The Federal Circuit has issued another rebuke of a convenience transfer denial by Western District of Texas Judge Alan D. Albright—doing so precedentially for the first time. On June 30, the appellate court granted mandamus petitions filed by LG Electronics (LGE) and Samsung after Judge Albright declined to transfer cases brought against them by Ikorongo Technology, LLC (“Ikorongo Tech”) and Ikorongo Texas, LLC to the Northern District of California. Unlike Judge Albright, the Federal Circuit ruled that the case could have been brought outside West Texas, finding that the plaintiffs’ corporate and ownership structure was designed to “manipulate venue” in order to keep the cases in their chosen district. The court further held that Judge Albright had committed another “abuse of discretion” through his ruling on the merits.

Ikorongo Texas, a Texas LLC, sued LGE (6:20-cv-00257) and Samsung (6:20-cv-00259) in March 2020 in the Western District of Texas, accusing them of infringing four patents (8,874,554; RE41,450; RE45,543; RE47,704) through the provision of smartphones with preinstalled Google apps that support certain login features. The following month, Ikorongo Texas amended its complaints to name its fellow Concert Technology Corporation subsidiary Ikorongo Tech, a North Carolina entity, as a coplaintiff.

Both sets of complaints detail a rather unusual apportionment of patent rights between the two entities, specifying that Ikorongo Texas holds rights to the asserted patents—acquired the same month the cases were filed—that are geographically limited to certain counties in the Western District: “[P]ursuant to the principles of [the Supreme Court’s 1891 holding in] Waterman v. Mackenzie”, Ikorongo Texas “is the owner of the exclusive right under the Asserted Patents within and throughout a specified part of the United States (‘the Specified Part’) that includes specific counties within the present judicial district, including the right to sue for past, present and future infringement and damages thereof”. The complaints further stated that Ikorongo Technology owns the corresponding rights outside of the “Specified Part”. (See here for further background on the plaintiffs and Concert Technology.)

Judge Albright’s Transfer Ruling

In September, LGE and Samsung moved to transfer the cases against them to the Northern District of California, where they stated the accused apps were all developed—whereas none had been developed in the Western District of Texas. Judge Albright denied those motions in March 2021, holding that the defendants had not established that the case “might have been brought” in the transferee venue. While holding that Ikorongo Tech’s allegations would subject them to venue there, he found that because Ikorongo Texas only had the right to assert the patents in the Western District, venue would not have been proper as to that plaintiff in Northern California. This, Judge Albright concluded, rendered venue improper as to the entire action.

In the alternative, Judge Albright then proceeded to analyze the applicable public- and private-interest factors, finding that the volume of proof in the transferee venue tilted toward transfer. However, although the two defendants had identified potential witnesses in the Northern District of California and none in the Western District of Texas, he found the “willing witness” factor to weigh “only very slightly in favor of transfer”, and the “compulsory process” factor to be neutral. Judge Albright explained that he typically “gives the convenience of party witnesses little weight”, factoring the purportedly low likelihood that most such witnesses would testify and the plaintiffs’ offer to pay their travel expenses into his analysis. With respect to the “local interest” factor, Judge Albright acknowledged that the accused products were developed in the California venue, he dismissed this—asserting that “it is generally a fiction that patent cases give rise to local controversy or interest” and arguing that “Ikorongo Texas’s claims do specifically relate to infringement in this District”. Lastly, he cited the presence of other cases filed by the same plaintiffs in West Texas, and his venue’s quick time to trial, as tipping the “practical problems” factor against transfer as well.

The Federal Circuit’s Decision on Appeal

Ruling on appeal in In re: Samsung (2021-0139, 2021-0140), the Federal Circuit began by rejecting Judge Albright’s holding that venue was improper in California—in particular, faulting his underlying conclusion that infringement could only occur in Texas within the geographically limited scope of the rights purportedly held by Ikorongo Texas. While acknowledging that on its face the complaint did establish that the Northern District of California could not be a proper venue based on the aforementioned distribution of rights, the court rejected this as the result of gamesmanship: “[I]n ascertaining proper venue, we are not bound by a plaintiff’s efforts to manipulate venue”.

The Federal Circuit then detailed how analogous statutes and applicable judicial precedent both clearly preclude such machinations. As to the former, the court noted that under 28 USC Section 1359, a “district court shall not have jurisdiction of a civil action in which any party, by assignment or otherwise, has been improperly or collusively made or joined to invoke the jurisdiction of such court”. The Supreme Court has interpreted this requirement by “reject[ing] litigants’ attempts to manipulate jurisdiction”. Though a comparable statute for venue does not exist, the Supreme Court has similarly and “repeatedly assessed the propriety of venue by disregarding manipulative activities of the parties” in the context of convenience transfers, as the Federal Circuit noted it has done as well.

