Uniloc 2017 LLC v. Microsoft Corporation
- Filed: 05/20/2019
- Closed: 11/15/2019
- Latest Docket Entry: 01/22/2020
Judge Albright Delays Patent Trial After Federal Circuit Rejects Rationale for Switching Courthouses Due to PandemicDecember 30, 2020
The COVID-19 pandemic has led most of the nation’s top patent venues to push scheduled jury trials back due to public health risks, with the notable exception of Texas. While District Judge Rodney Gilstrap of the state’s Eastern District recently halted jury trials after resuming them in August, District Judge Alan D. Albright of the Western District has not done so—even moving a scheduled trial from Austin, where the courthouse remains closed, to Waco, in an attempt to proceed with a scheduled January trial between VLSI Technology LLC and Intel. However, the Federal Circuit ruled on December 23 that Judge Albright moved the trial without proper authority and that doing so would require a complete convenience analysis to determine whether the entire case could be transferred to Waco. On December 30, Judge Albright granted plaintiff VLSI’s emergency motion for such a transfer, also announcing that he would push the trial back to mid-February to give Intel time to appeal.
VLSI, an affiliate of Fortress Investment Group LLC, began its litigation against Intel with an October 2017 lawsuit filed in the Northern District of California, followed by a pair of lawsuits filed in Delaware in June 2018 and March 2019. However, in April 2019, after District Judge Colm Connolly dismissed some of VLSI’s infringement claims in the first Delaware action, VLSI voluntarily dismissed the second Delaware suit. That same day, the NPE then refiled the case with two more asserted patents in the Western District of Texas’s Waco Division—the lawsuit in which the trial was just delayed—along with two other complaints in that same venue.
While Judge Albright subsequently denied Intel’s motion to transfer the present case to Delaware in August 2019 on convenience grounds, that October he granted Intel’s request to transfer the case from Waco—where he presides—to the Western District’s Austin Division, also for convenience (1:19-cv-00977). In granting the latter motion, Judge Albright cited Intel’s “substantial presence in Austin” as among the facts tipping the “sources of proof”, “cost of attendance”, and local interest factors in favor of transfer, with only the “compulsory process” factor weighing slightly against. Judge Albright remained the presiding judge despite the transfer to Austin, with trial initially set for October 2020 and then pushed back to November.
As has so often been the case over the past year, though, COVID-19 forced the court to shift gears. In April 2020, a month after a national emergency was declared, District Judges Lee Yeakel and Robert Pitman closed the Austin courthouse, and it has been shuttered ever since in light of ongoing public health concerns due to the novel coronavirus. As October came to a close, Judge Albright then pushed the trial back to January 11. Nonetheless, with all signs pointing to a further-prolonged closure of the Austin courthouse, Judge Albright then ruled on November 20, over Intel’s objection, that if the Austin courthouse could not reopen by the scheduled January trial date, he would conduct the trial in Waco.
Judge Albright grounded the power to do so in two places. First, he cited Federal Rule of Civil Procedure 77(b), which provides that “[e]very trial on the merits must be conducted in open court and, so far as convenient, in a regular courtroom” but also establishes that “no hearing—other than one ex parte—may be conducted outside the district unless all of the affected parties consent”. As to the latter limitation, Judge Albright argued that “[c]ourts in the Fifth Circuit have uniformly interpreted Rule 77(b) as giving a district court the discretion to hold the trial at any division within the district, even without the parties’ consent”. Second, he asserted that moving the trial was an appropriate use of the court’s inherent power to manage its docket, asserting that further delaying the trial was impractical—highlighting the need to proactively manage the “backlog of trials” created by the pandemic, as well as the notion that trials should not be delayed because each US patent has an expiration date. (Note, however, that the oldest patent at issue in this case appears to expire in 2027.)
