Patent Lawyer Blog
In a recent case in the United States District Court for the Eastern District of Texas, the court denied defendants’ motion to transfer the case to the District of New Jersey. The court’s analysis focused primarily on whether the case could have originally been filed in the District of New Jersey. The court began its analysis by noting that 28 U.S.C. § 1404(a) provides that “[f]or convenience of the parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.”
Recognizing that the “first determination to be made under § 1404(a) is whether the claim could have been filed in the judicial district to which transfer is sought,” the court stated that the “‘critical time’ when making this threshold inquiry is the time when the lawsuit was filed.” Plaintiff contended that the matter could not have been filed in New Jersey initially because two of the defendants were not subject to personal jurisdiction in New Jersey. Defendants responded that the action could have been filed in New Jersey because the defendants consented to personal jurisdiction in New Jersey and were indemnified by another defendant, which was based in New Jersey.
In analyzing defendants’ arguments, the court stated that “[d]efendants must make a prima facie showing that the transferee court would have personal jurisdiction over all originally-named defendants to satisfy the threshold requirement pursuant to § 1404(a).” This requires that the defendants show, at the time of the filing of the lawsuit, that all defendants were subject to personal jurisdiction in the proposed transferee district, in this case the District of New Jersey. The district court found that one of the defendants was founded, operates in and maintains its principal place of business in New Jersey and, therefore, is subject to personal jurisdiction in New Jersey. With respect to the other two defendants, the court found that that they maintained their principal places of business in the Eastern District of Texas and have no contacts with New Jersey. There was also no evidence that these two defendants directed any activities into New Jersey or that the claims of the suit arose out of activities in New Jersey.
Defendants instead contended that the lawsuit could have been filed in New Jersey because the two non-New Jersey residents stated that they would consent to jurisdiction in New Jersey. The court declined to rely on this consent to personal jurisdiction as basis for transfer.
Quoting from a United States Supreme Court case, the court rejected the consent argument: “The Court, however, declines to rely on Defendants’ consent to personal jurisdiction. In other words, ‘the thesis urged by [Defendants] would not only do violence to the plain words of § 1404(a), but would also inject gross discrimination. That thesis, if adopted, would empower a District Court, upon a finding of convenience, to transfer an action to any district desired by the defendants and in which they were willing to waive their statutory defenses as to venue and jurisdiction over their persons, regardless of the fact that such transferee district was not one in which the action ‘might have been brought’ by the plaintiff.’ Hoffman v. Blaski, 363 U.S. 335, 344, 80 S.Ct. 1084, 4 L.Ed.2d 1254 (1960).”
Defendants also argued that transfer was appropriate because the New Jersey defendant was indemnifying the other two defendants. The court also disregarded this argument, finding that there was no support in any authority (defendants cited none) for such a proposition and in any event the “critical time” for making the inquiry was the date the lawsuit was filed and any indemnification agreement entered after the filing of the lawsuit, even if relevant, would not factor heavily in the court’s analysis.
Accordingly, the court denied the motion to transfer.
The authors of www.PatentLawyerBlog.com are patent trial 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.