What Does In re Link_A_Media Devices Mean for the Eastern District of Virginia?

Posted on December 21, 2011 by Dabney Carr

Earlier this month, the Federal Circuit granted a petition for mandamus and directed the District Court of Delaware to transfer venue of a patent infringement suit filed against Link_A_Media Devices to the Northern District of California, even though Link_A is a Delaware corporation. In Re Link_A_Media Devices Corp., Misc. Docket No. 990 (Fed. Cir. Dec. 2, 2011) found here. 

In a nutshell, the Federal Circuit held that the district court’s “fundamental error” was holding that the patentee’s choice of Delaware as the forum for its suit and Link_A’s incorporation in Delaware were dispositive. Since Delaware was not the patentee’s home forum, the Court ruled, its choice of forum was entitled to much less deference, and aside from Link_A’s incorporation in Delaware, the forum had not ties to the dispute or either party. The plaintiff was a holding company located in Bermuda and both its operating affiliate and Link_A were located in Santa Clara, California. All of the identified witnesses, including the named inventors (who were employed by the plaintiff’s affiliate) and the relevant documents, were located in California.

The Impact of Link_A on Delaware, California and East Coast Plaintiff-Patentees

Link_A extends the series of Federal Circuit decisions granting mandamus and ordering transfer of venue from the Eastern District of Texas, discussed here and here, to the District of Delaware. If the judges in Delaware apply Link_A as the Federal Circuit has dictated, the decision could result in a sharp reduction in the number of patent cases filed in Delaware. While Delaware is the state of incorporation of many corporations, far fewer corporations operate there. As a result, the convenience factors in the venue analysis will seldom favor venue in Delaware, except perhaps in the case of companies located in nearby venues such as New Jersey, New York and Pennsylvania.

Link_A is also likely to increase the number of cases filed in California, where many high technology businesses are headquartered. Given the crowded dockets in the federal district courts and the distance and expense of litigating in California, though, many East Coast-based plaintiff-patentees may seek an alternative venue that is closer to home.

The EDVA as an Alternative

The Eastern District of Virginia is a good candidate to be an alternative venue for plaintiffs seeking an East Coast forum. As we have written here, the speed of the Rocket Docket and the numerous significant patent verdicts in the Eastern District make it a favorable venue for plaintiff-patentees. While judges in the Eastern District of Virginia will not hesitate to transfer venue of a patent case with little connection to Virginia, many high technology companies have operations in Virginia which will make them subject to venue. Further, many defendants may prefer the Eastern District of Virginia’s more efficient procedures and the experience of its judges in patent litigation. Time will tell whether the impact of Link_A will be to spread patent litigation which would otherwise be filed in Delaware to other Eastern venues, including Virginia.

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EDVA Patent Case Against Virginia Companies Transferred to New York

Posted on July 28, 2011 by Dabney Carr

Typically, a plaintiff can feel confident that a patent infringement claim filed in the Eastern District of Virginia against Virginia-based defendants will not be transferred – but that’s not always the case, as shown by Judge Hudson’s recent decision, found here, to transfer venue in Augme Tech’s., Inc. v. Gannett Co., Inc., et al., Case No. 3:11CV282, 2011 U.S. Dist. LEXIS 81605 (E.D.Va. July 26, 2011) (Hudson, J.).

Augme Tech's is an example of the increasingly common tactic of filing a “mass patent” case in which a plaintiff asserts infringement of the same patents against multiple independent defendants who are acting separately. 

Despite some case law to the contrary, most EDVA judges are reluctant to sever individual defendants in such cases because of the risk of inconsistent claim constructions and verdicts. Thus, a plaintiff can draw out-of-state defendants into the EDVA’s faster docket by including Virginia defendants in the suit and using the presence of the Virginia defendants to defeat a motion to transfer venue.

That strategy did not work for Augme, which sued two defendants, Gannett and LucidMedia Networks, which were based in Virginia, and a third defendant, AOL, which has a substantial presence in Virginia, for infringement of patents for adding function to Internet web pages. Regardless of the Virginia defendants, Judge Hudson found that other factors required transfer of venue to New York.

