Microsoft Wins Mandamus at the CAFC: Allvoice Suit Headed to Washington State

The CAFC granted mandamus yesterday, overruling a decision by Judge Davis (U.S.D.C. Eastern District of Texas) to let a software patent infringement suit against Microsoft continue in Texas rather than Washington state.

According to the ruling (per curium by Judges Newmanm Friedman, and Lourie), all individuals identified by Microsoft as having material information relating to the patents reside within 100
miles of the Western District of Washington "and thus would not have to undergo considerable cost and expense to testify and would also be subject to that district's subpoena powers." The Court further reasoned that "Allvoice has identified 14 witnesses, 12 who reside outside Texas and two who are local Eastern Texas businessmen who bought or used the accused Microsoft products and are not represented as having any knowledge of the patent or the issues of the suit."

According to an article in IP 360, Allvoice apparently "gamed the system by creating the appearance of diversity jurisdiction in the Eastern District of Texas, a no-no that the district court should have identified and stopped."

The patent-in-suit, U.S. Patent Number 5,799,273, claims software dealing with voice recognition in word-processing applications. The specifications discloses, generally, software that creates an interface between voice recognition engines and word-processing documents, such that recognized speech can be directly input into word-processing applications.

Will Seattle Become a Favored Forum for Patent Litigation?

Ignoring patent reform politics for a moment, Seattle patent litigators should all support at least one aspect of the hotly contested Patent Reform Act of 2007--the venue provisions. Why, you ask? Because Seattle litigators representing local technology companies (or, Portland for some well known Microsoft litigators) will be able to defend cases closer to home, and the increase in patent litigation here will certainly benefit all Seattle patent litigators working on both sides of the "v."

Under the current rules, companies like Microsoft, Amazon, and Nintendo are regularly sued in placed like Beaumont, Texarkana, Marshall, and Lufkin, Texas. There is often one suit with multiple defendants. Just to put things into perspective, this post from Patent Troll Tracker explains that the number of defendants sued in the Eastern District of Texas in November 2007 was 244. That surpasses by far the number sued in Los Angeles, San Francisco/Silicon Valley, New York City, Chicago, Delaware, and New Jersey combined. In November 2007 the combined total for all those large cities was just 162.

The number for Seattle ... Are you ready ...? Are you sitting down ...? It's seven. Yes, just seven defendants sued for patent infringement in Seattle in November 2007. In fact, Seattle is not even on pace to break 50 patent cases total (not so sure on the total defendant count, but it is not likely to be more than 100. FYI, I'll be reporting on District patent litigation statistics in the first part of January 2008, comparing them to 2006, and Nationally for 2007).

This doesn't mean that companies and lawyers here aren't engaging in a lot of patent litigation--they are. Last month Amazon, Microsoft, Real Networks, and Nintendo were all targeted by patent infringement lawsuits, but it is just not happening here. Congress hopes to change all that.

If the proposed patent venue rules pass, the Western District of Washington will become a favored forum for patent infringement plaintiffs because many of their targets live here.

On July 17, 2007, House Report 1908 set forth some pretty radical changes to the current liberal venue provisions, aimed at keeping defendants from being sued in places like Marshall, Texas.

Under the current proposed bill, venue for a patent action is appropriate in only the following judicial districts: (1) the district where the defendant has its principal place of business or where it is incorporated; (2) for foreign corporations with a U.S. subsidiary, the district where the defendant’s primary U.S. subsidiary has its principal place of business or where it is incorporated; (3) The district where the defendant has committed a substantial portion of the acts of infringement and has a regular and established physical facility that the defendant controls and that constitutes a substantial portion of the defendant’s operations; (4) the district where the primary plaintiff resides, if the primary plaintiff in the action is an institution of higher education (as defined by 20 U.S.C. § 1001(a)); (5) the district where the plaintiff resides, if one of the following is true: (i) the plaintiff or a subsidiary of the plaintiff has an established physical facility in the district dedicated to research, development, or manufacturing that is operated by full-time employees of the plaintiff or such subsidiary; (ii) or the sole plaintiff in the action is an individual inventor who is a natural person and who qualifies, at the time the action is filed, as a micro entity under 35 U.S.C. § 124.

Even if venue in a particular district or division is appropriate in a patent case, a court may transfer the case to another district or division if the following is true: (i) it is a district or division where the defendant has substantial evidence or witnesses; and (ii) it is a district or division where venue would be appropriate under 28 U.S.C. § 1391, if transfer would be appropriate under 28 U.S.C. § 1404.

Finally, a party to a patent suit may not by “assignment, incorporation, or otherwise” manufacture venue in a “specific district court.”

On July 19, 2007, the Senate Judiciary Committee reported out S1145, which also limits a patentee’s choice of venue, although with a number of variations to HR1908. The Senate Bill (1) further limits venue for a case in the district where the primary plaintiff resides; (2) provides for transfer to districts in cases of hardship for a defendant with respect to substantial evidence of the plaintiff; and (3) interjects consideration of hardship to a plaintiff in determining whether transfer of a patent case is valid.