Latest Federal Court Cases, 07/06/21
In re: Samsung Electronics Co., Ltd., et al., Appeal Nos. 2021-139, -140 (Fed. Cir. June 30, 2021)
In this week’s Case of the Week, the Federal Circuit granted mandamus petitions filed by Samsung and LG Electronics, directing that patent cases pending against them in the Western District of Texas be transferred to the Northern District of California. In issuing its writ, the Court expanded on precedent disregarding pre-litigation attempts by a plaintiff to manipulate jurisdiction or venue when those questions are disputed, holding that such attempts should also be disregarded when determining for venue purposes whether an action “might have been brought” in a transferee district under 28 U.S.C. § 1404(a).
In this case, the asserted patents were owned by Ikorongo Technology LLC. Within a month before the action was filed against Samsung and LG in the Western District of Texas, Ikorongo Tech spun off Ikorongo Texas LLC, a formally unrelated company owned by the same five individuals and operated out of the same North Carolina office as Ikorongo Tech. Ikorongo Tech then assigned to Ikorongo Texas the exclusive right to sue and collect damages on the patents within specified parts of Texas, while retaining the rights to the patents in the rest of the country. Ikorongo Texas then sued Samsung and LG in the Western District of Texas, with Ikorongo Tech joining in amended complaints the day after the initial complaints were filed. The complaints generally accused functionality of third-party apps run on Samsung’s and LG’s mobile devices.
Samsung and LG moved to transfer venue under § 1404(a) on the basis that most potential witnesses and sources of proof were in the Northern District of California, where most of the accused apps had been developed and two of the named inventors resided, and that none were in the Western District of Texas. The district court denied the transfer motions, reasoning that because Ikorongo Texas’s geographically-limited rights could not have been infringed in the Northern District of California, Samsung and LG had failed to establish that the complaints “might have been brought” there. The district court alternatively analyzed the traditional public- and private-interest transfer factors, assigning little weight to the presence of witnesses in California since few would testify at trial, opining that it was “generally a fiction that patent cases give rise to local controversy or interest,” and pointing to another case Ikorongo had pending in the Western District of Texas asserting some of the same patents as establishing that judicial economy weighed against transfer.
The Federal Circuit held that the district court erred by disregarding Ikorongo’s pre-litigation acts aimed at manipulating venue. The Court collected Supreme Court and its own precedent rejecting efforts to manipulate jurisdiction and venue, noting that while its prior venue cases on point involved the convenience of parties and witnesses and interest of justice factors, “longstanding principles against manipulation are no less applicable to the requirement that an action ‘might have been brought’ in the transferee district.” Because Ikorongo Texas “seem[ed] to exist for the sole purpose of limiting venue to the Western District of Texas,” the Federal Circuit found that the district court should not have separately considered its geographically bounded claims, and that disregarding that manipulation, Ikorongo Tech could have filed suit in the Northern District of California.
The Federal Circuit also held that the district court clearly abused its discretion in balancing the traditional transfer factors, finding that with no witnesses or sources of proof in the Western District of Texas, the convenience of the parties and witnesses strongly favored transfer; noting that Ikorongo’s other pending case would likely have little overlap in discovery and other proceedings; and soundly rejecting the district court’s conclusion that it was a “fiction” that the Northern District of California had a local interest in adjudicating the dispute. As such, the Court vacated the orders denying transfer and directed the district court to transfer the cases to the Northern District of California.
A copy of the opinion can be found here.