Court Opinion

ID: 6112114
Source: CourtListenerOpinion
Date Created: 2022-01-24 21:02:38.931912+00
Date Added: 2024-06-11T08:54:22.079719
License: Public Domain

Case: 22-110    Document: 15      Page: 1    Filed: 01/19/2022

           NOTE: This order is nonprecedential.

   United States Court of Appeals
       for the Federal Circuit
                  ______________________

                 In re: NETFLIX, INC.,
                         Petitioner
                  ______________________

                         2022-110
                  ______________________

    On Petition for Writ of Mandamus to the United States
District Court for the Eastern District of Texas in No. 2:21-
cv-00080-JRG-RSP, Chief Judge J. Rodney Gilstrap.
                  ______________________

                      ON PETITION
                  ______________________

   Before LOURIE, PROST, and TARANTO, Circuit Judges.
PER CURIAM.
                         ORDER
    CA Inc. and Avago Technologies International Sales
Pte. Limited (collectively, “CA”), both of which are subsidi-
aries of Broadcom Corp. brought this patent infringement
case in the United States District Court for the Eastern
District of Texas against Netflix, Inc. The district court de-
nied Netflix, Inc.’s motion seeking dismissal of the case for
improper venue under 28 U.S.C. §§ 1400(b), 1406(a) or, al-
ternatively, transfer of the case to the Northern District of
California under 28 U.S.C. § 1404(a). Netflix seeks a writ
of mandamus directing the district court to grant its
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2                                           IN RE: NETFLIX, INC.

motion; CA opposes. We conclude that, under our prece-
dent, the denial of transfer was a clear abuse of discretion,
and we grant mandamus directing transfer. We do not ad-
dress Netflix’s motion to dismiss for lack of venue.
                       BACKGROUND
     CA filed this suit in the Marshall Division of the East-
ern District of Texas, alleging that Netflix infringes five of
its patents relating to networking techniques for improving
the quality and efficiency of content delivery. It is undis-
puted that Netflix does not own or lease any offices in the
Eastern District. CA’s complaint premised venue over Net-
flix in CA’s chosen forum based on the location of servers
installed at internet service providers (ISPs) under con-
tracts with Netflix that are part of Netflix’s “Open Connect”
content delivery network allowing local delivery of content
to Netflix customers.
    Netflix moved to transfer under § 1404(a) to the North-
ern District of California. Netflix noted that both CA and
Netflix are headquartered in that district; that district is
where Netflix designed, developed, and manages the ser-
vices and products that are the basis of the infringement
allegations; and that district is where Avago and parent
Broadcom Corp. sued Netflix based on the same products
and where, after CA brought the present action, Netflix
sought a declaratory judgment against CA concerning the
patents asserted in this case. See Broadcom, Inc. v. Netflix,
Inc., 3:20-cv-4677 (N.D. Cal. Mar. 13, 2020); Netflix, Inc. v.
CA, Inc., 3:21-cv-03649-EMC (N.D. Cal. May 14, 2021). As
noted, Netflix also moved to dismiss for lack of venue, in-
voking this court’s decision in In re Google LLC, 949 F.3d
1338 (Fed. Cir. 2020), to argue that Netflix’s local servers
could not support venue.
    The district court, adopting the recommendation of the
magistrate judge, denied both motions. It ruled that the
arrangements Netflix had with its ISPs to provide local
content delivery through in-district servers were
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IN RE: NETFLIX, INC.                                        3

materially different from the server arrangements at issue
in Google. On that basis, the court found venue proper and
denied the motion to dismiss.
     In denying the motion to transfer, the district court as-
sessed the private and public interest factors enunciated in
In re Volkswagen of America, Inc., 545 F.3d 304 (5th Cir.
2008) (en banc). The court determined that the factor ad-
dressing local interests favored transfer because the North-
ern District of California was the locus of the events giving
rise to this suit. On the other hand, the court determined
that the factor addressing administrative difficulties from
court congestion weighed against transfer and the factors
addressing relative ease of access to evidence and availa-
bility of compulsory process each also weighed slightly
against transfer. The remaining factors, the district court
held, favored neither of the two forums.
     Of particular significance, the district court considered
the declaration submitted by Netflix’s Manager of Litiga-
tion and IP Enforcement, Elena Garnica, which stated that
all its source code, financial information, and other docu-
mentation that would be at issue in this case are located at
Netflix headquarters in the Northern District of California,
but the court ruled that Netflix had provided an insuffi-
cient factual foundation for its claim that the sources of
proof factor favored the Northern District of California. In
addition, the court considered Netflix’s identification of 21
potential witnesses resident in that district—product and
engineering team employees who wrote articles about the
accused technology discussed in CA’s complaint, as well as
an employee in Northern California knowledgeable about
Netflix’s finances. But the court determined that “[b]oth
parties name several of Defendants’ employees in both the
Northern District of California and the Eastern District of
Texas,” so the “willing witness” factor was neutral. Finally,
the court noted that the California forum could compel the
testimony of patent prosecution attorneys, prior art inven-
tors, and former Netflix employees, but the court gave that
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4                                          IN RE: NETFLIX, INC.

