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Message to Judge Albright: Venue Motions Are First Order of Business

The US Court of Appeals for the Federal Circuit vacated a scheduling order from the US District Court for the Western District of Texas and directed the court to postpone fact discovery and other substantive proceedings until it considered a motion for transfer. In re: Apple Inc., Case No. 22-162 (Fed. Cir. Nov. 8, 2022) (Reyna, J.) The Federal Circuit ordered that Apple’s motion to transfer must proceed expeditiously as the first order of business, precluding fact discovery and other substantive matters. The Court has repeatedly scolded Judge Albright for his refusal to transfer patent cases out of the Western District of Texas.

Aire Technology sued Apple for patent infringement in October 2021. In April 2022, Apple moved to transfer the action to the US District Court for the Northern District of California, pursuant to 28 U.S.C. § 1404(a). During venue discovery, Apple submitted declarations by its employees, offered to make the declarants available for deposition, and stated non-opposition to a “reasonable continuance” of the transfer proceedings. Judge Albright granted Apple’s motion but sua sponte ordered the parties to complete fact discovery (which the court extended by 30 weeks) followed by another six weeks of rebriefing before he would rule on Apple’s request to transfer. Apple filed a petition for mandamus with the Federal Circuit seeking an order to vacate the district court’s scheduling order and promptly rule on the transfer motion, staying all proceedings on the merits until the transfer was resolved.

Apple argued that the district court abused its discretion in ordering the parties to complete 30 more weeks of fact discovery and six weeks of rebriefing the issue to decide on Apple’s transfer request. Apple noted that by the time the district court considered Apple’s motion, a full year would have elapsed since Apple initially sought the transfer, fact discovery would be completed, the parties’ infringement and invalidity contentions would be served, the asserted claims and prior art references would be narrowed, and the parties would have exchanged preliminary trial exhibits and witness lists.

The Federal Circuit agreed with Apple that the district court’s scheduling order went too far. The Court stated that “it is a clear abuse of discretion to require the parties to expend additional party and court resources litigating the substantive matters of the case while Apple’s motion to transfer unnecessarily lingers on the docket.” The Court noted that Aire consented to resolving Apple’s transfer motion at any time, provided that no stay interfered with discovery, claim construction proceedings or preparation of the case for trial.

The Federal Circuit disagreed with the district court’s view that delaying the decision until after full fact discovery and rebriefing could reduce “speculation” and “allow the parties to provide the court with the best evidence for ruling on a motion to transfer.” The Court stated that discovery on the transfer motion itself was sufficient to allow a decision of that motion, especially because the parties agreed that further venue discovery was unnecessary. The Federal Circuit ordered the district [...]

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Remote Employees Support Patent Venue

In a per curiam opinion, the US Court of Appeals for the Federal Circuit denied a petition for a writ of mandamus seeking to direct the district court to dismiss or transfer the underlying case based on improper venue. In doing so, the Court pointed to remote workers residing in the district to find satisfaction in the venue statute. In re Monolithic Power Systems, Inc., Case No. 22-153 (Fed. Cir. Sept. 30, 2022) (Lourie, Chen, Stark, JJ.) (per curiam) (Lourie, J., dissenting)

Bel Power brought suit in the Western District of Texas alleging that Monolithic infringed Bel Power’s patents by selling power modules used in electronic devices. Monolithic had four remote employees working from home in the district. Monolithic moved to dismiss or transfer to the Northern District of California, arguing that because it was a Delaware corporation without property in the district, venue was not proper under § 1400(b). The district court denied both requests, finding that Monolithic maintained a business presence in the district as contemplated by § 1400(b) by soliciting employment in the district and providing employees with equipment used at or distributed from their homes as part of their employment responsibilities.

In denying the motion to transfer, the district court found that Monolithic had not established that the Northern District of California was clearly more convenient. Monolithic filed for mandamus seeking to overturn either ruling.

The Federal Circuit denied relief. With regard to venue, the Court reasoned that “the district court’s ruling does not involve the type of broad, fundamental, and recurring legal question or usurpation of judicial power that might warrant immediate mandamus review.” Instead, the Court credited the factual findings regarding the amount of equipment Monolithic provided to one of its employees in the district for “the sole purpose” of allowing him “to conduct testing and validation as part of his job,” and ruled that post-judgment appeal would be an adequate alternative means for attaining relief. On the issue of transfer (reviewed under regional circuit law), the Court denied for failure to establish a clear abuse of discretion, noting that this “is not a case in which there is only one correct outcome.”

