In re Microsoft: Presence Created Solely for Purposes of Litigation Does Not Support Venue

By Jason Rantanen

In re Microsoft Corporation (Fed. Cir. Order 2011)
Panel: Newman, Friedman, Laurie (per curium)

The Federal Circuit's decision in In re Microsoft, which granted Microsoft's request for a writ of mandamus ordering the Eastern District of Texas to transfer the case to Washington State, originally issued as a nonprecedential order in early November; the CAFC reissued it as precedential today.  The order adds another piece to the now fairly substantial body of law surrounding review of denials of requests to transfer venue.  Allvoice Develop-ments, a company operated from the United Kingdom, sued Microsoft in the Eastern District of Texas for infringing Patent No. 5,799,273.  Microsoft, which is headquartered in the Western District of Washington (where a substantial portion of its employees and operations are located), requested a transfer of venue to Washington State. 

In denying Microsoft's motion to transfer venue, the district court relied on the existence of a local Allvoice office in Tyler, as well as Allvoice's incorporation under the laws of Texas.  The court also weighed the witness factor against transfer because Allvoice had identified potential non-party witnesses in New York, Massachusetts and Florida who, the court found, would find Texas more convenient for trial.  Although the court found that the sources of proof factor weighed in favor of transfer, it did so only slightly because Allvoice said that its documents were maintained in its office in the E.D. Texas. 

On appeal, the Federal Circuit granted Microsoft's request for a writ, likening this case to In re Genentech, Inc., 566 F.3d 1338 (Fed. Cir. 2009), and concluding that the district court abused its discretion by denying transfer.  The CAFC first noted that there was a vast disparity with respect to the convenience of witnesses: all individuals identified by Microsoft as having material information relating to the patents reside within 100 miles of the W.D. Wash.; all but two of the witnesses identified by Allvoice reside outside Texas, and even those two witnesses appear to be relatively peripheral.

Particularly notable, however, was the CAFC's refusal to consider Allvoice's presence in the E.D. Texas.  "Allvoice’s argument … rests on a fallacious assumption: that this court must honor connections to a preferred forum made in anticipation of litigation and for the likely purpose of making that forum appear convenient."  Slip Op. at 5.  Thus, just as transferring thousands of pages of relevant documents to the offices of litigation counsel in Texas in order to assert that the location of those documents favored non-transfer was entitled to no weight in In re Hoffmann-La Roche Inc., 587 F.3d 1333 (Fed. Cir. 2009), so too is the existence of an office created solely for the purpose of manipulating venue a meaningless fact for the venue analysis.  Nor did the CAFC ascribe any weight to extra step of incorporating under the laws of Texas, noting that it was done sixteen days before filing suit.

18 thoughts on “In re Microsoft: Presence Created Solely for Purposes of Litigation Does Not Support Venue

  1. Actually, they never addressed it.

    Actually, they did – it is at the core of their decision. They saw right through what in any non-manipulative situation would be a perfectly legitimate establishment of standing.

    Standing failed and the court made a point of saying why. In essence, “don’t do this again.”

  2. a better pair of glasses – “The court did not share your problem”
    Actually, they never addressed it. As I stated and Anon restated above, there is no wrongdoing assuming the proper disclosures were made.

  3. isn’t there a distinction between a dead guy and his estate?

    Cy, really? Are ya goin to nitpick to that level? How deep does that pole go? – Wait, never mind I don’t wanna know.

  4. This thread turned into a cesspool rather quickly.

    Here are my 2 obvious thoughts.

    1. “Manipulation” isn’t sanctionable. I didn’t see any evidence that the lawyers misled the court or lied about the duration or purpose of the plaintiff’s contacts with E.D. Tex. The law makes a plaintiff’s choice of forum more likely to stick when the litigation has connections to that forum, and the lawyers tried to take advantage of that law by setting up some connections before filing suit. It didn’t work, but the ethics laws aren’t about punishing strategic behavior; only dishonest behavior.

    2. The order here was issued back in November. Yesterday the court reissued it as precedential in response to a request from a lawyer at a firm that doesn’t represent any of the parties here. It’s a semi-interesting procedure that doesn’t happen very often.

