Genentech & Volkswagen: Federal Circuit Splits on Venue Transfer Cases

In re Genentech (Fed. Cir. 2009)(granting mandamus and ordering transfer) 09-M901.pdf
In re Volkswagen of America (Fed. Cir. 2009)(denying mandamus) 09-M897.pdf

Since deciding TS Tech, the Federal Circuit has received a gaggle of Mandamus petitions – most of them asking the appellate court to order cases transferred out of the Eastern District of Texas to more convenient locations. In a pair of opinions – both authored by Judge Linn and released on the same day – the appellate court has provided additional guidance on deciding these transfer issues.

Genentech – Transfer Granted:

  • Key Witnesses: Genentech identified several witnesses in Northern California and argued it would be more convenient for them to attend trial in that locale. The district court, however gave little weight to Genentech list because the did not identify location of “key” witnesses. On appeal, the Federal Circuit held that at such an early stage of trial, it is unreasonable to require a defendant to show that potential witnesses are “more than relevant” or face denial of transfer.
  • European Witnesses: Several identified witnesses would come from Europe. The Texas court held that it would be more convenient for the European witnesses to travel to Texas than to California because California is further from Europe than is Texas. Here, the district court directly followed the Fifth Circuit’s proportionality test that “[w]hen the distance between an existing venue for trial of a matter and a proposed venue under § 1404(a) is more than 100 miles, the factor of inconvenience to witnesses increases in direct relationship to the additional distance to be traveled.” On appeal, the Federal Circuit noted that the difference in distance should be given less weight when the witnesses are already traveling a great distance.
  • Centralized Location: Although Texas is certainly a more central location, the Federal Circuit held that the factor could not favor a Texas venue because none of the identified witnesses reside in Texas. Rather, the court found that California is more centralized because a number of material witnesses reside within California.
  • Convenience to the Parties: Genentech is in Northern California, Biogen (another defendant) is in San Diego, Sanofi (the plaintiff) is in Germany.
  • Availability of Compulsory Process: If trial is in Texas, there may be several third-party witnesses that could not be compelled to attend because they are in California – outside the long-arm of Texas jurisdiction.
  • Evidence: “In patent cases, the bulk of the relevant evidence comes from the accused infringer.” Here, all of Genentech & Biogen’s relevant evidence is in California.
  • Prior Suit: Genentech has been a plaintiff in the Eastern District of Texas and the district court. On appeal, the Federal Circuit ruled that it would be legal error to consider a prior case that would not otherwise provide for judicial economy.
  • California’s Jurisdiction over Sanofi: There is some question of whether the California court has jurisdiction over Sanofi. The Federal Circuit held that the potential lack of personal jurisdiction in the transferred venue does not weigh heavily against transfer. “There is no requirement under § 1404(a) that a transferee court have jurisdiction over the plaintiff or that there be sufficient minimum contacts with the plaintiff.”
  • Court Congestion: This is a speculative factor and given little weight.

In re Volkswagen – Mandamus Denied:

  • The plaintiff – MHL – is a small company headquartered in Michigan, but registered in Texas.
  • In two lawsuits separate lawsuits (both in the Eastern District of Texas), MHL has sued over thirty US & Foreign automobile companies for patent infrignement.
  • VW has asked that the case be transferred from the Eastern District of Texas to the Eastern District of Michigan.
  • Multiple Lawsuits: The Federal Circuit identified the “existence of multiple lawsuits” involving the same patents and overlapping issues to be “a paramount consideration when determining whether a transfer is in the interest of justice. … Although these cases may not involve precisely the same issues, there will be significant overlap and a familiarity with the patents could preserve time and resources. Because the district court’s decision is based on the rational argument that judicial economy is served by having the same district court try the cases involving the same patents, mandamus is inappropriate under our precedents.”

Comment: In patent cases, these venue games tend to approach the absurd, and I am surprised that the Federal Circuit has taken these cases so seriously. Defendants want to move out of the Eastern District of Texas because they fear trial and the potential major damage award. The “convenient venue” argument is concocted because the Eastern District of Texas is clearly a “proper forum” with personal jurisdiction over the defendants.

