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Federal Circuit grants mandamus ordering transfer of case from Eastern District of Texas
March 25, 2009

In a recent decision, the Federal Circuit granted a petition for a writ of mandamus after a district court denied transfer of the case. The defendants/petitioners had been denied transfer of a patent case from the Eastern District of Texas (a venue perceived to be plaintiff-friendly in patent cases) to the Southern District of Ohio, where two of the three defendants were located. The district court gave essentially controlling weight to the plaintiff's choice of venue, even though none of the parties, witnesses, or evidence was located in the district. The only connection to the Eastern District of Texas was the fact that there had been sales of the allegedly infringing product there.The Federal Circuit, applying the recent en banc Fifth Circuit decision in In re Volkswagen of America, Inc., granted the petitioners' request for mandamus. The court held the case was factually indistinguishable from Volkswagen, where the Fifth Circuit en banc granted mandamus ordering transfer. As a result, the court sent the case back with orders to transfer it to Ohio.

More detail of In re TS Tech USA Corp. after the jump.On September 14, 2007, Lear Corp. sued TS Tech USA, TS Tech North America, and TS Tech Canada in the Eastern District of Texas, alleging patent infringement. The patent is directed to a vehicle headrest assembly that TS Tech had made and sold to Honda Motor Company, which in turn installed the headrest assemblies in their vehicles which were sold throughout the United States, including in the Eastern District of Texas. On December 27, 2007, TS Tech filed a motion to transfer the case to the Southern District of Ohio on the basis that Ohio was a more convenient forum for the case. TS Tech USA and TS Tech North America are both located in Ohio, while TS Tech Canada is located in Ontario. Lear is located in Michigan. None of the parties had any offices in the Eastern District of Texas, the physical and documentary evidence was located mainly in Ohio, and the key witnesses all lived in Ohio, Michigan, and Canada. The only connection to the Eastern District of Texas was the Honda vehicles sold there to consumers incorporating the allegedly infringing component.The district court denied the transfer, and TS Tech filed a petition for a writ of mandamus with the Federal Circuit, asking the court order the district court to transfer the case. The writ of mandamus is an extraordinary remedy to correct a clear abuse of discretion that produces a patently erroneous result and for which no other remedy is available. Because the petition did not involve substantive issues of patent law, the Federal Circuit applied the law of the Fifth Circuit, where the Eastern District of Texas sits. Under Fifth Circuit law, a motion to transfer venue should be granted upon a showing that the transferee venue is clearly more convenient than the venue chosen by the plaintiff. The Fifth Circuit applies a set of public and private factors in determining convenience. The private interest factors include:

  1. the relative ease of access to sources of proof;
  2. the availability of compulsory process to secure the attendance of witnesses.
  3. the cost of attendance for willing witnesses;
  4. all other practical problems that make a trial easy, expeditious, and inexpensive.

The public interest factors include:

  1. the administrative difficulties flowing from court congestion;
  2. the local interest at having localized interests decided at home;
  3. the familiarity of the forum with the law that will govern the case;
  4. the avoidance of unnecessary problems conflicts of laws or in the application of foreign law.

Initially, the Federal Circuit noted that TS Tech's extensive contacts in Ohio indisputably make it a venue where the patent infringement suit could have been brought, making it a permissible transferee court under § 1404. The court further agreed with the district court that several of the private and public factors were neutral in this case, including the availability of compulsory process, a possibility of delay and prejudice in granting a transfer, administrative difficulties due to court congestion, and both courts being able to apply federal patent law to the infringement claims.However, the district court had several key errors on other factors. First, the district court gave too much weight to Lear's choice of venue, which is accorded deference, but is not a distinct factor in the transfer analysis. The plaintiff's choice of venue corresponds to the convenience factor. In relation to this factor, the district court ignored the cost of attendance for witnesses. It is obvious that additional distance from home means additional travel time, meal and lodging expenses, and absence from employment. It generally becomes more inconvenient and costly for witnesses to attend trial the further they are away from home. Thus, the Fifth Circuit uses a "one hundred mile rule," which provides that the relative importance of "the factor of inconvenience to witnesses increases in direct relationship to the additional distance to be traveled," if it is more than one hundred miles between the competing venues. The district court completely disregarded the one hundred mile rule. Here, the witnesses would have to travel at least 900 more miles to attend trial in Texas than in Ohio.The Federal Circuit also held the district court erred in evaluating the access to sources of proof factor. The district court acknowledged that the vast majority of evidence was in Ohio, Michigan, and Canada, and none of the evidence is in Texas, but nonetheless concluded that because many of the documents were stored electronically, the access to proof factor was neutral. However, because all of the physical evidence, including the head rests themselves, was more conveniently located near Ohio, the Federal Circuit held the district court erred in not weighing this factor in favor of transfer.Finally, the district court erred in analyzing the public interest in having localized interests decided at home. Here, there was no relevant connection between the infringing head rests and Texas, except that some vehicles have been sold in Texas. The district court reasoned that this gave the citizens of the Eastern District of Texas a "substantial interest" in having the case tried locally. However, this rationale was rejected by the Fifth Circuit in Volkswagen, because the vehicles have been sold throughout the United States and the citizens of Texas have no more or less of a meaningful connection to this case than any other venue.The Federal Circuit, after examining these issues, noted there is no easy way to draw a line separating a "clear" abuse of discretion (required for mandamus) from a "mere" abuse of discretion. Nevertheless, the court concluded TS Tech met is difficult burden of demonstrating a clear and indisputable right to the writ of mandamus, because the district court clearly abused its discretion in denying transfer from a venue with no meaningful ties to the case. Accordingly, transfer to Ohio was ordered.Between this case and the Volkswagen case, it appears defendants sued in the Eastern District of Texas will have a greater potential to have the cases transferred to other venues. However, it also may mean that parties who wish to bring suit in that district will simply incorporate or set up offices in the Eastern District of Texas in order to tip the transfer analysis in their favor.To read the full decision in In re TS Tech USA Corp., click here.

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