Judge Albright Moves Second VLSI Case Back to Waco as Federal Circuit Prompts New Approach to Transfer Timing

  • April 2, 2021
  • Category: COVID-19, Patent Litigation Feature
    Tag: COVID-19

Weeks after a Western District of Texas jury returned a $2.2B verdict for Fortress Investment Group LLC subsidiary VLSI Technology LLC against Intel, District Judge Alan D. Albright has transferred a second case between those two parties (6:19-cv-00255) from Austin back to his home division of Waco. Judge Albright’s March 28 decision to transfer that second case on convenience grounds closely mirrors his rationale for doing so in the first action as well and came after the Federal Circuit rejected his attempt to move that earlier trial but not the entire proceeding. Meanwhile, another disagreement with the Federal Circuit appears to have prompted Judge Albright to reassess the timing of his transfer decisions: after the appellate court issued a series of rulings faulting him for delaying transfer rulings despite proceeding with claim construction, he has now announced that he will rule on interdistrict transfer motions before holding a Markman hearing.

 

COVID-19 Triggers a Series of VLSI Transfers

As noted above, Judge Albright’s decision to transfer the -255 case was directly informed by the outcome of a series of skirmishes over venue in the lawsuit that recently went to trial. In August 2019, Judge Albright denied Intel’s motion to transfer the latter case to Delaware in August 2019 on convenience grounds. That October, he then 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). Judge Albright remained the presiding judge despite the transfer to Austin, with trial initially set for October 2020 and then pushed back to November. However, the Austin courthouse was subsequently closed due to ongoing public health concerns as the year came to a close in the midst of the COVID-19 pandemic’s winter wave, forcing Judge Albright to shift gears in order to hold the trial in person. In late November, he ruled over Intel’s objection that he would conduct the trial in Waco if the Austin courthouse could not reopen by the scheduled January trial date—asserting that he had the authority to do so based in part on the court’s inherent power to manage its docket.

The Federal Circuit disagreed, holding the following month 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, finding this time that several factors previously weighing for or against transfer to Austin were now neutral due to the present circumstances of the case. Moreover, he concluded that some previously neutral factors now weighed in favor of transfer, in particular the “practical problems” and “court congestion” public-interest factors. The Federal Circuit subsequently affirmed that transfer order, and after another set of delays the case went to trial starting on February 22—culminating in the aforementioned infringement verdict on March 2.

Judge Albright incorporated his December 30 transfer ruling by reference into his March 28 order in the -255 case, holding that the same transfer factors “apply equally strongly in favor of transferring” that lawsuit back to Waco as well. He also noted that “[s]ince the Court made those findings, the COVID-19 infection rate in Waco has improved materially, while the Austin courthouse closure has been extended and the Austin courthouse remains closed indefinitely for trials”. Judge Albright further cited the “significant time and resources” invested by the court and the parties “in developing and implementing COVID-19 safety protocols at the Waco courthouse” as among the “facts and circumstances” weighing toward transfer.

With that decision, the -255 case appears likely to head to trial as scheduled starting on April 12. A third VLSI case against Intel (6:19-cv-00256), moreover, has been scheduled for trial on June 7, and Judge Albright has opted to wait until closer to that trial date before determining whether to transfer that action back to Waco as well: “The Court will address re-transferring the final case (-256) as the trial date approaches and the Austin Courthouse has an opportunity to reopen”. Both cases have been consolidated with a third, lead action (1:19-cv-00977).

The lawsuits discussed above are part of a third round of cases filed in the dispute between VLSI and Intel, which began with a complaint brought by the NPE in October 2017 in the Northern District of California. A pair of Delaware lawsuits then followed in June 2018 and March 2019, the second of which VLSI voluntarily dismissed in April 2019 after District Judge Colm Connolly dismissed some of VLSI’s infringement claims in the first Delaware case. That same day, the NPE then refiled the second case with two more asserted patents in the Western District of Texas’s Waco Division—the lawsuit that went to trial in February. VLSI also filed two cases in that same venue, including the one just transferred (-255). Meanwhile, public records indicate that VLSI has also sued Intel in at least two Chinese venues, the Intellectual Property Courts in Shanghai and Shenzhen.

