TX Court Orders Transfer of Microsoft Toolbar Patent Dispute to Oregon

Holding:

The U.S. District Court for the Eastern District of Texas has ordered the transfer of a patent dispute between Microsoft Corp. and its former technical consultant Gary Odom to Oregon. The district court reasoned that the convenience of witnesses and localized interests weighed in favor of transfer. The district court described the case at bench as significantly localized in the Northwest (where the district court of Oregon is found). In particular, both parties are residents of the Northwest, and Microsoft’s equitable defenses all arose out of conduct and contracts in the Northwest. The district court added that no Texas resident is a party to this litigation, nor is any Texas state law cause of action asserted. All identified witnesses -- with the possible exception of one --were located in the Northwest. In this regard, the district court granted Microsoft’s motion to transfer venue.

Detailed Summary:

By way of background, plaintiff Odom, the sole inventor and owner of the ‘592 patent,  claimed that defendant Microsoft has infringed his patent by the manufacture and distribution of Microsoft’s Office 2007 software. In response, Microsoft asserted that during the time period in which Odom filed and prosecuted the patent applications underlying the ‘592 patent, Odom was a technical consultant for Microsoft, and also for Microsoft’s outside counsel, on Microsoft patent matters, including at least one litigation that involved Microsoft’s Office line of software.

Since at least 1999, Odom has resided in Oregon and operated an Oregon consulting company, Patent Hawk, LLC, with its principal place of business in Portland. From 1999 until 2001, Odom was employed at the law firm Klarquist Sparkman LLP, (“Klarquist”). From 2001 until 2003, plaintiff provided independent consulting services for Klarquist. During this time, Klarquist represented Microsoft in various patent disputes. From 2001 to 2004, Odom provided independent consultation directly to Microsoft.

On the other hand, Microsoft is a Washington corporation with its principal place of business in Redmond, Washington. Microsoft alleged that the development team for the accused Office 2007 software is located in Redmond, and the documents, witnesses, and source code related to that software would likely all be found in Redmond. Moreover, Microsoft’s in-house legal team, including the individual lawyers who worked with Odom, is located in Redmond.

At issue was Microsoft’s motion to transfer venue to the District of Oregon under section 1404(a). This law provides that “[f]or the convenience of 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.” Opinion, p. 3, citing 28 U.S.C. § 1404(a).

In resolving Microsoft’s motion in its favor, the district court considered two recent appellate opinions. In re Volkswagen AG (“Volkswagen II”) involved a products liability claim stemming from an automobile collision in Dallas. Id., p. 5, citing 545 F.3d at 307. In that case, the Fifth Circuit granted a writ of mandamus requiring the Eastern District of Texas to transfer the case to the Northern District of Texas. Id., citing Volkswagen II at 307. It found that the trial court had erred by giving inordinate weight to the plaintiff’s choice of venue, and by not giving appropriate weight to, among other things, the location of proof, the cost of attendance of willing witnesses, the availability of compulsory process and the localized interest of the fora. Id., citing Volkswagen II at 318.

Thereafter, the Federal Circuit, relying on Volkswagen II, granted a writ of mandamus requiring the Eastern District of Texas to transfer a patent case to the Southern District of Ohio. Id., citing In re TS Tech USA Corp., No. 888, 2008 WL 5397522 at *5 (Fed. Cir. Dec. 29, 2008). Specifically, TS Tech held that because the physical evidence, headrests and documents, were found in Ohio, Michigan and Canada, the trial court erred in not weighing this factor in favor of transfer.

Examining the circumstances presented here, the district court found that the convenience of witnesses and localized interests weigh in favor of transfer with the other factors neutral (such as administrative difficulties in having a transfer of venue caused by court congestion) or weighing slightly in favor of transfer.

The district court described this case as significantly localized in the Northwest. In particular, the district court pointed to both parties being residents of the Northwest, and Microsoft’s equitable defenses that arose out of conduct and contracts in the Northwest. No Texas resident is a party to this litigation, nor is any Texas state law cause of action asserted. All identified witnesses—with the possible exception of one—were located in the Northwest.

“This is not a case where witnesses are expected to be traveling from all over the country or world,” the district court wrote. Id., p. 8.

In summary, the district court found little convenience to the parties for this case to remain in Texas. On the basis of the foregoing, the district court granted Microsoft’s motion to transfer venue.

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