Deference to Plaintiff Trumps Convenience to Parties in Recent Transfer of Infringement Cases
By Insue Kim – Edited by Elise Young
Elcommerce.com, Inc. v. SAP AG, No. 2011-1369 (Fed. Cir. Feb. 24, 2014) Slip opinion In re Barnes & Noble, Inc., No. 13-162 (Fed. Cir. Feb. 27, 2014) Slip opinion In re Apple Inc., No. 13-156 (Fed. Cir. Feb. 27, 2014) Slip opinion
The United States Court of Appeals for the Federal Circuit upheld the transfer of venue of Elcommerce, Inc. v. SAP AG, from the Eastern District of Texas to the Eastern District of Pennsylvania. In response to Elcommerce’s claim that the declaratory counterclaims could not be transferred to the Pennsylvania court without voluntary or personal jurisdiction, the court emphasized that there is “‘no requirement under § 1404(a) that a transferee court have jurisdiction over the plaintiff . . . [as long as] the transferee court ha[s] jurisdiction over the defendants in the transferred complaint.’” Elcommerce.com, slip op. at 10 (quoting In re Genentech, 566 F.3d 1338, 1346 (Fed. Cir. 2009)). As plaintiff, Elcommerce was subject to the declaratory counterclaims filed by SAP in Texas, and “jurisdiction was preserved when the entire action was transferred to Pennsylvania . . . .” Id. at 9.
The case was one of many “patent troll” cases regularly filed in the District Court of the Eastern District of Texas. Because of the treatment plaintiffs receive in the Eastern District of Texas, many defendants attempt to transfer their cases to another district. This has made procedural decisions from the Federal Circuit increasingly significant. ArsTechnica discusses why the Eastern District of Texas is such a popular venue for patent trolls.
In Elcommerce, the transfer was permitted specifically under the statutory authorization on specified conditions, “for the convenience of parties and witnesses, [and] in the interest of justice . . . .” 28 U.S.C. §1404(a) (1996). On two other recent occasions, however, district court decisions to deny transfer were upheld on grounds that they were not “clearly and indisputably incorrect . . . .” Barnes & Noble, slip op. at 5.
In Barnes & Noble, the court noted that “‘unless the balance is strongly in favor of the defendant, the plaintiff’s choice of forum should rarely be disturbed.’” Id. at 4 (quoting Reese v. CNH America LLC, 574 F.3d 315, 320 (6th Cir. 2009)). Upon weighing the convenience of the witnesses, convenience to the parties, and the interest of justice, the district court did not find that these factors weighed strongly in favor of Barnes & Noble. Since the district court was not “clearly and indisputably incorrect” in denying the transfer, its decision was upheld. Similarly, in Apple, the court found that the district court did not abuse its discretion in denying Apple’s motion to transfer, emphasizing the lack of specificity in Apple’s assertions as to why the case should be transferred. Apple, slip op. at 4–5.
In both cases, Judge Newman delivered the dissenting opinion, arguing that the plaintiff’s choice of forum should be given minimal deference in light of considerable imbalance in convenience. He noted that “‘in a case featuring most witnesses and evidence closer to the transferee venue . . . the trial court should grant a motion to transfer.’” Apple, slip op. at 4 (Newman, J., dissenting) (quoting In re Nintendo Co., 589 F.3d 1194, 1198 (Fed. Cir. 2009)). In both cases, most of the relevant evidence and witnesses were located near the transferee venue, with few practical conveniences in the plaintiff’s original choice of venue.
Given the non-trivial, if not substantial, deference that plaintiffs are granted, as well as the strict standard of appellate review permitting remand only upon “clearly and indisputably incorrect” decisions, it is unclear whether the statutory purpose of protecting “convenience of the parties and witnesses” as well as preserving the “interests of justice” is given much deference in present-day decisions.