ability little weight because patent prosecution attorneys
“almost never testify” and, while CA and Netflix both were
specific in identifying third-party witnesses, only CA, not
Netflix, showed why testimony from them would be im-
portant. Appx027. As a result, the court deemed this fac-
tor to weight against transfer.
    On balance, the district court decided that, with the
factors mostly either neutral or weighing against transfer,
Netflix had not met its “burden to show that the Northern
District of California is ‘clearly more convenient’ than the
Eastern District of Texas.” Appx035 (quoting Volkswagen,
545 F.3d at 315). On that basis, the court denied transfer.
                        DISCUSSION
     Our review is governed by the law of the regional cir-
cuit, which in this case is the United States Court of Ap-
peals for the Fifth Circuit. See In re TS Tech USA Corp.,
551 F.3d 1315, 1319 (Fed. Cir. 2008). Fifth Circuit law pro-
vides that a motion to transfer venue pursuant to section
1404(a) should be granted if “the movant demonstrates
that the transferee venue is clearly more convenient.” In
re Radmax, Ltd., 720 F.3d 285, 288 (5th Cir. 2013) (quoting
Volkswagen, 545 F.3d at 315) (internal quotation marks
omitted). The district court’s conclusion regarding transfer
is a question that we review on mandamus for a clear abuse
of discretion. See In re Juniper Networks, Inc., 14 F.4th
1313, 1318 (Fed. Cir. 2021); In re Samsung Elecs. Co., 2
F.4th 1371, 1375 (Fed. Cir. 2021); In re Apple Inc., 979 F.3d
1332, 1337 (Fed. Cir. 2020).
    “Motions to transfer are decided by weighing private
and public interest factors to compare the relative conven-
ience of the venues.” In re Atlassian Corp. PLC, No. 2021-
177, 2021 WL 5292268, at *2 (Fed. Cir. Nov. 15, 2021); In
re Hulu, LLC, No. 2021-142, 2021 WL 3278194, at *2 (Fed.
Cir. Aug. 2, 2021) (“That determination is focused on a com-
parison of the relative convenience of the two venues based
on assessment of the traditional transfer factors.” (quoting
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IN RE: NETFLIX, INC.                                         5

In re HP Inc., 826 F. App’x 899, 901 (Fed. Cir. 2020) (citing
Radmax, 720 F.3d at 288))). We have explained that “the
relative convenience for and cost of attendance of witnesses
between the two forums is ‘probably the single most im-
portant factor in transfer analysis.’” Juniper, 14 F.4th at
1318 (quoting In re Genentech, Inc., 566 F.3d 1338, 1343
(Fed. Cir. 2009).
    In this case, we agree with Netflix that the district
court clearly erred in disregarding potential sources of
proof and witnesses in the Northern District of California.
And we conclude that correction of those errors, when com-
bined with the district court’s own determination regarding
the local interest factor, means that the court clearly
abused its discretion in denying transfer to the Northern
District of California as the “center of gravity” of this case.
Id. at 1323.
                              A
     Netflix first contends that the factor addressing the
sources of proof supports transfer because the bulk of the
relevant evidence will likely be in its possession as the ac-
cused infringer, In re Genentech, Inc., 566 F.3d 1338, 1345
(Fed. Cir. 2009), all of its relevant sources of proof are at
its headquarters in the Northern District of California, and
the only evidence the district court identified in the East-
ern District of Texas is merely duplicative of records also
in the California forum. Even under the deferential stand-
ard of review required on mandamus, we agree that the
record supports the finding that Netflix urges, and the
court’s contrary finding rested on legal error.
    Although Netflix introduced evidence that its sources
of proof would be located at its headquarters in the North-
ern District of California, the district court gave that evi-
dence no real weight, reasoning that Netflix had “failed to
identify any specific evidence in the record and articulate
the precise way that evidence supports its claim.”
Appx024. At the same time, the court gave significant
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6                                           IN RE: NETFLIX, INC.

