It seems like people are just never happy where they are, and defendants in patent suits even more so. Often a plaintiff will file its lawsuit in a court it thinks is pro-patentee, like the Eastern District of Texas or the District of Delaware, and a defendant will do its best to move the litigation somewhere else. Some judges don’t seem to like to transfer cases to other courts and will find any excuse to keep the case. The last few years, the Federal Circuit has been pushing back against that trend. Today’s opinion involves another transfer case, but with a slight twist at the end…
In re Link_A_Media Devices Corp., No. 2011-m990 (Fed. Cir. Dec. 2, 2011) (Chief Judge Rader, Circuit Judges Dyk and O’Malley) (nonprecedential) (per curiam) and In re Link_A_Media Devices Corp., No. 2011-m990 (Fed. Cir. Dec. 16, 2011) (Chief Judge Rader, Circuit Judges Dyk and O’Malley) (nonprecedential) (per curiam)
Marvell International sued Link_A_Media Devices in Delaware, even though both companies have their U.S. operations mostly in northern California. In fact, their main places of business in the U.S. are only a few miles away from each other.
It’s not surprising that Link_A_Media wanted to move the case to the Northern District of California, but the district court denied its motion to transfer. Link_A_Media is incorporated in Delaware, and the district court relied on that fact heavily, as well as giving a lot of deference to Marvell’s choice of forum. Link_A_Media filed a petition for a writ of mandamus to the Federal Circuit to order the district court to transfer the case.
The Lack of Ties That Fails to Bind
The Federal Circuit concluded that the lower court shouldn’t have given any weight to the state of incorporation—it’s not a factor that should be considered. And given that Marvell had no ties to Delaware, its choice of forum shouldn’t get that much weight, either. The trial court didn’t consider the convenience of the witnesses and the location of records, all of which were in northern California. (This is why some non-practicing entities will move all their documents into storage in the Eastern District of Texas.) The Federal Circuit also noted that the public interest didn’t favor keeping the case in Delaware, because, apart from Link_A_Media’s incorporation there, neither company had any ties to the state.
As a result, the court granted Link_A_Media’s petition and ordered the transfer to the Northern District of California.
There’s a little postscript to the opinion. It seems that the parties settled the case on December 1, the day before this opinion issued, and one of the parties’ counsel telephoned the clerk’s office to tell the court. On December 2, the parties filed the settlement agreement with the district court, which dismissed the case on December 5. The parties notified the Federal Circuit in writing that same day by filing a motion to withdraw the opinion. Marvell asked the court to vacate its order transferring the case. Marvell is not an infrequent plaintiff, so it’s not surprising that it might prefer not to have the order entered.
The Federal Circuit, in a separate order, declined to vacate its order and opinion. The panel said that a phone call to the clerk’s office wasn’t sufficient to notify the court of the settlement—it needed to be done in writing. (District judges will often allow the parties to notify the court of settlement by phone and then follow up later with written notice. But not the Federal Circuit.) While the district court no longer needs to transfer the dismissed case, the opinion granting the petition stays.
Courts Aren’t All the Same
This case illustrates a difference in atmosphere between a district court and a court of appeals.
Often the parties are motivated to sign a settlement agreement by something that’s coming up in the litigation, like a claim construction decision, a trial, a large number of depositions, or something else that’s potentially risky, costly, or both. There may be dozens of papers filed with the district court and a number of hearings. And trial is always looming. Once the agreement is signed, the parties want to stop the clock so that attorneys’ fees stop accumulating and trial is taken off the table. District court judges are well aware of this, and they want cases to settle to clear their dockets. That’s a big reason why federal trial court judges are typically flexible in letting the parties notify them by phone of a settlement, with formal notice to follow—to make it easy to get the case settled and over.
The Federal Circuit, on the other hand, wants the formal notice. It’s not that Federal Circuit judges don’t want to have cases settle, they just have a different relationship with the proceedings. Federal Circuit panels don’t get involved in mediation or negotiations between the parties, and they don’t generally have hearings other than oral arguments on the merits issues appealed to the court. Once an appeal has been briefed and argued, there’s nothing huge like a trial coming up that the panel has a strong incentive to avoid. So it’s understandable that the court expects things to be done in a certain way, with less tolerance for informality. It’s just the nature of an appellate court.