Federal Circuit Orders Transfer From E.D. Texas To N.D. California Where Accused Product Was Developed
On May 23, 2022, the Court of Appeals for the Federal Circuit (CAFC) granted writs of mandamus to the United States District Court for the Eastern District of Texas in No. 2:19-cv-00362-JRG, Chief Judge J. Rodney Gilstrap, directing the district court to transfer patent cases to the United States District Court for the Northern District of California. In re Google LLC, __ F.3d __ (Fed. Cir. May 23, 2022). In its order, the CAFC held that the district court abused its discretion in failing to weigh the local interest factor in favor of transferee forum and erred in its analysis of other factors.
In 2017, Patent owner filed complaints in the Eastern District of Texas against Google, a Google subsidiary, and Samsung (collectively, “petitioners”). The complaints accuse Google software applications of enabling users to form groups, viewing the locations of other users on a map, and communicating together, and devices that run these applications, of infringing certain of patent owner’s patents. Patent owner was assigned the asserted patents and incorporated in the state of Texas shortly before filing.
Petitioners moved under 28 U.S.C. § 1404(a) to transfer to the Northern District of California, where the accused software was designed and developed, and where important witnesses and evidence are located. In ultimately denying the motions, the district court concluded that court congestion, judicial economy considerations, and local interest factors all weighed against transfer. In particular, the court weighed against transfer the fact that patent owner had previously litigated the asserted patents before the same trial judge up to the pretrial conference. The remaining factors, the court determined, favored neither of the two possible forums.
Petitioners sought writs of mandamus directing the Eastern District of Texas court to transfer to the United States District Court for the Northern District of California.
Applying regional circuit law, the CAFC asked whether the movant demonstrated that the transferee venue is clearly more convenient, such that the district court’s contrary determination was a clear abuse of discretion. To answer this question the CAFC proceeded to evaluate the private and public interest factors applicable in the Fifth Circuit.
With respect to private interest factors, petitioners argued that the district court erred by not finding Northern California far more easily accessible for potential witnesses and sources of proof. With respect to public interest factors, petitioners argued that the district court erred by not finding local interest favored Northern California.
Addressing private interest factors first, the CAFC agreed with petitioners that transfer to the Northern District of California, where the accused technology was developed and where numerous Google and prior art witnesses reside, would ensure not only that the forum would be more convenient for the balance of the witnesses, but also that a court could compel their testimony if necessary.
The CAFC faulted the district court for declining to find that the witness convenience factor favored transfer based on the presence of one of patent owner’s consultants in the Eastern District of Texas. It appeared to the CAFC that this consultant had disclaimed material knowledge on the topic for which patent owner had sought testimony. The CAFC also concluded that petitioners had identified far more relevant witnesses in Northern California.
Regarding access to sources of proof, the district court acknowledged that the technical documents and source code relating to the accused functionality was all physically present and/or electronically accessible in the Northern District of California. But the district court gave this factor little weight, because the information could be produced electronically in the Eastern District of Texas, and because patent owner stores its patent-related documents and corporate records at its office space in the Eastern District of Texas.
The CAFC found this was additional error, stating that “while electronic storage of documents makes them more widely accessible than was true in the past, that does not make the sources-of-proof factor irrelevant.” Further, the CAFC concluded that the presence of documents at patent owner’s office space in the transferor forum should have been given no weight, because these documents were nothing more than artifacts of litigation serving no meaningful purpose except to attempt to establish a presence for forum selection for patent cases. The CAFC noted that patent owner’s office space in the transferor forum was leased just prior to commencing litigation and did not appear to be a place of regular business.
Turning to the public interest factors, the CAFC agreed with petitioners that the district court again erred by not finding that the Northern District of California’s comparative local interest favored transfer. The CAFC explained that because the events forming the basis for the infringement claims occurred mainly in the transferee forum, it had a substantial local interest in resolving the dispute, whereas patent owner’s patent-litigation-inspired connections to its chosen forum were not entitled to significant weight. The CAFC acknowledged that one of petitioner’s had a “general presence” in the Eastern District of Texas, a fact relied on by the district court, but stated that this general presence is not enough to establish a local interest that weighs against another forum’s local interest tied to events giving rise to the particular suit.
The CAFC also faulted the district court for giving disproportionate weight to the fact that it was familiar with the asserted patents. The CAFC made clear that just because a patent has been previously litigated in a particular forum does not mean the patent owner will necessarily have a free pass to maintain all future litigation involving that patent in that forum. The CAFC also found no reason why a more rapid disposition of the cases, another factor weighed heavily by the district court, should outweigh the clear convenience of the transferee forum.