While those decisions address convenience transfers, the Federal Circuit underscored that “longstanding principles against manipulation are no less applicable to the requirement that an action ‘might have been brought’ in the transferee district”. These Ikorongo cases, held the court, “present just such a manipulation under § 1404(a)”. Specifically, the Federal Circuit pointed out that “Ikorongo Texas was created and assigned its targeted geographic rights” in West Texas the month before the cases were filed. Furthermore, Ikorongo Texas and Ikorongo Tech are fully owned by the same five individuals, share an office, and had the same person sign all “relevant agreements” on their behalf. Indeed, the court observed that “[n]othing would prevent the Ikorongo entities from undoing the assignment if they so desired”. For those reasons, and because Ikorongo Texas apparently had no other operations apart from those related to patent assertion, the Federal Circuit observed that the entity “seems to exist for the sole purpose of limiting venue to the Western District of Texas”.

This arrangement, the Federal Circuit found, was “quite similar” to another that the Supreme Court considered in Miller & Lux v. East Side Canal & Irrigation, where a California corporation—seeking to establish diversity jurisdiction—created a Nevada entity under common management and control and conveyed it certain property at issue in the case. The Court rejected that scheme as an “attempt to ‘collusively’ create jurisdiction”. As in Miller & Lux, “the presence of Ikorongo Texas is plainly recent, ephemeral, and artificial”, the Federal Circuit found—“just the sort of maneuver in anticipation of litigation that has been routinely rejected. In the venue analysis, therefore, we need not consider separately Ikorongo Texas’s geographically bounded claims. And disregarding this manipulation, Ikorongo Tech could have filed suit in the Northern District of California. Under the proper construction of § 1404(a), then, these cases ‘might have been brought’ in the Northern District of California”.

Turning to the merits of the defendant’s transfer motions, the Federal Circuit then held that Judge Albright’s decision amounted to a “clear abuse of discretion in balancing convenience against judicial economy”. In part, the court held that Judge Albright “here clearly assigned too little weight to the relative convenience of the Northern District of California”, despite the fact that “many identified sources of proof and likely witnesses are in Northern California and none in the Western District of Texas”. Among those witnesses were at least two inventors of the asserted patents both based in the Northern District, while no witnesses had been “identified as residing in or near” West Texas.

Furthermore, the Federal Circuit held that Judge Albright erred by holding that the “willing witness” factor only slightly favored transfer. In particular, the court faulted him for failing to give any weight to the “presence of possible party witnesses in Northern California”, despite its ruling from In re: Apple “that the district court must consider those individuals”. Relatedly, the court rejected his decision to discount the presence of third-party witnesses based on the presumption that few would likely testify, countering that “[e]ven if not all witnesses testify, with nothing on the other side of the ledger, the factor strongly favors transfer”. Transfer would also ensure that the Northern California court could compel witnesses there to testify if needed.

Additionally, the Federal Circuit ruled that Judge Albright erred by “overstat[ing] the concern about waste of judicial resources and risk of inconsistent results in light of plaintiffs’ separate infringement suit against Bumble in the Western District of Texas”. That case, the appellate court found, had insufficient overlap with the LGE and Samsung cases to warrant “overriding the inconvenience to the parties and witnesses”.

The Federal Circuit also rejected Judge Albright’s approach to the “local interest” factor against transfer. In part, the court objected to his assertion that “it is generally a fiction that patent cases give rise to local controversy or interest”—countering that “[l]ocal interests are not a fiction, and the record evidence here shows a substantial local interest”. That evidence includes the fact that the accused third-party services were all “researched, designed, and developed” primarily in Northern California. Judge Albright’s decision to weigh this factor as neutral because acts of infringement occurred primarily in his district was in error, the court held: “The fact that infringement is alleged in the Western District of Texas gives that venue no more of a local interest than the Northern District of California or any other venue”.

Finally, the Federal Circuit declined to uphold Judge Albright’s decision based on the “court congestion” factor as sought by the plaintiffs, finding that neither the district court nor the plaintiffs had identified any reason why speculation as to trial time “would be important enough to be assigned significant weight in the transfer analysis here”. The appellate court then concluded by ordering the cases’ transfer to the Northern District of California.

The Federal Circuit’s In re: Samsung ruling follows a series of other decisions in which it has also overturned convenience transfer denials by Judge Albright on mandamus. While the appellate court’s holding here flags certain issues in which Judge Albright has continued to flout its guidance, the Federal Circuit’s pushback has started to have an impact, at least in certain other cases. In one recent ruling, Judge Albright took a markedly different posture with respect to certain transfer factors, in recognition of the Federal Circuit’s rebukes—in part, applying factors related to witness travel distance less rigidly and placing less emphasis on his district’s quick time to trial. For details, see “Judge Albright Grants Google Convenience Transfer Motion as Federal Circuit Rulings Move the Needle” (May 2021).