The key considerations cited by the Court were:

  • Virginia was not Augme’s home forum, and so Augme’s choice of forum was not entitled to any deference;
  • Augme and AOL had been litigating a closely related action involving the same family of patents in the Southern District of New York for four years – which gave a strong appearance of forum-shopping to Augme’s Virginia action;
  • New York was Augme’s (and AOL’s) home forum, and Augme was actively litigating claims there

In ordering transfer, Judge Hudson relied primarily on the interest of justice, particularly the risk of inconsistent judgments and the New York Court’s familiarity with the technology and the patent family at issue.

In the end, Augme will be forced to litigate in both forums, as Judge Hudson agreed to sever LucidMedia’s cross-claim for infringement of a separate patent and retain venue over that dispute.
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Plaintiff's Choice of EDVA Venue Gets Little or No Deference

Posted on June 16, 2011 by Robert Angle

Two recent decisions out of the Norfolk Division of the U.S District Court for the Eastern District of Virginia highlight the Court’s increasing skepticism towards plaintiffs’ choice of Virginia as a forum for patent infringement claims that otherwise have no real connection with Virginia. In Adiscov, LLC v. Autonomy Corp., PLC, Civil Action No. 2:11cv201, Judge Rebecca Beach Smith granted a motion to transfer venue to the Northern District of California, finding that “though the district is the plaintiff’s home venue, the Eastern District as a forum has very little connection to the cause of action.” The Court focused on the fact that Adiscov is a non-practicing entity and that the center of the alleged infringing activity is San Francisco in concluding that “the plaintiff’s choice of forum does not warrant a strong presumption and instead counsels that transfer may well be proper.” Judge Smith’s Opinion can be found here. 

A few days later, Senior Judge Henry Coke Morgan, Jr., granted a motion to transfer venue to the Southern District of Florida in Patent Licensing & Investment Co, LLC v. Green Jets, Inc., Civil Action No. 2:10cv421. Like Judge Smith, Judge Morgan found that the plaintiff’s choice of forum was entitled to little deference because, although plaintiff is located in the district, “[t]he inventor is not located in this district … [t]he alleged infringing activity is not occurring in this district … [and] [t]here is no evidence to suggest that Plaintiff is employing the ‘548 Patent in furtherance of a business enterprise in this district…” Judge Morgan’s opinion can be found here. 

These cases, like Pragmatus AV, LLC v. Facebook, Inc., Civil Action No. 1:10cv1288, 2011 WL 320952 (E.D. Va. January 27, 2011), show that plaintiffs (particularly non-practicing entities) hoping to keep patent infringement cases in the EDVA cannot simply rely on the fact that they are formed or located in the district. 
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Virginia is for Virginians

Posted on February 2, 2011 by Joshua Heslinga

A patent infringement suit against Facebook, YouTube, LinkedIn, and Photobucket is headed to California, after the defendants prevailed on their motion to transfer venue.  The opinion reinforces a trend against giving choice of forum deference to patent holding companies, particularly if those companies formed shortly before the lawsuit.  The opinion also makes clear that compliments about the Rocket Docket do not help a plaintiff stay in Virginia.

District Judge Leonie M. Brinkema transferred Pragmatus AV, LLC v. Facebook, Inc. et al, case no. 1:10cv1288, from the U.S. District Court for the Eastern District of Virginia to the U.S. District Court for the Northern District of California, by memorandum opinion and order dated January 27, 2011.

The case involves three patents related to the storage, distribution, and playback of media files.  The inventors, the owners of the IP while the patents were pending, and lawyer who prosecuted the original applications are located in California.  Three of the four defendants are headquartered in the Northern District of California, and the fourth has offices in Denver and San Francisco.  None have any relevant personnel or evidence in Virginia.  Pragmatus, the plaintiff, is a patent holding company that was incorporated in Virginia one week after acquiring the patents in June 2010.  Suit was filed in November 2010.  One of the two owners of Pragmatus has lived in Alexandria, Virginia, four days per week since 2007.

If these facts don’t sound like they show much of a connection to Virginia to you, you are getting the picture.  After proceeding through the 28 U.S.C. 1404(a) two-step analysis and factors, Judge Brinkema concludes that they “weigh overwhelmingly” in favor of transfer.

Two interesting points emerge along the way. 