MHL is a patent holding company that registered as a Texas business in June of 2007. That registration appears to have served its purpose – to win the Texas venue argument even though the principles of the business are all located in Michigan. On the other side – it looks like the Federal Circuit refused to consider the two most important facts of convenience in the Genentech case. First, in 2006, Genentech sued MedImmune for patent infringement in the Eastern District of Texas. At that time, Genentech calculated that Texas was perfectly suitable even though neither party was located in the state. Yet, the Federal Circuit held that it was legal error for the district court to consider Genentech’s prior activities in the present motion for Venue. The second issues is jurisdiction – it just does not make sense to transfer a case to a new forum without some assurances that the court has personal jurisdiction over the parties.

Disclaimer: I just noticed that my former firm MBHB (who is now a sponsor of Patently-O) is involved in the Genentech case. I do not represent any clients these days. One reason why I have enjoyed having MBHB as a sponsor is that the firm has never tried to exert editorial control over the blog or its content beyond the layout of the firm’s ad.

27 thoughts on “Genentech & Volkswagen: Federal Circuit Splits on Venue Transfer Cases

  1. Can anyone explain how the CAFC did its job of applying 5th Circuit law when the In re Genetech decision only (other than VW) cites to other circuits’ precedent. Thoughts on this?

    Notably, the CAFC didn’t cite to any 3rd circuit (or Delaware ) precedent as it is even more anti-transfer than EDTX. Looks like the decision led to the reasoning instead of the reasoning leading to the decision, IMHO.

  2. “This seems a bit untrue on its face Leopold, since the defendent is both a party in the present case and in the previous case and factors of convenience thus would be likely similiar for at least one of the parties (unless the defendant has a habit of moving between cases).”

    I don’t mean to gloss over anything. What you say is completely true, but there’s nothing that prevents a plaintiff from picking an inconvenient forum, as I tried to point out in my first comment. Plaintiffs rationally do so to get an attractive venue. Therefore, the fact that Genentech chose this same forum before does not tell you anything about whether it is or was inconvenient for Genentech. That’s the definition of “irrelevant.”

    If there’s any “glossing over,” it’s the continued ignoring of the Supreme Court’s admonition that this analysis should be “case-by-case.”

  3. “The defendant’s choice of forum in a previous case has nothing to do with the convenience of parties and witnesses in the current case.”

    This seems a bit untrue on its face Leopold, since the defendent is both a party in the present case and in the previous case and factors of convenience thus would be likely similiar for at least one of the parties (unless the defendant has a habit of moving between cases).

    You seem to want to gloss over the point that smashmouth is making – consistency of a company in choosing venues should not be ignored. Merely labeling that very choice and the background of consistency of choice as “irrelevant” does not make it so.

  4. “Don’t forget that when a defendant challenges the plaintiff’s choice of forum under 1404(a), the balancing is tilted in favor of the plaintiff. Only if the transferee forum is clearly more convenient should the motion be granted.”

    smash, you’re absolutely correct. But a defendant’s previous choice of a forum has nothing to do with any of this, and nothing to do with the convenience of the forum in the present case. 1404(a) says that “[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to another district court or division where it might have been brought.” Further, as the CAFC notes, “The Supreme Court has long held that § 1404(a) requires ‘individualized, case-by-case consideration of convenience and fairness.’”

    The defendant’s choice of forum in a previous case has nothing to do with the convenience of parties and witnesses in the current case. And the district court can’t “do justice” in this case by punishing a defendant for a prior choice of forum, especially given the clear Supreme Court statement on the issue. I don’t see how the CAFC could come to any conclusion other than that considering the earlier case was clear error. The court simply can’t throw in irrelevant factors.

  5. Leopold:

    Respectfully disagree. Estoppel is too strong a term here. I just think Genentech’s previous recent choice of the same forum should be allowed to be considered as a factor in what, after all, is a factor-based analysis. The Fed. Cir. held that considering that as a factor was error as a matter of law. That’s pretty much using a slegdehammer to smash an ant.

    Don’t forget that when a defendant challenges the plaintiff’s choice of forum under 1404(a), the balancing is tilted in favor of the plaintiff. Only if the transferee forum is clearly more convenient should the motion be granted. See 1 ALR Fed. 15 for cases (including the supplemental updates, it’s still good law).