Judge Lourie dissented, arguing that “[m]ost basically, Monolithic lacks a regular and established place of business in the Western District of Texas, as the statute requires in order for it to be sued there.” In his view, “we should not stand back and let the requirements of the statute be eroded by the details of what an employee stores in his or her home.” He noted that judicial efficiency counsels against allowing cases to be tried in venues not permitted by the statute only to be retried in a proper venue. Judge Lourie reasoned that the circumstances relied on by the district court, including job advertisement and storage of product and equipment in the venue, were not meaningfully different from those of Celgene v. Mylan Pharms (Fed. Cir, 2021), where venue was deemed improper. He noted that “[t]he [...]

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Not “Use It or Lose It”: Even if Unexercised, Director’s Authority over Institution Decisions Remains

The US Court of Appeals for the Federal Circuit denied mandamus relief, finding that a party is not entitled to petition the director for review of a Patent Trial & Appeal Board (Board) decision denying institution of an inter partes review (IPR) or post-grant review (PGR) proceeding. This ruling reflects the Court’s ongoing consideration of the Supreme Court’s decision in United States v. Arthrex, Inc., which held that Board judges cannot constitutionally render final decisions in IPRs without US Patent & Trademark Office (PTO) Director oversight. Click here for our discussion of the case on remand, for which the Federal Circuit just denied en banc rehearing. In re Palo Alto Networks, Inc., Case No. 22-145 (Fed. Cir. Aug. 16, 2022) (Dyk, Chen, JJ.) (Reyna, J., concurring).

After being sued by Centripetal Systems for patent infringement, Palo Alto Networks filed petitions for IPR and PGR of some of the asserted patents. The Board denied institution, and Palo Alto Networks filed requests for Director rehearing. Although the PTO acknowledged receipt of the request, it informed Palo Alto Networks that the Director was not considering requests for rehearing of institution decisions “at this time.” Thereafter, Palo Alto Networks sought a writ of mandamus from the Federal Circuit. Between the request for mandamus and the Court’s decision, the PTO issued guidance explaining that although the PTO was not considering requests for rehearing, “the Director has always retained and continues to retain the authority to review such decisions sua sponte after issuance (at the Director’s discretion),” and indeed, exercised its authority to initiate sua sponte review since.

The Federal Circuit rejected Palo Alto Networks’ claim that the Director’s refusal to consider petitions for rehearing of institution decisions amounted to an abdication of authority prohibited by the Appointments Clause. Even assuming that institution decisions were “final decisions on how to exercise executive power” implicating the Appointments Clause, the Court found that the Director maintains statutory and regulatory authority to review institution decisions (unlike in Arthrex), and that the Board renders such decisions only based on the Director’s delegation of authority (also unlike Arthrex). Accordingly, the structural authority maintained by the Director is sufficient, even if such authority goes unexercised, according to the Court.

Writing separately, Judge Reyna agreed that no Appointments Clause violation had occurred but on different grounds. Although Judge Reyna noted that a categorical rejection of requests for rehearing by the Director might raise constitutional concerns, he concluded that mandamus was inappropriate for several reasons. First, the Director’s caveat that she refused to accept requests “at this time” did not constitute a categorical refusal but rather an exercise of discretion. Second, the Director’s invocation of her sua sponte authority to review belied a lack of exercise of discretion. The Director did in fact exercise sua sponte authority to consider Palo Alto Networks’ request, even though briefing in the Federal Circuit was pending, and thus a writ of mandamus was inappropriate.




Venue Manipulation Obviates Geographically Bounded Claims in Venue Analysis

The US Court of Appeals for the Federal Circuit issued a rare grant of two mandamus petitions directing the US District Court for the Western District of Texas to transfer the underlying patent infringement actions to the US District Court for the Northern District of California pursuant to 28 U.S.C. § 1404(a). In re: Samsung Elecs. Co., Ltd., Case Nos. 21-139, -140 (Fed. Cir. June 30, 2021) (Dyk, J.)

