by Dennis Crouch
In re HULU, LLC (Fed. Cir. 2021)
Sito Mobile (SITO) sued Hulu in the Western District of Texas (Waco), alleging infringement of seven of its patents. U.S. Patent Nos. 8,825,887; 9,026,673; 9,135,635; 9,135,636; 9,591,360; 10,009,637; and 10,171,846. Both SITO and Hulu are Delaware companies with Hulu headquartered Santa Monica and SITO in New Jersey (although SITO is currently going through Chapter 11 reorganization bankruptcy).
Although venue was “proper,” Hulu argued that the case should be transferred to the Central District of California for convenience. 28 U.S.C. § 1404(a). Judge Albright refused, but the Federal Circuit has now granted Hulu’s petition for mandamus and ordered the case transferred.
(a) 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.
Section 1404(a) seems straight forward as providing a district court discretionary authority to transfer a case. Still, the court must transfer the case once a party “clearly demonstrates” that transfer meets the statutory standard of being “for the convenience of parties and witnesses and in the interest of justice.” The courts have developed substantial gloss on the statute, with a set of four public interest factors and four private interest factors used to answer the convenience question:
- Private 1: Ease of access to sources of proof;
- Private 2: Availability of compulsory process;
- Private 3: Cost of attendance for willing witnesses;
- Private 4: Any other practical issues “that make trial of a case easy, expeditious and inexpensive.”
- Public 1: Administrative difficulties from court congestion;
- Public 2: Local interest in having test decided at home;
- Public 3: Familiarity of the forum with the law of the case;
- Public 4: Avoidance of unnecessary conflicts of laws.
The district court found three factors weighed against transfer. (1) compulsory process for witnesses; (2) cost for willing witnesses; and (3) administrative difficulties from court congestion. On Mandamus, the Federal Circuit held that each of these factors actually weigh in favor of transfer.
Availability of compulsory process — 100 miles and state lines: Most witnesses in patent infringement trials are either under the control of the parties or are willing witnesses. However, the rules also allow for compulsory process to force third party witnesses to testify even if unwilling. The catch, “a subpoena may command a person to attend a trial . . . (A) within 100 miles of where the person resides, is employed, or regularly transacts business in person; or (B) within the state where the person resides, is employed, or regularly transacts business in person, if the person … (ii) is commanded to attend a trial and would not incur substantial expense.” FRCP 45.
The 100 mile and state line rules mean that Judge Albright could not compel a non-party witness to fly from Southern California to Texas in order to testify in court. In this case, Hulu identified several content delivery networks (CDNs) as well as prior art witnesses all located in California that it would potentially call at trial. The district court disregarded these witnesses as either (1) not likely to be called or (2) likely willing to attend. On mandamus, the Federal Circuit found that Judge Albright’s statement that “prior art witnesses are generally unlikely to testify at trial” was “untethered to the facts of this case and therefore was an abuse of discretion.” The appellate panel writes:
Hulu’s proposed prior art witnesses directly related to prior art that was specifically mentioned in the asserted patents themselves, heightening their potential relevance. The district court provided no analysis whatsoever to cast doubt that these particular prior art witnesses would play a role in an upcoming trial other than speculation that they would be “unlikely to testify at trial” because generally prior art witnesses do not do so. Such a bare and generalized analysis cannot be said to be providing “individualized, case-by-case consideration” of the relevant factors, as is required for the analysis of a § 1404(a) motion. Van Dusen v. Barrack, 376 U.S. 612 (1964). Furthermore, we have cautioned that “[r]equiring a defendant to show that the potential witness has more than relevant and material information at this point in the litigation or risk facing denial of transfer on that basis is unnecessary.” In re Genentech, Inc., 566 F.3d 1338 (Fed. Cir. 2009). The district court abused its discretion in zeroing out the weight of these witnesses without any case-specific analysis.
Slip Op. Regarding their willingness to testify. Here, the appellate panel found it sufficient that there were multiple third-party witnesses none of which had been shown to be willing to travel to Texas.
Willing Witnesses: Even though only one of the willing witnesses reside in W.D. Tex., the district court still found that W.D. Tex. was more convenient. The appellate court disagreed here. “[G]iven the overwhelming number of potential witnesses from Hulu in or near California compared to the two from SITO in Texas, we determine that this factor favors transfer.”
Court Congestion: Although W.D.Tex and C.D.Cal have about the same level of court congestion, Judge Albright weighed this favor strongly in favor of keeping the case in his courtroom. The difference is that Judge Albright in particularly aggressively pushes patent cases to trial. On mandamus, the appellate panel held that it should not look at the particulars for this factor. After “disregarding the particular district court’s ability to push an aggressive trial date, this factor is neutral.”
Mandamus granted, and the district court is ordered to transfer the case to C.D.Cal.