If there are no sources of proof in the Eastern District of Texas, expect to be transferredDecember 15, 2009

After the Fifth Circuit's Volkswagen and the Federal Circuit's TS Tech decisions, potential patent plaintiffs should be getting the message: Don't file in the Eastern District of Texas unless there are actually some sources of proof there. The Federal Circuit has again granted mandamus ordering the district court to transfer another case out of the district.

In this case, there were no witnesses within the court's subpoena power. The allegedly infringing product was designed, manufactured, and tested elsewhere. The plaintiff had no offices in the district. While 75,000 pages of relevant documents were in the district, they were electronically transferred to the plaintiff's counsel there, apparently for purposes of providing an "anchor" to the district. The district court held the case was "decentralized," and transfer would only adjust which witnesses would be inconvenienced.

The Federal Circuit was having none of it, however. The court observed that the Eastern District of North Carolina had subpoena power over four (of eighteen) non-party witnesses and was also the site of all documentation regarding the development of the accused product. The court was particularly unimpressed with the presence of the 75,000 pages of documents, stating the notion that these documents were "Texas" documents was "a fiction which appears to have been created to manipulate the propriety of venue." Because of the utter lack of connection to Texas, the court ordered the district court to transfer the case to North Carolina.

Novartis brought suit for patent infringement in the Eastern District of Texas against Hoffman-La Roche (and others), alleging the HIV drug Fuzeon^® (enfuvirtide) infringed a Novartis patent. The parties' initial disclosures revealed the following sources of proof, separated by state:

• Texas
  • 75,000 pages of documents (sent from Novartis to litigation counsel before filing suit)
  • One non-party witness (residing in Houston, outside the subpoena power of the Eastern District of Texas
• Colorado
  • Active pharmaceutical ingredient manufactured
  • One party witness
• Maryland
  • Three non-party witnesses
• Missouri
  • One non-party witness
• Alabama
  • Two non-party witnesses
• Michigan
  • Further processing of active ingredient
• New Jersey
  • Fuzeon packaged
  • Two party witnesses
• North Carolina
  • Documents relating to development of Fuzeon
  • Four non-party witnesses (all stated attendance at trial would inconvenient and unlikely)
  • Three party witnesses
• California
  • Five non-party witnesses
  • Novartis headquartered

Based on this information, Roche moved to transfer the case to the Eastern District of North Carolina. The district court denied the motion, holding the case was "decentralized," and therefore transfer would only shift inconveniences from some witnesses to others. The district court also held it could subpoena the non-party Texas witness, despite the fact she lived more than 100 miles from the district and was therefore outside the court's subpoena power under Rule 45. Roche sought mandamus relief from the Federal Circuit.

The Federal Circuit granted mandamus and ordered the case to be transferred. The court noted the heavy burden on a party seeking mandamus, namely that there must be a "clear and indisputable" right to relief. In a transfer case from a district court in the Fifth Circuit, the court grants mandamus if the district court's assessment of the transfer factors "do not rationally support the district court's conclusion."

Turning to the facts, the court noted the "stark contrast" between the "relevance, convenience, and fairness" of the two venues. The documents and sources of proof relevant to the development of Fuzeon are located in the Eastern District of North Carolina, as were four non-party witnesses. Further, because the drug was developed there by a local business (formed by the Duke University professors who developed the drug), there was a strong "local interest" in the case because it "calls into question the work and reputation of several individuals residing in or near that district and who presumably conduct business in that community." The court also noted the Eastern District of North Carolina's "less congested docket" suggested that court may be able to resolve the case quicker than the Texas court. This seems like a stretch, as the Eastern District of Texas is known as a "rocket docket" offering fast resolution of patent cases.

The Federal Circuit rejected Novartis' contention that there was any connection to the Eastern District of Texas. It noted the assertion that the 75,000 pages of documents were "Texas" documents was "a fiction which appears to have been created to manipulate the propriety of venue." Further, the one non-party witness that resided in Texas was not within that court's subpoena power, as she lived more than 100 miles from the district. The fact that the court could deny a motion to quash did not address the convenience issue.

Finally it was "undisputed that this case has no relevant factual connection to the Eastern District of Texas." This, as compared with the "self-evident" interest of the Eastern District of North Carolina, led the court to conclude transfer was appropriate. The court therefore ordered the district court to transfer the case to the Eastern District of North Carolina.

After the series of cases being ordered out of the Eastern District of Texas by both the Fifth Circuit and Federal Circuit, would-be plaintiffs need to carefully assess whether they will be able to remain in the Eastern District of Texas should they decide to file suit there. If it appears that transfer is likely, it may make more sense to file in the plaintiff's home forum rather than risk transfer to a forum more convenient and potentially favorable to the defendant.

To read the full order in In re Hoffman-La Roche Inc., click here.