    I guess the other problem I have here is that the district court’s decision on a 1404(a) motion is supposed to be reviewed for abuse of discretion. That’s supposed to be an extremely deferential standard. Instead the Fed. Cir. engages in de novo review for a good 10 pages or more, and then throws in some saving phrase about abuse of discretion near the conclusion to make it look legit. I am not ocnvinced.

  6. “I think this is simply dishonest. Of course Genentech isn’t really inconvenienced by the plaintiff’s choice of forum here. They just simply don’t think the EDTX is fair to accused infringers. Which is exactly why they chose to sue in that forum 2 years ago.”

    smash, I don’t follow your logic. It’s quite likely that another forum might have been more convenient for Genentech 2 years ago, but they felt the inconvenience was outweighed by the plaintiff-friendly environment in EDTX. If the other party in that case could have shown that the forum was inappropriate, they should have done so.

    You’re arguing (like the district court) for a sort of estoppel with respect to a forum challenge, by virtue of having appeared in that court before. That’s completely inconsistent with a case-by-case approach. I don’t think the CAFC is being dishonest at all. And neither are Genentech’s attorneys.

  7. Dennis:
    “Prior Suit: Genentech has been a plaintiff in the Eastern District of Texas and the district court. On appeal, the Federal Circuit ruled that it would be legal error to consider a prior case that would not otherwise provide for judicial economy.”

    From the Fed. Cir. slip op. at 11-12:

    “In its order, the District Court for the Eastern District of Texas cited two issues regarding the practicality of trying this case in the Eastern District of Texas instead of the Northern District of California. One of the issues the court found to weigh significantly against transfer was that Genentech had previously chosen to file a different suit in the Eastern District of Texas. The court reasoned that “Genentech cannot avail itself of the Eastern District’s courts when it suits them, only to complain little more than two years later that the Eastern District is an inconvenient venue in a subsequent suit.” Sanofi-Aventis, slip op. at 15-16.
    We agree with the petitioners that the district court’s consideration of the previous case was clear error in this case. The Supreme Court has long held that § 1404(a) requires “individualized, case-by-case consideration of convenience and fairness.” Van Dusen v. Barrack, 376 U.S. 612, 622 (1964); see also Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988). The court does not suggest that Genentech’s previous lawsuit involved the same parties, witnesses, evidence, and facts. Thus, the court clearly erred in finding Genentech’s prior suit weighed against transfer.”

    I think this is simply dishonest. Of course Genentech isn’t really inconvenienced by the plaintiff’s choice of forum here. They just simply don’t think the EDTX is fair to accused infringers. Which is exactly why they chose to sue in that forum 2 years ago.

    I think decisions like this damage and distort the law of forum non conveniens. It may well be that EDTX is a “bad” forum, but this way of “fixing” the problem upends long-settled law, IMHO.

  8. It’s just this simple. Clients want out of EDTX because they want judges who will actually read summary judgment motions.

  9. @Paul F. Morgan:

    Is there a specific critique of the reasoning in VE Holdings that you would like to offer, other than not liking the result? It isn’t as if the CAFC just leaped to the result.

    The CAFC wrote: “The Supreme Court’s decision in Fourco is generally viewed as holding that § 1400(b) is the ‘exclusive’ venue statute in patent infringement actions. Thus it is sometimes said that, since Fourco, the only way to change the way that venue in patent infringement actions is determined is to change § 1400(b). *This argument fails, however, because the Supreme Court, in Brunette, 406 U.S. 706, 32 L. Ed. 2d 428, 92 S. Ct. 1936, refused to impose such a disablement upon the Congress’ ability to enact or amend legislation.*” The CAFC also noted that “Section 1391(c) as it was in Fourco is no longer. We now have exact and classic language of incorporation: ‘For purposes of venue under this chapter. . . .’”

    So we have express language of incorporation (which addresses your contention regarding intent) plus Fourco not being directly on point any more because the language of 1391(c) had changed.

  10. A critic paraphrased DC thusly: “Defendants want to move out of the Eastern District of Texas because they fear a trial in which the decks are procedurally stacked … .”

    How is the trial procedurally stacked, pray tell? Pre-trial perhaps, given the rarity with which summary judgment of non-infringement is granted. But a claim that the trial itself is procedurally stack should be supported by more than a bald assertion.

