In re Biosearch Technologies, Inc. (Fed. Cir. 2011)

By Kevin E. Noonan --

The Federal Circuit's exclusive jurisdiction includes all questions "arising under" the patent laws of the U.S. (among other things).  For all other issues the Court applies the law of the circuit in which the action was brought.  This practice results in the Court deferring to (and applying the law as developed under) principles "arising under" the application of the law to everything other than U.S. patent law.  Often (and perhaps most of the time) this has little effect.  Occasionally, however, this practice does raise the question of whether the Court's application of particular circuit law in the context of patent litigation is appropriate, and whether the law can be (or should be) applied so readily to patent issues.

These questions are raised by the latest application of the law of forum selection and the role of forum non conveniens principles in deciding the best situs of patent litigation, in In re Biosearch Technologies, Inc.  This question is a little curious, since one of the principal motivations for establishing the Federal Circuit in 1982 was to provide sufficient harmonization of U.S. patent law that so-called "forum shopping" was discouraged to the point of elimination (on the theory that different fora would not matter if the Federal Circuit mandated uniform application of the law in all districts).  However, the penchant for patent litigants (primarily plaintiffs) to file suit in the Eastern District of Texas in Marshall, coupled by the perception that that court was "pro-patent," has raised the profile of this issue significantly (including, inter alia, being the basis of successful attempts to prevent "inappropriate" forum selection by legislation; see the Leahy-Smith America Invents Act).

The Federal Circuit has addressed this issue, in In re TS Technologies (Fed. Cir. 2008), where the Court applied the 5th Circuit Court of Appeals decision in In re VW to provide the standard for granting petitions to transfer patent litigation from the Marshall courthouse.  The VW case established several factors considered by the 5th Circuit in deciding forum non conveniens questions, including the plaintiff's choice (which the Court cautioned should not be given "inordinate" weight), distance from the defendant's "home," the location of the physical evidence and witnesses and whether the chosen forum was more than 100 miles away from the location of the physical evidence and witnesses (thus impacting the Court's subpoena jurisdiction over both) and the public interest (particularly with regard to the public's interest in having "local" issues decided locally).  The Court's application of these factors varies from case to case, of course, but in applying 5th Circuit precedent on the question it is well to consider the circumstances behind the 5th Circuit court's VW decision.  The facts provide the relevant information regarding the issues considered by the 5th Circuit:

On the morning of May 21, 2005, a Volkswagen Golf automobile traveling on a freeway in Dallas, Texas, was struck from behind and propelled rear-first into a flat-bed trailer parked on the shoulder of the freeway.  Ruth Singleton was driving the Volkswagen Golf.  Richard Singleton was a passenger.  And Mariana Singleton, Richard and Ruth Singleton's seven-year-old granddaughter, was also a passenger.  Richard Singleton was seriously injured in the accident.  Mariana Singleton was also seriously injured in the accident, and she later died as a result of her injuries.

[T]he Volkswagen Golf was purchased in Dallas County, Texas; the accident occurred on a freeway in Dallas, Texas; Dallas residents witnessed the accident; Dallas police and paramedics responded and took action; a Dallas doctor performed the autopsy; the third-party defendant lives in Dallas County, Texas; none of the plaintiffs live in the Marshall Division; no known party or non-party witness lives in the Marshall Division; no known source of proof is located in the Marshall Division; and none of the facts giving rise to this suit occurred in the Marshall Division.  These facts are undisputed.

With this in mind, the following are the circumstances before the Federal Circuit in the Biosearch Technologies case.  Applied Biosystems LLC and Life Technologies Corp. brought suit for patent infringement against Biosearch Technologies, Inc., Eurofins MWG Operon Inc., Midlands Certified Reagent Company, Inc. and Bio-Synthesis, Inc. in the Eastern District of Texas, Marshall Division.  Defendants moved to transfer the case to the Northern District of California on the grounds inter alia that "a substantial number of witnesses and documents" are located with the jurisdiction of the California court.  In denying the petition, the magistrate judge noted that all of defendant Bio-Synthesis's evidence was located in the Eastern District of Texas, and that while plaintiffs' evidence was located in "Austin, Texas, California, Maryland and New York," and that Eurofin was located in Alabama, the Eastern District of Texas was "convenient" to the parties as being a "proper central location" for the suit.  The one factor in favor of transfer noted by the magistrate judge was that certain third party witnesses were located in California and thus the parties would not have access to compulsory process if the suit remained in the Texas court.  However, the magistrate judge balanced this inconvenience against the additional costs that would be incurred "due to the number of Bio-Synthesis witnesses in Texas" and increased travel costs for other witnesses if the action was transferred to California.  The District Court upheld the magistrate's denial of defendants' transfer motion.