First, following a January 5, 2011, Federal Circuit order in the In re Microsoft case, Judge Brinkema concludes that where a patent holding company was created in the forum shortly before the lawsuit, its choice of its “home” forum gets “minimal” weight (at least in the absence of other meaningful connections).  The nature of the plaintiff – its lack of a business other than enforcing IP rights, often through litigation – explicitly is part of what leads the Court to discard deference to the plaintiff’s choice.

Second, the plaintiff argued that the Eastern District’s “Rocket Docket” status should weigh in its favor.  On its face, this seems like a good tactic – after all, “docket conditions” are explicitly part of the 1404(a) analysis, and how can you go wrong complimenting a court?.  The plaintiff noted that the average time to resolution is 10 months in the Eastern District of Virginia and 26 months in the Northern District of California and said that it wanted a “quick and efficient” resolution of its claims.  The Court was unmoved. It explained that if it allowed those with “minimal” connections to the forum, like Pragmatus, to choose the forum because of the Court’s speed, that could lead to the Court being swamped with patent cases and unfairly slow cases for parties with “genuine connections” to the forum.  Thus, the interests of justice favor transfer.

As we've noted in other posts, the Rocket Docket's procedures impose special challenges that can help or hurt a patent plaintiff or defendant.  This opinion does not change those considerations, but it does shed light on what patent litigation properly can be maintained in the Eastern District of Virginia.  In sum, if a patent plaintiff wants to take advantage of the Rocket Docket, the case needs a real connection to the forum, and patent holding companies in particular raise this concern.  Moreover, in part to defend the Rocket Docket itself, complimenting the Court for its efficiency will not save such a plaintiff from transfer.

 
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Eastern District of Virginia Judge Denies Motion to Sever Local Subsidiaries and Transfer Venue of Patent Infringement Suit

Posted on October 1, 2010 by Dabney Carr

On September 23, Judge Raymond Jackson of the Eastern District of Virginia denied a motion by Verizon to sever two of its Virginia-based subsidiaries and transfer venue of a patent infringement action involving its FiOS interactive television services. ActiveVideo Networks, Inc. v. Verizon Comm’s., Inc., et al., Case No. 2:10cv248 (E.D. Va. Sept. 23, 2010) (Jackson, J.), found here.

Verizon argued that its two Virginia subsidiaries, Verizon Virginia, Inc. and Verizon South, were “peripheral” defendants with only an indirect connection to the main claims, and so should be severed and the remaining claims transferred to New Jersey under the decision in Corry v. CFM Majestic, Inc., 16 F.Supp.2d 660 (E.D.Va. 1998).

Verizon claimed that the two Virginia subsidiaries should be severed because neither were responsible for the design, development, research or creation of the allegedly infringing FiOS services and relied on several Eastern District of Virginia cases in which the Court had severed claims against retailers and distributors of allegedly infringing devices.

Judge Jackson rejected this argument, finding that the two Virginia subsidiaries were not merely retailers, but were actually providing and selling the allegedly infringing services. The parent company defendants, by contrast, did not provide or offer for sale any products or services to the public, and so were less involved in the alleged infringing sales and service than the subsidiaries.

The lesson here is that a plaintiff cannot create venue in Virginia merely by suing a company’s Virginia sales subsidiary.  If the infringing acts involve provision of services by the subsidiary, however, or if the parent company has little involvement in the allegedly infringing sales, a Virginia subsidiary is enough to overcome a venue objection.

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A Quick Post on Compromise Patent Reform Legislation

Posted on March 5, 2010 by Dabney Carr

Sen. Patrick Leahy announced last Thursday that agreement had been reached by a bipartisan group of Senators on a compromise bill providing for patent reform. The full text of the bill can be found here.

Undoubtedly, the blogosphere and legal publications will shortly become saturated with analysis of the compromise bill and speculation about its chances for passage.  Last April, we blogged about a relatively minor provision of the bill -- the provisions addressing venue.  As patent litigators in Virignia, we have a particular interest in venue, because the venue provisions of the bill will direcly affect the volume of patent cases filed here.

The compromise version of the bill includes the same provisions discussed in our earlier post, which can be found here. Here are the highlights (all of which are discussed in detail in the earlier post):

  • the legislation provides that a district court shall transfer a case upon finding that a transferee forum is clearly more convenient. (Sec. 8 of the bill, page 72).
     
