Eastern District of Texas Federal Court Practice

Motion to Transfer Denied With Leave to Refile Following Venue Discovery

Mobilemedia Ideas, LLC v. HTC Corp., 2:10cv112 (E.D. Tex. 9/15/11)

Judge: T. John Ward

Holding: Motion to Tranfer Venue DENIED without prejudice to refiling

Well, I thought I'd seen everything, but apparently not.  Judge Ward denied the motion to transfer in this case, holding that there was not yet a factual record that showed that HTC had (or had not) met its burden of showing that its requested transferee forum was "clearly more convenient" for two reasons.

First of all, when the case was filed, Defendant HTC America was incorporated in Texas and had its principal place of business in Texas.  Six months later it moved its principal place of business to Washington State, and a few weeks later filed this motion.  Judge Ward noted that "it appears that HTC may be attempting to manipulate venue, which has been discouraged by recent Federal Circuit cases" citing In re Zimmer.  But even if it were not, he observed that HTC had not explained why the Court shouldn't consider the venue facts as they existed when the case was filed, as opposed to after a party makes a change of location.  (Judge Ward doesn't explicitly note this here, but the date of filing was noted to be a fact of significance in In re Volkswagen, and as I'll explain at a HIPLA seminar next month in HTC's former home of Houston, eventually matured into the joinder provision in the recent patent legislation in much the same way that the little iguana swimming near the beach at Bikini Atoll matured into Godzilla at the beginning of the 1998 movie.  Or something like that.  I'm still working on my metaphors, as you can tell.  Maybe it's more like early and late Elvis.  Have to think about that one some more).

Anyway, second, Judge Ward noted that there had not been sufficient discovery into the extent of HTC's activities in Texas, or on why it changed its location and citizenship after the suit was filed.  Judge Ward accordingly ordered discovery limited to: (1) the circumstances surrounding the move of HTC America’s Houston, Texas principal place of business and the change in HTC America’s legal status and (2) information regarding the details of HTC’s former and current operations in Texas, including current employees in Texas".  HTC can refile its motion to transfer in sixty days and again attempt to make a showing that its proposed transferee forum is "clearly more convenient" once the relevant discovery has taken place. Judge Ward made clear that he had not decided one way or the other whether the showing could be made - just that it had not yet been, but the necessary discovery needed to take place first.

In other words, Judge Ward is sending the analysis down the tracks the Federal Circuit has laid in allowing discovery to determine why the change was made, so that on reurging his successor can determine whether the required showing has been made - and what effect the manipulation - if any such occurred - has on the analysis.  Maybe HTC just couldn't take the humidity.  Or they just really like rain.  Hard to say.

And here's a fascinating little fact the opinion discloses.  Yes, HTC moved its shop six months after the case was filed and only a few weeks before filing its motion.  But it had given notice to its landlord in Texas that it was going to move from the offices it was currently using a few days before the case was filed.  Hmmmm.  This ought to be interesting.

JMOL rulings in Mondis v. LG - finding of willful infringement set aside

Mondis v. LG, 2:07cv565 (E.D. Tex. 8/29/11)

Judge: T. John Ward

Holding: Rulings on JMOLs

As I posted last month, a Marshall jury in the Mondis v. LG case returned a split verdict in Judge Ward's court, finding about half the claims infringed (with a few infringed willfully), and about half the claims invalid.  Damages were set at $15 million, which was a little under ten percent of what the plaintiff asked for (the third such verdict in the district in the past year).

I won't go through Judge Ward's detailed ruling on the pending postverdict motions (JMOLs, motions for new trial, and so forth), but I did want to note that he granted the motion asking to set aside the jury's finding of willful infringement.  "The primary reason for this holding is that a reasonable jury could not have found that the objective prong of the willfulness test was satisfied for these claims because there is no evidence InnoLux had pre-suit notice of these claims," he wrote, noting that Mondis was not alleging post-suit willfulness, and had stated at the pretrial conference that it would only be relying on “pre-suit notice and conduct.” 

Just What Judge Yeakel Wanted ... Motion to Transfer Marshall Patent Case to Austin Granted - Prior Pending Case in Transferee Court

Bandspeed v. Acer, et al., 2:10cv215 (8/15/11)

Judge: T. John Ward

Holding: Motion to Transfer Venue GRANTED

In their motion, Defendants asked Judge Ward to transfer this case to the United States District Court for the Western District of Texas based on three legal doctrines: (1) the first–to-file rule, (2) 28 U.S.C. § 1404(a), and (3) the “customer suit” exception.  Judge Ward granted the motion based on § 1404(a), writing that "[c]onsiderations of judicial economy demonstrate that the Western District of Texas is “clearly more convenient” than the venue chosen by Plaintiff."

