By Mary Calkins, Foley & Lardner LLP (View Part 1 of this article)
This article is part of our Spring 2010 edition of Legal News: China Quarterly Newsletter, Eye on China.
When You Are the Defendant: Dealing With an Inconvenient Forum
If you have been sued as the defendant in a patent action in the United States, then the plaintiff has already chosen the district court for you. However, there are some ways in which a defendant can attempt to avoid litigating in an undesirable court.
Motion to Dismiss for Lack of Jurisdiction
A defendant who believes that jurisdiction does not exist over him in a particular state (and consequently in that state’s district court(s)) can file a motion to dismiss for lack of jurisdiction under Federal Rule of Civil Procedure 12(b). This motion must be filed early in the case, at or before the time of the response to the initial complaint. The court will consider whether the defendant has established “minimum contacts” with the forum state in deciding whether to grant or deny the defendant’s motion. If the defendant has done very little business in the state, and the alleged violations occurred outside the state, the defendant may succeed on this motion.
Motion to Transfer Venue
Similarly, a defendant may move to transfer a case under 28 U.S.C. § 1404 to any other district where the case might have originally been brought, if such a transfer is “for the convenience of the parties and witnesses, or in the interest of justice.” For example, if the defendant has a place of business in the U.S. state of Delaware, but was sued in a different district court such as the Eastern District of Texas, the defendant might move the Texas district court to transfer the case to the district court in Delaware, where its place of business and many of its witnesses are located.
In deciding whether to grant the motion, the court, while recognizing the plaintiff’s right to choose the forum, also will consider the convenience of a particular district court to parties and witnesses. Although the legal analysis varies slightly depending on the location of the district court considering the motion, factors commonly considered include the location of the alleged violations; the location of the witnesses and evidence; the current work load of the court that would receive the case; and whether transferring the case might cause harm or delay. While some courts rarely grant such motions, the Federal Circuit’s recent decision In re TS Tech Corp. USA, 551 F.3d 1315 (Fed. Cir. 2008), which overturned a district court’s denial of a transfer, may encourage district courts to grant transfers where the forum state lacks any “meaningful ties” to the case.
Motion to Sever Defendants
Where multiple defendants are sued in the same action, a district court that is a proper venue for some defendants may not be proper for others. For example, a patent holder might bring a single infringement action against the foreign manufacturer of an accused product and its U.S. distributor in a district court in the distributor’s state. This court is a proper venue for the distributor, but if the distributor only sold a small number of the accused products, and the main target of the suit is the foreign manufacturer, then the manufacturer might move to sever the distributor and transfer the action against the manufacturer to a more convenient U.S. court for the manufacturer. In Koh v. Microtek Int’l, Inc. (250 F. Supp. 2d 627 (E.D. Va. 2003)), a Virginia district court faced with a similar situation severed one defendant, a Virginia sales outlet, from an infringement action and transferred the action against the remaining defendants, who were foreign manufacturers and importers, to a California district court, close to the entry point for the accused products and the manufacturers’ base of operations in the United States.
Motion for a Stay Pending Settlement Discussions, Patent Reexamination, or Other Litigation
A defendant who cannot escape an undesirable court might still be able to avoid or delay litigating in that court by moving for a stay. A district court has the discretion to grant a stay, which effectively stops the litigation activity and minimizes costs for a period of time. If the parties are engaged in settlement discussions and need more time to negotiate, the parties might jointly move for a stay, which the court will often grant. One or both parties might also move for a stay if another patent litigation, or a reexamination of the patent-in-suit by the USPTO, that might resolve some issues in the case is pending. In that situation, the court may be more willing to grant the stay if the parties agree to be bound by the results of the other proceeding. The parties would then have to weigh the risk of being bound by a potentially unfavorable outcome against the benefits of obtaining a stay.