By Cheryl Beise, J.D.
The federal district court in Waco erred in finding WDTX was more convenient forum than NDCA.
The federal district court in Waco, Texas, abused its discretion by denying Apple Inc.’s motion to transfer an infringement action brought by Uniloc 2017 LLC to the Northern District of California (NDCA) because Apple established that the private and public interest convenience factors weighed in favor of the transfer, U.S. Court of Appeals for the Federal Circuit has held. Because the district court misapplied the law to the facts in analyzing all but one of the relevant convenience factors, Apple’s petition for writ of mandamus was granted. Circuit Judge Moore filed a dissenting opinion (In re Apple Inc., November 9, 2020, Prost, S.).
In September 2019, Uniloc sued Apple in the Waco Division of the Western District of Texas (WDTX), alleging that several Apple products infringe U.S. Patent No. 6,467,088. In November 2019, Apple moved to transfer the case to NDCA pursuant to 28 U.S.C. § 1404(a) on the basis that it would be clearly more convenient to litigate the case in that district. The district court held a hearing on Apple’s motion on May 12, 2020. The court stated that it would deny the motion and issue a written order as soon as possible. After the hearing, but before issuing a written order, the court held a Markman hearing, issued its claim construction order, held a discovery hearing regarding the protective order in the case, and issued a corresponding discovery order. On June 15, Apple petitioned the Federal Circuit for a writ of mandamus directing the district court to transfer the case. The district court issued its written order denying transfer a week after Apple filed its petition.
Waiver. The Federal Circuit first rejected Uniloc’s argument that Apple waived a number of arguments by raising them for the first time in its reply brief. Ordinarily, an appellant waives issues or arguments not properly raised in its opening brief. However, in this case, Apple’s petition was filed before the district court issued its written order, and Apple addressed what it believed would be the court’s likely reasons for its denial of the motion. Apple was unable to directly address the district court’s order until its reply brief. Under these circumstances, the Federal Circuit declined to apply waiver, particularly because there was no prejudice to Uniloc since the Federal Circuit granted its motion to file a surreply.
Transfer. Under 28 U.S.C. § 1404(a), "[f]or 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."
Under Fifth Circuit law, to prevail on its transfer motion before the district court, Apple bore the burden of demonstrating that "the transferee venue is clearly more convenient." The Fifth Circuit assesses transfer requests using the well-established private and public interest factors. The private interest factors are: (1) the relative ease of access to sources of proof; (2) the availability of compulsory process to secure the attendance of witnesses; (3) the cost of attendance for willing witnesses; and (4) all other practical problems that make trial of a case easy, expeditious, and inexpensive. The public interest factors are: (1) the administrative difficulties flowing from court congestion; (2) the local interest in having localized interests decided at home; (3) the familiarity of the forum with the law that will govern the case; and (4) the avoidance of unnecessary problems of conflict of laws or in the application of foreign law. The last two factors were not at issue.
The Federal Circuit examined each of the six relevant factors.
Sources of proof. The district court concluded that the first private interest factor—the relative ease of access to sources of proof—weighed slightly in favor of transfer. The Federal Circuit found that the district court legally erred in considering witnesses as "sources of proof" for purposes of the first private interest factor. This factor relates to the ease of access to non-witness evidence, such as documents and other physical evidence; the third private interest factor—the cost of attendance for willing witnesses—relates to the convenience of each forum to witnesses. The district court also misapplied the law to the facts in analyzing the location of relevant documents.
The Federal Circuit pointed out that the district court’s analysis confused Apple’s burden of demonstrating that the transferee venue was clearly more convenient with the showing needed for a conclusion that a particular private or public interest factor favored transfer. "And although we credit the district court’s determination that some relevant documents are located in WDTX, the movant need not show that all relevant documents are located in the transferee venue to support a conclusion that the location of relevant documents favors transfer," the Federal Circuit said. "At a minimum, the court erred by overemphasizing the sources of proof in or nearer to WDTX and failing to meaningfully consider the sources of proof in NDCA." In patent infringement cases, the bulk of the relevant evidence usually comes from the accused infringer, the court noted.
The availability of compulsory process to secure the attendance of witnesses. The district court found this factor was neutral, and the Federal Circuit saw no reason to disagree.