  • the legislation establishes a pilot program in six U.S. District Courts that provides $5 million a year for education of judges and hiring of patent law clerks. (Sec. 16 of the bill, pages 92-93). 
     
  • the legislation changes venue for civil actions appealing decisions by the BPAI relating to patent rejections and interferences, civil actions appealing decisions of the PTO relating to patent term adjustments, civil actions appealing decisions of the TTAB relating to registrations of a trademark, and civil actions appealing suspensions or exclusions from practice before the PTO from the District Court in Washington to the Eastern District of Virginia. (Sec. 8 of the bill, pages 72-73).

 

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Venue in the Eastern District of Texas (Updated)

Posted on June 4, 2009 by Dabney Carr

Since I posted here on the shift of patent infringement case filings away from the Eastern District of Texas, the Federal Circuit has issued another decision reversing a denial of a motion to transfer venue in a patent case in the Eastern District of Texas (EDTex).  See In re Genentech, Misc. Dock. No. 901, 2009 U.S. App. LEXIS 10882 (Fed. Cir. May 22, 2009).

Genentech rejects several grounds cited in recent EDTex decisions denying transfer.

  • First, the Court rejected the rationale that the location of witnesses favors transfer only if transfer is more convenient for all witnesses. Many post-TS Tech decisions in the EDTex have routinely rejected transfer if the plaintiff could identify relevant witnesses who lived far away from both Texas and the transferee forum.

In Genentech, fourteen witnesses lived in California, the proposed transferee forum, while the six inventors lived in Europe, a prior art witness lived in Iowa and four of the patent prosecuting attorneys lived on the East Coast. The Federal Circuit held that the District Court had placed too much emphasis on the additional distance that the European witnesses would have to travel to go to California rather than Texas.

Thus, the Court soundly rejected the rationale that “Texas must be more convenient because it’s in the middle of the country” found in several EDTex decisions. Rather, where material witnesses reside in the transferee forum and no witnesses reside in the EDTex, it is clear error to find that the convenience of witnesses weighs against transfer.

  • The Federal Circuit also faulted the EDTex for requiring a showing that the witnesses in the transferee forum were “key witnesses.” Since they had relevant information, “it was not necessary for the district court to evaluate the significance of the identified witnesses’ testimony.”

Two other holdings in Genentech will also weigh in favor of transfer in future cases.

  • First, despite the storage of most documents electronically, the Court found that it was clear error to discount the burden to transport documents from California to Texas.
     
  • Second, the Court held that it was clear error to consider Genentech’s filing of an unrelated patent infringement suit in Texas in the decision to deny transfer.

One common basis for denying transfer post–TS Tech remains available – the presence of multiple defendants in different forums. In Genentech, both defendants were located in California (though they were in two different court districts). Where defendants are in multiple forums, or where there are relevant defense witnesses in multiple forums, transfer will remain difficult in the EDTex.
 

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What Patent Reform Means for Virginia

Posted on April 10, 2009 by Dabney Carr

On April 2, the Senate Judiciary Committee passed a compromise version of S. 515, the Patent Reform Act (the “Act”). The original bill can be found here, and the amended bill is here.  A few observations on the Act’s impact on litigation in Virginia:

Venue

• The original bill limited venue in most patent cases to districts where the defendant is incorporated, has its principal place of business or has a “regular and established physical facility . . . that constitutes a substantial portion of [its] operations.” This provision would have shifted cases from popular plaintiff’s forums like the Eastern District of Texas to the homes of high-tech companies such as California, Delaware and New Jersey/New York and perhaps Virginia, based on the high-tech presence in Northern Virginia.

• The amended bill replaced those venue provisions with a very short new subsection, 28 U.S.C. §1400(c), which provides that “for the convenience of the parties and witnesses, in the interest of justice,” a district court shall transfer a patent case “upon a showing that the transferee venue is "clearly more convenient” than the current venue. (emphasis added).

• The “clearly more convenient” language comes from In re Volkswagen, 545 F.3d 304, 315 (5th Cir. 2008) (en banc) and In re TS Tech, 551 F.3d 1315 (Fed. Cir. 2008). Some commentators have characterized the amendments as “codifying” TS Tech, but the true impact is likely to be more muddled. Since the Act does not alter 28 U.S.C. § 1404(a), courts may well continue to apply their existing venue transfer standards and ignore the “clearly more convenient” standard. More likely, courts will simply add the “clearly more convenient” standard to their existing analysis.

