Procedural Considerations: Venue

In In re Hulu, the Federal Circuit, in response to a mandamus petition by Hulu to transfer its case to California, picked apart each factor of 5th circuit jurisprudence for venue transfer motions, and concluded that “the district court clearly abused its discretion in evaluating Hulu's transfer motion and denying transfer.”

The court found the following errors in Albright's analysis (citations omitted) (emphasis in bold added):

• In denying Hulu's motion for transfer, the district court at least erred in its analysis for each factor that it found weighed against transfer.
  • First, the district court erred in finding that the availability of compulsory process to secure the attendance of witnesses weighed against transfer.
    • [The court] determined that this factor weighed against transfer by discounting Hulu's proposed prior art witnesses and by faulting Hulu for 'not show[ing] [that] any potential witness is unwilling to testify' other than one of the specifically identified prior art witnesses. This was error for several reasons.
      • [T]he district court erred by entirely overlooking Hulu's multiple CDN witnesses who Hulu alleged, without dispute, would have knowledge of Hulu's allegedly infringing systems and processes and were located in California.
      • [T]he district court erred by ignoring all of Hulu's proposed prior art witnesses for the reason that 'prior art witnesses are generally unlikely to testify at trial. . . . This categorical rejection of Hulu's witnesses is entirely untethered to the facts of this case and was therefore an abuse of discretion. [. . .] The district court abused its discretion in zeroing out the weight of these witnesses without any case-specific analysis.
      • Finally, the district court erred in discounting Hulu's proposed witnesses because 'Hulu has not shown any potential witnesses is unwilling to testify [in the Western District of Texas], other than Mr. Newton. . . .“
      • Overall, . . . the district court erred in finding the factor weighed against transfer, rather than being neutral. Nothing in the district court's analysis showed a comparative advantage of the Western District of Texas over the Central District of California. [. . .] But all else was not equal. . . .
  • We next turn to the district court's analysis of the willing witness factor. The district court . . . acknowledged that '[i]f a substantial number of witnesses reside in one venue and no witnesses reside in another, th[is] factor will weigh in favor of the venue where witnesses reside.' Even though that is precisely the case here, the district court still found this factor weighed against transfer for two reasons[:] 'First, the convenience of party witnesses is typically given little weight because the witnesses' employer could compel their testimony at trial.' Second, Hulu failed to 'identify specific third-party witnesses.' We conclude that the district court erred in its analysis.
    • First, the district court did not dispute Hulu's contention that nearly all of the party witnesses are in or near the Central District of California. And in analyzing the parties' arguments, the district court could identify no witnesses within the Western District of Texas, instead relying entirely on discounting all of Hulu's witnesses located in or near the Central District of California. Even if the district court were correct that Hulu's witnesses could be completely discounted, and the district court only considered SITO's employees, it was unrebutted that five out of six SITO's own full-time employees were located in California, thus tipping this factor toward favoring transfer because the district court did not rely on any witnesses that would have found the Western District of Texas to be more convenient. Thus, at minimum, it was error to find this factor weighed against transfer.
    • Second, the district court erred in entirely discounting Hulu's party witnesses [. . .] because . . . Hulu 'could compel their testimony at trial.' Although an employer's cooperation in allowing an employee to testify may diminish certain aspects of inconvenience. . . , it hardly eliminates the inconvenience. This is true even if the employer allows for their testimony. The district court's analysis . . . is fundamentally at odds with the purpose of a transfer for convenience of the witnesses, and it conflicts with the district court's own recognition that 'a court must consider the factor of inconvenience to all witnesses.
    • As to the last factor . . . –court congestion–the statistics presented to the court regarding the two forums were remarkably similar. The consideration that the district court assumed tipped the scales toward denying transfer was its own ability to set an early trial date and bring a case to trial earlier than district-wide statistics woudl suggest. This was error for precisely the same reason described in In re Apple Inc..

News/Blogs:

• Analysis, discussion
• News article (paywall)

In In re. Samsung Electronics, the Federal Circuit issued a precedential opinion establishing:

• Although there is not an analogous statute for venue, in similar situations, the Supreme Court and this court have repeatedly assessed the propriety of venue by disregarding manipulative activities of the parties.
  • It does not appear that Ikorongo Texas . . . seems to exist for the sole purpose of limiting venue to the Western District of Texas. [. . .] In the venue analysis, therefore, we need not consider separately Ikorongo Texas's geographically bounded claims. And disregarding this manipulation, Ikorongo Tech could have filed suit in the Northern District of California. Under the proper construction of § 1404(a), then, these cases “might have been brought” [there].
• [A] clear abuse of discretion in balancing convenience against judicial economy under § 1404 is not outside the scope of correctible error on mandamus review. Here, we find that the court's conclusions were such an abuse.
  1. [T]he district court clearly assigned too little weight to the relative convenience of the Northern District of California.
  2. In weighing the willing witness factor only slightly favoring the transfer to [N.D.Cal.], the district court provided no sound basis to diminish these conveniences.
  3. [T]he district court overstated the concern about waste of judicial resources and risk of inconsistent results. . . .
  4. The district court's weighing of the local interest factor as neutral on the ground that “Ikorongo Texas's claims do specifically relate to infringement in this District . . . regardless of when the entity formed” is error. The fact that infringement is alleged in the Western District of Texas gives that venue no more of a local interest than the [N.D.Cal.] or any other venue. The facts of this case indicate that the local interest factor weighs in favor of Samsung and L.G.
  5. [W]e cannot say that the prospective speed with which this case might be brought to trial of of particular significance in these cases. [. . .] [E]ven if the court's speculation is accurate that it could more quickly resolve these cases. . . , neither respondents nor the district court pointed to any reason that a more rapid disposition of the case that might be available in the [W.D.Texas] would be important enough to be assigned significant weight in the transfer analysis here.

• RPX news story (paywall) (private cached).

In In re: Cray, Inc., the Federal Circuit articulated what constitutes a “regular and established place of business” for proper venue under § 1400(b), overruling Judge Gilstrap' interpretation of the same in E.D. Texas. The Order by the Fed. Cir. was in response to a mandamus petition by Cray.

A key finding by the circuit court was that merely having an employee who works from a home office within a particular district does not necessarily make that district fair game for proper venue. In fact, the Court laid out 3 key requirements for proper venue under the “regular and established place of business”:

• There must be a physical place in the district. The Court stated, ”[w]hile the 'place' need not be a 'fixed physical presence in the sense of a formal office or store,' there must still be a physical, geographical location in the district from which the business of the defendant is carried out“ (internal citation removed).
• The second requirement is that the place must be a regular and established place of business. The court stated that “a business may be 'regular,' for example, if it operates in a 'steady, uniform, orderly, and methodical manner. [. . .] The 'established' limitation . . . directs that the place in question must be 'settled certainly, or fixed permanently.'
• The third requirement is that the place of business must be “the place of the defendant, . . . not solely the place of the defendant's employee.” As stated by the court, “Employees change jobs. Thus, the defendant must establish or ratify the place of business. It is not enough that the employee does so on his or her own.”