The U.S. Court of Appeals for the Federal Circuit has added to its growing body of case law about the grounds for transferring patent infringement cases. In a Dec. 15 unanimous order in In Re Vistaprint Ltd. and OfficeMax Inc. , the court departed from a recent appellate trend of ordering cases transferred from the plaintiff-friendly Eastern District of Texas; it affirmed the lower court judge’s denial of Vistaprint and OfficeMax’s transfer bid.
ColorQuick LLC sued the companies in the Eastern District of Texas, alleging infringement of a patent related to computer technologies used to print documents and other media.
The Vistaprint defendants asked for a transfer to the District of Massachusetts because the U.S. subsidiary of the Netherlands-based Vistaprint is in that state. The defendants argued that the Massachusetts venue would be convenient for Vistaprint employees who might be witnesses. Vistaprint also operates the accused OfficeMax services. The district judge denied their request.
Motions to transfer patent cases out of the Eastern District of Texas, filed as writs of mandamus, have been on the upswing since a December 2008 Federal Circuit ruling in In Re TS Tech USA Corp. , which concluded that the Eastern District of Texas abused it discretion by rejecting a transfer motion.
That ruling followed an October 2008 en banc decision by the 5th Circuit on the transfer issue, In Re Volkswagen of America Inc. The appeals court ordered the Eastern District of Texas to transfer a products liability case to the district where the witnesses and evidence were located.
In the Vistaprint order, Senior Judge Alvin Schall agreed with the lower court that keeping the case in Texas would preserve judicial economy, because the trial court became familiar with the patent at issue and related technology during a prior case. The ruling also noted that there’s pending litigation in the same court involving that patent and technology. Judges Arthur Gajarsa and Kimberly Moore joined the order.
The panel found the defendants’ argument that there should be a bright-line rule favoring convenience factors “unpersuasive,” Schall wrote.
He acknowledged the defendants’ concerns that plaintiffs could “artificially manipulate venue” in the absence of a rule about convenience: “While these are perhaps valid concerns, we cannot say that there is enough justification here to depart from the above-mentioned principles.”
Schall noted that there’s “no evidence” of manipulation in the Vistaprint case. He also wrote that courts have held that “judicial economy plays a paramount role” in the justice system.
Schall further concluded that the trial court properly balanced judicial economy against convenience in the Vistaprint case: “The gain in judicial economy from keeping this case in the Eastern District of Texas is more than negligible.”
Venue disputes are fact-specific, says Alfonso Chan, a partner in Dallas-based Shore Chan Bragalone DePumpo and one of ColorQuick’s lawyers in the Federal Circuit appeal. “There aren’t any hard and fast rules,” Chan says. “There are issues that the district court and litigants have to weigh. In this case, the prior experience of the district court in dealing with this patent was an important factor.”
Lawyers at Cooley who represented Vistaprint and OfficeMax did not respond to requests for comment.
“At this time we have no comment on this ruling,” states Vistaprint in an e-mailed statement. OfficeMax spokeswoman Jennifer Rook says the company is “not going to comment on pending legal matters.”
Michael C. Smith, a partner in the Marshall office of Siebman, Burg, Phillips & Smith, says the Federal Circuit “made clear that it was a narrow holding.” Smith isn’t involved in the case, but he tracks venue transfer cases in his Eastern District of Texas federal court practice blog.
Transfer appeals were rare at the Federal Circuit until the Volkswagen ruling, and the case law goes both ways, he says.
Of the 14 Federal Circuit rulings on the issue since 2006, half transferred the case, Smith says.
But Smith says it’s important not to read too much into ColorQuick’s victory in the Vistaprint case. “It has a lengthy footnote, essentially cautioning against reading it as meaning that anytime there was a prior case [involving the same patent] you get a free pass to stay in the Eastern District of Texas,” Smith says.
That footnote states, “Our holding today does not mean that, once a patent is litigated in a particular venue the patent owner will necessarily have a free pass to maintain all future litigation involving that patent in that venue.”