Vertical Computer Systems, Inc. v. Interwoven, Inc.: A Transfer in Part

May 27, 2011

In a case involving application of the "first-filed action" doctrine and transfer, the district court in the Eastern District of Texas transferred a case as to one defendant but severed and kept the case as to two other defendants. One of the defendants in Texas, Interwoven, began the litigation, not in Texas, but in the Northern District of California by filing suit against Vertical Computer Systems, Inc. seeking a declaration that the Vertical patents were invalid and were not infringed by Interwoven. Vertical subsequently filed a patent infringement action on the same patents against Interwoven and two additional defendants, Samsung and LG, in the Eastern District of Texas. Samsung then filed a declaratory judgment action in the Northern District of California.

In analyzing the first-filed action doctrine on a motion to transfer, the district court agreed that the Interwoven action was filed first and that therefore the case against Interwoven should be transferred to the Northern District of California. The district court disagreed with Samsung, however, and found that the action against Samsung should remain in Texas as Samsung was not a party to the first filed case.

Notably, the district court considered that the same three patents would be at issue and that there would be potential for overlap regarding the claim construction issues. "The Court appreciates that given the same patents are asserted in all three cases, there is a potential for overlap regarding claim construction issues, infringement issues, invalidity issues, and unenforceability issues."

Nonetheless, the district court resolved this issue by severing Interwoven. "However, given that the Court will sever Interwoven from the present case, the risk of inconsistent rulings as it relates to the specific parties is significantly decreased. Moreover, the Court finds that the plaintiffs in the second-filed cases should not be rewarded for the procedural hooks they attempted to create with their respective filings."

The district court then addressed the section 1404(a) factors and found that Texas was a more appropriate forum than California.

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The ruling from the district court is interesting to follow given the strong preference for having patent claims litigated in the same jurisdiction and not splitting the patent claim construction and validity issues across multiple jurisdictions. Nonetheless, the district court did not want to reward Samsung for filing a second patent action in the Northern District of California after it had been sued in Texas.

Vertical Computer Systems, Inc. v. Interwoven, Inc., Case No. 2:10-CV-490 (E.D. Tex. May 10, 2011).

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The authors of www.PatentLawyerBlog.com are patent litigation lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.