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CAFC Orders Transfer of Patent Case, Finding That District Court Placed Too Much Weight on Plaintiff’s Choice of Forum and Defendant’s State of Incorporation

December 2, 2011

The U.S. Court of Appeals for the Federal Circuit on Dec. 2 ordered that a patent case be transferred to a California district court because another district court improperly placed too much weight on the fact that Delaware is the forum where the plaintiff filed suit and the defendant is incorporated (In re Link_ A_Media Services Corp., Misc. No. 990, 12/2/11).

The Federal Circuit pointed out that the district court completely ignored the fact that the defendants’ employees, the inventors of the asserted patents, and most of the pertinent records are all located near the U.S. District Court for the Northern District of California.

Mandamus Sought After Denial of Transfer.

Here, Link_A_Media Services Corp. (LAMD), headquartered in California, was sued for patent infringement in Delaware federal court by Marvell International Ltd., a holding company based in Bermuda. Arguing that its employees, the inventors of the asserted patents, and most of the relevant documents in this case are all located in the Northern District of California, LAMD, which was incorporated in Delaware, sought to transfer the case pursuant to 28 U.S.C. § 1404(a). This provision authorizes a district court of proper jurisdiction to nonetheless transfer a case “[f]or the convenience of the parties and witnesses, in the interest of justice.”
After the Delaware court denied the motion, LAMD petitioned the Federal Circuit for a writ of mandamus.

‘Fundamental Error’ in Relying on Choice of Forum and Defendant’s State of Incorporation.

In granting the motion, the Federal Circuit found that a writ of mandamus was warranted under Third Circuit law because the district court’s decision amounted to a failure to meaningfully consider the merits of the transfer motion. Citing Jumara v. State Farm Ins. Co., 55 F.3d 873 (3d Cir. 1995), the per curiam opinion noted that the Third Circuit considers various private and public interest factors in its Section 1404 transfer analysis, but that “the district court failed to balance those factors fairly and instead elevated two considerations to overriding importance.” Here, it said that the district court’s “fundamental error was making Marvell’s choice of forum and the fact of LAMD’s incorporation in Delaware effectively dispositive of the transfer inquiry.”

“First, the district court placed far too much weight on the plaintiff’s choice of forum,” the Federal Circuit said. While this factor is given great significance in the Third Circuit, it is not accorded much weight when, as here, the plaintiff brings its charges in a venue that is not its home forum, the appellate court explained. “The court’s heavy reliance on the fact that LAMD was incorporated in Delaware was similarly inappropriate,” the Federal Circuit continued, noting that neither Section 1404 nor Jumara lists a party’s state of incorporation as a factor for a venue inquiry. “It is certainly not a dispositive fact in the venue transfer analysis, as the district court in this case seemed to believe.”

The Federal Circuit added:

The district court also refused to consider two of the private interest factors in a Third Circuit venue inquiry: the convenience of the witnesses and the location of the books and records. Jumara, 55 F.3d at 879. Rather than analyze the merits of the parties’ arguments relating to these factors, the district court stated that these issues are “outdated, irrelevant, and should be given little weight, if any, except for those rare exceptions where truly regional defendants are litigating.” Marvell Int’l Ltd. v. Link_A_Media Devices Corp., Case No. 10-cv-869, 2011 WL 2293999, *2 (D. Del. June 8, 2011). While advances in technology may alter the weight given to these factors, it is improper to ignore them entirely.

The district court also erred when it found that consideration of the public interest factors did not favor either forum. Jumara lists six public interest factors: (i) the enforceability of the judgment, (ii) practical considerations that could make the trial easy, expeditious, or inexpensive, (iii) court congestion, (iv) the local interest in deciding local controversies at home, (v) the public policies of the fora, and (vi) the familiarity of the trial judge with the applicable state law in diversity cases. 55 F.3d at 879-80.

When reviewing the public interest factors, the district court, again, noted LAMD’s incorporation in Delaware. The defendant’s state of incorporation, however, should not be dispositive of the public interest analysis. Aside from LAMD’s incorporation in Delaware, that forum has no ties to the dispute or to either party. LAMD is headquartered in the Northern District of California, where its relevant witnesses and evidence are located. Marvell is a holding company that is incorporated in Bermuda and has its principal place of business there. The named inventors of the patents-in-suit, moreover, are employed by a Marvell affiliate, Marvell Semiconductor, Inc., which is headquartered in Santa Clara, California, only three miles from LAMD.

Accordingly, the Delaware district court was directed to vacate its order denying venue and to transfer the case to the U.S. District Court for the Northern District of California.

Chief Judge Randall R. Rader and Judges Timothy Dyk and Kathleen O’Malley heard this case.

Link_A_Media Services Corp. was represented by Deanne E. Maynard of Morrison & Foerster, Washington, D.C.

Marvell International was represented by Indranil Mukerji of Fish & Richardson, Washington, D.C.

Read the per curiam opinion in In re Link_ A_Media Services Corp.

 


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