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In Latest Venue Dispute Ruling, Delaware Court Transfers Part of Patent Case to Texas
The National Law Journal
November 09, 2009
A Delaware federal judge's transfer of part of a patent infringement case involving software giant Microsoft Corp. to the Eastern District of Texas is the latest example of the federal courts' shifting approach to patent litigation venue battles. The decision is also notable in that the Eastern District of Texas, known as a plaintiff-friendly venue, has itself recently started to transfer cases to other venues in compliance with recent federal appellate decisions.
Online direct marketing company QuinStreet first filed suit against epicRealm Licensing LP in August 2006 asking the court to declare that it wasn't infringing epicRealm's patents, which involve technology for creating dynamic Web pages. It amended its filing in November 2007 to sue Parallel Networks when it learned that Parallel was claiming the right to enforce the patent because it was or had been the owner or assignee of epicRealm's patents. QuinStreet has asked the Delaware court to declare that QuinStreet is not infringing Parallel Networks' patents. QuinStreet also wants the court to declare the patents invalid and unenforceable.
QuinStreet dragged Microsoft into the case in January 2008 with a third-party complaint asking the court to rule that Microsoft should reimburse QuinStreet for any damages awarded to Parallel Networks. QuinStreet alleges that if it is infringing Parallel Networks' patents, that is due to QuinStreet's use of Microsoft's Web server software for Web page generation.
In November 2008, Microsoft asked the court to declare that it is not infringing Parallel Network's patents and that the patents are invalid. Parallel Networks filed its transfer motion in June of this year.
On Nov. 3, District Judge Sue Robinson ruled that Microsoft's declaratory judgment against Parallel Networks, filed in QuinStreet Inc. v. Parallel Networks LLC, should be severed and transferred to the Eastern District of Texas. Robinson also denied Microsoft's motion to dismiss QuinStreet's third-party complaint against it.
"Although I continue to be amazed by the energy and resources expended on motions to transfer and believe that the way this litigation has unfolded would warrant jurisdiction in Delaware, nevertheless, under the circumstances presently existing in this court and the undeniable fact that the Eastern District of Texas is an appropriate venue, I conclude that Microsoft's declaratory judgment action should be severed and transferred," Robinson wrote.
Robinson referred to a nearly three-year judicial vacancy on Delaware's federal court in a footnote. A second footnote noted that the Texas court's Judge David Folsom is hearing a related Parallel Networks case against Microsoft and an additional Parallel Networks case involving the same two patents. She also noted that Folsom has ruled on the patents' claims in prior litigation.
Parallel Networks' lawyer, Larry Carlson, a Dallas litigation partner at Houston's Baker Botts, said the case belongs in Folsom's court because the company is headquartered in that district. Carlson also cited Folsom's expertise on the patents and technology.
"If the case has all the connections with Texas that this case has, on the merits, the transfer decision here was the right one," Carlson said.
Since the U.S. Court of Appeals for the Federal Circuit ruled last Dec. 29 that the Eastern District of Texas abused its discretion by denying the defendants' transfer motion in In re TS Tech USA Corp., venue has been top of mind for intellectual property litigators.
The Federal Circuit's similar message in its May 22 decision, In re Genentech Inc., prompted more defense attorneys to file transfer motions from the district, which is known for massive verdicts for plaintiffs.
Microsoft declined to comment. QuinStreet's attorneys at Chicago's Vedder Price declined to comment. The company did not respond to a message left at its Foster City, Calif., headquarters.
