Yesterday, in two separate precedential decisions on mandamus, the Federal Circuit refused to overturn the district courts’ decisions not to transfer patent assertion entity cases to the defendants’ home forum: In re Apple, Misc. 13-156 (mandamus from E.D. Tex.) and In re Barnes Noble, Misc. 13-162 (mandamus from W.D. Tenn.).  Both mandamus orders were decided by the monthly-rotated motions panel at the Federal Circuit comprised in this instance by Judge Reyna who wrote the majority opinions in both cases, Judge Prost who joined those opinions and Judge Newman who dissented.  The decisions provide guidance on the substantial deference the Federal Circuit gives on mandamus review of such decisions as well as evidentiary considerations.

The case also is interesting because a different outcome might have been expected had this issue been decided about six years ago.  At that time, the patent bar had started raising questions about the high number of patent assertion entity patent cases being filed in E.D. Texas.  The Federal Circuit appeared to address that concern by using the exceptional procedure of granting petitions for mandamus to transfer cases out of E.D. Texas (see, e.g., the 2009 In re Genentech decision).  Further, some have indicated that Judge Newman, a well-respected judge on the Federal Circuit, is more inclined to patent owner rights; but in this instance she dissented and would transfer the cases given the practicing entities Apple and Barnes & Noble having more witnesses and documents in their local forum than the non-practicing entity patent owner would have in its chosen forum.

In re Apple.  In February 2012, Apple was sued in E.D. Texas by Core Wireless, a subsidiary of MOSAID based in Plano, Texas.  The patent dispute concerns iPhones and iPads sold by Apple (based in Cupertino, CA) having baseband processing chips supplied by Qualcomm (based in San Diego, CA) and Intel (based in Santa Clara, CA).  The district court denied Apples motion to transfer based on “lack of specificity in Apple’s assertions as to why the transfer factors favored [N.D. Cal.]”, and denied Apple’s request to supplement the record because Apple should have presented that information with its original motion.  Apple then filed with the Federal Circuit petitions for writ of mandamus to instruct the district court to transfer the case to N.D. Cal.

The majority opinion emphasied the tough standard of review that Apple faced on mandamus: “whether there was such a ‘clear abuse of discretion’ that refusing transfer would produce a ‘patently erroneous result'” and “it is clear ‘that the facts and circumstances are without any basis for a judgment of discretion.”  The majority staed that the district court “was stymied in its analysis by Apple’s lack of evidence,” stating:

Specifically, the court noted that it was unable to evaluate the convenience of witnesses in its transfer analysis because of Apple’s failure to identify willing witnesses who would need to travel to the Eastern District of Texas or any third party witnesses not subjecd to the compulsory process of that court.  Similarly, in light of “Apple’s vague assertions and unknown relevance and location of potential sources,” the district court was unable to weigh the relative ease of access to sources of proof factor in its transfer analysis, because th “weighing of this factor would be merely speculative.”

The majority found that “the district court simply determined that the evidence … was so general in nature that the court was unable to evaluate its relevance in the transfer analysis.”  The majority also held that the district court did not abuse its discretion by not permitting Apple to supplement the record where “there was no indication that Apple could not have submitted this information with its motion to transfer.”

The majority distinguished the Federal Circuit’s 2009 decision in In re Genentech that ordered the E.D. Texas court to transfer the case, because that case included evidence of specific witnesses, but this case was too general:

In [In re Genentech], however, the petition identified at least ten specific witnesses in the transferee forum, two of which were attorneys responsible for the prosecution of the patents-in-suit, and at least four additional witnesses with relevant knowledge that were located outside of the original venue but within the transferee venue.  We decline to find that the district court was “patently erroneous” based only on inferences drawn from the number of employees at Apple’s headquarters, which only reflecdts the parties’ relative size and not necessarily the location of potential witnesses–particularly as Apple has not shown that it did not have more granular facts at its disposal to support its original motion.