Intel challenged that holding in a December 2 mandamus petition that the Federal Circuit granted on December 23 (2021-0105). After ruling that mandamus was an appropriate way to seek review here, noting that it was “difficult to see how Intel could obtain meaningful review of the decision otherwise”, the appeals court proceeded to rule in Intel’s favor on the merits. In particular, the Federal Circuit held that moving the trial ran counter to the applicable statutes, explaining in part that Congress established in 28 USC Section 124(d)(1) that “[c]ourt for the Austin Division shall be held in Austin”. This clumsy articulation means, according to the appeals court, that “Intel generally has a ‘statutory right’ to have this case tried in the division in which the action lies” (citation omitted).
As a result, the Federal Circuit rejected both of the arguments that Judge Albright cited. He could not move the trial based on his inherent power because “our plain reading of the above-noted statutes simply leaves no room to invoke such authority here”, the appeals court explained. Judge Albright could not rely upon Rule 77(b) either. Even if that rule allowed a district judge “to decide where to initially assign a case within a district, it does not follow that Rule 77(b) also allows a district court to later sidestep the transfer rules set forth in § 1404 generally”—a proposition not supported by any appellate caselaw that the Federal Circuit was “aware of”. The court also found VLSI’s additional statutory arguments unavailing. The NPE cited Section 1404(b), which allows a proceeding to be moved to another division, but the court ruled that it did not apply because it required the consent of all parties—and Intel had not consented. Nor did Section 1404(a), governing convenience transfers, apply here, as the Federal Circuit noted that it was not relied upon by Judge Albright and held that it can only be used to transfer an entire case, not a trial.
The Federal Circuit thus granted Intel’s mandamus petition, deciding that Judge Albright had abused his discretion. However, the court explained that it was not ruling that Judge Albright lacked the authority to move the trial. Rather, it clarified that he “must effectuate such result under appropriate statutory authority, such as moving the entire action to the Waco Division after concluding, based on the traditional factors bearing on a § 1404(a) analysis, that ‘unanticipated post-transfer events frustrated the original purpose for transfer’ of the case from Waco to Austin originally”. That same day, VLSI filed an emergency motion to transfer the case on that basis.
On December 30, Judge Albright granted the motion to transfer the case in its entirety, explaining his reasoning in an order issued the next day. He held that the case meets the Fifth Circuit’s general criteria for granting a transfer in that it 1) could have been properly brought in the Waco Division and 2) would be in the interests of justice or convenience of the parties (citing that court’s 2013 In re: Radmax decision). Moreover, Judge Albright asserted that under Fifth Circuit law, a district court “retains discretion to retransfer an action back to the original district where it was filed when unanticipatable post-transfer events frustrate the original purpose for transfer”, as that court held in its 1983 In re: Cragar Industries decision. Under Cragar, he explained, there 1) must be an “unanticipatable post-transfer event” that 2) “frustrates the original purpose for transfer”, and 3) “retransfer should be granted under the most impelling and unusual circumstances”.
The closure of the Austin courthouse easily satisfies the first and third requirement, Judge Albright found, as both the court and parties agree that a courthouse closure due to COVID-19 was an unanticipated post-transfer event. As for the second factor, he revisited his Section 1404(a) convenience factor analysis, finding this time that several factors weighing for or against transfer to Austin were now neutral. Specifically, Judge Albright had previously found that the private-interest “relative ease of access to sources of proof” factor weight toward transfer due to the likelihood that it would be easier to locate Intel documents in Austin than Waco, but discovery was now complete. Additionally, the court previously found the private “compulsory process” factor weighed against transfer because some non-party witnesses were based in Dallas (which is in the Northern District), but now found it to be neutral because neither party now plans to call any fact witnesses from that area. Furthermore, while the court originally found the private “cost of attendance” factor “strongly” weighed against transfer, this was now neutral because “hotel costs are cheaper in Waco, witnesses may testify via videoconference” per the agreement of the parties and the court, “Austin witnesses’ costs will be minimal, and VLSI has offered to cover costs of attendance”.
