Court Opinion

ID: 206784
Source: CourtListenerOpinion
Date Created: 2011-03-13 06:43:56+00
Date Added: 2024-06-11T12:06:54.257817
License: Public Domain

NOTE: This order is nonprecedential.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