In re: SK hynix Inc.
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First-to-File Rule Requires That Action Could Have Been Brought in Transferee Forum

After issuing a rare grant of a mandamus petition directing a district court to stay proceedings until ruling on a pending motion to transfer, the US Court of Appeals for the Federal Circuit denied a subsequent mandamus petition to compel transfer after that district court denied the transfer. In re SK hynix Inc., Case No. 21-114 (Fed. Cir. Feb. 25, 2021) (Taranto, J.) (non-precedential). The Federal Circuit found that the doctrine of forum non conveniens and the first-to-file rule did not establish a basis for transfer because the action could not have initially been brought in the transferee forum and the patentee’s prior filings in that forum did not give consent for subsequently filed actions.

Netlist and SK hynix are competitors in the memory semiconductor space. Netlist sued SK hynix for patent infringement in the US District Court for the Western District of Texas. SK hynix moved to transfer the case to the US District Court for the Central District of California. With no ruling after eight months (while the case continued to move forward), SK hynix sought mandamus from the Federal Circuit to compel the district court to transfer the case. The Federal Circuit declined to transfer the case and instead stayed the district court proceedings until the district court ruled on the transfer motion. The district court then denied the transfer motion, rejecting SK hynix’s arguments that the doctrine of forum non conveniens and the first-to-file rule required transfer to the Central District of California. The district court also advanced the Markman hearing and trial dates. SK hynix again sought mandamus from the Federal Circuit to compel transfer and requested a stay of the district court proceedings because of the advanced Markman and trial dates.

Applying Fifth Circuit law, the Federal Circuit denied the mandamus petition, concluding that SK hynix had not shown that the district court clearly abused its discretion in denying the transfer motion. On the forum non conveniens issue, the Court found no clear abuse in the district court’s determination that SK hynix did not meet the threshold conditions for transfer under 28 USC § 1404(a), namely that the action “might have been brought” in the Central District of California or that, in the alternative, all the parties had consented to that venue for the action. As to the “might have been brought” inquiry, the Court found that the district court properly focused on whether the action might have been brought against SK hynix America, a domestic entity subject to the venue requirements of 28 USC § 1404(b) and headquartered in the Northern District of California, rather than SK hynix, a foreign entity not subject to the same venue requirements. The Court also found that SK hynix did not differentiate between the foreign and domestic SK hynix entities in its transfer motion. This was not an action that might have been brought against SK hynix in the Central District of California because SK hynix America lacked sufficient presence there to confer venue under [...]

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Eight-Month Delay on Transfer Motion Ruling Is “Egregious,” Warrants Stay

The US Court of Appeals for the Federal Circuit issued a rare grant of a mandamus petition directing a district court to stay proceedings until ruling on a pending motion to transfer, stating that the district court’s eight-month delay in ruling on the motion while allowing substantive issues to proceed “amounted to egregious delay and blatant disregard for precedent.” In re SK hynix Inc., Case No. 21-113 (Fed. Cir. Feb. 1, 2021) (Moore, J.) (non-precedential). The district court denied the transfer request the following day, and the petitioner asked the Federal Circuit to again stay the proceedings until it completed briefing on a new mandamus petition to compel transfer, which the Federal Circuit denied without prejudice. In re SK hynix Inc., Case No. 21-113 (Fed. Cir. Feb. 3, 2021).

Netlist and SK hynix are competitors in the memory semiconductor space. Netlist sued SK hynix for patent infringement in the US District Court for the Western District of Texas. SK hynix moved to transfer the case to the US District Court for the Central District of California. The parties completed briefing on the transfer motion in May 2020. The district court ordered the parties to engage in extensive discovery and scheduled a Markman hearing for March 2021. On January 6, 2021, after SK hynix moved to stay proceedings pending the motion to transfer, the district court instructed the parties to proceed with all deadlines while jurisdictional issues were resolved in parallel. SK hynix then filed the mandamus petition seeking to direct the district court to transfer the case, or alternatively, to rule on SK hynix’s pending motion to transfer. The district court soon issued an order setting a hearing on the transfer motion for February 2, 2021.

On February 1, 2021, the Federal Circuit granted the mandamus petition and directed the district court to stay all proceedings concerning the substantive issues in the case, including discovery, until the district court issued a ruling on the transfer motion. In its Order, the Court recognized that mandamus may be used to correct an “arbitrary refusal to act” by a district court on a transfer request. Although a district court has discretion in handling its docket, a motion to transfer “should unquestionably take top priority.” The Court characterized the district court’s handling of the transfer motion as amounting to “egregious delay and blatant disregard for precedent,” finding that the motion “lingered unnecessarily on the docket” while the parties were instructed to proceed with the merits of the case.

The next day, the district court issued an order denying SK hynix’s transfer request. The district court’s order also moved up the trial date from December 6, 2021, to July 6, 2021, and the Markman hearing from March 19, 2021, to March 1, 2021. SK hynix immediately notified the Federal Circuit of the denial and its intention to file a new mandamus petition to compel transfer. In the interim, SK hynix requested that the Federal Circuit extend the stay of the district court proceedings until briefing [...]

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