Defendants’ State of Incorporation Is Entitled to Little Weight in Transfer-of-Venue Analysis

Addressing a defendant’s petition for writ of mandamus, the U.S. Court of Appeals for the Federal Circuit held that district judge erred in her order denying the defendant’s motion to transfer venue from the U.S. District Court for the District of Delaware to the U.S. District Court for the Northern District of California.   In Re Link_A_Media Devices Corp., Miscellaneous Docket No. 990 (Fed. Cir., Dec. 2, 2011) (per curiam).

Link_A_Media Devices Corp.   (LAMD)   sued in Delaware by Marvell, alleging patent infringement.   Marvell International Ltd. is a Bermuda-based holding company, and the entity related to Marvell, which employs the inventors of the patents-in-suit, is headquartered in the Northern District of California.  Although LAMD is incorporated in Delaware, its principle place of business is also located in the Northern District of California.  LAMD sought removal to the Northern District of California, but the district court declined, primarily citing plaintiff’s choice of forum the state of incorporation of LAMD and the international character of the plaintiff as the reasons.  

LAMD petitioned the Federal Circuit for mandamus for review of the denial.  Applying U.S. Court of Appeals for the Third Circuit law, the Federal Circuit found four faults in the district court’s venue analysis.  First, and most notably, the Federal Circuit held that district court’s heavy reliance on the fact that LAMD was incorporated in Delaware was inappropriate.  The Federal Circuit noted that Jumara v. State Farm Ins. Co., the leading 3d Circuit case on transfer of venue, does not list a party’s state of incorporation as a factor for a venue inquiry. 

Second, the Federal Circuit noted that the lower court placed too much weight on plaintiff’s choice of forum.   The Federal Circuit made clear that when a plaintiff chooses a forum that is not its own, its choice is entitled to less deference. 

Third, the Federal Circuit held that the district court erred by refusing to consider two private interest factors in a 3d Circuit venue inquiry:   the convenience of the witnesses and the location of the books and records.  In her opinion, District Judge Robinson had noted that these factors are “outdated, irrelevant and should be given little weight, if any, except for those rare exceptions where truly regional defendants are litigating.”  The Federal Circuit rejected this analysis, noting that “[w]hile advances in technology may alter the weight given to these factors, it is improper to ignore them entirely.” 

Finally, the Federal Circuit held that the district court erred with respect to the public interest factors and rejected Marvell’s argument that the District of Delaware’s general experience with patent infringement litigation should weigh against transfer of venue.

Practice Note:   This decision may provide new authority for defendants incorporated in Delaware, but headquartered elsewhere, to move litigation from Delaware to their home forum.  In a late breaking development, the parties to this dispute settled and sought to have the Federal Circuit’s transfer order vacated based on a withdrawal of the petition by LAMD.  In a per curiam order (issued on December 16, 2011) the Court refused:  “We determine the granting a motion to vacate our order is neither required nor a proper use of the judicial system.”

In another (non-precedential) decision, In re Biosearch Technologies, Inc. et al., Misc. Docket No. 995 (Fed. Cir., December 22, 2011) (Linn, J.), the Federal Circuit ordered a case transferred from the U.S. District Court for the Eastern District of Texas (and now retired Judge Ward) to the U.S. District Court for the Northern District of California.  The court accorded little weight to the fact that one of the named defendants (Bio-Synthesis) and its evidence were located in Texas; instead focusing on the fact that both of the plaintiffs and one of the defendants were located in the Northern District of California, as were most of the witnesses and the attorneys that prosecuted the patents in suit (while no witnesses were in Texas).  The court also noted that the Texas defendant, Bio-Synthesis, had only "limited involvement" in the case.  Citing its Nintendo decision on venue, the Court observed "in a case featuring most witnesses and evidence closer to the transfer venue with few or no convenience factors favoring the venue chosen by the plaintiff, the trial court should grant a motion to transfer."