Thursday, December 03, 2009

TS Tech revisited -- I've got a ticket to ride (out of Marshall)

As patent defendants who have been dragged into EDTex courtrooms against their will well know, the Fifth Circuit's recent decision in TS Tech has changed the landscape dramatically. Although the Eastern District judges are still pretty reluctant to let a patent case go if they think there is a good reason to keep it, even those judges know that cases that (1) have no contact whatever to East Texas and (2) clearly belong someplace else should be transferred -- and they have been.

The Federal Circuit has also taken up the cudgel of transfer and, in the recent case of In re Hoffman-La Roche, gave its views as to the weight that should be given to the convenience of the parties -- something that, in our online age, has been given less weight as of late.

In this case, Novartis, a California company, brought suit in the Eastern District of Texas against Fuzeon, a resident of North Carolina, for infringing its patent through its manufacture and sale (through Hoffman-La Roche) of an HIV inhibitor drug. Fuzeon objected, claiming that there were no witnesses within 100 miles of the Eastern District of Texas and that the key documents were all in North Carolina. Novartis argued that the witnesses were spread our all over the country and that, for some of them, Texas would be more convenient. Novartis had also been careful to move 75,000 pages of documents into its attorneys offices in Texas, so that it could claim that most of the important documents were in the jurisdiction.

Judge Folsom took pity on Novartis, holding that the case was inappropriate for transfer because the case was "decentralized" and that the president of Fuzeon could be compelled to come to Texas for trial.

The Federal Circuit gave pretty short shrift to Judge Folsom's decision, however.

First, in a nod to defendants who are in a fix like Fuzeon's, the Federal Circuit indicated that it would be open to writs of mandamus on transfer issues, noting that it would be an "inadequate remedy" for a party in an inappropriate vene to have to wait for judgment to challenge it.

The court noted several factors which, it held, warranted sending the case to North Carolina: (1) the accused drug was developed and tested in North Carolina; (2) the claim "calls into question to work and reputation" of residents of that district; (3) there are four non-party witnesses who live within 100 miles of that district who could be compelled to attend both deposition and trial; (4) the North Carolina docket was less congested.

Two important points the court raised, which should put parties on notice:
  • Shipping documents into the Eastern District in order to "manufacture" venue is not a good idea. The courts see right through it and it just makes them mad.
  • The fact that you can subpoena the defendant's witness for trial does not give you the "absolute subpoena power" referred to in the Fifth Circuit's Volkswagen case -- to have this power, you need to have the ability to subpoena all material party and non-party witnesses for deposition and trial. This was not the case here.
So, all of you defendants looking for a "ticket to ride" out of the Eastern District, you might consider going to the ticket window in Washington DC, if they are not selling them in Marshall.

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