Virginia IP Law : Virginia Intellectual Property Lawyer & Attorney : Troutman Sanders Law Firm : Technology & Patent Litigation

Four times over the course of less than a year, the Federal Circuit has reversed a decision by the Eastern District of Texas (EDTex) denying a motion to transfer venue under 28 U.S.C. § 1404(a). Posts on the first two decisions, In re: TS Tech USA Corp., 551 F.3d 1315 (Fed. Cir. 2008) and In re: Genentech, 566 F. 3d 1338 (Fed. Cir. 2009), can be found here and here.

Last month, the Federal Circuit issued two more writs of mandamus reversing the EDTex for refusing to transfer a patent case to a different venue. See In re: Nintendo Co., Ltd., Misc. No. 914, 2009 U.S. App. LEXIS 27647 (Fed. Cir. Dec. 17, 2009); In re: Hoffman-La Roche Inc., Misc. No. 911, 2009 U.S. App. LEXIS 26244 (Fed. Cir. Dec. 2, 2009).

In Hoffman, the Court reversed a decision by EDTex Chief Judge Folsom denying transfer of a pharmaceutical patent case to the Eastern District of North Carolina.

• The Federal Circuit rejected the reasoning (which can be found in numerous EDTex cases) that where a case is “decentralized” because witnesses and documents are located across the country, transfer should be denied.
   
• The court held that the district court improperly ignored the significant contrast between the strong connections the cause of action had with North Carolina, where the accused drug was developed, and the Eastern District of Texas, which had no factual connection to the case.
   
• The Court also held that a plaintiff could not manipulate venue by transferring documents to litigation counsel in the EDTex, calling the assertion that these were “Texas” documents a “fiction” and characterizing the district court’s ruling as having “no legally rational basis.”

In Nintendo, the Court used similarly strong language in reversing a denial of transfer by Judge Davis, holding that “in a case featuring most witnesses and evidence closer to the transferee venue with few or no convenience factors favoring the venue chosen by the plaintiff, the trial court should grant a motion to transfer.”

• Unlike Judge Folsom in Hoffman-La Roche, Judge Davis acknowledged that the Western District of Washington had a strong interest in the dispute, while the EDTex did not.
   
• As in Hoffman-La Roche, the Federal Circuit rejected the reasoning that the EDTex was as convenient as any other forum because witnesses and documents were located in several locations. Instead, the Court should have more strongly considered the convenience of witnesses who must travel farther to reach the EDTex and the location of the Defendant’s documents in Washington.
   
• The Federal Circuit also chided the EDTex court for glossing over a record “without a single relevant factor favoring the plaintiff’s chosen venue.”

Despite the strong messages that the Federal Circuit continues to send regarding venue motions in the EDTex, it remains to be seen whether the district judges will listen. Hoffman-La Roche and Nintendo will be helpful to sole defendants sued in the EDTex, but transfer will continue to remain difficult where there are multiple defendants in different forums.

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Last week’s decision by the Federal Circuit regarding the pleading requirements for an inequitable conduct claim, Exergen Corp. v. Wal-Mart Stores, Inc., 2009 U.S. App. LEXIS 17311 (Fed. Cir. Aug. 4, 2009), and the Supreme Court’s decision earlier this summer in Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009) may foreshadow additional enhanced pleading requirements in patent infringement cases. 

Robert Matthews at Mathews Patent-Law Consulting has published a detailed analysis of Exergen that can be found here. In short, under Fed.R.Civ.P. 9, a claim of inequitable conduct must include specific identification of the who, what, when, where and how of the material misrepresentation committed before the PTO. As Matthews states, under Exergen, “an accused infringer must identify the exact information within a withheld prior art reference that it alleges is material, identify where that information can be found in the reference, identify the particular claim limitations or combination of claim limitations for which the withheld information is material, and then show how the prosecution record lacked that information.” 

An accused infringer must also identify by name the specific individual who allegedly knew of the allegedly material information and withheld or misrepresented that information to the PTO. A party may plead “on information and belief” but only if essential information lies within another party’s control and only if the pleading sets forth specific facts upon which the belief is reasonably based. Thus, the mere fact that an applicant disclosed a reference while prosecuting one application but did not disclose the same reference while prosecuting a second application is insufficient to plead the requirement of deceptive intent. 

Exergen echoes the Supreme Court’s decisions in Iqbal and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) that under Fed.R.Civ. P. 8, a pleading offering “labels and conclusions” or a “formulaic recitation of a cause of action will not do.” As the Court stated in Iqbal, “While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.” Thus, a plaintiff must make “well-pleaded factual allegations” that “plausibly give rise to an entitlement to relief.” 

Exergen takes Iqbal and Twombly a step further, requiring allegation of facts with a high degree of specificity and detail, and Exergen may presage stricter pleading requirements for other types of patent claims and defenses. 

So far, though, the Federal Circuit has not required stricter pleading of patent infringement claims. Applying Twombly, the Federal Circuit has held that a claim for patent infringement must only assert that the plaintiff owns the patent and that the defendant infringed the patent, must describe, in general terms, “the means by which the patent was infringed” and must identify the specific parts of patent law that are implicated. McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1357 (Fed. Cir. 2007). A patentee “is not required to specifically include each element of the claims of the asserted patent." Thus, here in Virginia, Judge Payne has held that a plaintiff satisfies McZeal by identifying the infringing devices at issue. Taltwell, LLC v. Zonet USA Corp., 2007 U.S. Dist. LEXIS 93465 at *40 (E.D.Va. Dec. 20, 2007).  Judge Dyk dissented in McZeal, arguing that a patentee should be required to specify which claims are infringed and the features of the accused device that correspond to the claim limitations, and Iqbal arguably supports Judge Dyk’s position. At this point, though, it appears that the Federal Circuit will not impose stricter requirements for pleading patent infringement, even though a plaintiff’s Rule 11 obligations requires a detailed infringement analysis before suit is filed and such information often must be provided in a claim chart filed early in the case. 

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As detailed in an earlier blog post found here, a group of intellectual property attorneys from around the Eastern District, including myself, Robert Angle, Maya Eckstein, Dave Finkelson, Dana McDaniel, Chip Molster, Steve Noona and Bob Barrett, have been working over the past several months to draft a local patent rule and model patent pretrial schedule and pretrial order to use in patent cases in the Eastern District of Virginia.

A draft of a proposed local rule was circulated to several statewide intellectual property bar groups, and comments were received from practicioners in all parts of the district. The comments were considered and many were adopted, and a revised proposed local rule, model scheduling order and model pretrial order have been submitted to Chief Judge Spencer.  The judges will consider the proposal at their district-wide meeting, which occurs in October. The revised rule can be found here, and an executive summary of the rule is here.

As we’ve said before, the judges of the EDVA will obviously decide on their own whether to adopt any proposed changes to their Local Rules. That said, the support of practitioners and interested bar organizations cannot hurt and may well help. If you believe the proposed rules make sense, please express your support to the EDVA judges.  If you have other comments, submit them on this blog, and we will pass them on to the judges.
 

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