Specifically, with respect to this factor, Judge Ward noted that "Defendants argue that the time that Judge Yeakel has expended familiarizing himself with the technology and the patents-in-suit as a result of the Western District Action weighs in favor of transfer. According to Defendants, litigating the patents-in-suit almost simultaneously in this Court and the Western District of Texas would be a waste of judicial resources and risk inconstant outcomes. The Court agrees. Judge Yeakel has already conducted a technology tutorial and markman hearing on these same patents in the Western District Action and, thus, has expended considerable time and energy familiarizing himself with the technology at issue and the claims of the patents. A duplication of Judge Yeakel’s efforts would be wasteful of judicial resources and detrimental to judicial economy.  Accordingly, judicial economy considerations strongly favor transferring this case to Judge Yeakel in the Western District of Texas."

The judicial economy factor was the deciding one in this motion, Judge Ward noted, because all but one of the private and public interest factors are neutral, and "[g]enerally, such an outcome would result in a ruling that the Defendants have not met their burden of demonstrating that the Western District of Texas is clearly more convenient."  Why the different outcome here?  Because "judicial economy considerations weigh heavily in favor of transfer in this case.  As discussed above, the Federal Circuit has held that in patent cases the “consideration of the interest of justice, which includes judicial economy, may be determinative to a particular transfer motion, even if the convenience of the parties and witnesses might call for a different result."  Typically that means that the convenience factors support transfer, but judicial economy considerations outweigh them and justify denial of the motion.  Here, the reverse was the case - the convenience factors were not shown to support a transfer, Judge Ward concluded, noting that "[i]t is clear from the limited evidence provided that this district has little if any connection to this litigation; however, the Defendants have failed to provide evidence that significant sources of proof are located in the Western District of Texas such that transfer is warranted."  But the judicial economy considerations carried the day.

Patent Case Transferred - Judge Ward's Retirement Mooted Experience Due to Prior Litigation

Rembrandt Vision Technologies LP v. Johnson & Johnson Vision Care, Inc., 2:09cv0200 (E.D. Tex. July 19, 2011, Order)

Judge: T. John Ward

Holding: Motion to Transfer Venue GRANTED

Before proceeding into the public and private interest factors on this motion to transfer venue, Judge Ward addressed two "unique issues related to judicial economy", specifically the plaintiff's assertion that two judicial economy reasons weighed against a transfer, specifically: (1) judicial economy weighs against transfer because of this Court's experience with the patents-in-suit; and (2) judicial economy weighs against transfer because JJVC waited seventeen months to file this motion to transfer.  Judge Ward held that these assertions didn't weigh against transfer in this case.

Because both the undersigned and Magistrate Judge Everingham are retiring from the bench on October 1, 2011, these issues do not weigh as heavily, with respect to judicial economy, as they may have otherwise. Issues of “judicial economy” are generally considered in connection with the “other practical problems” private interest factor. See Software Rights Archive, LLC v. Google, Inc., Civ. No. 2:07-CV-511-CE, 2010 WL 2950351, at *3-4 (E.D. Tex. July 22, 2010). In this case, Rembrandt's argument with respect to the seventeen-month delay is an issue of judicial economy. See id. Further, the Court‟s familiarity with the particular case is also an issue of judicial economy. Id.

With respect to the Court‟s familiarity and experience with the patents-in-suit, due to the approaching retirement of both the undersigned and Magistrate Judge Everingham, there will no longer be a judge in the Marshall Division with familiarity of this case. Therefore, the Court‟s current familiarity is of no further use in this case, given that this Court has already performed a claim construction in this case and neither the undersigned nor Magistrate Judge Everingham will be available to try this case in May of 2012. As such, the Court's familiarity and experience under the unique facts of this case, do not affect the analysis of judicial economy or the other private or public interest factors.

With respect to the seventeen-month delay in filing this motion to transfer venue, though not commendable, under the unique facts of this case, the Court holds that the delay is not sufficient for this Court to keep the case in the Eastern District of Texas.... JJVC filed this motion to transfer venue three months after learning of the undersigned‟s retirement—and potentially less than three months. As indicated above, the undersigned‟s announcement of retirement shifts the analysis of the private and public interest factors more in the direction of transferring venue, so it is reasonable that JJVC may have decided to file the motion to transfer venue only after learning of the undersigned's retirement.

Though in Novartis Vaccines & Diagnostics, Inc. v. Wyeth this Court has found that a sixteen-month delay may “weigh heavily against transfer,” that case is distinguishable because the motion to transfer was not filed soon after the judge on the case announced his retirement. 2:08-cv-76-TJW-CE, 2010 WL 1374806 (E.D. Tex. Mar. 31, 2010) (Everingham, M.J.).
Therefore, under the unique facts of this case, the seventeen-month delay does not weigh as heavily against transfer.

