[co-author: Myles Douglas Young]
The Federal Circuit sits for oral arguments this week. Despite juggling argument preparation and the July 4 holiday weekend, the Court still managed to release several decisions last week. One was a precedential order granting mandamus to order a change of venue (a subject our blog has covered before). Below we provide our usual weekly statistics and our case of the week—our highly subjective selection based on whatever case piqued our interest.
Precedential opinions: 2
Non-precedential opinions: 5
Rule 36: 0
Longest pending case from argument: Corus Realty Holdings, Inc. v. Zillow Group, Inc., No. 20-1775 (391 days)
Shortest pending case from argument (non-Rule 36): GateArm Technologies, Inc. v. Access Masters, LLC, No. 20-2313 (23 days)
Case of the week: In Re Samsung Electronics Co., LTD., Samsung Electronics America, Inc., LG Electronics Inc., LG Electronics USA, Inc., No. 21-139.
Panel: Judges Lourie, Dyk, and Reyna, with Judge Dyk writing the opinion
You should read this case if: You have a matter involving a request for change of venue, especially if alleged attempts to manipulate venue are at issue.
The plaintiffs in this week’s case tried to ensure that Texas was the only possible venue for their patent infringement suits. The Federal Circuit was unimpressed. Refusing to be “bound by a plaintiff’s efforts to manipulate venue,” the Court looked past the plaintiffs’ patent assignment agreements and the legal separation between corporate entities to hold that the suits must be transferred to California.
The case concerns petitions for writs of mandamus related to patent infringement suits against Samsung and LG, directed at functionality in third-party applications that run on Samsung and LG devices. Both suits were brought by Ikorongo Technology (“Ikorongo Tech”) and Ikorongo Technology Texas (“Ikorongo Texas”) in the Western District of Texas.
The relationship between Ikorongo Tech and Ikorongo Texas was, in the Federal Circuit’s eyes, an effort to manipulate venue. Although the two are legally separate entities, the Court saw them as related. The same five people own both companies, and Ikorongo Texas was created shortly before the filing of these suits. Ten days prior to filing its initial complaints, Ikorongo Tech assigned to Ikorongo Texas the exclusive rights to sue for infringement for the patents at issue within specified parts of Texas, including the Western District of Texas. According to the Ikorongo companies, this meant that venue could lie only in Texas, the only place where one of the plaintiffs—Ikorongo Texas—had relevant patent rights.
Samsung and LG both moved under 28 U.S.C. § 1404(a) to transfer the suits to the Northern District of California, asserting that 60% of the accused third-party applications were developed by parties in that district, that the majority of potential witnesses resided in that district, and that no potential witness resided in the Western District of Texas.
The district court denied the motion, finding that Samsung and LG had failed to establish the threshold requirement under § 1404(a): that the suit “might have been brought” in the transferee district. The court reasoned that Ikorongo Texas’ claims would not be subject to venue in the Northern District of California, so venue over the entirety of the actions was improper under §1404(a). In the alternative, the district court also held that under the next stage of the transfer analysis—a weighing of traditional public and private interest factors—a transfer was unwarranted.
The Federal Circuit disagreed on all counts and granted mandamus relief.
The Court held that it would not allow the Ikorongo companies to escape a venue transfer by way of “manipulative activities”—namely, the use of what amounted to a shell corporation to assure venue in the Western District of Texas. The Court observed that efforts to manipulate jurisdiction (rather than venue) are barred by statute, and that past cases had rejected venue manipulation under the public/private interest analysis. The panel extended that principle to § 1404(a)’s threshold requirement that the suit “might have been brought” in the transferee district. The Court ruled that § 1404(a) does not allow for defeat of a motion for change of venue deriving from “deliberate conduct of a party” favoring one venue over another. As a result, the Federal Circuit disregarded the limited claims by Ikorongo Texas and considered only the nationwide claims asserted by Ikorongo Tech (which could have been brought in the Northern District of California) in determining the appropriate venue.
The Court also concluded that the district court abused its discretion in assessing the public/private interest factors. The Court determined that the district court had given too little weight to the fact that nearly all potential witnesses were located in the Northern California. Furthermore, the Federal Circuit rebuked the district court’s assertion that local interests in a patent case are generally a “fiction.” The Court held instead that “[l]ocal interests are not a fiction, and the record here shows a substantial local interest,” since the events leading to the infringement claims took place mostly in Northern California, and not Texas. Finally, the panel found that the district court overstated concerns about judicial economy. While Ikorongo Texas had pointed to a related suit filed in Texas, the Federal Circuit held that the cases overlapped only slightly, and that the asserted expediency of the Texas district courts in resolving these cases had no “particular significance in these cases.”
Based on these considerations, the Circuit granted Samsung's and LG’s petitions for writs of mandamus and ordered the district court to transfer the case to the Northern District of California.