weight to CA’s identification of agreements between Net-
flix and six ISPs and agreements between Netflix and Am-
azon Web Services as likely available in the Eastern
District of Texas. On that basis, the court concluded that
the “sources of proof” factor weighs against transfer.
    We agree with Netflix that the district court clearly
erred. Netflix adequately pointed to specific types of evi-
dence in Northern California that are likely to be relevant
and material to the case. Ms. Garnica’s declaration in-
cluded sworn statements that Netflix’s source code is lo-
cated at its headquarters in the Northern District of
California from where its product and engineering teams
are based, “as is any other documentation about the re-
search, design, and development of its streaming service.”
Appx238–39. She also stated that “Netflix maintains its
financial documentation in the Los Gatos headquarters,
where Netflix’s primary corporate decisionmaking takes
place.” Appx239.
     The district court apparently discounted these poten-
tial sources by requiring that Netflix “articulate the precise
way that evidence supports its claim.” Appx024. But the
district court did not cite and CA has not cited authority
that imposes a requirement of precision greater than was
present here. To be sure, we have explained that it is
within the district court’s discretion to reject vague and un-
supported statements regarding the location of sources of
proof. See In re Apple Inc., 743 F.3d 1377, 1379 (Fed. Cir.
2014). But we see no basis for reasonably demanding more
from Netflix than it provided at this stage of the litigation,
when a transfer motion must be filed and ruled on. The
specificity here is materially comparable to the specificity
we held sufficient in Juniper, 14 F.4th at 1321. Nor have
we been shown any reasons here to doubt that the docu-
ments and sources would be relevant and material to the
issues here.
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IN RE: NETFLIX, INC.                                        7

    The district court’s “sources of proof” determination
rested, at bottom, on its improper disregard of the potential
sources of proof in the Northern District of California. The
district court also recited the availability of certain con-
tracts in the Eastern District of Texas, but it did not find,
and we have not been shown, that such contracts were not
also available at Netflix headquarters in the transferee
venue. We conclude that this factor had to be weighed as
favoring transfer.
                              B
     We draw the same conclusion with respect to the dis-
trict court’s assessment that the “compulsory process” fac-
tor here weighs in favor of the Eastern District of Texas.
In two ways, the court’s approach improperly disregarded
the comparative advantage of the Northern District of Cal-
ifornia to compel the testimony of potential witnesses.
     First, the district court rested its determination on its
finding that Netflix had failed to show that the 13 non-
party potential witnesses it identified in the Northern Dis-
trict of California would provide “important” testimony.
But Fifth Circuit law does not treat the burden on the mo-
vant as imposing so high a standard. Rather, in applying
that law, “we have cautioned that ‘[r]equiring a defendant
to show that the potential witness has more than relevant
and material information at this point in the litigation or
risk facing denial of transfer on that basis is unnecessary.’”
Hulu, 2021 WL 3278194, at *3 (quoting Genentech, 566
F.3d at 1343). Here, Netflix, in its transfer motion, set
forth a sufficient explanation of why the identified third-
party witnesses in the Northern District of California likely
had information relevant and material to the issues to be
litigated in this case. Netflix noted that the identified pa-
tent prosecution attorneys had information pertaining to
the prosecution history of the patents; the identified former
employees authored articles cited by CA itself to support
its infringement allegations and one former employee
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8                                           IN RE: NETFLIX, INC.