Having addressed these two factors, Judge Ward examined the traditional factors, and observed that the relative ease of access to sources of proof and the availability of compulsory process to secure the attendance of witnesses weigh slightly in favor of transfer, and the cost of attendance for willing witnesses and local interest weigh in favor of transfer.  In addition, no factors weigh against transfer and all other factors are neutral. Therefore, the Court concluded that JJVC had met its burden of showing that the Middle District of Florida is “clearly more convenient” than the Eastern District of Texas, and granted the motion to transfer. 

Sanctions of $100,000 and $500,000 Assessed Against Defendants (plus another $5 million in damages) Postverdict For Failure to Produce Information on Relevant Products

SynQor, Inc. v. Artesyn Technologies, Inc. et al, 2:07-cv-00497 (July 11, 2011)

Judge: T. John Ward

Holding: Defendant Lineage's Motion to Amend and Increase the Partial Judgment Pursuant to Fed. R. Civ. P. 59 DENIED; Sanctions Against Defendant Lineage GRANTED.  Motion for Sanctions and Supplemental Damages as to Defendant Delta GRANTED.

As I posted previously, back on December 21, 2010, a Marshall jury in Judge T. John Ward's court found that the eleven named defendants (I think there were five or maybe seven defendant groups) directly and/or indirectly infringed various patent claims.  On December 29, 2010, the Court entered a partial judgment on the verdict ordering the defendants to pay the monetary damages awarded by the jury, which collectively totaled $95,224,863, of which approximately $87.1 million was lost profits and the balance of which was a reasonable royalty on units for which lost profits were not calculated.

Defendant Lineage Power Corp. later filed a Motion to Amend and Increase the Partial Judgment Pursuant to Fed. R. Civ. P. 59.  Admittedly an odd motion from a defendant, but not nearly as odd as the facts - it dealt with products which the defendant had not disclosed until after the trial and the injunction had been entered after the trial, so the defendant was asking the court to find certain products infringed based on the jury's findings and ratchet up the damages accordingly.  Not so fast - Plaintiff SynQor, Inc. filed an opposition and a cross-motion for sanctions due to failure to timely disclose products during discovery and for an assessment of supplemental damages on recently disclosed sales of Lineage products. Judge Ward denied Lineage's request to amend and increase the partial judgment pursuant to Fed. R. Civ. P. 59, and granted SynQor‟s requests for supplemental damages for the sales of 79,881 semi-regulated QSW025 and QBW025A0B bus converters incorporated into Lineage's CDC 350 product and 566/568 products. Based on the damages model adopted by the jury, the Court awarded $4,475,051.00 to SynQor for these sales by Lineage.
In addition, Judge Ward held that Lineage was subject to sanctions for discovery violations, and ordered Lineage to pay $100,000.00 in civil contempt sanctions, as well as fees and costs attributable to the discovery abuses for failure to timely identify these relevant products.

You know the saying about "if you friend jumped off a cliff, would you too?"  Well, apparently so.  The next order Judge Ward issued was also a sanctions order, this time against defendant Delta Equipment, this time for $500,000.  Again, Judge Ward found that Delta "willfully and intentionally" violated the Court's discovery orders when it failed to disclose substantial sales until after the verdict, and adjusted damages upward a little over $560,000.  He then asessed a monetary sanction of $500,000 as a civil contempt sanction, plus fees and costs.

Split Decision in Mondis v. LG in Marshall

As I posted Friday, Judge Ward and Judge Davis both sent patent cases to Eastern District juries Thursday. (Mondis v. LG in Marshall and Colorquick v. Vistaprint in Tyler) and Colorquick came back with a defense verdict on Thurday.

After a break Friday, the Marshall jury came back with a somewhat split verdict today.  The jury found that seven of the twelve claims were infringed, and that three of the five claims for which willful infringement was alleged were infringed willfully.  It then found that seven claims were valid and six were invalid (all claims which were also found not to be infringed), and that certain products were licensed.  Finally, it assessed damages at $15 million.  For comparison purposes, the plaintiff asked for $168 million in closing. 

I call it a split decision because it appears that the plaintiff won on some claims, but lost on others (it is not the norm to have a jury split infringement and invalidity findings with this degree of granularity), and achieved a relatively small fraction of what it sought in damages. 

Rapture Denied: Extensions to answer "may not continue eternally"

Texas Data v. French Transit, 2:10cv525 (E.D. Tex. 5/4/11)

Judge: T. John Ward

Holding: Unopposed Fourth Motion for Extension of Time DENIED

Like most other Eastern District practitioners, I am veritably board certified in requesting extensions to answer, respond, or otherwise plead.  My personal best is eleven on behalf of one party in a case, I think, which is why this order from Judge Ward was so ... disturbing.