 

Judge Albright Agrees to Address Transfer Requests Earlier Following Pressure from Federal Circuit

More broadly, the past year has seen a growing rift develop between the Federal Circuit and Judge Albright on the issue of convenience transfers—a form of relief that he has rarely granted since taking the bench in 2018. This divide has encompassed both Judge Albright’s substantive handling of such transfer motions, and increasingly, his tendency to let those motions sit undecided for months while proceeding with other issues. The latter trend finally came to a boil last month, following a series of rulings in which the Federal Circuit highlighted with increasing firmness Judge Albright’s prior tendency to let transfer motions sit undecided for months—as many as eight in some cases.

In particular, the Federal Circuit first cautioned Judge Albright on timing its November 2020 In re: Apple opinion—a divided ruling focused more directly on Judge Albright’s application and weighing of the public and private interest factors but also involving a six-month delay in deciding a motion a transfer. The appellate court took notice of that delay, stating that “[a]lthough district courts have discretion as to how to handle their dockets, once a party files a transfer motion, disposing of that motion should unquestionably take top priority”. The court contrasted that precedent with what actually happened, noting that “[i]nstead, the district court barreled ahead on the merits in significant respects”. (See here for more on the In re: Apple decision.)

The Federal Circuit more firmly and directly addressed the topic of delay head-on in its February 2021 In re: Hynix decision. In that litigation, defendant SK hynix sought the appellate court’s intervention in January after its motion to transfer litigation filed by Netlist to California sat fully briefed for eight months, during which time Judge Albright moved forward with claim construction. The appellate court found in its February 1 order partly granting Hynix’s mandamus petition “that the district court’s handling of the transfer motion up until this point in the case has amounted to egregious delay and blatant disregard for precedent. Yet another similar circumstance presented itself in a third case, between Precis Group LLC and TracFone Wireless, prompting the Federal Circuit to step in once again—this time, staying the case until Judge Albright ruled on transfer, which he did just a few days later. (More on the resulting In re: TracFone Wireless decision can be found here.)

The TracFone ruling appears to have prompted Judge Albright to formally change his approach with respect to timing. On March 23, he issued a new standing order establishing that he will address interdistrict transfer motions prior to the claim construction hearing: “When there is a pending inter-district transfer, the Court will either promptly enter an order resolving the pending motion(s) prior to the Markman hearing or it will postpone the Markman hearing until it has had the opportunity to do so. The Court will not conduct a Markman hearing until it has resolved the pending motion to transfer.” The order also establishes that parties may not file a motion for interdistrict transfer within eight weeks of a scheduled Markman hearing except when granted leave by the court. Notably, the order also puts the onus on parties, rather than the court, to remind it about currently pending transfer motions ripe for decisions—requiring that such movants file “a status report with respect to whether the motion(s) has been fully briefed and ready for resolution no later than six weeks prior to the date of the Markman hearing”.

For more on the Federal Circuit’s recent rulings on convenience transfers, see “Courts Cannot Delay Transfer Rulings, Repeats Federal Circuit—Prompting Another West Texas Denial” (March 2021).

The new standing order could have a ripple effect across other cases with languishing transfer motions and related motions to stay, some of which are detailed in this recent RPX article. Indeed, some cases with pending transfer requests have already been impacted—for instance, one case filed last July by Koss against Apple, in which the defendant’s transfer motion was filed in December along with a related motion to stay the case. On March 22, the company filed a mandamus petition (2021-135) asking the Federal Circuit to force Judge Albright to act on its motions, but in the wake of Judge Albright’s new standing order—issued the following day—the company filed a status report advising the court that its motions were ready for resolution, as required under the standing order. Judge Albright has not yet issued a ruling as of the date of this report. Meanwhile, Koss filed its response to Apple’s mandamus petition on March 30, arguing that the petition is now moot in light of Judge Albright’s standing order.

Further details on the Koss-Apple dispute can be found here: “Koss and Apple Joust over the Proper Use of Confidential Pre-Suit Communications (December 2020).

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