In early December 2009, the Court of Appeals for the Federal Circuit again granted a petition for mandamus to transfer a case out of the U.S. District Court for the Eastern District of Texas. The Federal Circuit's decision in In re Hoffman-La Roche, (Fed. Cir., Misc. No. 911, 12/2/09), is the third such mandamus order in less than 12 months. The underlying case was filed in 2007 in the Eastern District of Texas before Judge Folsom by Novartis Vaccines and Diagnostics, which is headquartered in California. Novartis accused defendants Hoffman-La Roche, Trimeris, and others of patent infringement over an HIV-inhibitor drug discovered by researchers at Duke University.
The defendants sought to transfer venue to North Carolina, where the drug at issue was discovered and developed. However, Judge Folsom twice denied Hoffman-La Roche's motion to transfer, once after the first Federal Circuit mandamus grant in TS Tech in December 2008 and again after the second mandamus grant in Genentech in May 2009. Hoffman-La Roche subsequently petitioned the Federal Circuit for relief.
In granting the petition to transfer venue, the Federal Circuit undertook the now-standard transfer analysis under 28 U.S.C. § 1404(a). However, there are several new points of interest in the Hoffman-La Roche opinion:
- The Federal Circuit found that the Texas district court did not have "absolute" subpoena power over any witnesses because, although it could compel a Houston-based witness to appear at trial, it could not compel her deposition. In contrast, at least four non-party witnesses were subject to the absolute subpoena power of the North Carolina court.
- Under the "localized interest" factor, which usually weighs neutrally in the transfer analysis, the Federal Circuit found that North Carolina had a greater local interest in the case because the drug discovery and original development had occurred there, while Texas had no ties to the events.
- Under the "convenience to the parties" factor, the Federal Circuit was not persuaded by plaintiff's transfer of 75,000 pages of documents to local counsel in Texas prior to filing suit. Citing U.S. Supreme Court precedent disfavoring such maneuvers, the Federal Circuit called the plaintiff's acts a "fiction" designed to manufacture and support venue in the Eastern District of Texas.
While the Federal Circuit relied on many factors in reaching its decision, its holding on this last point may prove to be the most important, since it is not uncommon for patent infringement plaintiffs to form limited liability companies in Texas ahead of filing suit in an apparent attempt to justify venue. The Federal Circuit's ruling in Hoffman-La Roche will undoubtedly be cited against such plaintiffs who resist transfer. In response, plaintiffs will continue to search for additional justifications for maintaining venue in the Eastern District of Texas such as naming as many defendants as possible and including Texas-based entities as defendants whenever feasible.
The fact that the Federal Circuit has, for the third time in less than a year, granted a petition to transfer venue under the very high standard for obtaining mandamus relief, is an indicator of the strong feelings the Federal Circuit must harbor on this issue. However, it remains to be seen whether and how the Federal Circuit will rule in potentially more difficult scenarios where multiple, unrelated defendants are named, especially where one or more of those defendants is based in Texas.