Judge Newman dissented because, even though Apple may not have identified specific witnesses, “the evidence proffered makes it clear that all relevant Apple witnesses and documents are located in [N.D. Cal.]” and “the suppliers of the accused components are located in California.”  Judge Newman also contrasted local interests of the parties based on their businesses (operating entity compared to non-practicing entity), stating:

Finally, I am struck by how heavily the local interest factor favors the Northern District of California.  Apple is a robust company that supports the local economy of Curpertino, California, employing over 13,000 people.  Core Wireless, on the other hand, is a non-United States corporation with one employee that exists solely to license its patent portfolio.  To carry out this task, Core Wireless employs 6 people through a subsidiary in Plano, Texas.  Apple’s impactd on the local economy in the Northern District of California is clearly much greater than that of Core Wireless in the Eastern District of Texas.

In re Barnes & Noble.  In September 2012, Barnes & Noble was sued in W.D. Tenn. by B.E. Technology (“B.E.”) alleging that Barnes & Noble’s Nook device infringed a B.E. patent.  Martin Hoyle is B.E.’s founder, Chief Executive Officer and named inventor on the asserted patent.  Mr. Hoyle lived in W.D. Tenn. since 2006 and has run B.E. from there since 2008.  Barnes & Noble is a Delaware company headquartered in New York having a Palo Alto, California office where most of its Nook activity takes place.  The district court denied Barnes & Nobles transfer motion because, among other things, Barnes & Noble did not “address[] how many of its employees would be unavailable to testify in Tennessee or why deposition testimony would not suffice in lieu of live testimony if the witnesses were unwilling to travel for trial.”

The majority opinion again started with the high burden of getting reversal on mandamus, stating that the “standard is an exacting one, requiring the petitioner to establish that the district court’s decision amounted to a failure to meaningfully consider the merits of the transfer motion.”  The majority also noted the importance of the regional circuit law at issue in this case as compared to other decisions, indicating that the Fifth Circuit is less deferential to the plaintiff’s chosen forum:

Barnes & Noble cites no Sixth Circuit case that would suggest that the district court erred in requiring it to demonstrate its employees would be unwilling or unable to testify if the case was tried in the Western District of Tennesse. …We note that the dissent relies on a series of cases in which the Federal Circuit reviewed venue transfer under Fifth Circuit law.  Unlike the Sixth Circuit, however, the Fifth Circuit has expressly held that while the transferee venue  must be “clearly more convenient,” district courts err when they require that S 1404(a) factors “must substantially outweigh the plaintiff’s choice of venue.”  The dissent would give the plaintiff’s choice of forum here minimal weight so as not to reward “attempts of plaintiffs that do not practice their patents to rely on mere artificats of litigation.”  But there is no indication on the record that B.E.’s connection to Tennessee was manufactured in anticipation of litigation to make the forum appear convenient. [emphasis in original]

The majority cited to other factors supporting the decision not to transfer, such as the district court’s prior experience and copending cases with the same patent at issue and B.E. and its CEO having evidence in W.D. Tenn. such that its not a case where the district court “has no meaningful connection to the case.”

Similar to her dissent in In re Apple discussed above, Judge Newman contrasted the local interests of the parties given their different business models:

Until just prior to filing this and 19 other pending infringement suits in the same forum, [B.E.] was not registered to do business in the state of Tennessee.  The company is run and operated by the patent owner out of his home.  The plaintiff has no other employees, and does not make, use or sell the patented subject matter in Tennessee or elsewhere.

The defendant Barnes & Noble has a large office in Palo Alto, California, where it employs over 400 people.  The record states that the Barnes & Noble employees that are most knowledgeable about the design, development, and operation of the accused product work in Palo Alto.  The record also states taht substantially all of the documents relating to the development, design, and components of the accused product are located in Barnes & Noble’s Palo Alto office. …  Although Barnes & Noble’s accused product is sold nationwide, the Barnes & Noble evidence relevant to this ltigiation is located in Northern California.