Federal Circuit Grants Writ Of Mandamus Ordering Transfer Of Venue Based On Convenience
On August 2, 2021, the United States Court of Appeals for the Federal Circuit (“CAFC”) granted a petition for a writ of mandamus ordering the United States District Court for the Western District of Texas to transfer the underlying action to the Central District of California. In re Hulu, LLC, __ F.3d __ (Fed. Cir. Aug. 2, 2021).
On June 2, 2020, plaintiffs SITO Mobile R&D IP, LLC and SITO Mobile, Ltd. (“SITO”), Delaware companies operating primarily out of New Jersey, sued Hulu, LLC in the United States District Court for the Western District of Texas for patent infringement, alleging that Hulu’s streaming platform—specifically, Hulu’s delivery of streaming video content in combination with other features (e.g., revenue sharing with content providers and various advertisement-selection methods)—infringes seven SITO patents directed to systems and methods for routing media.
Four months later, Hulu, a Delaware company with its principal place of business in Santa Monica, California, moved under 28 U.S.C. § 1404(a) to transfer the litigation to the United States District Court for the Central District of California, a more convenient forum for Hulu given its principal place of business and that several potential witnesses from the third party content delivery networks that Hulu uses to deliver its streaming content are located there.
The Texas district court denied Hulu’s motion, finding that, under the Fifth Circuit’s public and private interest factor test, only two factors (sources of proof and local interest) slightly favored transfer, while three factors (compulsory process, willing witnesses, and court congestion) weighed against transfer (the other factors were found either neutral or inapplicable). Hulu then petitioned the CAFC for a writ of mandamus ordering the district court to transfer the case to California.
On consideration of the writ, the CAFC explained that the private interest factors to be considered are: (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 trial of a case easy, expeditious and inexpensive; while 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 conflict of laws or in the application of foreign law. The CAFC explained that, in denying Hulu’s motion, the district court erred in finding that three factors—compulsory process, willing witnesses, and court congestion—weighed against transfer.
With respect to the compulsory process factor, Hulu identified several CDN witnesses, as well as a number of potential prior art witnesses based in California. In response, SITO merely posited that certain third-party witnesses that Hulu had identified (from Apple and Microsoft) may be subject to the compulsory power of both districts. The district court discounted Hulu’s proposed prior art witnesses and faulted Hulu for not showing that any potential witness would be unwilling to testify (other than one specifically identified prior art witnesses). The CAFC found that these findings were in error for four reasons: (1) even assuming the district court had properly discounted Hulu’s proposed witnesses, the evidence before the district court showed, at best, only two potential Hulu prior art witnesses that would be subject to compulsory process by the Western District of Texas in addition to the Central District of California; (2) the district court erred by entirely overlooking Hulu’s multiple CDN witnesses—located in California—who Hulu alleged, without dispute, would have knowledge of Hulu’s allegedly infringing systems and processes; (3) the district court erred by ignoring all of Hulu’s proposed prior art witnesses for the reason that prior art witnesses are generally unlikely to testify at trial; and, (4) the district court erred in discounting Hulu’s proposed witnesses because Hulu allegedly had not shown that any potential witness, other than one individual, would be unwilling to testify in the Western District of Texas.
With respect to the willing witness factor, the most important of the factors, even though a substantial number of witnesses reside in California as compared to Texas, the district court still found this factor weighed against transfer because, according to the district court, the convenience of party witnesses is typically given little weight because the witnesses’ employer could compel their testimony at trial, and Hulu failed to identify specific third-party witnesses. The CAFC found that these findings were in error for three reasons: (1) the district court did not dispute Hulu’s contention that nearly all of the party witnesses are in or near the Central District of California; (2) the district court erred in entirely discounting Hulu’s party witnesses located in the transferee venue because, according to the district court, Hulu could compel their testimony at trial; and (3) the two potential witnesses identified by SITO located in Texas would not change our conclusion as to this factor.
With respect to court congestion, which the district court found to weigh against transfer because of its ability to set an early trial date, the CAFC explained that the actual statistics with respect to court congestion in the two districts are remarkably similar. The CAFC criticized the district court’s rationale for the same reason described in In re Apple Inc., 979 F.3d 1332 (Fed. Cir. 2020)—i.e., that it relied too heavily on the scheduled trial date, which is not particularly relevant to the court congestion factor. The CAFC explained that, considering the close similarity of cases per judgeship and average time to trial of the two forums (facts actually relevant to the inquiry), and disregarding the particular district court’s ability to push an aggressive trial date, this factor is neutral.
The CAFC concluded that, after correcting the district court’s errors in its analysis, the factors weigh in favor of transfer, thus granting Hulu’s petition for mandamus.