In re Apple

The U.S. Court of Appeals for the Federal Circuit granted a petition for a writ of mandamus and ordered the case transferred from the U.S. District Court for the Eastern District of Texas to the U.S. District Court for the Northern District of California, finding that the district court abused its discretion in denying a motion to transfer. In re Apple, Case No. 14-143 (Fed. Cir., Sept. 11, 2014) (per curiam) (Bryson, J., dissenting).

The defendant, Apple, filed a motion to transfer its patent infringement suit brought by the plaintiff, EON Corp. IP Holdings, the Eastern District of Texas to Northern District of California. The district court denied the motion, finding that the factors governing motions to transfer in the U.S. Court of Appeals for the 5th Circuit, on balance, did not favor transfer. Apple petitioned the Federal Circuit for a writ of mandamus, asking the Federal Circuit to order the district court to grant the motion to transfer. Petitions for writ of mandamus are reviewed for abuse of discretion.

EON is a non-practicing entity, thus it does not have any records related to corporate activities in Texas (the state where it is incorporated). The Federal Circuit found that while the law recognizes EON’s right to select its forum, the Supreme Court and Congress have determined that this right is not unfettered. In considering the convenience of the parties, the Court did not explicitly state that EON’s NPE status weighed in favor of transfer, but noted that EON did not have any documents or relevant witnesses in the Eastern District of Texas that would weigh against transfer.

The district court concluded that the compulsory process factor was neutral, as it only considered one witness who was located in the Northern District of California. However, Apple identified five other witnesses that the Northern District of California would have compulsory process over. The Federal Circuit concluded that the district court ignored the relevant evidence of these other witnesses and held that the compulsory process factor weighed heavily in favor of favor when the witnesses were considered.

The district court found that convenience of party witnesses favored transfer, as Apple identified eight party witnesses in the Northern District of California, whereas EON identified no witnesses in the Eastern District of Texas. The Federal Circuit agreed with this analysis and found that convenience of the witnesses heavily favored transfer.

The district court found that the judicial economy factor weighed heavily against transfer, as the Eastern District of Texas had previously construed claims of three of the four patents-in-suit, whereas the Northern District of California had only construed claims from one of the patents-in-suit.  While the Eastern District of Texas would still have some cases involving the family of the patents-in-suit in transfer was granted, the Federal Circuit panel noted that multi-district litigation procedures exist to mitigate inefficiencies in situations where cases involving the same patents are filed in multiple districts. Accordingly, the Federal Circuit found that this factor should not weigh so heavily in favor of transfer, but rather should weigh only somewhat in favor of transfer.

Dissent

In dissent, Judge Bryson criticized the majority for taking the balancing of factors and the assignment of weight of the factors out of the hands of the district court and into the hands of the Federal Circuit. The dissent argued that, at most, the Federal Circuit should remand the case to the district court to reconsider the factors that were ignored and not grant Apple’s motion to transfer.

In addition, the dissent criticized the majority for giving too much credit to Apple’s identification of third-party witnesses. Specifically, Apple failed to state that any of the third-party witnesses would not be willing to travel to Texas or state that the witnesses’ testimony would be important to the issues at trial. Without this information, the dissent argued that Apple failed to carry its burden to show the Northern District of California’s compulsory process over the third-party witnesses would be useful.