Characterizing Plaintiff S Actions as Attempts to Manipulate Venue Federal Circuit Orders Transfer of Cases to More Convenient Forum

IN RE: SAMSUNG ELECS., CO., LTD.

Before Lourie, Dyk, and Reyna.  On Petitions for Writs of Mandamus to the U.S. District Court for the Western District of Texas.

Summary:  Manipulation of venue through pre-litigation actions can lead to transfer of venue.

Ikorongo Technology LLC (“Ikorongo Tech”), a North Carolina LLC, assigned rights to sue for patent infringement occurring in the Western District of Texas (“W.D. Tex.”) to Ikorongo Texas LLC (“Ikorongo Texas”).  Both Ikorongo Tech and Ikorongo Texas are owned by the same five individuals who run both businesses out of the same North Carolina office.  Ten days after the assignment, Ikorongo Texas filed suits against Samsung Elecs., Co., Ltd. (“Samsung”) and LG Electronics U.S.A., Inc. (“LG”) in W.D. Tex., asserting infringement of Ikorongo Tech’s patents.  An amended complaint named Ikorongo Texas and Ikorongo Tech as co-plaintiffs.

Samsung and LG separately moved under Section 1404(a) to transfer the cases to the Northern District of California (“N.D. Cal.”).  The district court denied the motions, concluding that Samsung and LG failed to establish that the complaints “might have been brought” in N.D. Cal. because Ikorongo Texas’ patent rights were limited to W.D. Tex.  Samsung and LG each petitioned the Federal Circuit for writs of mandamus to transfer the cases to N.D. Cal., and the Federal Circuit considered the writs together.

Analyzing whether the complaints “might have been brought” in N.D. Cal., the Federal Circuit noted that prior case law discourages the manipulation of jurisdiction and of venue through pre-litigation actions by a plaintiff.  Here, the Federal Circuit stated that the assignment from Ikorongo Tech to Ikorongo Texas, and the existence of Ikorongo Texas as a whole, appeared to be for the sole purpose of limiting venue to W.D. Tex.  The Federal Circuit concluded that the presence of Ikorongo Texas was “plainly recent, ephemeral, and artificial—just the sort of maneuver in anticipation of litigation that has been routinely rejected.”  It reasoned that, without this manipulation, Ikorongo Tech could have filed suit in N.D. Cal. and that, thus, the complaints “might have been brought” there.  The Federal Circuit accordingly vacated the district court’s orders and granted the writs to transfer the cases to N.D. Cal.

Editor: Paul Stewart

Written by: Brian Reece & Justin J. Gillett