  5. You’d better really brush up.

    Thanks for the advice, looking glass. But isn’t there a distinction between a dead guy and his estate?

  6. I’m curious – can you really act “on behalf of… a dead guy?

    Compared to:

    Well d@mn. I guess I better brush up on my Wills & Estates law” – (From the “Uniloc v. Microsoft” thread)

    W

    T

    F

    You’d better really brush up.

  7. MM: Sometimes when the wind is blowing strongly from the West, you can smell bananas in Dallas.

    Ron: it may have been easier to just point out that the EDTex is east of Dallas. ”

    6: Lulz that’s what I was thinking.

    Guys. Give MM some credit. He was just saying he lives in Fort Worth.

  8. “Ron: it may have been easier to just point out that the EDTex is east of Dallas. ”

    Lulz that’s what I was thinking.

  9. I’m curious – can you really act “on behalf of” (i.e., in the interest of; as a representative of) a dead guy?

    I’m more concerned with who will act on behalf of Malcolm’s dead horse when it sues Ron for battery.

  10. Ron, enough with the ridiculous signature. We all know who you are, and none of us are impressed by your “other affiliations”. Go sell crazy somewhere else.

    I’m curious – can you really act “on behalf of” (i.e., in the interest of; as a representative of) a dead guy?

  11. Ron, enough with the ridiculous signature. We all know who you are, and none of us are impressed by your “other affiliations”. Go sell crazy somewhere else.

  12. “Sometimes when the wind is blowing strongly from the West, you can smell bananas in Dallas.

    Posted by: Malcolm Mooney | Jan 05, 2011 at 06:40 PM”

    Malcolm Malarkey has ate so many bananas that his gait, stature and critical thinking skills have all regressed to the point that he can now start doing caveman commercials for one of the invention promoters who routinely rips off aspiring inventors.

    Ronald J. Riley,

    President – http://www.PIAUSA.org – RJR at PIAUSA.org

    Other Affiliations:
    Executive Director – http://www.InventorEd.org – RJR at InvEd.org
    Senior Fellow – http://www.PatentPolicy.org
    President – Alliance for American Innovation
    Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
    Washington, DC
    Direct (202) 318-1595 – 9 am to 9 pm EST.

  13. “Particularly notable, however, was the CAFC’s refusal to consider Allvoice’s presence in the E.D. Texas. “Allvoice’s argument … rests on a fallacious assumption: that this court must honor connections to a preferred forum made in anticipation of litigation and for the likely purpose of making that forum appear convenient.” Slip Op. at 5. Thus, just as transferring thousands of pages of relevant documents to the offices of litigation counsel in Texas in order to assert that the location of those documents favored non-transfer was entitled to no weight in In re Hoffmann-La Roche Inc., 587 F.3d 1333 (Fed. Cir. 2009), so too is the existence of an office created solely for the purpose of manipulating venue a meaningless fact for the venue analysis. Nor did the CAFC ascribe any weight to extra step of incorporating under the laws of Texas, noting that it was done sixteen days before filing suit.”

    Man, despite a weak finish for 2010 by misapplying the lawl in several cases the CAFC is starting the new year off right. Kudos to them.

    “Question: Will there be sanctions against the attorneys for attempting such wanton manipulation?

    Why or why not?”

    No, because corruption, so long as it is sufficiently widespread, is tolerated in lawlyer circles.

  14. Ping – Sanctions against the attorneys? The company made a decision to incorporate in Texas. I’m not sure how the litigation attorneys were involved in this, but assuming they were and gave advice to incorporate in Texas, I fail to see any wrongdoing here assuming proper disclosures were made.

    If the court, or rather the state bar, sees a problem with this, perhaps you’d see a warning letter.

    A side note: It is good that MS fights so many lawsuits. Just think, if they settled more we’d have less case law.

  15. The Supreme Court has long urged courts to ensure that the purposes of jurisdictional and venue laws are not frustrated by a party’s attempt at manipulation.”

    Question: Will there be sanctions against the attorneys for attempting such wanton manipulation?

    Why or why not?

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