Bald-Faced Attempt to Manipulate Venue Rejected

by Dennis Crouch

In re Samsung Electronics Co., LTD (Fed. Cir. 2021)

The Federal Circuit has again granted mandamus and ordered Judge Albright to transfer two cases case out of his W.D.Tex. court to a more convenient forum (N.D.Cal.).

The underlying actions were filed by a patent holding company known as Ikorongo Texas LLC against Samsung and LG Electronics. As explained below, the owners of Ikorongo Texas formed the company as an attempt to solidify venue in W.D.Texas and avoid the case being transferred for inconvenient forum.

Ikorongo Texas is owned by five-individuals led by patent agents Hugh Svendsen & Sarah Svendsen.  The five also own a separate company known as Ikorongo Technology LLC.  The asserted patents were previously fully owned by Ikorongo Tech. However, before suing, Ikorongo Tech geographically divided the patent rights. In particular, the company assigned all rights in the patents relating to the WDTX back to the five-individuals.  At that point, the five individuals owned all rights to sue and collect damages associated with infringement occurring in the “specific counties” covered by WDTX.  The five individuals then created the new company Ikorongo Texas and assigned their WDTX rights to the company.  Ikorongo Texas then sued Samsung and LGE.  The following day, Ikorongo Texas amended its complaint to also add Ikorongo Tech as a co-plaintiff so that collectively they could seek damages for the full USA.  Ikorongo Texas is a Texas LLC (corporate registration in Texas), but its owners and managers all reside in North Carolina.

The defendants in the lawsuit admitted that venue was proper in WDTX, even under the high bar for proper venue created by 28 U.S.C. § 1400(b).  But, the defendants argued that N.D.Cal. is a better, more convenient venue, and requested transfer. Even if venue is proper, a defendant may still complain that that the forum is inconvenient and request a change of venue. The statute:

For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented.

28 U.S.C. § 1404(a). A court has discretion as to whether to transfer a case, but should look to the convenience of the parties, convenience of the witness, and also the interest of justice. In addition, the court may only transfer a case to a district where venue and personal jurisdiction are proper (“where it might have been brought”).

Judge Albright refused to transfer the case to California — holding that Ikorongo Texas would not have had proper venue to sue in the state. In patent cases venue is only proper against a US corporate defendant if either (1) the defendant is incorporated within the state or (2) the infringement occurred within the district and the defendant has a regular place of business in the district.   The defendants here are incorporated in NY & Delaware, and the infringement alleged by Ikorongo Texas was only in WDTX. Thus, no proper venue.

On mandamus, the Federal Circuit has rejected that analysis — rejecting this “collusive” attempt to avoid the transfer on convenience grounds.

Ikorongo Texas is plainly recent, ephemeral, and artificial—just the sort of maneuver in anticipation of litigation that has been routinely rejected. . . . [T]he district court disregarded the pre-litigation acts by Ikorongo Tech and Ikorongo Texas aimed at manipulating venue.

Slip Op. The court then disregarded the creation geographic division and ordered transfer (after also finding that the convenience factors clearly weigh in favor of transfer and refusing to transfer would be an abuse of discretion).

The decision here has a limiting feature–that Ikorongo Texas was formed for the sole purpose of manipulating venue.  I wonder what the courts would say about Apple closing its store in E.D.Tex.

= = = =

I’ll note also that the case might have turned out differently if Ikorongo Tech had not been added to the case.

= = = =

The decision does not rely in direct on-point precedent, but instead relies heavily upon precedent in in the context of subject matter diversity jurisdiction. Miller & Lux, Inc. v. E. Side Canal & Irrigation Co., 211 U.S. 293, 305–06 (1908). In that case, a California corporation had formed a separate Nevada corporation and transferred property rights to the Nevada Corp in order to create diversity jurisdiction. The Supreme Court said No.  One problem with this analogy is that there is a particular statute barring collusive incorporation in order to create diversity jurisdiction:

A district court shall not have jurisdiction of a civil action in which any party, by assignment or otherwise, has been improperly or collusively made or joined to invoke the jurisdiction of such court.