Conversely, the court also found some previously neutral factors now weighed in favor of transfer. In particular, the “all other practical problems” public-interest factor now weighed toward transfer due to the closure of the Austin courthouse and because the Waco courthouse remains open. Also, the court originally found the public-interest “administrative difficulties flowing from court congestion” factor to be neutral, but here found it to weigh in favor of transfer, noting that the court’s packed trial schedule would require moving another trial and further observing that the delay would be far longer than a “garden variety” delay ordinarily associated with transfer. Moreover, Judge Albright noted that the Federal Circuit had previously faulted him for placing too much weight on this factor and pointedly stated that he was not doing so here: “This Court takes note of the Federal Circuit’s guidance and does not attribute dispositive or undue weight to this factor but accords it weight equivalent to that given to other factors.”
After reaching the same conclusions as his original analysis for the remaining public-interest factors—finding the “localized interest” factor to weigh against transfer, and the remaining public factors neutral—Judge Albright held that retransfer back to Waco was appropriate under both Cragar and Section 1404(a).
In addition to moving the case back to Waco, Judge Albright also delayed the trial until February 15 to give Intel sufficient time to challenge the ruling before the Federal Circuit, reportedly remarking at the motion hearing that the appeals court’s guidance would be helpful given the unprecedented circumstances. “These are non-normal issues we’re dealing with,” he purportedly explained, as it would be “good for the circuit to tell me whether I’m properly applying” the convenience transfer factors.
Judge Albright’s nods to the Federal Circuit’s guidance is particularly significant given a recent series of rulings in which that court has rejected his handling of other convenience transfers. These include a July decision in which the Federal Circuit ruled that Judge Albright improperly weighed the applicable factors in a decision that denied an Adobe motion seeking a convenience transfer to the Northern District of California. More recently, a divided Federal Circuit granted a mandamus petition from Apple, ruling in November that Judge Albright erred in concluding that a variety of the applicable factors weighed against transferring another Fortress case—this one brought by its subsidiary Uniloc 2017 LLC—to that same venue. However, Circuit Judge Kimberly A. Moore dissented, arguing that the majority’s analysis exceeded the permissible bounds of mandamus review and improperly disturbed the district court’s factual findings and conclusions.
For more on that decision, see “Divided Federal Circuit Reverses Another Convenience Transfer Denial by Judge Albright” (November 2020). Details on how other top patent venues have handled jury trials can also be found here.
June 26, 2020
District Judge Alan D. Albright has made no secret of his desire to attract more patent litigation to the Western District of Texas, and along the way he has developed a rather restrictive approach to certain types of motions—an approach that may indeed be helping to draw the eye of NPE plaintiffs. In particular, as more and more cases get filed in his district, Judge Albright has been interpreting the factors for granting transfers for convenience in a manner that imposes a particularly “significant burden” on defendants seeking that relief. Last week, Apple—waiting on Judge Albright to explain his denial of such a transfer motion, and noting that he has never granted a convenience transfer out of his district—asked the Federal Circuit to step in, arguing in a June 16 mandamus petition that Judge Albright’s posture on the issue contributed to judge-shopping. On June 22, over 40 days after denying the motion at a hearing, Judge Albright issued an order outlining his reasoning, declining to “follow the crowd” by “blindly” adopting related factual findings and rulings from other judges.
As reported last week by RPX, that venue dispute arose in a lawsuit between Apple and Fortress Investment Group LLC subsidiary Uniloc 2017 LLC (6:19-cv-00532), “one of 24 actions involving 35 patents that Uniloc has filed against Apple in the Eastern or Western District of Texas” (per Apple’s mandamus petition). While District Judges Rodney Gilstrap (of the Eastern District) and Lee Yeakel (of the Western District) had already transferred 21 of those cases to the Northern District of California on convenience grounds—with Judge Gilstrap, in particular, chiding the plaintiff for making factual misrepresentations concerning venue—Judge Albright began to forge a different path starting last year. In two rulings issued in cases also involving Apple, one filed by Fintiv and the other by STC.UNM (an arm of the University of Mexico), Judge Albright denied convenience transfers to the Northern District of California despite what Apple deemed an “increasing extremity of circumstances”, applying improper weight to certain applicable factors according to the company’s mandamus petition in the Uniloc case. This included the “convenience to party witnesses” factor, which Judge Albright characterized (incorrectly, alleges Apple) as one given “little weight” by courts. Judge Albright also found in both cases that the “court congestion” factor weighs against transfer given his district’s typically shorter time to trial, among the other factors considered.
