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Silver Linings Transfer Playbook

January 31, 2013

The Eastern District of Texas remains the number one patent venue in America. The old normal was that patent–owning plaintiffs would file a single lawsuit against many, many unrelated defendants in that court. Then the America Invents Act—prohibiting joinder of unrelated defendants in a single case based solely on the fact that they are all accused of infringing the same patent—ushered in the new normal. Now patent–owning plaintiffs file many, many individual lawsuits against multiple unrelated defendants, which the court then consolidates on the basis of judicial economy.

Which leaves the question of transfer of individual cases to more convenient forums. Does judicial efficiency also weigh against transfer, meaning that the America Invents Act accomplished essentially nothing in its new joinder provision? Perhaps not.

In an order issued this week in In re EMC, the Federal Circuit—while denying the defendant’s petition seeking to force a transfer—suggested otherwise. In doing so, the court of appeals took some steps to avoid turning the denial of transfer motions into the self–fulfilling prophecy this case threatened to become.

First, the appellate court reaffirmed “the importance of addressing motions to transfer at the outset of litigation.” District courts should not sit on transfer motion while the case moves forward, as has been happening in some cases.

Second, the analysis of “judicial economy” must be decided based on the situation that existed at the time the lawsuit was filed. The district can consider its own prior experience with the patents or issues in suit, but cannot manufacture that experience based on events that take place in the current lawsuit while the transfer motion is pending.

Third, the panel made clear that it was not “suggesting that the judicial economy of having the same judge handle multiple suits involving the same patents should dominate the transfer inquiry.” That is what the Judicial Panel on Multidistrict Litigation is for.

Thus, EMC may represent a reverse–pyrrhic victory (pyrrhic defeat?) for defendants. The legal battlefield may have improved for other defendants, just not the defendant in the case.

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