28 U.S.C. § 1359.  Although also statutory, diversity jurisdiction has an express constitutional basis whereas convenient-forum is entirely statutory.  That distinction has historically offered courts to – at times – distinguish between the two in their analysis and interpretation. The opinion does not delve into why the linkage is appropriate here.

 

51 thoughts on “Bald-Faced Attempt to Manipulate Venue Rejected

  1. 9

    The CAFC today grants the same mandamus order for Uber that it granted last week for Samsung.

    1. 9.1

      Before LOURIE, DYK, and REYNA, Circuit Judges.

      DYK, Circuit Judge

      That panel make-up pretty much sealed the deal (although it is a mirror of the case at point here).

  2. 8

    Greg, have you taken a statistics course? My sampling of patent applications and patents is statistically significant over the course of my career.

    The person who has little credibility is you. You obviously want to put out a public persona of a person that is trying to limit software/EE/mechanical patents in favor of biotech patents and you push the typical propaganda day in and day out.

    The person that obviously lies on here is you. Below is a good illustration of your nonsense. The type of stuff untrained minds would buy into but that any scientists would know is false. Over more than 20 years I’ve looked at approximately 100,000 patents/patent applications. Even if the number is 1/10 that it is still statistically significant. But the propaganda machine of Greg pushes on for clients. You are the one with little credibility.

    Greg >>
    The propaganda is that patents are fantasy disclosures of non-products that are marginally enabled at best.

    This is simply not true for the vast majority of patent applications and certainly for the large technology companies.

    Honestly, how could anyone pretend to know this. We are on the 11 million series of patents right now. To opine about the sufficiency of enablement of even a simple majority of patents—to say nothing of the “vast majority”—one would need to be familiar with more than 5.5 million patents, their respective technology fields (at each of their filing dates), and their file wrappers.

    You are not familiar with that many patents. Nor am I. Nor is any person alive today.

    In other words, you could not possibly know what you are talking about, and yet you say it anyway. Like I said, some do not value their credibility all that highly…

    1. 8.1

      I mean seriously. Greg you are a joke. It is predictable depending on the subject matter whether you are going to lie or not. You lie about anything that tries to limit the patent right for software/EE/mechanical inventions.

      You are the type of person that has created the great problems in this country as you are a bought off boy. You don’t care about your own dignity or character but building your client base. Gut wrenching to see you slither your way through these positions to please your clients. Bought off boy.

      1. 8.1.1

        And please respond bought off boy, Greg, whether 100,000 or even 10,000 sampling of the patent/patent application database is statistically significant or not.

        Or is that one of those factual things that you can’t answer because it is counter to your clients positions? You are a shill with no credibility as we always have to evaluate everything you say as to whether it has to do generally with patents that include biotech patents (then the credibility goes up) or it has only to do with EE/CS/mechanical patents, in which case, the credibility goes to zero to please Greg’s clients. Right bought off boy?

      2. 8.1.2

        [Y]ou are a bought off boy.

        See, this just further proves my point. You cannot possibly know whether I am “bought.” Everyone who reads this board knows that you cannot possibly know as much. Nevertheless, you throw around such an accusation without even attempting to establish your contention with evidence.

        This is the sort of behavior calculated to diminish one’s credibility, and here you come engaging in such behavior. What other conclusion can a sane person draw, except that you do not much value your own credibility?

        1. 8.1.2.1

          Right Greg. So I explained why I think you are a bought off boy above.

          I said that we can tell that you are adopting positions to please clients and so forth as your views vary depending on the art unit. You just ignored the substance of my post and then yap on.

          And my argument about the sample size of patents I’ve reviewed is statistically significant goes unanswered.

          You are the one with little credibility —not me. And it is very telling to that the people you criticize most are the ones that defend patents in the CS/EE space.

        2. 8.1.2.2

          “This is the sort of behavior calculated to diminish one’s credibility, and here you come engaging in such behavior. What other conclusion can a sane person draw, except that you do not much value your own credibility?”

