Guest Post by Prof. Paul R. Gugliuzza (Temple U.)
A rare thing happened at the Federal Circuit today. The court heard oral argument on a petition for a writ of mandamus. The petition was filed by the tech behemoth, Apple, in a patent infringement case filed against it in the Western District of Texas. In the petition, Apple seeks an order sending the case to the Northern District of California under 28 U.S.C. § 1404, which permits transfer “[f]or the convenience of parties and witnesses, in the interest of justice.”
Though transfer petitions are relatively common in patent cases, the Federal Circuit almost always decides them on the briefs alone. That the court scheduled oral argument—in a case arising out of the Western District of Texas, no less—has been interpreted as reflecting concern by the Federal Circuit about the judge shopping occurring in the Western District.
As Jonas Anderson and I showed in a recent Patently-O post and discuss in more detail in a draft article, the Western District’s case assignment rules permit plaintiffs to predict, with absolute certainty, which judge will hear their case. And plaintiffs are overwhelmingly choosing Judge Alan Albright, whose procedural rules and substantive decisions they find quite favorable.
That said, the Federal Circuit’s decision to hold oral argument on Apple’s petition could also reflect the fact that, in the midst of the COVID pandemic, it’s a pretty easy thing to do. For the past six months—and for the foreseeable future—the Federal Circuit has been conducting oral argument entirely by telephone. Indeed, that’s how I was able to listen to today’s arguments, live.
Before getting to a summary of that argument, some background about the case. The plaintiff is, like many plaintiffs in the Western District, a prolific non-practicing entity, Uniloc 2017 LLC. In September 2019, Uniloc sued Apple for infringing a patent on a system for controlling software updates.
Like more than 800 other patent cases over the past two years, Uniloc filed its case in the Waco Division of the Western District of Texas and—like 100% of cases filed in the Waco Division—it was assigned to Judge Albright. Apple sought transfer to the Northern District of California, noting that, out of 24 prior cases Uniloc had filed against it in the Eastern and Western Districts of Texas, 21 had been transferred.
But Judge Albright denied Apple’s motion in an order from the bench in May 2020. As covered here on PatentlyO, it took Judge Albright more than a month to issue an order explaining why he was doing so. When that order eventually issued, it noted, among other things, that Apple has stronger connections to the Western District of Texas than to the Eastern District and that the cases previously transferred out of the Western District (by Judge Lee Yeakel) were distinguishable because Apple’s activities in the Western District had grown significantly over the past couple years.
The Federal Circuit argument, it’s worth noting, wasn’t part of the court’s normal calendar of arguments, which typically take place during the first week of the month. Rather, it was the only case heard by a panel consisting of Chief Judge Prost, Judge Moore, and Judge Hughes.
Mel Bostwick, from Orrick, Herrington & Sutcliffe’s Washington, D.C., office, presented argument for Apple. In her view, the district court made two critical errors in denying transfer: First, it relied too heavily on the progress it had already made in the case as well as its already-scheduled trial date (which, under Judge Albright’s extremely speedy default schedule, is less than 18 months after the initial case management conference).
Second, according to Apple, the district court erred in applying the “cost to willing witnesses” factor in the transfer analysis. Though both Apple and Uniloc identified witnesses in California, Judge Albright, according to Apple, inappropriately discounted the relevance of those witnesses because they were willing to travel. But, Apple contended, the relevant question is the cost of their travel, not their willingness to do so.
Apple faced skeptical questioning from Judge Moore, who was, in fact, the only judge to ask a question of Apple until rebuttal. Judge Moore focused initially on the standard of review. To receive the extraordinary writ of mandamus, a party must show a “clear abuse of discretion” by the district judge. The fact that this case has some factual connection to the Western District—namely, Apple has a campus in Austin and a third party makes accused products in the district—seemed to raise doubts in Judge Moore’s mind about whether any error by the district court met that high bar.
Christian Hurt of the Davis Firm in Longview, Texas argued on behalf of Uniloc. He began by emphasizing the concerns about parties and witnesses located in the Western District that were initially raised by Judge Moore. Apple didn’t dispute, Uniloc noted, that it has an 8,000 employee campus in Austin, technical witnesses work there, and a third-party contractor makes accused products in the district.
Almost all the questions for Uniloc came from Chief Judge Prost. She asked about matters including: the exact location of the witnesses, whether it was clearly an abuse of discretion for the district court to rely on its progress and projected schedule in denying transfer, and whether Apple might have an alternative means of seeking relief, such as through a later mandamus petition or by seeking a stay pending related litigation elsewhere.
Toward the end of Uniloc’s argument, Judge Moore chimed in to ask whether, if the court found the district court had made errors in its transfer analysis, it would be appropriate for the Federal Circuit to vacate the decision and remand the case for further proceedings, rather than ordering transfer—a step the very same panel of Federal Circuit judges basically took in a recent Western District case filed against the file storage company, Dropbox.
During Apple’s rebuttal argument, Judge Moore asked why transfer to California was warranted given the local interest in the case. Apple, Judge Moore observed, is one of the largest employers in the Western District—a far cry from the Eastern District, where Apple doesn’t even have stores anymore, for fear of aiding patent plaintiffs in establishing venue there. Judge Moore was unconvinced (to put it mildly) by Apple’s assertion that the local interest isn’t the interest of Western District of Texas and its residents, but the interest of “the people who created the accused technology,” in Cupertino.
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So, what’s my take? The atmospherics are clearly troubling. There’s no doubt that Judge Albright is successfully courting patentees to file in his courtroom both by explicitly advertising to them and by adopting procedural rules and making substantive decisions that clearly favor them. But those larger dynamics, though they were discussed in Apple’s brief, weren’t even mentioned at oral argument. (Bostwick, Apple’s attorney, seemed to want to go there during rebuttal, but ran out of time.)
In this case, the Federal Circuit might struggle to find a legal justification for ordering transfer, particularly given high standard for mandamus. That said, the Federal Circuit rarely hesitated to transfer cases out of the Eastern District during its heyday as the nation’s patent litigation capital. In several cases, the Federal Circuit used the extraordinary writ of mandamus to engage in what seemed like pure error correction. It’s not out the question that the Federal Circuit would do something similar with the Western District, whether in this case or one of the other nearly 600 filed before Judge Albright this year alone.
Moreover, though the court competition and judge shopping that’s going on in the Western District is troubling, interlocutory appeals like the one Apple is pursuing can be costly and disruptive. That will be even more so if the Federal Circuit makes a habit of simply vacating orders denying transfer and remanding for further consideration, as Judge Moore suggested. The end result would be another round of briefing and argument—and possibly even discovery—on an issue entirely tangential to the merits of the case.
Whatever the outcome, this case between Apple and Uniloc shows how difficult it will be for the Federal Circuit, which can only hear the disputes that come before it, to change the systemic incentives that encourage judges to compete for patent cases and for plaintiffs to shop for those judges. As we suggest in our article, legislation or administrative rules mandating random case assignment and more particularly defining plaintiffs’ venue choices may be the only solution.
Paul Gugliuzza is Professor of Law at Temple University Beasley School of Law