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Venue Roundup #4 - On Semi v. Hynix - case transferred to California

By Michael C. Smith

On Semiconductor v. Hynix Semiconductor, 6:09cv390 (9/30/10)

Judge: Leonard Davis

Holding: Motion to Transfer Venue GRANTED

Plaintiffs asserted five patents against four groups of defendants.  The Court noted that with one exception the defendants were corporate families with their main headquarters in Asia and U.S. headquarters in California, although one group's design work was done in Texas.

Judge Davis went through the various factors, starting with the location of documents.  While they were spread throughout the world, the majority of the U.S. documents appeared to be closer to California than Texas.  With respect to witnesses, some were subject to subpoena in California, but none in Texas, and with respect to the cost of obtaining their attendance, while they were, again, spread throughout the world, slightly more were in California than Texas.  Same thing with local interest - both states had an interest, but California's was slightly greater than Texas.

Judge Davis identified as a key factor in this case - in fact the factor that eventually tipped the scale in favor of transfer - as something that the parties apparently did not focus on, and that was his finding that the Eastern District was a "very questionable venue" for defendant NTC Texas which, although located in Texas, had very scarce contacts with the Eastern District.  If the Court granted that motion to dismiss the plaintiff would have to prosecute two separate cases, with the attendant judicial economy issues, or give up its claims against NTC Texas Thus a transfer alleviated this issue because there was no dispute that all parties were amenable to suit in the Northern District of California.

In conclusion, Judge Davis wrote that whether transfer would be "clearly more conveneint" for the parties and witnesses was a close call, but the certainty that the Northern District of California would be proper venue as to all defendants "tips the scales in favor of transfer."  But the Court had more to say on the subject of motions to transfer, and the interests of the parties:

Motions to transfer in patent cases have become almost common place. Often, defendants merely seek to move the litigation to their home district under the assumption that since the plaintiff chose the forum where the case was filed, it cannot be a ?good? venue for the defendant. The transfer issue becomes almost a separate litigation within the case, with discovery being taken and hundreds of thousands of dollars being spent to litigate the issue. Each side seeks to identify every possible witness and document in the United States that might support their position, the vast majority of whom will not be deposed, called to testify, or offered at trial.
The Court has serious questions over whether such a fight is in a client?s best interest. As recognized by the transfer factors, litigating away from home does pose an increased cost in transporting documents to the trial location and housing party representatives and witnesses for the trial. However, as judged by the boxes of documents that often fill this Court?s courtroom that go unopened at trial, the vast majority of documents are not needed. As for the cost or convenience of housing party representatives and witnesses, many will spend long hours and late nights during trial preparing for the next day and will thus effectively be ?away from home? during trial, even if the trial is in their home town. While the Court does place importance on the ability to bring truly necessary third-party witnesses to testify, such an occasion or need is fairly rare in this Court?s experience. In the cases this Court has tried, the vast majority of the witnesses are being paid by one side or the other. But because documents, witnesses, and third-party witnesses have been identified as important to the transfer analysis, each sides seeks to unearth or identify every document and person that might have some connection to the case and is closer to their chosen forum, even though in this Court?s experience these documents and witnesses are unlikely to ever see the inside of the courtroom. In this instance, their convenience supports transfer, and the parties can begin anew in a new court, with the attendant expenses associated with such a change of venue.

Full post as published by Eastern District of Texas Federal Court Practice on October 19, 2010 (boomark / email).