          I mean, I’m confident that from NW’s perspective, between his ​”facts” and his “argument” and his threshold of proof, you’ve been shown to be a “bought off boy.” Whatever his faults, I do not believe NW is an insincere participant.

          1. 8.1.2.2.1

            Sure Ben. No substantive response just attitude. What a surprise. Ben sees an opportunity to take a shot so he fills the opportunity with attitude and no substance. Nice contribution.

            1. 8.1.2.2.1.1

              Hey, muttonhead, the shot was not directed at you. I was criticizing Greg’s lack of charity while indicating my general agreement with his assessment of your argument.

              My response to you is down at 8.4. I’m terribly curious as to how you’ve accounted for the non-independence of your sample. Wouldn’t want anyone to think that your statistical methods are unsound.

              1. 8.1.2.2.1.1.1

                But Ben thinks YOU are the muttonhead,

                After all, Greg lacked ‘charity,’ even as Ben was, … while indicating my general agreement with his assessment of your argument.

                Seems like a call to be “polite” about dissing you and your argument.

                (Not sure what Ben thinks a “muttonhead” is — maybe someone who is not a doormat while being politely dissed…

          2. 8.1.2.2.2

            I concur in your estimation of his sincerity. I neither question nor disparage his sincerity. I was speaking only to the question of his credibility. One can be sincere and nevertheless unreliable. NW has many virtues, from which I would not wish to detract.

            1. 8.1.2.2.2.1

              Yay, ‘patty-cake’

            2. 8.1.2.2.2.2

              Right, but then he’s not deliberately destroying his credibility as you seem to suggest with “behavior calculated to diminish one’s credibility” and “you do not much value your own credibility.”

              I think the credibility discussion started with NW asking something equivalent to “why do people damage their credibility by saying X.” It should be obvious to any adult that the answer in most cases is “because they don’t interpret saying X as damaging their credibility.”

              1. 8.1.2.2.2.2.1

                It should be obvious to any adult that the answer in most cases is “because they don’t interpret saying X as damaging their credibility.”

                A fair enough observation.

                Of course, when one REFUSES to actually engage or take into consideration the counter points provided, the notion of “they don’t interpret” does NOT salvage the SELF-destruction of their credibility.

              2. 8.1.2.2.2.2.2

                To my mind, the maxim “I will not make assertions that I know to be false” is necessary but not sufficient for one who cares about one’s own credibility. One must also observe the maxim “I will take care to investigate the truth of a contention before advancing it.”

                One thing that I like about you, for example, is that you keep me honest. You will not let me get away with advancing a contention that I have not supported, even when the contention is one that you find congenial. That is the attitude of one who cares about maintaining credibility.

                1. This is total C R P from Greg:

                  One thing that I like about you, for example, is that you keep me honest. You will not let me get away with…

                  I suppose if you kiss his arse while you are doing that…

                  But — don’t you be mean to widdle Gweggie

        3. 8.1.2.3

          Perceiving that shady, powerful forces control those whom with we disagree connotes a certain word. The first letter of that word is P.

          1. 8.1.2.3.1

            Patentee…?

      3. 8.1.3

        You don’t care about your own dignity or character but building your client base.

        This makes no sense. I am an in-house attorney. What sort of client base can I possibly build by posting here? More nonsense accusations, the palpable falsity of which serves merely to diminish your own credibility.

        1. 8.1.3.1

          Meh, he does miss on the goal, but that certainly does not mean that your actions are ‘pure.’

          They most certainly are not – judging just from the way that you act (all duplicitous about people ‘keeping you honest,’ but then getting all in a huff because I would routinely do exactly that – but you ‘felt’ that I was ‘too mean.’

    2. 8.2

      I take it that you may have hit the “Count Filter” on that other thread…

      (See link to patentlyo.com )

      Notwithstanding your defense here (which I had not seen prior to the linked post), it is Greg that would need verify his position for credibility reasons.

      He simply does not care to do so.