    Whether representing a defendant or a plaintiff, I believe Appendix M of the Local Rules (which govern contention discovery and claim construction in patent cases) move cases along efficiently, provided the plaintiffs don’t provide BS infringement contention charts and the defendants don’t provide BS invalidity contention charts. That’s where the cases can get bogged down.

  11. Also note the vital legal fact that plaintiffs can now de facto bring patent cases against major corporations in any district court they chose anywhere in the entire country, irrespective of the defendants having no significant business OR witnesses in that district ["ultimate" forum shopping] only because a trial-lawyer-friendly Congress changed the 28 USC 1391(c) venue statute to effectively eliminate any venue requirements for corporations, and then the CAFC held that that change had overruled the specific patent and copyright venue statute 28 USC 1400, even though that specific statute is still on the books and Congress had never expressed any intent to overrule it.

  12. The legal error part of the Genentech decision is interesting. Here, I think the fact that Genentech is defendant rather than plaintiff would presumptively allow them to make the transfer of venue motion. Is this part mainly to tell district courts that which side a party is on still makes a difference?

  13. anonymous:
    “Again, parties make procedural motions with an eye toward gaining an advantage in the case. The motion to transfer is no more ‘concocted’ than a plaintiff’s decision to file the case in Marshall.”

    True. However, it’s pretty well-settled that the plaintiff’s choice of forum is presumptively preferred. In other words, the burden is on the moving party (usually, but not always, the defendant) to persuade the court in order to win a 1404(a) motion. See 1 ALR Fed. 15 (discussing 28 USC 1404 and analyzing cases).

  14. Dennis, I am not sure if you have ever represented a patent defendant in the E.D.Tex. but your comment seems to imply that you haven’t, at least not recently. Here is how I would reword your comment based on my experience in that jurisdiction:

    “Defendants want to move out of the Eastern District of Texas because they fear a trial in which the decks are procedurally stacked and usually results in a ludicrous damage award. The ‘convenient venue’ argument is raised out of necessity because the Eastern District of Texas is one of many fora having personal jurisdiction over the defendants.”

    Your comment, as a whole, seems to imply that the doctrine of forum non conveniens, which is older than bread, should be stricken from the books and is completely superfluous in view of personal jurisdiction jurisprudence. I respectfully disagree.

  15. I agree with TJ. I’m not sure what Dennis means by “proper forum,” 1404 wouldn’t exist if the only questions were personal jurisdiction and plaintiff’s choice. Marshall TX is physically inconvenient for pretty much everybody, so it seems to me that defendants hauled into Marshall would be making 1404 transfer motions even if the courts there weren’t so pro-patentee. [Though of course, plaintiffs wouldn't sue there in the first place if the courts weren't so pro-patentee]

    This comment seems a little strange:
    ——–
    Defendants want to move out of the Eastern District of Texas because they fear trial and the potential major damage award. The “convenient venue” argument is concocted because the Eastern District of Texas is clearly a “proper forum” with personal jurisdiction over the defendants.
    ——–

    Again, parties make procedural motions with an eye toward gaining an advantage in the case. The motion to transfer is no more “concocted” than a plaintiff’s decision to file the case in Marshall.

  16. It’s interesting that the question of personal jurisdiction over the plaintiff even arose. In point of fact, there has never been a requirement that a court have personal jurisdiction over the plaintiff.* (See 465 U.S. 770). The theory being that the act of filing suit waves the right to contest in personum jurisdiction. And yet it’s difficult to identify any justification for hailing the plaintiff into an unfamiliar jurisdiction.
    *The subject does arise infrequently in class action cases.

  17. Flight time Heathrow – SF: 11 hours. To Dallas: 10.5 Add in driving time to Marshall and it’s a longer trip from London to EDTX than to NDCA. But why should judges in EDTX be bothered to check travel times on Expedia before issuing rulings? They may litigate high-tech patents there, but apparently the internet still hasn’t arrived in Texas.

  18. Dennis, agree with you about the motivations of the parties, but that hardly means the Federal Circuit should give these cases short shrift. Assuming that we have a random normal distribution of district judges in the country, then the extremes are going to be rather extreme. The most pro-patentee judge in the country is going to be wildly pro-patentee; and the most anti-patentee judge in the country is going to be wildly anti-patentee.