In the order granting the Defendant's third unopposed motion for extension to answer, Judge Ward stated "ALL FURTHER EXTENSIONS TO ANSWER MUST SHOW GOOD CAUSE."  (Emphasis in original).  But this fourth motion, while unopposed, didn't provide any good cause, as the Court's order required.

That the motion is unopposed is not good cause by itself. If the parties are currently engaging in settlement discussions, for example, that may potentially be good cause for an extension to answer or respond, but even those extensions, however, may not continue eternally. Though Defendant has asked this Court for extensions to respond to the complaint, which have been unopposed, Defendant has had approximately six months to answer or otherwise respond to the complaint. At this point, therefore, the Court requires Defendant to show good cause for the extension—whether unopposed or not. 

(Emphasis added). 

Judge Ward Grants Motion to Dismiss With Leave to Replead in False Marking Case, Citing In re BP Lubricants

Promote Innovation v. Pfizer, 2:10cv242 (E.D. Tex. April 4, 2011)

Judge: T. John Ward

Holding: Motion to Dismiss GRANTED with leave to replead

As readers are aware, the Federal Circuit in In re BP Lubricants USA, Inc., --- F.3d ----, 2011 WL 873147 (Fed. Cir. Mar. 15, 2011) held that Rule 9(b)'s particularity requirement applied to false marking cases and that a complaint alleging false marking is insufficient when it only asserts conclusory allegations that a defendant is a "sophisticated company‟ and "knew or should have known" that a patent expired. Following BP, defendants in Eastern District cases filed the proverbial boatload of motions urging or reurging motions to dismiss asserting that the plaintiff's allegations were insufficient to state a claim.

In this case Judge Ward found that Promote's complaint asserted the same type of conclusory allegations that the Federal Circuit in BP Lubricants found insufficient under Rule 9(b), and granted the Defendants' motion to dismiss Promote‟s complaint under Rule 12(b)(6), but with leave to amend the
pleadings within 30 days "given the uncertainty in the law, previous to BP Lubricants, regarding whether Rule 8 or Rule 9(b) pleading standards applied to complaints for false marking."

Motion to Transfer Venue Granted (But Don't Brief Like This At Home)

DE Technologies, Inc. v. E4X, Inc., et. al., 2:10cv139 (3/24/11)

Judge: T. John Ward

Holding: Motion to Transfer Venue GRANTED

Defendants sought dismissal for improper venue, or in the alternative a transfer to Virginia or if not Virginia, California.  Judge Ward found that venue was proper, but granted the motion to transfer the case to Virginia.  But in doing so he noted that the motion suffered from a relative paucity of proof to support the allegations that the transfer was appropriate - proof that as the movant seeking to carry a burden to show that another forum is "clearly more convenient" should be present to support the requested relief.  For example, there was no proof as to where the documentary evidence was, nor any identification of who the relevant witnesses in the proposed transferee forum were, simply requests for the Court to make assumptions regarding these facts based on the fact that the plaintiff had previously had activities there, which the Court declined to do.

Squinting at the little proof he could find in the briefing, and drawing inferences from what the parties had said in affidavits and other proof, Judge Ward was able to document that nothing was in Texas, while the plaintiff was formerly in Virginia, at least some proof was there, and - importantly - the plaintiff had a prior patent infringement suit in the Western District of Virginia involving the same patent where that court performed a claim construction, issued two partial summary judgment orders, and issued multiple other orders."  Relying heavily on judicial economy considerations, and to a lesser extent on the apparent fact that at least some documents were located in Virginia, Judge Ward granted the motion to transfer.  

From Docket Navigator.

Name of An Accused Product and Elements of Induced & Contributory Infringement Not Required to Be Included in Complaint

LML Patent Corp. v. National Bank of Daingerfield, et al., 2:09cv180 (3/24/11)

Judge: T. John Ward

Holding: Motion to Dismiss DENIED

Defendants moved to dismiss, claiming that dismissal was proper because the plaintiff's complaint did not identify any accused product or service by name, and because it didn't allege facts that made a claim of patent infringement against any defendant plausible.  Judge Ward disagreed, noting that while identifying at least one product should not be difficult, given the prefiling investigation requirements of Rule 11, neither Twombly nor Iqbal require identification of a product by name, nor does Form 18.  The Court specifically noted the similarity between the form's use of "electric motors" and the complaint's reference to "payment services".   The motion was similarly denied as to the claim that the complaint must include allegations as to the elements of induced and contributory infringement.

From Docket Navigator.