“We have previously cautioned that, ‘to the extent that post-motion events may ever be considered in a section 1404(a) analysis, we must guard against manipulative measures designed to defeat transfer to a more convenient venue.’” – CAFC
The U.S. Court of Appeals for the Federal Circuit (CAFC) today granted Amazon, Inc.’s petition for a writ of mandamus asking that Judge Alan Albright of the Western District of Texas be directed to sever claims brought by Flygrip, Inc. against it from claims made against another defendant and to transfer the case to a Colorado district court.
Flygrip sued Amazon for direct and indirect patent infringement based on resale on Amazon’s platform of handheld-device cases manufactured by PopSockets, Otter Products and Quest USA Corp. PopSockets and Otter are headquartered in Colorado, so Amazon moved to transfer the case to the U.S. District Court for the District of Colorado. Flygrip subsequently amended its complaint to include another defendant, Western Texas-based Coghlan Family Enterprises, for infringement based on sales and offers to sell the PopSocket products on Amazon’s site. Amazon responded with motions to sever the claims against it from those made against Coghlan and refiled its motion to transfer. In the alternative, Amazon asked the court to stay the proceedings in Texas pending resolution of two declaratory judgment actions PopSocket and Otter had filed in Colorado.
The Texas court denied both motions, finding the claims against Coghlan could not be severed because Coghlan was not a peripheral party to the litigation and dismissed the motion to transfer on the ground that the action could not have been brought in Colorado initially due to lack of patent venue over Coghlan. The district court also denied the motion to stay, explaining that the Texas case involves products not at issue in the Colorado actions.
The CAFC ultimately found that the Texas court had abused its discretion in denying both motions. Citing In re NetScout Sys., Inc.,the appellate court explained:
“First, the district court erred in its analysis because it failed to properly recognize that Flygrip’s decision to add CFE as a defendant only after Amazon filed its first motion to transfer suggests that it was intended to affect the transfer analysis. We have previously cautioned that, ‘to the extent that post-motion events may ever be considered in a section 1404(a) analysis, we must guard against manipulative measures designed to defeat transfer to a more convenient venue.’”
The opinion further noted that Coghlan Family Enterprises was the one out of 150 identified online resellers that was based in Western Texas and called the addition only after the first motion to transfer “suspect.” Flygrip added another Texas-based co-defendant, Benjamin Tillinghast, who is a college sophomore at Purdue University and went to high school in Waco, and also allegedly resells accused products on Amazon’s website, but because he was added after the district court’s order was issued and neither party explained his relevance to the mandamus analysis, the CAFC declined to consider him as part of the opinion. Flygrip’s actions amounted to “venue manipulation,” said the court.
On the issue of severance, the Federal Circuit said that, manipulation aside, severance would be appropriate because Coghlan’s sales of the accused products amount to only just over $3,000, which makes them peripheral to the claims against Amazon. Furthermore, the district court failed to consider the advantages of transfer once it determined that the claims should not be severed, effectively skipping the remainder of the relevant analysis. Once the claims are severed, said the CAFC, “the transfer factors weigh heavily in favor of transferring the claims against Amazon to the District of Colorado.”
The factor the CAFC found weighs most heavily in favor of transfer is that the sources of proof for the claims against Amazon “are almost exclusively found in Colorado,” said the court, since PopSockets and Otter are both located there. Flygrip admitted during discovery that it had no documents located in the Western District of Texas and Amazon’s witnesses with knowledge of the accused products are located in Colorado, whereas Flygrip’s witnesses are located in New York, from which “travel to Texas is not significantly easier than travel to Colorado.”
In three other nonprecedential patent decisions issued today, the CAFC affirmed the Patent Trial and Appeal Board on all issues.
Image Source: Deposit Photos
Image ID:12047087
Copyright:naraytrace