The cost of attendance for willing witnesses. The district court found that this factor—the convenience for and cost of attendance of witnesses—was neutral. Uniloc identified three important third-party witnesses believed to reside in New York. The district court found they would be less inconvenienced by travelling to Texas than California. According to the Federal Circuit, the district court misapplied the law to the facts of this case by too rigidly applying the 100-mile rule. As a result, the district court gave too much significance to the fact that the inventors and patent prosecutor live closer to WDTX than NDCA. In view of the district court’s findings that "most relevant party witnesses are located in NDCA" and "it is likely that both Apple and Uniloc will each have one or more potential trial witnesses from NDCA," this factor weighed at least slightly in favor of transfer, according to the Federal Circuit.
All other practical problems. The district court concluded that the fourth private interest factor—all other practical problems that make trial of a case easy, expeditious, and inexpensive—weighed heavily against transfer. The court reasoned that "significant steps" had already been taken in the case. The court also noted that NDCA has more pending civil cases than WDTX.
The Federal Circuit found that the district court legally erred in its analysis of this factor. "Aside from the service of preliminary infringement contentions … all the ‘significant steps’ that had been taken by the court and parties in the case were taken after Apple moved for transfer in November 2019, as well as after Apple moved to stay the case in January 2020," the appeals court said. Once a party files a transfer motion, disposition of that motion should take top priority in the case. "A district court’s decision to give undue priority to the merits of a case over a party’s transfer motion should not be counted against that party in the venue transfer analysis," the court added. In addition, while NDCA has more cases than NDTX, they have comparable times for civil case to reach trial—25.9 months for NDCA versus 25.3 months for WDTX. All said, this factor at least slightly weighed in favor of transfer.
Administrative difficulties. The district court determined that the first public interest factor—the administrative difficulties flowing from court congestion—weighed against transfer. The court acknowledged that NDCA historically "has a shorter time to trial for patent cases than WDTX," but weighed this factor against transfer because trial date had already been set. The Federal Circuit found district court misapplied the law to the facts of this case by relying too heavily on the scheduled trial date. This factor should have been neutral.
Local interests. The district court concluded that the second public interest factor—the local interest in having localized interests decided at home—was neutral. The court reasoned that "Apple has substantial presences in both NDCA and WDTX, so both districts have a significant interest in this case." Again, the Federal Circuit found that the district court misapplied the law to the facts. The district court too heavily weighed Apple’s general contacts with the forum that were untethered to the lawsuit and failed to give weight to the significant connections between NDCA and the events that gave rise to a suit.
Conclusion. Concluding that the district court abused its discretion in denying Apple’s motion to transfer, the court granted Apple’s mandamus petition. Contrary to the argument of Judge Moore in her dissent, the court said it did not conduct a de novo review. "To the contrary, … we properly reviewed the district court’s order only for reliance on clearly erroneous fact findings, erroneous conclusions of law, or misapplications of law to fact," the court said. Further, Judge Moore’s statement about the court’s order as an invitation for ad hominem attacks on jurists was "a baseless and counterproductive statement about our order."
Dissenting opinion. Circuit Judge Kimberly Moore filed a dissenting opinion to express her view that the majority overstepped its authority by usurping the district court’s role in the transfer process and exercising de novo dominion over the district court’s individual fact findings and the balancing determination that Congress has committed "to the sound discretion of the trial court." According to Judge Moore, the district court thoroughly considered each convenience factor and the majority’s criticism "amounts merely to a disagreement with the district court’s weighing of its thorough fact findings."
Judge Moore also voiced concern that "the majority’s blatant disregard for the district court’s thorough fact findings and for our role in a petition for mandamus will invite further petitions based almost entirely on ad hominem attacks on esteemed jurists similar to those Apple wages here." She cautioned litigants to be "mindful that personal attacks against judges such as those lodged in this case are not welcome."
This case is No. 20-135.
Attorneys: Melanie L. Bostwick (Orrick, Herrington & Sutcliffe LLP) for Apple Inc. Christian John Hurt (Davis Firm, PC) for Uniloc 2017 LLC.
Companies: Apple Inc.; Uniloc 2017 LLC
MainStory: TopStory Patent FedCirNews GCNNews
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