On June 16, Apple filed a mandamus petition seeking the Federal Circuit’s intervention, noting that more than a month had passed after a hearing in which Judge Albright denied its motion—citing statements made by the court at that hearing suggesting that Judge Albright would follow a similar route as in his Fintiv and STC.UNM decisions. Apple argued that those prior rulings, coupled with permissive divisional rules in the Western District that allowed plaintiffs to specifically file before Judge Albright, promoted judge-shopping. The day after Apple filed its petition, Judge Albright filed a notice for the benefit of the parties and the Federal Circuit, explaining that an order would soon issue.
Judge Albright then filed that order on June 22, detailing his reasons for denying Apple’s motion. Despite the parallels drawn by Apple between the present case and the others already transferred, Judge Albright characterized those lawsuits as merely “informative”. Rather, Judge Albright distinguished those cases as involving “a different asserted patent and different technology from any other case that Apple relies on”, stating instead that the court’s ruling here “should be based on the facts that are unique to this case. In short, discretionary decisions by other courts in different cases do not compel the transfer of the current case.”
In denying the motion, Judge Albright repeatedly cited the presence of “thousands of employees” that worked at Apple’s Austin campus (its second largest) in support of statements expressing doubt that the Northern District of California was the “clearly more convenient” venue. Additionally, Judge Albright cited in support of that point the fact that many of the company’s suppliers “have a significant presence in the district” (specifically mentioning Cypress Semiconductor, Maxim, Samsung, Cirrus Logic, Intel, Microchip, Micron, NXP Semiconductor, Qualcomm, Renesas Electronics, SK Hynix, STMicro, and TSMC), despite the fact that the accused technology comprises primarily the software update features of the macOS, iOS, and iPadOS operating systems, with the court not identifying aspects of those products linked to the suppliers in question.
Rather, Judge Albright continued, the underlying issue is that Apple allegedly “refuses to accept that the transferee district must be ‘clearly more convenient’”. Apple’s litigation and business conduct amounted to an argument that the law governing venue should be changed, asserted Judge Albright: highlighting the fact that Apple has filed multiple mandamus petitions on this issue, again mentioning the thousands of Apple employees at the company’s second-largest campus, and its closure of Apple retail stores in the Eastern District of Texas (“thus making venue improper in EDTX”), he asserted that “it appears that Apple is attempting to essentially change the venue laws such that it cannot be sued in Texas, but rather that it can only be sued in NDCA”—a rule under which repeated rulings transferring cases to a company’s home district would make it so that the company could be sued only in that venue. “Not only is this not the law in the Fifth Circuit, it effectively—but incorrectly—transmutes plaintiff’s choice of forum into defendant’s choice of forum. . . . Nothing would be more restrictive than limiting the number of available forums to solely where a defendant’s primary headquarters is located.”
Distinguishing Prior Transfer Orders
Judge Albright then began his analysis of the relevant transfer factors, starting first by outlining the ways in which the circumstances of the present case are distinct and thus require the applicable factors to be weighed differently. Judge Albright also underscored that he is not bound by the “discretionary” rulings by Judge Gilstrap and Judge Yeakel that transferred the other Uniloc cases in question.
Addressing the Gilstrap rulings first, Judge Albright cited the fact that Apple and its suppliers have different presences in the Eastern and Western districts, again mentioning Apple’s Austin employees and campus, its manufacturing presence in the Western District (via a third party, Flextronics), and the closure of its Eastern District retail stores. These circumstances, Judge Albright argued, mean that documents and witnesses are more likely to be in the Western District, and that the “cost of attendance” for witnesses would be less. Additionally, Judge Albright found that the “local interest” factor also weighed against transfer, citing “the City of Austin, Travis County, and Williamson County’s grant of tax subsidies to Apple for its significant presence” there as generating an “extremely strong local interest in any Apple-related litigation, especially as compared to EDTX”. Furthermore, the presence of certain standard-setting organizations in the Western District also weighed against transfer, found Judge Albright, citing his similar ruling on that point from the STC.UNM ruling.
