Judge Albright Delays Patent Trial After Federal Circuit Rejects Rationale for Switching Courthouses Due to Pandemic

  • December 30, 2020
  • Category: COVID-19, Patent Litigation Feature
    Tag: COVID-19

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.

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