Texas Patent Litigation Monthly Wrap-Up: December 2022

The update for December 2022 summarizes three patent decisions that issued from the Western District of Texas. These three decisions all evaluated challenges to venue in patent suits. In the end, the court transferred two of the cases to an out-of-state court and kept one in WDTX. Below we will review the factual background and analysis that led to the differing outcomes in each of these three cases.

Parus Holdings, Inc. v. Microsoft Corp., No. 6:21-CV-00570-ADA, 2022 WL 17420391 (W.D. Tex. Dec. 4, 2022) – granting transfer to Western District of Washington.

Parus Holdings filed a lawsuit asserting U.S. Patent Nos. 6,721,705 and 8,185,402 against Microsoft in the Western District of Texas. Id. at *1. Microsoft has its headquarters in Redmond, Washington, and moved to transfer the case to the Western District of Washington.

As an initial matter, the court found that this case could have been brought in WDWA. The court then turned its analysis to the private and public interest factors used to evaluate “convenience” under 28 U.S.C. § 1404(a).

Looking next at the private interest factors, the court explained that the “most important factor in the transfer analysis is the convenience of the witnesses.” Id. at *3. Although there is a “100-mile rule” within the Federal Circuit, the court elaborated that the Federal Circuit has recently “disregard[ed] distance altogether in favor of considering travel-time statistics.” Id. Microsoft argued that the “overwhelming majority” of Microsoft witnesses are in WDWA, and it relied on a declaration identifying six specific witnesses with relevant information. Id. Parus argued that witnesses with relevant information are located in Texas based on public information from LinkedIn. Ultimately, the court found this factor heavily favored transfer because Microsoft was able to identify several specific witnesses in WDWA, while Parus could only identify one potential witness in Texas. Id. at *5.

The court also found that the relative ease of access to sources of proof also heavily favored transfer because the majority of employees who work on the relevant products are in WDWA. Id. at *6. Although Microsoft was not able to identify the location of the data center for these documents, Microsoft demonstrated that the custodians are located in WDWA. This outweighed any argument by Parus that its documents “are ‘or will be’ in Austin” because the bulk of relevant evidence in a patent infringement case will come from the accused infringer. Id. On the other hand, the court found that the availability of compulsory process factor weighed against transfer because Parus identified several potential third-party witnesses in Texas. Id. at *7-8.

Turning then to the public interest factors, the court found that the local interest factor heavily favored transfer because Microsoft’s headquarters and the teams that designed and developed the accused products are all primarily located in WDWA. Id. at *10. The court further explained that “[t]he presence of Microsoft’s data centers and offices in this District cannot outweigh the presence of Microsoft’s headquarters and the fact that the majority of the Accused Products were designed and developed primarily in the WDWA.” Id.

Finally, the court found that court congestion weighed only slightly against transfer because “this Court’s average time to trial in this District is faster than in the WDWA.” Id. at *9. The court noted that Microsoft incorrectly compared “time-to-trial statistics for WDTX as a whole” instead of for this court. Id. Additionally, the court disregarded the argument that Microsoft only moved to transfer 25 of the current 64 cases in this district, as “each case presents unique facts that may warrant transfer.” Id.

The court found the remaining private and public factors neutral. As such, Microsoft’s motion to transfer was granted because three factors weigh heavily in favor of transfer, one weighs against transfer, and one weighs slightly against transfer.

Speir Tech., Ltd., v. Apple, Inc., No. 6:22-CV-00077-ADA, 2022 WL 17945398 (W.D. Tex. Dec. 15, 2022) – granting transfer to the Northern District of California.

In Speir Tech. v. Apple, Speir brought suit in WDTX alleging infringement against Apple. Speir is an Irish company, and Apple is headquartered in California with established businesses in Austin. Apple moved to transfer this case to the Northern District of California. With a very similar analysis to that explained above in Parus, the court granted transfer to NDCA because three factors favored transfer and only one slightly weighed against transfer.

The court found that the cost of attendance and convenience for willing witnesses strongly favored transfer due to the number of relevant witnesses in NDCA. Id. at *2. Apple identified specific technical and business employees related to all the accused products located in NDCA. This outweighed Speir’s identification of four relevant employees in Austin because those four employees were only relevant for one asserted patent. Id. at *4.

The court also found the ease of access to sources of proof favored transfer because Apple sufficiently presented that the majority of relevant document custodians were in NDCA. Id. at *6. The analysis for this factor mirrored that of the convenience of willing witnesses.

Further, the court found that the compulsory process factor was neutral because Apple identified Qualcomm in NDCA while Spier identified four prior art witnesses within the 100 mile radius of this court. Id. Related to this factor, the court also granted a motion to strike Apple’s prior art witnesses because Apple did not disclose the witnesses until its reply brief. Id. at *4-5.

On top of this, the court found that the local interest factor weighed in favor of transfer. Apple relied on the fact that it is headquartered in NDCA and the fact that the “engineering teams responsible for designing and developing those other accused technologies, as well as all sales, licensing, and marketing teams, have no presence in Texas—all are undisputedly in NDCA.” Id. at *8.

The only factor weighing against transfer in this case was the administrative difficulties flowing from court congestion. This factor weighed slightly against transfer because “recent data shows that this Court has been able to hold trials faster than the Northern District of California.” Id. at *7.

Viasat, Inc., v. Western Digital Tech., Inc., No. 6:21-CV-01230-ADA, 2022 WL 17815126 (W.D. Tex. Dec. 19, 2022) – denying transfer to the Northern District of California.

In this case, Viasat brought a patent infringement suit against Western Digital in WDTX when both companies are headquartered in California. Western Digital has its corporate headquarters in NDCA while Viasat’s headquarters is in San Diego. In contrast with the Spier case, despite the fact that both parties are headquartered in California, the court denied Western Digital’s motion to transfer this case to NDCA because it found WDTX more convenient.

Unlike the previous two cases, the cost of attendance, convenience of willing witnesses and availability of compulsory process factors were neutral. The court explained that the cost of attendance factor is the “most important factor in the transfer analysis.” Id. at *3. Western Digital identified 10 party witnesses with relevant knowledge in NDCA, while Viasat identified 28 relevant Western Digital employees in WDTX that Western Digital did not address in its motion. Id. at *5. Ultimately, because both sides identified relevant witnesses in both districts, the court found this factor neutral. Id. Similarly, both sides identified non-party witnesses in both districts. The court explained that it was “not persuaded by WDT’s assertions, given that Viasat tried to elicit more information from Mr. Alrod and he was not prepared.” Id. at *10. It is likely that these factors were both influenced by the fact that the court found Western Digital’s “primary venue deponent … lack[ed] credibility.” Id. at *2. As such, the court gave “minimal weight to [witnesses] testimony.” Id. at *3.

Much like the previous cases, the court found that the relative ease of access to sources of proof slightly favored transfer. Id. at *7. This in large part turned on the fact that the product was designed and developed in NDCA (along with Israel). Id. The court also found that the local interest weighed slightly in favor of transfer because of Western Digital’s strong ties to NDCA. Id. at *13. The court held that the court congestion factor slightly favored against transfer because “[t]his Court has consistently been able to hold trials faster than NDCA.” Id. at *11.

When the factors were all evaluated, the final tally was two factors slightly in favor of transfer, one slightly against transfer, and the rest neutral.