How To Get Out Of Dodge: Winning Patent Venue Transfer Strategies And The Federal Circuit

Proper venue is important in U.S. district court litigation; you can't live without it. But successfully changing venue to a different district court can be even more important because transfer can seriously disrupt plaintiff's strategy surrounding the initiation, progress and potential settlement of the litigation—to defendant's distinct advantage. Indeed, even a strategic transfer of just those claims directed against your client, severed from like claims made against co-defendants or other parties in parallel co-pending cases, can result in your client's separate case creating risk and becoming a distraction that allows for a quicker and less costly exit. Or, if settlement is not desired, transfer may permit a more fulsome defense by eliminating the burden of multiple parties sharing your precious court time.

Venue transfer is particularly important in patent cases, where moving a case out of plaintiff's chosen jurisdiction to a more convenient forum can help level the playing field for an accused infringer. Perhaps even more significantly, the co-existence of parallel infringement claims in different courts can allow for multiple attacks on the patent with the same or different defenses, different and even inconsistent claim constructions, and procedural differences that can make it burdensome for plaintiff to simultaneously manage the different proceedings.

Many of these benefits can still be obtained even where related cases are coordinated for discovery and cost efficiency purposes. Moreover, in the all-too often context of non practicing entity (NPE) litigation, having an outlier case moved to a different forum can interfere with the NPE's licensing program and objectives as parties or potential licensees sitting on the sidelines wait to see how different cases play out in different courts.

In a patent case, transfer can be especially beneficial because of the potential for a race to judgment in what may not be plaintiff's preferred case. While not without certain incremental costs and inconveniences (especially in the rarer cases where evidentiary hearings are ordered), and while success is in part dependent on an ability to build a record and persuade the district court with facts most favorable to your client's specific situation, the potential strategic benefits of a motion to transfer venue should be considered carefully and early in the case.

This article draws on the teachings of recent Federal Circuit jurisprudence and the authors' real world experiences to distill some of the important tactical considerations that parties should account for in shaping a potential transfer strategy in patent cases. Despite the patent-oriented focus of this article, these same tactical considerations translate well for most civil actions in federal court.

Why Venue Matters

Venue dictates the procedural rules to be applied, sets the pace of the litigation, and defines the jury pool. Venue can even impact determination of the substantive law that will govern the parties' rights, especially with respect to ancillary claims based on state law. Venue considerations are particularly pronounced in patent litigation, where plaintiffs are prone to filing suit in a handful of select venues (which may have little or no specific connection to the parties or the merits of the case) in order to capitalize on fast-pace local patent rules, generous juries, and experienced jurists who are fond of patent litigation. i Indeed, these pressure points often operate to elicit risk-abating settlements in NPE cases that are divorced from the economic value of the infringement claim.

Whether to file a transfer motion is commonly one of the first strategic decisions confronting defense counsel. Venue motions often present the first serious show-down between the parties and provide an early opportunity to test an adversary's mettle. In fact, the mere filing of a transfer motion may be sufficient to induce a patent owner to settle quickly and cheaply. The outcome of a successful venue motion can help set the tone of the litigation and may drastically alter the settlement calculus. But although venue motions should typically be filed quite early on in the proceedings, there is an inherent tension between the need to move promptly and the need to develop a factual record sufficient to satisfy the applicable burden in the district court—and if necessary, in the Federal Circuit.

Legal Framework

Venue in patent cases is governed by the general federal venue statute, 28 U.S.C. § 1391, and by the patent-specific venue statute, 28 U.S.C. § 1404(b).ii Section 1404(b) provides that an action for patent infringement "may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business."

As in other civil cases, motions to transfer venue in patent cases are governed by 28 U.S.C. § 1404(a), which provides: "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to another district court or division where it might have been brought."iii

Despite its codification of convenience as the controlling standard, section 1404(a) provides less uniformity than one might expect. This is so because regional circuit law controls the procedural matter of application of section 1404(a),iv and there are substantial differences between the tests applied by certain regional circuits. For example, in Delaware and the Third Circuit, a plaintiff's choice of forum is "a paramount consideration in any determination of a transfer request," and a district court should deny a motion to transfer unless the balance of convenience "strongly" favors transfer.v By contrast, in Texas and the Fifth Circuit, the plaintiff's choice of forum is not considered as an independent factor in the transfer...