In Re Microsoft Corporation

NOTE: This order is nonprecedential. Wniteb ~tate~ QCourt of §ppeaI~ for tbe jfeberaI QCircuit IN RE MICROSOFT CORPORATION, Petitioner. Miscellaneous Docket No. 944 On Petition for Writ of Mandamus to the United States District Court for the Eastern District of Texas in case no. 09-CV-0366, Judge Leonard Davis. Before NEWMAN, FRIEDMAN, and LOURIE, Circuit Judges. PER CURIAM. ORDER This is a petition for a writ of mandamus from an or- der denying a motion to transfer pursuant to 28 U.s.C. § 1404(a). That section authorizes a district court of proper jurisdiction to nevertheless transfer a case "for the con- venience of parties and witnesses, in the interest of jus- tice." Because the record plainly shows that the United States District Court for the Western District of Washing- ton is clearly more convenient and fair for trial and that the determination of the United States District Court for the Eastern District of Texas denying transfer was reached by a clear abuse of discretion, we grant the petition and direct transfer. IN RE MICROSOFT CORP. 2 1. This case arises out of a patent infringement suit against the petitioner-defendant, Microsoft Corporation, brought by the respondent-plaintiff, Allvoice Develop- ments U.S. Specifically, Allvoice's complaint asserts that speech recognition functionality in Microsoft's XP and Vista operating systems infringe U.S. Patent No. 5,799,273 entitled "Automated Proofreading Using Inter- face Linking Recognized Words to Their Audio Data While Text is Being Changed." Allvoice brought this suit in the Eastern District of Texas. Allvoice is operated from the United Kingdom by the patent's co-inventor and company's managing mem- ber, John Mitchell. Although Allvoice now maintains an office in Tyler, Texas, it is not disputed that the entity does not employ individuals in those offices or anywhere in the United States. Allvoice's website directs requests and inquiries to its Texas office, and Mitchell then an- swers those requests and inquiries from the U.K. Microsoft moved to transfer the case to the Western District of Washington, where it maintains its corporate headquarters and where a substantial portion of its employees and its operations are located. Microsoft's motion indicated that all of its witnesses relating to sales, marketing and product direction and prior-art speech recognition technology reside in the Western District of Washington. Microsoft also indicated that all of its rele- vant documents and evidence relating to the marketing, development, and design of the accused products are located within the Western District of Washington. The Eastern District of Texas denied that motion. The District Court explained that both districts had a local interest in adjudicating this matter because Allvoice maintained offices in the Eastern District of Texas and 3 IN RE MICROSOFT CORP. was incorporated under the laws of Texas. With regard to the witnesses, the District Court weighed the factor slightly against transfer because Allvoice had identified potential non-party witnesses not in the Eastern District of Texas but rather in New York, Massachusetts, and Florida who, according to the court, would find Texas more convenient for trial. Finally, with regard to the sources of proof, the District Court weighed this factor only slightly in favor of transfer because Allvoice had said its documents were maintained in the Eastern District of Texas. II. A motion to transfer under § 1404(a) calls upon the trial court to weigh in the balance a number of case- specific factors relating to the convenience of the parties and witnesses, and the proper administration of justice based on the individualized facts on record. See Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988). Al- though a trial court has great discretion in these matters, we have applied Fifth Circuit law in cases arising from district courts in that circuit to hold that mandamus may issue when the trial court's application of those factors amounts to a clear abuse of discretion. See In re Nintendo Co., 589 F.3d 1194 (Fed. Cir. 2009); In re Hoffmann-La Roche Inc., 587 F.3d 1333 (Fed. Cir. 2009); In re Genen- tech, Inc., 566 F.3d 1338 (Fed. Cir. 2009); In re TS Tech USA Corp., 551 F.3d 1315 (Fed. Cir. 2008). Thus, in Genentech, this court granted mandamus when the trial court relied on its central proximity to the witnesses and parties rather than a meaningful applica- tion of the factors. 566 F.3d at 1344. We determined that the factors should conform to the fact that a significant number of witnesses and parties were actually located within the transferee venue and could be deposed and IN RE MICROSOFT CORP. 4 testify without significant travel or expense, while no witness or party was located within the plaintiffs chosen forum. Id. at 1345. We held that the trial court's applica- tion of the factors was patently erroneous, in part because a denial of transfer would require every witness to expend significant time and cost in order to attend trial. This case is in many respects analogous to Genentech. As in that case, there is a stark contrast in convenience and fairness with regard to the identified witnesses. All individuals identified by Microsoft as having material information relating to the patents reside within 100 miles of the Western District of Washington and thus would not have to undergo considerable cost and expense to testify and would also be subject to that district's subpoena powers. Meanwhile, Allvoice has identified 14 witnesses, 12 who reside outside Texas and two who are local Eastern Texas businessmen who bought or used the accused Microsoft products and are not represented as having any knowledge of the patent or the issues of the suit. Thus, maintaining trial in the Eastern District of Texas