In re TS Tech USA Corp.: Curtailing the 'Rocket Docket'

Accordingly, it appears at this time that if plaintiffs want to ensure that a case filed in the Eastern District of Texas stays in that District, plaintiffs will either need to have witnesses located in Texas, have physical evidence in Texas, or have a local interest in Texas such as through a state law claim or other specific interest in Texas. If a plaintiff is unable to combat some of the factors presented in TS Tech and avoid having all the factors weigh in favor of transfer, it appears that transfer of venue will more likely be granted in the district courts within the Fifth Circuit. Litigants should be aware that transfer out of the Eastern District of Texas could become a much more likely phenomenon.

Ivan R. Goldberg is an associate with Pearne & Gordon LLP. He can be reached at [email protected].

Due to its so-called “rocket docket,” many patent litigants select the Eastern District of Texas when filing a lawsuit or a declaratory action. However, the Federal Circuit's recent decision in In re TS Tech, 551 F.3d 1315 (Fed. Cir. 2008) may substantially curtail this practice. After In re TS Tech, there is a greater chance that defendants in the Fifth Circuit can succeed in transferring the case to a more convenient venue based on the location of the witnesses or the evidence, or if any local or state issues are raised. Thus, future plaintiffs seeking to ride the rocket docket will now have to weigh this strategy against the increased risk of landing in a jurisdiction more favorable to the defendant.

Fifth Circuit Case Law: Volkswagen II

In deciding In re TS Tech, the Federal Circuit applied the laws of the Fifth Circuit. Of particular import was the Fifth Circuit's opinion in In re Volkswagen, 545 F.3d 304 (5th Cir. 2008) (“VW II”) dealing with the issue of change of venue. In VW II, a writ of mandamus was issued directing the Eastern District of Texas to transfer the venue to a different district court because the party had no other adequate means to attain the relief desired.

Change of venue in patent cases, just as in other civil cases, is governed by 28 U.S.C. '1404(a). 28 U.S.C. '1404(a) describes that a district court may transfer any civil action to any other district “for the convenience of [the] parties and witnesses.” In VW II, the Fifth Circuit outlined both private and public interest factors for determining the convenience of the venue. The private interest factors include: 1) the relative ease of access to sources of proof; 2) the availability of compulsory process to secure the attendance of witnesses; and 3) the cost of attendance for willing witnesses. The public interest factors include: 1) the administrative difficulties flowing from court congestion; 2) the local interest in having localized interests decided at home; 3) the familiarity of the forum with the law that will govern the case; and 4) the avoidance of unnecessary problems of conflict of laws in the application of foreign law.

Notably, VW II involved a product liability case stemming from a car accident taking place in Dallas, which is located within the Northern District of Texas. The Fifth Circuit determined that each of the private interest factors weighed in favor of transfer: 1) the documents and physical evidence of the defective car were located in Dallas; 2) witnesses were located more than 100 miles from the venue selected, so compulsory processes were not available in the court where the case was filed; and 3) the cost of attendance for witnesses would be higher without a transfer of venue.

The one public-interest factor at issue in VW II was whether there was a localized interest. The Fifth Circuit determined that the public interest factors weighed in favor of transfer. It reasoned that where physical evidence was located in a different jurisdiction, it is improper to state that the factor of a “localized interest” weighs against transfer, holding that a “localized interest” cannot be achieved by simply showing that the product is available for purchase in all jurisdictions.

Perhaps the most important part of VW II is in footnote 10, which states that a plaintiff's choice of forum is not an independent factor in the analysis of 28 U.S.C. '1404(a). Instead, the deference to the plaintiff's choice of forum is only disturbed upon the balancing of the public interest and private interest factors. VW II, 545 F.3d at 314 n.10.

The Federal Circuit Decision: In re TS Tech

Similarly to VW II, the public and private interest factors were found to weigh in favor of transfer of venue in TS Tech. In TS Tech, Lear Corporation filed suit against TS Tech for infringement of Lear's patent on vehicle headrest assemblies. Lear had filed suit in the Eastern District of Texas, but TS Tech had moved to transfer venue to the Southern District of Ohio because the physical and documentary evidence was located in Ohio and the witnesses were in Ohio, Michigan, and Canada. The Eastern District of Texas denied TS Tech's motion.

In regard to the first public interest factor, the relative ease of access to sources of proof, the Federal Circuit disagreed with the conclusion of the Eastern District of Texas that the evidence of the headrest assemblies was available anywhere because some of the data was stored electronically. The Federal Circuit held that the headrest assemblies were physical evidence that TS Tech was producing, and they were being manufactured in Ohio, not Texas. Accordingly, the Federal Circuit determined that the first factor weighed in favor of transfer, stating that the mere fact that some of the evidence is in electronic form will not cause the factor to weigh against transfer. Based on the analysis, this factor can be used as a distinguishing point for future patent cases, such as those involving software, where there probably will not be any physical evidence or physical products.

The Federal Circuit agreed with the Eastern District of Texas regarding the second public interest factor, compulsory processes. Compulsory processes were not available in Texas to secure the witnesses of TS Tech because the witnesses to the manufacture and design of the headrest assemblies were in Ohio, Michigan, and Canada. This factor was correctly weighed as neutral since no single district court would have compulsory processes available for all of the witnesses.

Regarding the third public interest factor, the cost of attendance for witnesses, the Federal Circuit held that the Eastern District of Texas erred in failing to recognize the inconvenience and increased cost to the witnesses who would have had to travel a great distance (more than 100 miles) to reach Texas. Notably, in VW II, the Fifth Circuit held that a 155-mile distance is enough to weigh the third public interest factor in favor of a transfer. Thus, the third public interest factor weighed in favor of transfer.

The Federal Circuit also held that the Eastern District of Texas erred in its analysis of the public interest factor of a “localized interest,” stating that, as held in VW II, the mere fact the product is sold throughout all jurisdictions is not meaningful enough to obtain a “localized interest.” Thus, this public interest factor did not weigh against transfer of venue and is neutral.

As a result, both VW II and TS Tech have two of the same public interest factors weighing in favor of transfer of venue and the same private interest factor being neutral. Accordingly, the writ of mandamus ordering a transfer of venue was also issued in TS Tech based on similar reasoning as in VW II.

Conclusion and Future Implications

To analyze the future implications of TS Tech, it is important to note that a writ of certiori was applied for in VW II on Dec. 9, 2008. Thus, it is possible that the case law that TS Tech relies on could be altered if the writ is granted. However, assuming that the case law of VW II is affirmed or the writ of certiorari denied, the main implication from the TS Tech case is that a writ of mandamus can be issued to transfer venue. It appears that the threat of a writ of mandamus being issued may provide judges subject to the Fifth Circuit with a greater incentive to grant a defendant's request to transfer venue, so long as the factors described above weigh in favor of a transfer.

Accordingly, it appears at this time that if plaintiffs want to ensure that a case filed in the Eastern District of Texas stays in that District, plaintiffs will either need to have witnesses located in Texas, have physical evidence in Texas, or have a local interest in Texas such as through a state law claim or other specific interest in Texas. If a plaintiff is unable to combat some of the factors presented in TS Tech and avoid having all the factors weigh in favor of transfer, it appears that transfer of venue will more likely be granted in the district courts within the Fifth Circuit. Litigants should be aware that transfer out of the Eastern District of Texas could become a much more likely phenomenon.

Ivan R. Goldberg is an associate with Pearne & Gordon LLP. He can be reached at [email protected].