In granting the requested writ of mandamus transferring the case to the Northern District of California, the Federal Circuit (in an order by Judge Linn, joined by Judge Newman and Judge Reyna) acknowledged both the "case-specific" nature of the transfer question as well as the principle that such a motion should not be granted unless the reviewing court determines that there was a "clear abuse of discretion or usurpation of judicial power" by the district court.  The panel discerned that the 5th Circuit recognized "public" and "private" considerations or interest factors; the private factors including "(1) the relative ease of access to sources of proof; (2) the availability of compulsory process to secure the attendance of witnesses; (3) the cost of attendance for willing witnesses; and (4) all other practical problems that make a trial easy, expeditious and inexpensive," citing In re TS Technologies, 551 F.3d 1315, 1319 (Fed. Cir. 2008); while the "public interest" factors include "(1) the administrative difficulties flowing from court congestion; (2) the local interest in having localized interests decided at home; (3) the familiarity of the forum with the law that will govern the case; and (4) the avoidance of unnecessary problems with conflicts of laws [or in] the application of foreign law."

The Court noted the following "factors" it considered relevant to its decision to grant the writ:  that both plaintiffs are located in California and one in Northern California, as was defendant Biosearch Technologies, Inc., which locale provides a "strong interest" for courts in that venue to try the case as well as suggesting that Northern California would be "convenient with regard to the location of likely sources of evidence."  With regard to the latter factor, the panel noted the District Court identified "19 potential witnesses" who were located in Northern California (presumably within the subpoena power of that court), and that having to travel to Texas for trial would "likely incur significant expenses" which would be "significantly minimized or avoided" by transfer.  The order also cited that the "large number of witnesses" residing in the "transferee" forum "may be expected to be invaluable in the event process is required to hale the relevant witnesses into court."  In contrast, the only defendant having a significant presence within the jurisdiction of the Texas court, Bio-Synthesis Inc., had entered an agreement with plaintiffs that limited its discovery requests (this portion of the agreement contained a reciprocal limitation on discovery from plaintiffs directed at Bio-Synthesis) and waived its right to challenge the validity of the patents-in-suit.  This agreement, and "Bio-Synthesis's behavior" (such as "failing even to participate in the claim construction proceedings that are so critical to the outcome of the infringement determinations") convinced the Court that Bio-Synthesis (and their witnesses) would be unlikely to have sufficient impact on the case and should not be awarded "significant weight" in deciding the transfer petition.

The Court was also convinced that this was another case where "an invention [that] has no connection with Texas" was before it and that this case should be decided accordingly (i.e., by granting the transfer motion); earlier cases cited in support of this view included In re Genentech, Inc., 566 F.3d 1338 (Fed. Cir. 2009), In re Nintendo Co., 589 F.3d 1194 (Fed. Cir. 2009), and In re Hoffman-La Roche Inc., 587 F.3d 1333 (Fed. Cir. 2009).  Finding that the facts in the pending case were "as compelling" for transfer as the facts supporting its earlier precedent, the Court granted the motion to transfer.

While this outcome is not surprising in view of the Court's precedent, it is notable that many of the witnesses whose availability vel non and who would incur greater cost burdens were plaintiff's witnesses and evidence.  The plaintiff's choice of venue thus would seem to preclude the need to use the Court's compulsory subpoena power to produce these witnesses or this evidence.  Insofar as the presence of defendants' witnesses or evidence are outside the forum, any difficulties in obtaining such evidence during discovery or by deposition (including under Rule 45) are inconveniences to be borne by plaintiffs, who opposed the motion to transfer.  Thus, in applying the factors identified by the 5th Circuit in the VW case the Court appears to be applying these factors without regard to the positions of the parties and where the inconvenience would lie.  Such an approach may be relevant under the public interest prong of the VW test, but that is where the circumstances behind the rule become important considerations.  It is evident that the public interest is important, and may be paramount, in a case like VW involving public safety and products' liability, with regard to sales of products accused of being defective and hence dangerous.  There may be cases where related considerations are important in patent litigation, for example, where a patent-in-suit may protect an industry having a significant economic impact within the court's jurisdiction.  But in Biosearch there are no such public interest concerns, and the arguments on convenience are apparently not availing as to the inconvenience to the party proffering the motion in contrast to the inconvenience to the party opposing the motion.

It is difficult to adduce general rules in cases where the decision is based on particular factual circumstances that will be different and have different nuances in each case to be decided.  But the Court might consider that its establishment has not eliminated all benefits associated with forum shopping, and that decisions may be better made with a more skeptical view regarding the motivations behind parties requesting transfer of cases for convenience rather than jurisdictional deficiencies.  After all, gamesmanship over venue can be used as effectively to gain a litigation advantage now as forum shopping did previously, and recognition of its own mandate should motivate the Court to minimize instances where it permits these practices to occur.

In re Biosearch Technologies, Inc. (Fed. Cir. 2011)
Nonprecedential order
Panel: Circuit Judges Newman, Linn, and Reyna
Order by Circuit Judge Linn

Comments

[EG]

Kevin,

It is strange that the Federal Circuit focused on the inconvenience of the witnesses of the party who chose the forum. But I really think the underlying issue to motivated the Federal Circuit to transfer is that suit was filed in the E.D. Tex. I know there shouldn't be a presumption here that venue was being manufactured, but when it comes to patent suits filed in the E.D. Tex., that initial assumption/presumption is hard to ignore.