    3. 8.3

      Although I do have to note that the first four words of the title of this post…

      Bald-Faced Attempt to Manipulate

      … DOES fit what Greg is trying to do by diminishing credibility of others…

    4. 8.4

      “Greg, have you taken a statistics course? My sampling of patent applications and patents is statistically significant over the course of my career.”

      And how are you calculating that to take into account the rather extreme sample clustering one would expect from observations made by one attorney over their career?

      1. 8.4.1

        So what has little Benny done now. We went from –to paraphrase–“NW could not possibly know anything about all them patents as there be so many,” to Ben boy complaining about a secondary consideration that my sampling is not random enough.

        I’ll take that as a victory. So lame Ben boy. So lame.

        I am not going to take the time to explain to you why my sample is actually pretty good. Not the best but good enough to have an opinion and far from being “a liar” as Greg asserts for stating my opinion.

        1. 8.4.1.1

          I certainly did not accuse you of lying. One need not lie in order to lose credibility.

        2. 8.4.1.2

          “We went from –to paraphrase–“NW could not possibly know anything about all them patents as there be so many,””

          I didn’t suggest that, and I don’t think anyone else suggested that, but I appreciate you adding some weasle-words about paraphrasing to cover your assertion. I actually consider that progress!

          “I am not going to take the time to explain to you why my sample is actually pretty good.”

          I asked you how you accounted for sample bias, and you effectively tell me that you won’t explain why your sample is not biased. I’m going to interpret that as you assuming that your sample observations are independent, rather than having any methodological correction for their correlation. I bet your statistics professors wouldn’t be very happy about that methodology.

        3. 8.4.1.3

          “a secondary consideration that my sampling is not random enough.”

          Guy goes to the artic circle, observes bear coloration. Concludes that most bears are white. Says that sample independence is a secondary consideration. Nobody ever believes his assertions about statistics again.

          1. 8.4.1.3.1

            I wonder with people like Greg and Ben exactly what goes through their minds. Are they intentionally being obtuse or do they simply move on to their next argument with no shame or readjustment each time their arguments are knocked down. Ben loses miserably and doesn’t acknowledge it but rather creates another ridiculous argument and expects me to spend time discussing the randomness of my sample.

            Just f’ing nuts.

            1. 8.4.1.3.1.1

              Look, you’re acting as if you have some sort of internet based prosopagnosia where you might attribute any post to any interlocuter. I can’t imagine how someone who can so poorly follow an argument could possibly prosecute patents effectively.

              I sincerely suggest you reach out to your primary care provider and ask for a test of cognitive decline. You really should get this checked out if you care at all about your clients receiving effective representation. People sometimes don’t notice it, which is understandable. But refusing to recognize the warning signs while staying at the wheel is very selfish.

              1. 8.4.1.3.1.1.1

                Lol – like that suggestion will do anything but reinforce the view that you ignore counter points, Ben.

              2. 8.4.1.3.1.1.2

                OK. Anyone that knows anything about statistics knows that my sample size is way over the size it needs to be for me to be making credible observations about patents.

                And you want me to defend the randomness of the sample where you start off with a baseline that the sample has no randomness. No thanks.

                I could spend 1/2 an hour and illustrate that my sample is pretty random and actually excellent for many reasons. But then you would find another knit to pick and start off at a base that I am a liar and a dirty dog with head injuries.

                How about you show us how biased a sample of 100,000 from 5,000,000 would have to be to make it so that observations about the sample would not be valid.

                1. It’d be one thing to only refuse to justify your assertions. But with telling me to prove your assertion to be false, while you refuse to provide evidence backing it, you’ve strayed well into the realm of hypocrisy.

                2. I guess to be fair you’re not really telling me to prove it to be false, but you are assigning homework while you fail to back up your own assertions. Still pretty hypocritical.

                3. I guess to be really fair, you would recognize the hypocrisy only when those initially calling for painstaking back-up data are the ones refusing to provide it (rather than the one who merely attempts to point out that call in the first place).