would similarly require witnesses to undergo the cost, time, and expense of travel to attend trial, which would be significantly minimized if this case were trans- ferred to the Western District of Washington. Allvoice nevertheless urges that this case is distin- guishable from Genentech. Allvoice contends that unlike the plaintiff in that case, it has an established presence in the Eastern District of Texas. Allvoice's argument, how- ever, rests on a fallacious assumption: that this court must honor connections to a preferred forum made in anticipation of litigation and for the likely purpose to make that forum appear convenient. The Supreme Court has long urged courts to ensure that the purposes of jurisdictional and venue laws are not 5 IN RE MICROSOFT CORP. frustrated by a party's attempt at manipulation. Thus, in Miller & Lux, Inc. v. East Side Canal & Irrigation Co., 211 U.S. 293 (1895), the Supreme Court held that a corporation could not create federal diversity jurisdiction by merely assigning its claim to an otherwise fictitious subsidiary for just that purpose. See also Lehigh Min. & Mfg. Co. v. Kelly, 160 U.S. 307 (1895) (same); Morris v. Gilmer, 129 U.S. 315, 328 (1889) ("Upon the evidence in this record, we cannot resist the conviction that the plaintiff had no purpose to acquire a domicile or settled home in Tennessee and that his sole object in removing to that state was to place himself in a situation to invoke the jurisdiction of the circuit court of the United States."). More recently in Hertz Corp. v. Friend, 130 S.Ct. 1181 (2010), the Court stated, in the context of an inquiry into a corporation's principal place of business for diversity jurisdiction purposes: If the record reveals attempts at manipulation - for example, that the alleged, 'nerve center' is nothing more than a mail drop box, a bare office with a computer, or the location of an annual executive retreat - the court should instead take as the 'nerve center' the place of actual di- rection, control, and coordination, in the absence of such manipulation. Id. at 1195. This court has diligently followed these principles in matters of transfer. Thus, in Hoffmann-La Roche, we noted that in anticipation of litigation, the plaintiffs counsel in California transferred 75,000 pages of perti- nent documents to the offices of its litigation counsel in Texas and then asserted that the location of those docu- ments was a factor that favored not transferring the case IN RE MICROSOFT CORP. 6 from the Eastern District of Texas. We held that the assertion that those documents were "Texas" documents was a fiction that appeared to be created to manipulate the propriety of venue and that it was entitled to no weight in the court's venue analysis. 587 F.3d at 1336-37. Allvoice contends that its connections to the Eastern District of Texas are distinguishable from Hoffmann-La Roche. Allvoice explains that its principal place of busi- ness is in the Eastern District, which is where its docu- ments are maintained rather than in its counsel's offices. This argument was accepted by the trial court without scrutiny. But, we recently rejected such an argument in In re Zimmer Holdings, Inc., 609 F.3d 1378 (Fed. Cir. 2010). There, we held that the transfer of documents to a com- pany's offices in anticipation of litigation rather than to litigation counsel was a distinction without a difference for purposes of a § 1404(a) analysis. Id. at 1381. We further explained that, similar to Allvoice's offices here, the offices in Zimmer staffed no employees, were recent, ephemeral, and an artifact of litigation and appeared to exist for no other purpose than to manipulate venue. Id. The only added wrinkle is that Allvoice took the extra step of incorporating under the laws of Texas 16 days before filing suit. But, that effort is no more meaningful, and no less in anticipation of litigation, than the other ones we reject. In Koster v. Lumbermens Mut. Cas. Co., 330 U.S. 518 (1947), the Supreme Court explained that "[uJnder mod- ern conditions corporations often obtain their charter from states where they no more than maintain an agent to comply with local requirements, while every other activity is conducted far from the chartering state." Id. at 7 IN RE MICROSOFT CORP. 527-28. The Court further explained that the "[p]lace of corporate domicile in such circumstances might be enti- tled to little consideration" under the doctrine of forum non conveniens, "which resists formalization and looks to the realities that make for doing justice." Here, the realities make clear that the Western Dis- trict of Washington is comparatively the only convenient and fair venue to try this case. Allvoice presents arguments why mandamus should not issue. We have carefully considered these arguments, but find them unpersuasive. We note that Allvoice as- serts that Microsoft's attempt to also transfer this case to the United States District Court for the Southern District of Texas should be weighed against mandamus. Because the thrust of that motion was to transfer the case to a court that had previous experience adjudicating the patent, we cannot say that any asserted inconsistency with regard to the convenience of trial in the state of Texas as a whole should preclude transfer to a venue that is far more convenient and fair. Accordingly, IT Is ORDERED THAT: The petition for a writ of mandamus is granted. The district court shall vacate its order denying Microsoft's motion to transfer and transfer the case to the Western District of Washington. FOR THE COURT NOV 82010 /s/ Jan Horbaly Date Jan Horbaly Clerk U.S. (lOUfI~~~PEAlS FOR THE FED~RAl CIRCUIT NOV 08 2010 JAN HORBALY CLERK IN RE MICROSOFT CORP. 8 cc: David J. Lender, Esq. Chris P. Perque, Esq. Clerk, United States District Court for the Eastern District Of Texas s19