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Venue Roundup #3 - Eolas v. Adobe - motion to transfer to California denied

By Michael C. Smith

Eolas v. Adobe, 6:09cv446 (9/28/10)

Judge: Leonard Davis

Holding: Motion to Transfer Venue DENIED

Meanwhile, back in Tyler, Defendant Adobe is seeking a transfer to, uh, let me check ... yes, California as well.  The party lineup includes some 23 defendants, with several located in Texas, and four in the Eastern District of Texas proper.

Judge Davis first rejected the request to sever defendants, noting that it would not promote judicial economy.  He then delineated (I already used "provided a precis") the law on transfer this week, but in a departure from HTI, which saved the minimal analysis necessary for the end, included the analysis under each factor. 

A noteworthy part of the Court's analysis in this case was its attention to the plaintiff's location in the Eastern District.  While careful to note that he was not giving weight to the plaintiff's choice of forum, as it is already included in the weight a defendant must carry to justify a transfer, the Court rejected defendants' contention that the plaintiff's location should be rejected because it is "recent and insubstantial." 

While Eolas did recently relocate to the Eastern District of Texas, Eolas is conducting its normal business here. Its Chief Legal Officer and his family have relocated here and own a home here. Eolas?s only corporate office is located in Tyler, Texas, and board of directors meetings are conducted here. Most of Eolas?s tangible and intangible property, including all of the company?s electronic and non-electronic files, books, and records, are located in Tyler. Eolas is currently testing its AnatLab product at the University of Texas at Tyler and employs seven people in Tyler to conduct the testing. Defendants contend that Eolas?s recent relocation from Illinois to Texas is an attempt to manipulate venue, but Eolas points out that it receives more favorable tax treatment in Texas than in Illinois. Defendants also discount Eolas?s employees, saying they are merely part-time college students. Eolas responds that it is conducting its beta testing in the normal course of its business. While Eolas?s relocation is recent, it is not ephemeral. See In re Apple, Inc., 374 Fed. Appx. 997, 999 (Fed. Cir. May 12, 2010) (unpublished) (discounting a plaintiff?s state of incorporation and presence in Texas as ?recent and ephemeral?).  Eolas appears to have genuinely relocated its business to Texas and is conducting its business affairs in the normal course of its business in this District. The Court will not create a time-based litmus test for how long a plaintiff must reside in this District before bringing suit here. It would be substantially more convenient for Eolas to continue suit here. The Court will not ignore Eolas?s location simply because it is unfavorable to Defendants? transfer argument.

Defendants contended that the Texas-based defendants should not defeat transfer and implied that they were only named as defendants to manufacture venue. However, the Court observed that Eolas did not sue small, local businesses, but instead "large, billion dollar companies, and the Court will not presume that Eolas only sued them to manipulate venue."  And as with TiVo, the witnesses were in California, but also in Texas and elsewhere.

Judge Davis' conclusion is worth reproducing in full, since it shows the Court'a analysis in light of both the "clearly more convenient" standard and the facts of the case at bar:

Only the relative ease of access to sources of proof factor slightly favors transfer, and that factor only favors transfer to the extent that relevant documents or witnesses related to developing the patented inventions and prosecuting the patents may be in the Northern District of California. The remaining factors are either neutral or weigh against transfer. Accordingly, Defendants have not shown that transfer is clearly more convenient for the parties and witnesses. Cf. HTI IP LLC v. DriveOK, Inc., 2010 WL 3075200 (E.D. Tex. Aug. 4, 2010) (Davis, J.) (transferring a patent case where the case?s connection to Texas was nominal, but the connection to the transferee district was strong). 

Defendants? attempt to move this trial from the Eastern District of Texas to the Northern District of California would merely shift the inconvenience of trial from one set of parties to another. Defendants criticize Eolas?s recent relocation to this District as an attempt to manipulate venue.  However Defendants? arguments are dubious, at best. Defendants ask the Court to discount Eolas?s contacts with the Eastern District because those contacts do not serve Defendants? desire for transfer.  Eolas has not clearly set up a sham location in this District to manipulate venue. See In re Apple, Inc., 374 Fed. Appx. at 999 (discounting a plaintiff?s state of incorporation and presence in Texas as ?recent and ephemeral? when the plaintiff?s Texas office was that of its litigation counsel and plaintiff did not employ anyone in Texas ). Rather Eolas appears to have genuinely moved its business to this District and is operating within the normal course of its business within this District.  Contrary to what Defendants may believe, many businesses choose to relocate to Texas and to Tyler, Texas each year for reasons that are unrelated to venue. Eolas points out the tax benefits it receives in Texas, and additionally, many people find that Tyler is a wonderful place to live and work. The Court will not ignore Eolas?s location merely because it does not suit Defendants. 

Similarly, Defendants ask the Court to sever any defendant for whom transfer would be less convenient and imply that Eolas only sued certain defendants in an attempt to manipulate venue. Eolas chose to sue multiple large corporations, some of whom are located in Texas. Defendants contend that if the Court does not discount the existence of the Texas defendants in this case, the Court will encourage a policy of suing Texas defendants in order for a plaintiff to maintain venue in this District. It is not within the Court?s proper role to encourage or discourage suit against certain parties. As the plaintiff, Eolas is the master of its suit. Within the rules, Eolas is entitled to decide who it will sue, where and when it will bring suit, and on what causes of actions or patent claims it will sue. The Texas defendants are all large companies, likely with substantial damages exposure. The Court will not ignore or sever them merely because their existence in this case weighs against Defendants? motion for transfer.

The Court strongly encourages the parties to work together in a more cooperative manner to resolve their differences. The Court DENIES the motion.

 

Full post as published by Eastern District of Texas Federal Court Practice on October 18, 2010 (boomark / email).