Scott R. Cleere, LLM

Did the Federal Circuit just tell the last patent defendant in east Texas to turn off the lights on your way out? The Eastern District of Texas is a popular venue for patent owners, especially non-practicing entities commonly maligned as “patent trolls,” filing infringement lawsuits. The Eastern District is widely perceived as being friendly to patent owners–patents are less likely to be found invalid in the Eastern District and juries are generous in awarding damages. For the same reasons, defendants often try to have cases transferred away from the Eastern District, especially when both parties are located elsewhere. However, transfer motions are consistently denied. Now, two recent decisions by the Court of Appeals for the Fifth Circuit (Fifth Circuit), in which the Eastern District of Texas is located, and the Court of Appeals for the Federal Circuit (Federal Circuit), which has exclusive jurisdiction over appeals from patent cases, may signal an end to the Eastern District’s patent litigation parade.

In a product liability suit, In re Volkswagen, the Fifth Circuit sitting en banc issued a writ of mandamus ordering the Eastern District to transfer the case to the Northern District of Texas. The Eastern District had no connection to the case beyond the fact that Volkswagen vehicles were sold there (where aren’t they sold?). Conversely, witnesses and other evidence were located in the Northern District. A majority of the Fifth Circuit ruled that a district court must grant a motion to transfer venue when the transferee venue is shown to be “clearly more convenient” and granted only very minimal deference to the plaintiff’s choice of venue.

Relying on Volkswagen, in In re TS Tech USA Corp., the Federal Circuit also recently issued a writ of mandamus ordering the Eastern District to transfer a patent infringement case to Ohio because the majority of witnesses and other evidence was located there while the only connection to Texas was that allegedly infringing products (headrest components sold in Honda cars) had been sold there. The case was filed by Lear Corp., located in Michigan, against TS Tech USA Corp., located in Ohio. There was no apparent reason for the choice of the Eastern District other than the perceived advantage of patent friendly courts and juries.

The decision may signal an increased willingness by the Federal Circuit to intervene and remove cases from the Eastern District, which is notorious for its unwillingness to grant transfer motions. On the other hand, the decision should not affect cases filed in district courts outside the Fifth Circuit because the decision is based on and controlled by Fifth Circuit law. Once again, it appears that the courts are trying to fix a perceived patent law problem (overly broad choice of venue) rather than waiting for Congress to act on patent reform legislation.

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