Academic journal article Harvard Law Review

Patent Law - Forum Selection - Federal Circuit Heightens Standard for Plaintiff Presence That Will Weigh against Transfer

Academic journal article Harvard Law Review

Patent Law - Forum Selection - Federal Circuit Heightens Standard for Plaintiff Presence That Will Weigh against Transfer

Article excerpt

Patent LAW--forum selection--FEDERAL CIRCUIT HEIGHTENS STANDARD FOR PLAINTIFF PRESENCE THAT WILL WEIGH AGAINST TRANSFER.--In re Zimmer Holdings, Inc., 609 F.3d 1378 (Fed. Cir. 2010).

The Eastern District of Texas is well known for being plaintiff-friendly, particularly in patent litigation, (1) and is often the forum of choice for patent-holding companies (2) when suing large corporations that can be haled into court in many possible venues. (3) The defendant's counter to this tactic is a motion to transfer under the federal change of venue provision at 28 U.S.C. [section] 1404(a). (4) For the past few years, a defendant's motion to transfer has typically been granted except when the plaintiff has established a physical presence in the Eastern District of Texas. (5) Recently, in In re Zimmer Holdings, Inc., (6) the Federal Circuit held that a plaintiff's physical presence in a forum would weigh against transfer only if the presence met a sufficiency standard: namely, not "recent, ephemeral, and an artifact of litigation." (7) A key question is what kinds of presence will meet this sufficiency standard. The court's reasoning suggested three possible dimensions of analysis: time of presence; quality of presence, such as having an office or employees in the district; and activities conducted in the forum, such as patent prosecution or licensing. The former two kinds of sufficiency merely impose a nominal tax that plaintiffs must pay to keep their litigations in the Eastern District of Texas, but sufficiency based on the latter standard would impose a substantial tax on plaintiffs.

On August 26, 2009, plaintiff MedIdea, LLC, filed suit in the Eastern District of Texas against defendants Zimmer Holdings, Inc., Zimmer, Inc., and Zimmer US, Inc. (collectively, Zimmer), alleging infringement of two patents related to hip implants and four patents related to shoulder implants. (8) MedIdea was incorporated in Michigan and had only two officers, both of whom resided in Michigan. (9) It claimed its principal place of business was in Longview, Texas, though its office there had no employees and was shared with another client of its trial counsel. (10) MedIdea did not indicate what business was transacted there. (11) Zimmer was a Delaware corporation with its principal place of business in Warsaw, Indiana. (12)

Zimmer moved to transfer the case to either the Northern District of Indiana or the Eastern District of Michigan under [section] 1404(a). (13) The district court denied the motion. (14) It weighed the private interest and public interest factors for determining venue transfer from Gulf Oil Corp. v. Gilbert. (15) Regarding the private interest factors, the court recognized that the location of Zimmer's witnesses and evidence regarding the allegedly infringing products in Indiana weighed in favor of transfer but found that both of those factors were outweighed by MedIdea's presence in Longview. (16) The public interest factors were held to be neutral as to transfer. (17) The court also considered judicial economy, (18) which it believed weighed against transfer because MedIdea had brought a similar patent suit against another company in the same district. (19) Zimmer petitioned the Federal Circuit for a writ of mandamus. (20)

The Federal Circuit granted mandamus, vacated the order denying Zimmer's motion to transfer venue, and ordered the case transferred to the Northern District of Indiana. (21) Writing for a unanimous panel, Judge Gajarsa (22) held that transfer was required in the case because MedIdea's presence in Texas was "recent, ephemeral, and an artifact of litigation." (23) The court recognized that MedIdea was a Michigan company with two officers who were both residents of Michigan and that the company had no employees in Texas. (24) Although MedIdea had an office in the Eastern District of Texas, the court noted that the office was shared with another client of its trial counsel. (25) Also, MedIdea did not register to do business out of its Texas office until nine months after suit had already been filed. …

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