IP Law Daily Following remand, Texas court erred in denying TracFone’s transfer request
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Tuesday, April 20, 2021

Following remand, Texas court erred in denying TracFone’s transfer request

By Cheryl Beise, J.D.

In second mandamus order, Federal Circuit directs Waco court to transfer case to Southern District of Florida.

The federal district court in Waco, Texas, abused its discretion in denying Miami-based TracFone Wireless’s motion to transfer a patent infringement case filed by Precis Group to the federal district court in the Southern District of Florida, the U.S. Court of Appeals for the Federal Circuit has decided, in granting a second mandamus petition TracFone filed concerning its transfer motion. Last month, Federal Circuit ordered the district court to stay the case and give "top priority" to TracFone’s motion. Three days later, the court denied the motion, finding that TracFone failed to show that its preferred forum was clearly more convenient. However, the district court erred by giving significance to the fact that a patent inventor located in Minnesota and a patent prosecutor located in Arizona were closer to the Western District of Texas than the Southern District of Florida. With several factors favoring transfer and no factor favoring keeping the case in Texas, the district court’s decision produced "a patently erroneous result" (In re TracFone Wireless, Inc., April 20, 2021, per curiam).

Precis Group LLC is a Delaware limited liability company with no disclosed place of business. Precis owns four patents entitled "Secured Pre-Payment for Portable Communication Unit," which relate to systems and methods for pre-payment mobile device service. In April 2020, Precis filed suit against TracFone Wireless in the federal district court in Waco, Texas, accusing its prepaid phone cards of infringing various claims of the patents.

On June 22, 2020, TracFone, located in Miami, moved to dismiss the case based on improper venue or, alternatively, to transfer the case to the Southern District of Florida. The motion was fully briefed by July 14, 2020. On October 1, 2020, TracFone moved for a stay of all proceedings pending resolution of its venue motion. On December 21, 2020, the district court had not ruled on the venue motion, and TracFone moved for a decision on the motion before the scheduled Markman hearing, which had been scheduled for December 29. The district court also did not rule on that request. The Markman hearing took place as scheduled, and the district court issued a claim construction order.

Unhappy with the district court’s delay in ruling on its transfer motion, TracFone filed a petition for writ of mandamus with the Federal Circuit. On March 9, the Federal Circuit granted the petition and ordered the district court to stay all proceedings and decide the long-pending transfer motion within 30 days. The court explained that longstanding Fifth Circuit precedent regards transfer motions as a top priority that must be addressed before substantive issues. Three days after the Federal Circuit’s order, the district court denied TracFone’s motion. TracFone again sought mandamus relief from the Federal Circuit.

In its the present petition, TracForne argued that (1) venue was improper in the Western District of Texas under the patent venue statute, 28 U.S.C. § 1400(b), and (2) the Southern District of Florida was clearly a more convenient forum under 28 U.S.C. § 1404(a). The Federal Circuit agreed with TracFone that 28 U.S.C. § 1404(a) required transfer and did not reach TracFone’s alternative argument. Under the All Writs Act, in transfer cases, appellate courts are called upon to evaluate whether the district court’s denial of transfer amounts to a clear abuse of discretion.

More convenient forum. Under 28 U.S.C. § 1404(a), the Fifth Circuit requires a movant to establish that the transfer is for the convenience of parties and witnesses, and in the interest of justice. After evaluating the factors bearing on the private and public interest in transfer, the district court concluded that the Southern District of Florida was "slightly more convenient," but did not reach the level of clearly more convenient justifying transfer.

The district court found that the relative ease of access to sources of proof factor weighed slightly in favor of transfer because the physical location of TracFone’s documents were in Miami. The court congestion factor also weighed slightly in favor of transfer. Most factors were neutral, including the local interest factor, in the court’s view, because "TracFone utilizes the allegedly infringing process throughout the nation." However, the district court determined that the willing witness factor weighed against transfer. The court acknowledged that TracFone’s employees with knowledge of the alleged infringement worked at its headquarters in Miami and no party identified any witness residing in the Western District of Texas. Nevertheless, the district court weighed this factor against transfer because only a few party witnesses likely would testify, while there were two non-party witnesses—Daniel Karvonen, one of the inventors of the patents residing in Minnesota, and attorney involved in the patent prosecution residing in Arizona—who were likely to testify and would have to travel "double" or "nearly double" the distance if the case were held in the Southern District of Florida as opposed to Waco, Texas.

The Federal Circuit observed that the district court’s denial of TracFone’s motion depended largely, if not entirely, on its conclusion that the willing witness factor weighed against transfer. In the appellate court’s view, the district court’s conclusion was based on an improper rigid and formulaic application of "the Fifth Circuit’s 100-mile rule." In applying the 100-mile rule, the Federal Circuit has rejected a rigid approach that would produce results divorced from that underlying rationale. See In re Genentech, Inc., 566 F.3d 1338, 1344 (Fed. Cir. 2009) In In re Apple Inc., 979 F.3d 1332 (Fed. Cir. 2020), the Federal Circuit rejected the district court’s giving more weight to the fact that the inventors and patent prosecutor residing in New York would "need to travel a greater distance to reach" the Northern District of California than the Western District of Texas.

The facts of the present case were "comparable if not indistinguishable from those in Apple," the court noted. The district court gave too much significance to the fact that the inventor and patent prosecutor live closer to the Western District of Texas than the Southern District of Florida. "As in Apple, the district court here clearly misapplied the law in finding that any inconvenience to these individuals outweighed the convenience of having several party witnesses be able to testify at trial without having to leave home," the Federal Circuit said.

Moreover, the district court’s conclusion that the local interest factor was neutral also appeared to be incorrect, according to the Federal Circuit. The district court reasoned that TracFone utilized the allegedly infringing process throughout the nation, but this conclusion ignored that the Southern District of Florida had far stronger local interest in the case than the Western District of Texas because TracFone operates the accused methods and systems from its headquarters located in the Southern District of Florida.

"[W]ith several factors favoring transfer and no factor favoring keeping the case in the plaintiff’s chosen forum, the district court’s decision that the transferee venue was not clearly more convenient produced a patently erroneous result," the court said. The court granted TracFone’s petition, vacated the court’s March 11 order, and directed the district court to transfer the case to the Southern District of Florida.

The case is No. 2021-136.

Attorneys: Stevenson Moore (Ni, Wang & Massand, PLLC) for Precis Group LLC. Aaron Stenzler Weiss (Carlton Fields, P.A.) for TracFone Wireless, Inc.

Companies: Precis Group, LLC; TracFone Wireless, Inc.

MainStory: TopStory Patent FedCirNews GCNNews

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