The Eastern District of Texas (EDTX) has been a favorite venue for plaintiffs
(and patent trolls) in patent cases. The impression that juries in EDTX favor
plaintiffs, the front-loaded procedural rules that impose of heavy burden on
defendants early in a case, and the relative speed of the Court have contributed
to EDTX as a preferred locale for plaintiffs. In addition, the fact that it has
been virtually impossible to transfer cases out of EDTX has added to its appeal.
But the Fifth Circuit may have just dealt a blow to the transfer issue.
On October 10, 2008, in In re Volkswagen, ___ F.3d ___, 2008 WL
4531718 (5th Cir.) (en banc), a divided en banc panel of the Fifth Circuit held
that a district court “clearly abused its discretion” by refusing to transfer a
products liability case from the Eastern District of Texas, which had no
connection to the case other than plaintiffs’ filing, to the Northern District
of Texas, where the witnesses and all other factual connections existed.
The Fifth Circuit emphasized that the EDTX court had given “inordinate weight
to the plaintiffs’ choice of venue” and had ignored the statutory requirements
that a transfer motion under 28 U.S.C. § 1404(a) “is for the convenience of
parties and witnesses, [and] in the interest of justice.” The Fifth Circuit also
rejected the EDTX court’s reasoning on the factors to be considered under a
1404(a) transfer, including the court’s conclusion that “copying technology and
information storage” made access to sources of proof a neutral factor.
Several of the factors to be considered in transferring a patent infringement
case differ from a products liability case. For example, even though the
defendant in a patent infringement case may have no presence in the Eastern
District of Texas, the accused products may be sold in the Eastern District of
Texas. However, In re Volkswagen will lead to more defendants seeking to
transfer cases out of EDTX when neither the plaintiff nor the defendant has any
real connection to the district.