The above circumstances, Judge Albright then summarized, meant that “the following public and private factors” weighed against transfer: “(1) relative ease of access to sources of proof, (2) availability of compulsory process to secure the attendance of witnesses (e.g., for Flextronics, NXP, and Wi-Fi Alliance personnel), (3) cost of attendance for willing witnesses, and (4) local interest”.
Turning then to Judge Yeakel’s rulings regarding the Western District, Judge Albright again rejected the notion that he should follow the same reasoning—arguing instead that Apple’s arguments to the contrary ignored the company’s “explosive growth in the timeframe between when the Uniloc cases were filed in Judge Yeakel’s court and when they were filed in this Court”. In support of this finding, Judge Albright provided further information on Apple’s expanded presence in Austin, including physical details regarding the size of its Austin campus, that campus’s various amenities, and tax breaks received in support of its construction. The court further highlighted the fact that “the number of people engaged in Apple-related manufacturing is larger now than it was when the previous cases were filed”, again citing Flextronics’ manufacturing of Apple products (specifically, the latest version of its Mac Pro workstation). This meant that “at minimum, the relative ease of access to sources of proof is likely to weigh less heavily towards NDCA, if not even weigh neutrally or against transfer”, while Apple’s status as one of the district’s largest employers gives the Western District “a much higher localized interest that it previously did, to the point that this factor may weigh against transfer”.
Other circumstances that differed from those considered by Judge Yeakel, continued Judge Albright, include the fact that unlike those other cases, the inventors of the patent here in suit live in New York, placing them closer to the Western District of Texas than the Northern District of California—thereby making the cost of attendance factor weigh against transfer. “Another significant difference are the quantity and significance of third parties”, found Judge Albright: while in prior cases, Apple identified Intel and Qualcomm as third parties with relevant information, here the court found that there are “no comparable third-parties in this case which may have as many documents as Intel and Qualcomm reasonably could have had in the prior cases”. Additionally, because “two potentially relevant third parties”—Uniloc 2017’s San Francisco-based parent, Fortress; and Austin-based Flextronics—are split between the “the transferor and transferee districts, the relative ease of access to sources of proof factor, the availability of compulsory process, [and] the cost of attendance for willing witnesses each may not weigh in favor of transfer, as it did in the prior cases”.
Judge Albright also cited the “time to trial” factor as different here, noting that while the average time to trial was 32 months under Judge Yeakel, the time to trial in this case will be 18.4 months—“13.6 months (42.5%) faster than when Judge Yeakel transferred the prior cases to NDCA”.
Judge Albright’s Remaining Analysis
Judge Albright then proceeded to address other private interest factors not addressed in his rejection of the prior transfer rulings. As for the “relative ease of access to sources of proof” factor, Judge Albright first considered access to documents, extending to the present case a similar conclusion from his Fintiv ruling, in which the court found that the remote accessibility of documents made this factor essentially neutral. While acknowledging the court’s prior observation (in Fintiv) that the factor “is out of touch with modern patent litigation”, Judge Albright held that “until the Fifth Circuit addresses the reality previously discussed, trial courts must continue to apply this factor consistent with current precedent”.
Next, Judge Albright found that the “location of witnesses” factor actually weighed in favor of transfer, noting that Uniloc 2017 has no presence in the Western District of Texas and that “Uniloc’s party witnesses, as well as many Apple witnesses, are located in NDCA”. Here, the court acknowledged Apple’s argument on this point: “Although the Court finds it somewhat difficult to believe that none of the 8,000 or so employees located in this District are relevant, Apple provides sufficient argument that most relevant party witnesses are located in NDCA”. While finding that Flextronics employees could would also be relevant witnesses, this did not outweigh the other witnesses considered. In addition, the court found the “availability of compulsory process to secure the attendance of witnesses” factor to be neutral, with the willingness to testify (or potential lack thereof) of Northern District of California-based witnesses from Fortress balanced against the willingness of Western District of Texas-based Flextronics witnesses.
