America, Inc., No. 2:10-cv-130-TJW, 2011 U.S. Dist. LEXIS 36750, at *11 (E.D. Tex. Apr. 5, 2011) (finding that having substantial sources of proof located in the transferee forum weighs in favor of transfer). 
[4] - See, e.g., Internet Machines LLC v. Alienware Corp., et al., No. 6:10-cv-023, 2011 U.S. Dist. LEXIS 66207, at *18 (E.D. Tex. June 7, 2011); Regent Markets Group, Ltd. v. IG Markets, Inc., No. 2:10-cv-42-TJW, 2011 U.S. Dist. LEXIS 31543, at *7 (E.D. Tex. Mar. 25, 2011). 
[5] - See, e.g., Vice v. Woodline USA, Inc., No. 4:10-cv-04103-CW, 2011 U.S. Dist. LEXIS 8014, at *13 (N.D. Cal. Jan. 21, 2011) ("[G]iven advances in technology, document production need not be onerous."). 
[6] - See, e.g., de Los Santos, et al. v. Panda Express, Inc., et al., No. 4:10-cv-01370-SBA, 2011 U.S. Dist. LEXIS 69061, at *10-11 (N.D. Cal. June 28, 2011);Patent Mgmt. Found., LLC v. Analog Devices, Inc., No. 4:10-cv-03630-SBA, 2011 U.S. Dist. LEXIS 7389, at *4 (N.D. Cal. Jan. 19, 2011) ("[T]he possibility that documents can be produced electronically does not alter the conclusion that the cost of litigation will likely be less if the case were venued in the forum where the evidence is located."). 
[7] - Although not a forum discussed in detail in this article, the Central District of California in Global Décor, Inc., et al. v. The Cincinnati Ins. Co., No. 2:11-cv-02602-JST-FMO, 2011 U.S. Dist. LEXIS 64529, at *15-16 (C.D. Cal. June 16, 2011) found a middle ground, stating that ease of access to documents, while it does not weigh heavily due to electronic technology, is nonetheless taken into account because it speaks to the cost of litigation. Global Décor, 2011 U.S. Dist. LEXIS 64529, at *15-16. 
[8] - No. 1:10-cv-1288, 2011 U.S. Dist. LEXIS 8558 (E.D. Va. Jan. 27, 2011). The Court in Pragmatus only gave the non-practicing plaintiff's choice of forum minimal weight due to the weak connections between the plaintiff and the chosen forum. Id. at *8.

 

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