In late October, the Fifth Circuit Court of Appeals reversed a decision by the District Court for the Western District of Texas that blocked TikTok Inc.’s request to move a copyright infringement suit initiated by Beijing Meishe Network Technology Co. Ltd. from the Western District of Texas to the Northern District of California. The Fifth Circuit’s ruling offered much-needed guidance to “improve ‘consistency of outcomes’ by further instructing when transfer is – or, for that matter, is not – warranted.” Hopefully, this decision will help rebalance the patent infringement docket, where for too long, plaintiffs have been able to judge shop for venues that they believe favor patent owners.
As we have previously covered on Patent Progress, the Western District of Texas has been a patent infringement litigation hotbed for years. Judge Alan Albright, the sole judge in the Western District’s Waco Division, actively courts patent infringement plaintiffs, promising expedited trials that put defendants at a disadvantage and that have allowed plaintiffs to avoid patent quality reviews at the U.S. Patent and Trademark Office.
As a result of his efforts, at one point Judge Albright oversaw 25% of all U.S. patent litigation. He was—and still is—the preferred judge of patent trolls and licensing companies. The imbalance got so drastic that Supreme Court Chief Justice John Roberts called out venue selection in patent cases as a key issue in his 2021 Year-End Report on the Federal Judiciary and the Chief Judge for the Western District of Texas issued an order for patent cases to be randomly assigned among the 12 judges in the Western District. The assignment order – which applied only to patent cases – was intended to prevent plaintiffs from knowing with certainty that their case would be heard by Judge Albright if they filed in Waco.
Along with attracting cases to Waco, Judge Albright was aggressive in keeping them there. Per reporting by Bloomberg Law in 2021, Judge Albright denied “almost 80% of requests from defendants who argue another district is more convenient, well above average in patent suits.”
In the Fifth Circuit’s recent precedential decision, it determined that Judge Albright’s denial of TikTok’s transfer request and decision to keep the case in Waco “‘was a clear abuse of discretion’ leading to a ‘patently erroneous result.’”
Among the considerations that the Fifth Circuit weighed were that the technology in question was developed in China and was partly implemented by a team in California. While one member of the California team worked remotely from Texas, they are based in the Northern District of Texas, not the Western District of Texas. The Fifth Circuit acknowledged that TikTok has a 300-person office in the Western District, but it also pointed out that no employee in that office was involved in the creation or execution of the relevant technology. The only employees with access to it were based in China or California.
The Fifth Circuit ruling concluded that among the eight factors the District Court is required to consider in venue transfer decisions as established in the 2008 Volkswagen of America Inc. case – including the ease of access to proof, the cost of attendance for witnesses, and the desire that localized interests be decided at home – two factors weighed in favor of transfer and the others were neutral with respect to transfer. The court summarized that “the Western District of Texas contains no relevant evidence, is thousands of miles away from the vast majority of relevant witnesses, and is wholly unconnected to the underlying dispute. This case concerns Chinese intellectual property that was allegedly infringed and misappropriated by employees located in China. The only individuals in the United States who have any documented connection to this dispute are located outside the district. The Northern District of California is a clearly more convenient venue to adjudicate this case.”
The Fifth Circuit went on to directly address that in the fifteen years since Volkswagen, they had issued fewer than ten precedential decisions applying its test, therefore, giving the See CAFC “little guidance from our court” when reviewing these decisions.
I join the Fifth Circuit in the hope that this new guidance will improve consistency in outcomes for patent infringement venue transfer requests and will prevent future “abuses of discretion” from holding infringement cases in the Western District of Texas when they clearly should be decided elsewhere. Cases should be heard in a place that’s truly connected to the underlying dispute, and case outcomes should be determined by the facts, not the venue. Steps like this ruling help ensure plaintiffs cannot tip the scales in their favor by selecting the judge responsible for overseeing their case, a positive development for the fair adjudication of patent cases.