Ikorongo Technology owned four patents directed to functionalities allegedly performed by applications run on the accused mobile products sold by Samsung and LG. Ikorongo Technology assigned to Ikorongo Texas—an entity formed only weeks before—exclusive rights to sue for infringement of those patents within specified parts of the state of Texas, including certain counties in the Western District of Texas, while retaining the rights to the patents in the rest of the United States.

Ten days later, Ikorongo Texas sued Samsung and LG in the Western District of Texas. Although Ikorongo Texas claimed to be unrelated to Ikorongo Technology, the operative complaints indicated that the same five individuals owned both Ikorongo Texas and Ikorongo Technology, and that both entities shared office space in North Carolina.

The day after filing the initial complaints, Ikorongo Texas and Ikorongo Technology filed first amended complaints, this time naming both Ikorongo Technology and Ikorongo Texas as co-plaintiffs, noting that together Ikorongo Texas and Ikorongo Technology owned the entire right, title and interest in the asserted patents, including the right to sue for past, present and future damages throughout the United States and the world.

Samsung and LG separately moved under 28 U.S.C. § 1404(a) to transfer the suits to the Northern District of California, arguing that “three of the five accused third-party applications were developed in Northern California, where those third parties conduct significant business activities and no application was developed or researched in Western Texas.” Samsung and LG also argued that potential witnesses and sources of proof were located in the Northern District of California.

The district court first concluded that Samsung and LG failed to establish § 1404(a)’s threshold requirement that the complaints “might have been brought” in the Northern District of California. Because Ikorongo Texas’s rights under the asserted patents were limited to the state of Texas and could not have been infringed in the Northern District of California, the district court held that venue over the entirety of the actions was improper under § 1400(b), which governs venue in patent infringement cases. Alternatively, the district court analyzed the traditional public- and private-interest factors, finding that defendants had not met their burden to show cause for transfer. Samsung filed for mandamus to the Federal Circuit.

The Federal Circuit found that the district court erroneously disregarded Ikorongo Technology and Ikorongo Texas’s attempts to manipulate venue when analyzing venue under § 1404(b). While no act of infringement of Ikorongo Texas’s geographically bounded rights took place in the Northern District of California, the Federal Circuit determined that “the presence of Ikorongo Texas is plainly recent, ephemeral, and [...]

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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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Transfer Motions Must Take Top Priority

The US Court of Appeals for the Federal Circuit granted an accused infringer’s mandamus petition to transfer a case from the Western District of Texas to the Northern District of California, concluding that the district court “barreled ahead” on the merits before addressing the transfer motion and clearly abused its discretion in denying transfer. In re. Apple, Inc., Case No. 20-135 (Fed. Cir. Nov. 9, 2020) (Prost, C.J.) (Moore, J., dissenting). In re. Apple, Inc

In September 2019, Uniloc sued Apple in the Western District of Texas alleging that several Apple products infringed one of Uniloc’s patents. In November 2019, Apple moved to transfer the case to the Northern District of California on the basis that it would be clearly more convenient to litigate the case in that district. In January 2020, Apple moved to stay all activity in the case unrelated to its transfer motion pending a decision on that motion. The district court denied the stay motion without explanation. In May 2020, the district court held a hearing on Apple’s transfer motion during which 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 and issued a corresponding discovery order. In response to these advances in the case, in June 2020 Apple filed a petition for writ of mandamus requesting that the Federal Circuit transfer the case to the Northern District of California. One week after Apple filed its petition, the district court issued its written order denying transfer.

The Federal Circuit granted Apple’s mandamus petition and directed the district court to transfer the case to the Northern District of California. The Federal Circuit explained that the US Court of Appeals for the Fifth Circuit assesses transfer requests using 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 parties agreed that the third and fourth public interest factors were neutral, but disputed whether the remaining factors weighed for or against transfer.

The Federal Circuit found numerous errors in the district court’s analysis. As to the first private factor (access to sources of proof), the Court found that the district court erred in determining that the location of witnesses weighed in favor of transfer. The Court explained that the “access to proof” factor [...]

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Where Should This Case Go? Appeals Court Tosses Venue Motion to Dismiss

Addressing for the first time whether a court must consider the adequacy of an alternative forum in its forum non conveniens analysis, the US Court of Appeals for the Federal Circuit affirmed the denial of a defendant’s motion to dismiss under forum non conveniens. In re Fortinet, Inc., Case No. 20-120 (Fed. Cir. May 1, 2020) (Dyk, J.).

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