    So if the test really is whether the court has jurisdiction and the plaintiff gets to choose; and the Federal Circuit then gives the case no attention; then you are going to have practically every patent case being filed in the same district, a district that really will become a “renegade jurisdiction.” The same result occurs if you allow defendants to transfer at will to any other district, just in the opposite direction. I don’t think either is a good situation.

    So “convenience” seems like a good metric to assess things. True, defendants seek transfer not for convenience but for other reasons. But the convenience standard limits them in two ways. First, they really do need to find a more convenient forum. Second, they can’t just pick the most anti-patent district in the country unless they are headquartered there, which for a defendant is much harder to do (since you really need to move your headquarters).

    Your tone implies that the parties are arguing for cynical reasons and therefore applying the legal standard seriously is a waste of time. But that is like saying that the parties are arguing for summary judgment for cynical reasons (they want to win) and so applying the legal standard seriously is misguided. The legal standard exists for independent reasons; and the convenience of forum is not only for the parties but for the rational administration of the judicial system.

    Full disclosure: my old firm (QE) is on the other side of the Genentech case.

  19. I am a little confused how the CAFC can rely on 2nd, 7th, 11th, and 9th circuit caselaw in the Genentech decision when the law that was supposed to be applied should have been 5th circuit law.

    See:

    Neil Bros (EDNY)
    Bionx Implants (SDNY)
    Centro Group (SDNY)
    Ricoh (DNJ)
    US v. Binder (7th Cir)
    Murray v. Scott (MDAla)
    Gates Learjet (9th Cir)
    Collins (2nd Cir)

  20. Based on the precedent set forth by the Courts (5th Cir. Appeals and CAFC) since last Fall, these are absolutely the right decisions.

    Key point from MHL- to keep venue in Texas, sue lots of Defendants from all over the world.

  21. “Perhaps they also fear some of the judges there who are among the most corrupt and biased in the Federal system.”

    Could you be more specific, Malcolm?

  22. “Defendants want to move out of the Eastern District of Texas because they fear trial and the potential major damage award.”

    Perhaps they also fear some of the judges there who are among the most corrupt and biased in the Federal system.

  23. Although no witnesses at all from a plaintiff-selected forum is really the key here, could not witness convenience be more realistically measured by total travel time and availablilty rather than straight line miles distances? E.g., in this case, comparing the flight time and availability of direct and connecting flights into S.F. CA as compared to flights into the nearest airport to Marshall Texas plus car rental and driving time?
    Also, the comment above is ignoring the serious inconvenience and additional client cost of forcing all of the patent attorneys and all of the client counsels to have to travel to that bucolic locale and stay there.
    This current flood of venue transfer mandamus requests to the CAFC is bound to slow down considerably with the district court applying the more reasonable new 5th Cir. en banc VW case standards for granting venue transfer in appopriate new cases, rather than automatic venue transfer denials not coincidentally providing a financial bonanza for local counsel. Also, defendants are now winning there.

  24. Inglorious lawyer-

    It is called an adversarial system for a reason – if you can re-energize King Solomon or get GOD to decide and get perfect decisions in every case we can do away with these pesky humans, until then, get over it.

  25. Personal jurisdcition over Volkswagen and Genentech? They pass the International Shoe test anywhere. MHL is a patent holding company that really has few contacts anywhere, thus should they really be allowed to manipulate venue by simply incorporating in a crappy venue for their opponent? That does not seem fair either.

    Thus, under the TS Tech “clearly more convenient” argument do we really need to care much about MHL?

    As for your statement of why they take it seriously, they don’t want an appeal to the SCOTUS where Roberts can go off on them in clearly inappropriate and unprofessional ways as he has in the past from the bench…

    Can we just make Sotomayer Chief and fire Roberts (kidding, KIDDING!).

  26. The attorneys come off as dishonestly squirming to get out of a jurisdiction where they may not receive a favorable verdict.

    Isn’t this the very behavior Judges despise? Forum shopping??

    Maybe this why everyone hates lawyers… What they say (inconvenient venue) is never what they mean (unfavorable venue)?

Comments are closed.