                4. Ben, no.

                  Patents are presumed valid. You are asserting that they are all junk. I said my sample which is statistically significant says otherwise.

                  Your play.

                5. The presumption of validity has BOTH a presence and a level (by law).

                  Greg likes to pretend that he does not understand that combination.

                  Ben is a whiny examiner, who should understand WHY that presence and level of is there (but does not like the implication that any [beyond the tiniest] level of qualm leads directly to examiners NOT doing their F’n job).

                  You won’t get a straight reply from either of those two.

  3. 7

    Dennis writes:

    > I’ll note also that the case might have turned out differently
    > if Ikorongo Tech had not been added to the case.

    Not sure about that; it’s possible that the case might have been dismissed for lack of standing if Ikorongo Tech was not added as a party. The Texas company (Ikorongo Texas) was not the actual patent owner, but only an exclusive licensee within certain geographic regions. An exclusive licensee generally cannot sue on its own, without joining the patent owner, unless the license is basically the equivalent of an assignment.

    Of course, a patent owner can structure an exclusive license to give someone else the right to sue in certain geographic regions, without joining the patent owner, but I doubt that would have been possible here in light of the collusive nature of the arrangement. Ikorongo Tech (the patent owner) basically had full control over Ikorongo Texas’s enforcement activities, even within its exclusively licensed regions, which makes it unlikely that the case could have proceeded in its absence.

    1. 7.1

      + 1

    2. 7.2

      Exactly. This is the kind of gamesmanship that the (prudential, not constitutional) standing doctrine in patent law is meant to avoid: the potential of facing multiple lawsuits by different parties with different subsets of rights to get damages because the patent rights are split up in various ways, whether geographically or by field of use or otherwise. This is the kind of so-called “exclusive license” that doesn’t truly give the plaintiff standing on its own, without joining the owner as a necessary party.

  4. 6

    Your suit’s alright
    With Judge Albright
    *clap* *clap* *clap* *clap*
    Deep in the heart of Texas!

    1. 6.1

      That was an example of one of the only justifiable uses of “Deep in the Heart of Texas” other than in Pee Wee’s Big Adventure.

  5. 5

    Many a patent litigator has told me that if you want to win a patent case in a Texas court, it doesn’t hurt to have “Texas” in the company’s name.

  6. 4

    “I wonder what the courts would say about Apple closing its store in E.D.Tex.”

    But that’s distinguished . . . because . . . because . . . because . . . Apple!

  7. 3

    “I’ll note also that the case might have turned out differently if Ikorongo Tech had not been added to the case.”

    Is there any strategic advantage in such an outcome? If Ikorongo Texas had won their trial in Albright’s courtroom for their fraction of Texas, would that give Ikorongo Tech an edge in a separate lawsuit in another district? Do the courts even allow that sort of trial-balloon strategy?

  8. 2

    These serial Fed Cir mandamus defeats of ingenious Waco Texas patent suit retention-by-venue-avoidance schemes have been receiving written opinions longer than a Texas rawhide bullwhip, but apparently not yet having the same effect. [And we have yet to look forward to a normal Fed. Cir. decision on a normal appeal from a final trial decision therefrom.]

  9. 1

    The decision here has a limiting feature–that Ikorongo Texas was formed for the sole purpose of manipulating venue. I wonder what the courts would say about Apple closing its store in E.D.Tex.

    Goose and Gander (and quite like my prior comments)

    1. 1.1

      It may look that way, but this case is about a different part of the venue statute with different issues, as previously noted.

      1. 1.1.1

        I hear you on the different issues — but the animus crosses over those differences.

        The game playing has (and will continue) gone both ways, and the bottom line is that patent holders just do not hold sway when it comes to choice of preferred forums.

        1. 1.1.1.1

          Re: “patent holders just do not hold sway when it comes to choice of preferred forums.”
          So how did so many patent owners “sway” such a large percentage of all new U.S. patent suits filed in the last two years onto the very large Waco Texas D.C. single judge pending patent suits docket?

          1. 1.1.1.1.1

            Perseverance – but will that given ability stay intact?

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