The U.S. Court of Appeals for the Federal Circuit issued a writ of mandamus Monday that will make it easier for defendants in patent cases to spring themselves from the plaintiff-friendly, oftentimes inescapable Eastern District of Texas.
The court ruled that Eastern District Judge John Ward "clearly abused" his discretion when he denied TS Tech Co.'s motion to transfer its patent fight with Lear Corp. to a more convenient venue in Ohio.
"This opinion is going to prompt even more motions to transfer and I think it's going to result in an increase in the success rates of those motions," said B.C. Boren, an IP litigator with Baker Botts in Palo Alto, Calif. "Patent practitioners have been waiting for the courts to speak on the issue of venue and the appeals court speaks pretty loudly here."
The ruling bolsters a recent 5th Circuit order that took Ward to task for refusing to transfer a products liability case against Volkswagen out of the district. Although some patent lawyers were skeptical that the 5th Circuit opinion could be carried over to patent cases, Monday's ruling erased those doubts, liberally citing In re Volkswagen of Am., Inc ., also called Volkswagen II.
"As in Volkswagen II, the district court clearly abused its discretion in denying transfer from a venue with no meaningful ties to the case," Judge Randall Rader wrote for the three-judge panel.
Auto seat maker Lear sued TS Tech in the Eastern District in 2007 for infringing a patent on pivotally attached headrest assemblies. TS Tech filed a motion to transfer the case to Southern District of Ohio, arguing that the venue was closer to the evidence and witnesses.
Ward -- who is credited with turning the Eastern District into a patent litigation hot spot -- denied the motion, saying that because the headrests were sold in the area, the citizens of the Eastern District had a "substantial interest" in having the case tried locally.
Taking the drastic step of granting a writ of mandamus , the Federal Circuit criticized Ward for giving too much weight to Lear's choice of forum. The panel said that Ward also ignored the fact that witnesses and documentary evidence in the case were in Ohio, Michigan and Canada, not anywhere near Texas. Finally, they ruled that the case had no important connection to the Eastern District of Texas.
"The vehicles containing TS Tech's allegedly infringing headrest assemblies were sold throughout the United States, and 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," Radar wrote.
Harold McElhinny, a veteran patent litigator with Morrison & Foerster in San Francisco, said that the ruling knocks down arguments often used to keep cases in the Eastern District of Texas.
"It's going to make it very hard to keep a patent case in the Eastern District unless a party lives there or has some substantial connection there," he said.
But Michael Smith, a lawyer who practices in the Eastern District of Texas with Siebman, Reynolds, Burg, Phillips & Smith, said the ruling isn't as broad as some believe.
"The case is kind of specific to the facts," Smith said. "The court thought about who the parties were and where the parties were."
Smith called the criticisms of Ward "unfair," since the second Volkswagen decision came out after Ward's ruling in the TS Tech case. Smith also said that while the ruling will have an impact on the district, it will remain a popular venue for patent cases.
"I would not characterize it as a death knell," Smith said. "The court was looking pretty specifically at the facts and that is not the normal profile of a case out here."
But MoFo's McElhinny said this ruling is different than the perennial exaggerated reports of the rocket docket's death.
"I wish I could have nickel for every time that someone pronounced the demise of the Eastern District," McElhinny said. "But this one looks a little more serious than the others."