As to the “convenience of witnesses” factor, Judge Albright highlighted it as the “single most important factor in the transfer analysis” (citing his Fintiv ruling) and found it to be neutral. Specifically, the court found that the location of party witnesses weighed slightly in favor of transfer, while the location of third-party witnesses weighed against. While Judge Albright “recognizes that it is likely that both Apple and Uniloc will each have one or more potential trial witnesses from NDCA”—which, “[i]n a vacuum, . . . would favor transferring the case to NDCA based on the cost of attendance of available witnesses”—he noted that at most just one or two would do so live, while “trial-time restraints” would further limit the number of witnesses called by the two sides. However, Judge Albright noted again that the inventors are based in New York, and as they would be the “most important witnesses[,] . . . [and] because New York is much closer to WDTX than NDCA, the Court feels that declaring this factor neutral to be the prudent decision when properly factoring in the ‘100-mile’ rule”.
Additionally, Judge Albright found that the “judicial economy” prong weighed against transfer, citing the advanced stage of the case, “the lack of set trial dates and the number of stayed cases” among those already transferred, the lesser congestion of the Western District of Texas compared to the Northern District of California, and the court’s familiarity with the asserted patent as “unique to this case” as a result of the claim construction process.
Turning lastly to the public interest factors, Judge Albright found that the “time to trial” factor weighed against transfer due to the previously cited longer time to trial under Judge Yeakel vs. the quicker date already set in this case. Judge Albright further found the “local interest” factor to be neutral, given “Apple’s significant presence in both districts and Uniloc’s and Flextronics’s collective presences in NDCA and WDTX, respectively”. Also neutral were the factors pertaining to the familiarity of the forum with the governing law and the avoidance of unnecessary conflicts of law or in the application of foreign law.
For more information on this litigation and the ongoing rise of the Western District of Texas, see “Apple Asks Federal Circuit to Force Judge Albright’s Hand on Convenience Transfers” (June 2020).
June 19, 2020
The Western District of Texas has seen a surge in patent litigation since the September 2018 confirmation of District Judge Alan D. Albright, who has taken active steps to attract patent litigants to his district—in part through a standing order implementing rules designed to appeal to both plaintiffs and defendants. However, Judge Albright has taken a markedly restrictive approach with certain types of dispositive motions, including patent eligibility challenges and motions to transfer for convenience. Apple has now challenged Judge Albright’s handling of the latter in litigation brought by Fortress Investment Group LLC subsidiary Uniloc 2017 LLC, arguing in a June 16 mandamus petition filed with the Federal Circuit that the manner in which Judge Albright balances the applicable factors make convenience transfers “[e]ffectively [u]navailable” in the Western District. This case, Apple asserts, is “part of a trend”, as “[i]n his nearly two years on the bench, Judge Albright has never granted” a transfer out of his district on convenience grounds.
May 25, 2019
The Federal Circuit has breathed new life into a campaign begun by Uniloc Corporation Pty. Limited in April 2016—before the Australian NPE began ramping up its litigation activity in 2017, before it acquired the large portfolio of patents from Pendrell Corporation in early 2018, and before it transferred control over its patent assets to Fortress Investment Group LLC in May 2018. Throughout 2016 and 2017, Uniloc accused a wide range of defendants of infringing up to four patents, sourced from IBM, through their software licensing and delivery systems. Multiple decisions in the Eastern District of Texas, however, invalidated all four patents under Alice, stopping the campaign in its tracks. Now, in a May 24, 2019 nonprecedential opinion, the Federal Circuit has reversed the district court as to two of those patents while affirming the invalidity of the other two. The case has been remanded back to Texas for further proceedings in the underlying cases, filed against ADP, Big Fish Games, BitDefender, and Kaspersky Lab, but the decision could revive litigation dropped as to other defendants as well.