submitted a declaration in another related case; and iden-
tified individuals knowledgeable about prior art pertaining
to invalidity issues.
     Second, the district court stated that “prosecuting at-
torneys almost never testify, partly due to privilege issues
but mainly because they have little relevant knowledge not
more easily obtained from other sources.” Appx027. But
we rejected a similar rationale in Hulu. There, the district
court substituted its own generalization that prior-art wit-
nesses are unlikely to testify at trial in place of any case-
specific reason to believe that the particular identified po-
tential witnesses would not testify. 2021 WL 3278194, at
*3. Hulu held that such a categorical rejection of the sig-
nificance of identified witnesses, untethered to the facts of
the particular case, was an abuse of discretion. Id.; see Ju-
niper, 14 F.4th at 1319. The court in this case made a sim-
ilar error in categorically giving no weight to Netflix’s
patent prosecution witnesses.
    Those errors amount to an abuse of discretion. Even
were we not to consider all the identified patent prosecu-
tion attorneys, this factor would still tilt strongly toward
transfer because Netflix identified far more third-party
witnesses in the California forum than were identified in
the Texas forum. See In re Apple, Inc., 581 F. App’x 886,
889 (Fed. Cir. 2014) (“This factor will weigh heavily in fa-
vor of transfer when more third-party witnesses reside
within the transferee venue than reside in the transferor
venue.”). In any event, the record here cannot support the
district court’s determination that this factor favors the
Eastern District of Texas.
                              C
    We also conclude that the “willing witness” factor
should have been weighed in favor of transfer, not deemed
neutral, as the district court deemed it. The district court’s
ruling rested on the fact that CA had identified Netflix
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IN RE: NETFLIX, INC.                                       9

employees in Texas as potential witnesses in this case.
That ruling, we conclude, was a clear abuse of discretion.
     Netflix submitted a sworn declaration attesting to the
fact that the accused technology was designed, developed,
and managed from its Northern California headquarters,
which is also where its product and engineering teams are
located and where its primary corporate decisionmaking
takes place. Netflix identified 21 employees in the North-
ern District of California as potential witnesses that were
part of its product and engineering teams. In particular,
Netflix noted that these employees had written articles
about the accused technology on which CA relied in its com-
plaint and thus may serve as witnesses on the design, de-
velopment, and implementation of the accused technology.
Netflix also identified an executive in the Northern District
of California with knowledge of Netflix’s finances who
could also testify. It further appears undisputed that one
of the inventors resides in the Northern District of Califor-
nia full-time and another inventor lives part-time in the
Northern District of California.
    The court gave equal weight to seven Netflix employees
who work in the Eastern District of Texas. But CA was not
nearly as specific about why those employees may have rel-
evant and material information to this case; it merely
stated that, because the employees have some connection
to the streaming technology at issue in this case, “it ap-
pears just as likely that these East Texas employees have
as much relevant information as the employees Netflix
identified who live in the Northern District of California.”
Appx285. Even without second-guessing the court’s appar-
ent conclusion that the CA-identified employees may have
relevant information, Netflix made a far more compelling
showing on this factor.
    CA was more specific in its filings before the district
court about what potential testimony could be provided by
two other Netflix employees who were located in neither
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 10                                           IN RE: NETFLIX, INC.

 the transferee nor transferor venue. But any significance
 of those two witnesses is slight in the mix as a whole. In
 this case, we conclude, as we have before, “[t]he comparison
 between the transferor and transferee forums is not altered
 by the presence of other witnesses and documents in places
 outside both forums.” In re Toyota Motor Corp., 747 F.3d
 1338, 1340 (Fed. Cir. 2014).
     For these reasons, the comparison of the cost of attend-
 ance for willing witnesses is not neutral between the East-
 ern District of Texas and the Northern District of
 California but rather favors the transferee forum.
                               D
     Finally, there is no sound basis for the district court to
 premise its denial of transfer in these circumstances on its
 modestly faster average time to trial. We have held that
 when other relevant factors weigh in favor of transfer or
 are neutral, “then the speed of the transferee district court
 should not alone outweigh all of those other factors.”
 Genentech, 566 F.3d at 1347; see Juniper, 14 F.4th at 1322.
 Under our relevant precedents, we conclude that the time-
 to-trial statistics provided here are plainly insufficient to
 warrant keeping this case in the Texas forum given the
 striking imbalance favoring transfer based on the other
 convenience factors.
      Accordingly,
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 IN RE: NETFLIX, INC.                                        11

     IT IS ORDERED THAT:
      The petition is granted to the extent that the court’s
 order denying Netflix’s motion is vacated and the court is
 directed to grant a transfer of the case to the Northern Dis-
 trict of California.
                                  FOR THE COURT

        January 19, 2022          /s/ Peter R. Marksteiner
             Date                 Peter R. Marksteiner
                                  Clerk of Court