Intellectual Property Law

Don?t Mess With Texas

By Lee Gesmer

I?ve written before about how generous juries in the federal courts in the Eastern District of Texas (EdTX) are to patent plaintiffs. (link).  After I wrote about this a year ago there was a feeling that this trend might be reversing itself. However, Johnson & Johnson?s $1.6 billion judgment against Abbott and i4i?s $200 million verdict against Microsoft last summer put an end to those thoughts.

So, when Apple, Sirius XM and others were recently sued for patent infringement in EdTX they quite naturally looked for a way out.  Massachusetts, they told the Texas district court, was a far better choice, particularly when you considered the fact that that the patent owner, a non-practicing entity, had set up a Texas company shortly before filing suit, and located its business in the offices of its Texas lawyers.

But, it?s not that easy.

After the EdTX trial court refused to transfer the case to Massachusetts, Apple and its co-defendants filed a ?mandamus? with the Federal Circuit.  Mandamus is a rare procedural tool.  Its a way to ask a court (typically an appellate court) to take an action that isn’t really an appeal (because the there is no final judgment), and no specific statute authority authorizing interlocutory appeal. I think it fair to say that fewer than one in a hundred lawyers has ever filed a "writ of mandamus," (more likely fewer than one in five hundred).  

However, Apple was desperate.  And it had a good argument, or so you would think.  Clearly, the plaintiff in this case set up the Texas corporation for one reason only: to establish venue in Texas.  One would think that even if the Texas court refused to transfer the case out of the state, the CAFC would see the unfairness in this tactic. Sadly, for Apple, this was not to be the case.  The district court denied the motion to transfer, and the Federal Circuit upheld this decision on appeal, stating:

To be sure, the status of Personal Audio, LLC, as a Texas corporation is not entitled to significant weight, inasmuch as the company?s presence in Texas appears to be both recent and ephemeral?its office is apparently the office of its Texas litigation counsel, and it appears not to have any employees in Texas. Nonetheless, the petitioners have not made a compelling showing that Massachusetts is a more convenient forum, particularly in light of the fact that none of the defendants is headquartered there. The district court also addressed and rejected the petitioners? claim that Massachusetts would be a more convenient forum for prospective witnesses in the case, and we are not prepared to hold that the court?s conclusion in that regard was plainly incorrect. In sum, the petitioners have failed to satisfy the demanding standard required to justify the issuance of a writ of mandamus.

Link on Scribd.

Full post as published by Mass Law Blog on May 14, 2010 (boomark / email).