• In Virginia, a “clearly more convenient” standard may produce fewer venue transfers. In several post-TS Tech decisions, transfer has been denied as not “clearly more convenient” where parties, evidence or witnesses are located in several forums. See Novartis Vaccines & Diagnostics, Inc. v. Hoffman LaRoche, Inc., 2009 U.S. Dist. LEXIS 14656 (E.D. Tex. Feb. 3, 2009) (transfer denied where drug developed in North Carolina, manufactured in Colorado, processed in Michigan or Switzerland, packaged in New Jersey and sold nationwide). Under Virginia federal court precedent, by contrast, transfer is often granted if the parties are not located in Virginia and Virginia is not the “center of accused activity.” See GTE Wireless v. Qualcomm, 71 F.Supp. 2d 517, 519 (E.D.Va. 1999). Thus, a “clearly more convenient” standard may shift the focus from whether the case has ties to Virginia to whether the case has ties to a particular transferee district. That accused activity is occurring nationwide, for instance, would count against transfer rather than, as it presently does, in favor of transfer.

District Court Pilot Program

• The amended bill establishes a 10-year pilot program for patent cases in at least six U.S. District Courts. Courts included in the program must be among the 15 districts with the largest number of patent cases or that have adopted local patent rules. At least three of the courts must have more than 10 active judges (including three judges who have requested and been designated to hear patent cases), and at least three must have fewer than 10 active judges (including two designated patent judges). The pilot program includes $5 million a year for education of judges and hiring patent law clerks. Cases would still be randomly assigned to all judges, but non-patent judges could decline to accept patent cases.

Venue for Patent and Trademark Appeals

• A technical amendment in the Act moves venue for civil actions appealing various decisions of the PTO, BPAI and TTAB from the District Court in Washington, D.C. to the Eastern District of Virginia. Such actions include civil actions appealing decisions by the BPAI relating to patent rejections (35 USC 145) and interferences (35 USC 146), civil actions appealing decisions by the PTO relating to patent term adjustments (35 USC 154(b)(4)(A)), civil actions appealing decisions of the TTAB relating to registration of a trademark (15 USC 1071(b)(4)), and civil actions appealing suspensions or exclusions from practice before the PTO (35 USC 32). Though such actions are relatively rare, this change could increase the volume of patent practice in Virginia.

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Patent Filings Shifting Away from the Eastern District of Texas

Posted on April 6, 2009 by Dabney Carr

The Eastern District of Texas led the country in patent case filings in 2008 with 306, more than 100 cases more than the next two districts (the Central District of California with 198 and the Northern District of California with 171).

In two recent cases, though, the Fifth Circuit and the Federal Circuit overturned rulings from the Eastern District of Texas denying motions to transfer venue. In the Federal Circuit case, In re: TS Tech USA Corp., 551 F. 3d 1315 (Fed. Cir. 2008), decided on December 29, the Court held that the district judge had committed a “clear abuse of discretion” in refusing to transfer a case to Ohio when the relevant evidence and witnesses were located in Ohio, Michigan and Canada.

In the three months since TS Tech was decided, there have been 9 rulings on motions to transfer venue from the Eastern District of Texas. Five of those motions have been granted and four have been denied. Transfer has been denied where the relevant evidence or witnesses was not confined to a specific forum or region but are located around the country or in other countries, even if the case has no strong connection to Texas. Transfer has been granted where most of the parties, witnesses or evidence are located in one particular forum or where the plaintiff or the inventors are located outside of Texas.

Tellingly, since TS Tech, patent case filings in the Eastern District of Texas appear to be plummeting. So far in 2009, the Eastern District of Texas has fallen into fourth place, behind the Central District of California, the Northern District of California and the District of New Jersey. On average, filings in the Eastern District of Texas appear down approximately 40% off last year’s rate, while filings in the next three most popular districts appear on pace with last year. See Stanford IP Litigation Clearinghouse (registration required).

Here in Virginia, patent case filings are in line with average filings in 2008. The drop in filings in Texas, though, could mean that the Eastern District of Virginia, with its fast docket and the presence of a number of high technology companies in the district, may become even more popular for patent case filings.

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