The U.S. Court of Appeals for the Federal Circuit recently issued a precedential opinion discussing plaintiffs’ attempts to influence venue through reliance on a licensing agreement that purported to limit where a patent infringement suit “might have been brought.” See In re Samsung Electronics Co., Case Nos. 2021-139, 2021-140 (Fed. Cir. June 30, 2021). In its opinion, a panel of the Federal Circuit criticized the plaintiffs’ use of a licensing agreement that transferred the right to sue for infringement in certain counties in Texas, including certain counties in the Western District of Texas, to plaintiff Ikorongo Texas, with plaintiff Ikorongo Tech retaining the right to sue for infringement in the rest of the country.
In response to motions to transfer (from defendants in related actions concerning the same patents), Judge Albright in the Western District of Texas found that defendants had “failed to establish the threshold requirement that the complaints ‘might have been brought’” in the proposed transferee district, the Northern District of California, because “Ikorongo Texas’s rights under the asserted patents could not have been infringed in the Northern District of California[,]” and thus venue over the entirety of the actions was improper. The Samsung court disagreed, finding the district court improperly disregarded the prelitigation acts of the plaintiffs “aimed at manipulating venue.” The court noted that both the Federal Circuit and the Supreme Court “have repeatedly assessed the propriety of venue by disregarding manipulative activities of the parties[,]” citing prior Federal Circuit decisions that found, inter alia, a “plaintiff’s incorporation, office, and documents in Texas ‘were recent, ephemeral, and a construct for litigation and appeared to exist for no other purpose than to manipulate venue … in anticipation of litigation.’”
After concluding that the actions could have been brought in the Northern District of California, the Federal Circuit reviewed the district court’s analysis of merits of the transfer opinion and found that the court abused its discretion in concluding that transfers were not warranted. Of particular note, the Federal Circuit disagreed that the Western District’s ability to set a fast-paced schedule was relevant to the “court congestion factor” and that “neither respondents nor the district court pointed to any reason that a more rapid disposition of the case that might be available in the Western District of Texas would be important enough to be assigned significant weight in the transfer analysis here.”
Days after the Samsung decision, the same Federal Circuit panel vacated a substantially similar decision by Albright in the Western District of Texas, denying transfer of another case brought by the Ikorongo plaintiffs. Adopting the reasoning in Samsung, the panel vacated the order denying transfer and directed the district court to grant transfer of the case against Uber to the Northern District of California. See In re Uber Technologies, Inc., Case No. 2021-150 (Fed. Cir. July 8, 2021).
Given the above and the substantial number of other recent decisions from the Federal Circuit discussing venue and motions to transfer originating in the Western District of Texas, parties litigating or thinking about litigating in the Western District of Texas should give careful consideration to venue- and transfer-related issues.