Judge Albright Declines to “Follow the Crowd” on Convenience Transfers

  • June 26, 2020
  • Category: Patent Litigation Feature
    Market Sector: E-Commerce and Software

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 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).

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