IP Law Daily, PATENT—Fed. Cir.: Texas court ordered to transfer patent case to North Carolina, (Jan 26, 2024)

By Saurabh Kashyap, B.A., LL.B.

The appellate court granted the defendant's mandamus petition, citing critical errors in the district court's weighting of private and public interest factors.

The United States Court of Appeals for the Federal Circuit granted Honeywell International Inc.'s (Honeywell) petition for a writ of mandamus, directing the federal district court in Waco, Texas, to transfer a patent infringement lawsuit filed against Honeywell by Lone Star SCM Systems, Ltd. (Lone Star) to the Western District of North Carolina. Vacating the initial decision of the U.S. District Court for the Western District of Texas, the appellate court criticized the district court for a “clear abuse of discretion” leading to a “patently erroneous result” (In re Honeywell International Inc. , January 26, 2024, per curiam).

Background. Lone Star, a patent assertion entity from the Northern District of Texas, sued Honeywell in the Western District of Texas. Lone Star accused Honeywell of infringing radio frequency identification (RFID) patents. Honeywell contended that Handheld Products, Inc. (Honeywell’s subsidiary) based near Charlotte, North Carolina, developed and managed the accused products. Honeywell, also headquartered in Charlotte, requested a transfer to the Western District of North Carolina, citing the proximity of evidence and key personnel.

Despite the district court's recognition that North Carolina was a plausible venue, it denied the transfer. The district court's denial was based on balancing private and public interest factors, as established in Fifth Circuit jurisprudence. Honeywell next filed the instant petition seeking a writ of mandamus directing the Texas court to transfer the lawsuit to the Western District of North Carolina court.

Private-interest factors. The Court of Appeals highlighted several private-interest factors where the district court erred. Notably, the sources of proof, such as documents and witnesses, predominantly resided in North Carolina. The appellate court referenced In re Genentech Inc. (566 F.3d 1338, 1345 (Fed. Cir. 2009)) to emphasize that the bulk of relevant evidence typically comes from the accused infringer in patent infringement cases. The Federal Circuit found that the district court had not given sufficient weight to this factor.

Witness convenience and subpoena. The appellate court stressed the importance of witness convenience, noting several key Honeywell employees were based near Charlotte, thus favoring transfer. This point was bolstered by the Federal Rule of Civil Procedure 45(c)(1), which ensures subpoena power within 100 miles of a trial location. The court criticized the district court's decision to weigh this factor against transfer, citing the case of In re TikTok, Inc. (85 F.4th 352, 359 (5th Cir. 2023)), where a similar error was identified.

Public-interest considerations. Regarding public interest, the appellate court emphasized the local interest factor, where the Western District of Texas had no significant connection to the events of the lawsuit. The court referred to the Fifth Circuit's ruling in Def Distrib. v. Bruck (30 F.4th 414, 435 (5th Cir. 2022)), highlighting that local interest should focus on the venue's connection to the events giving rise to the suit. The court also found the district court's reliance on the judicial economy, due to co-pending lawsuits in Texas, insufficient to justify the inconvenience to parties in North Carolina, referencing In re Samsung Elecs. Co., Ltd.(2 F.4th 1371, 1380 (Fed. Cir. 2021)).

The case is No. 23-152.

Attorneys: Douglas L. Sawyer (Paul Hastings LLP) for Honeywell International Inc. Steven Nelson Williams (Munsch Hardt Kopf and Harr PC) for Lone Star SCM Systems, Ltd.

Companies: Honeywell International Inc.; Lone Star SCM Systems, Ltd.

Cases: Patent FedCirNews TexasNews