The Federal Circuit has taken away another tool used by patent plaintiffs to keep lawsuits in the Eastern District of Texas in spite of motions to transfer by defendants. “Non-practicing entities” (known as NPEs or sometimes by a more disparaging term) often attempt to make their lawsuits “stick” in the Eastern District by incorporating in Texas and/or by establishing a “headquarters” in that district. (One of the authors has considered performing an empirical study of how many NPEs list their address as 104 E. Houston Street in Marshall, Texas. 104 E. Houston Street is located next door to the Federal courthouse in Marshall). When considering venue transfer motions, Eastern District judges had previously declined to examine whether such tactics were motivated by litigation strategy or by other considerations. A recent Federal Circuit ruling changes that.

On November 8, 2010, the Federal Circuit in In re Microsoft Corp., No. 944 (Fed. Cir. Nov. 8, 2010) granted Microsoft’s petition for a writ of mandamus finding the District Court’s denial of Microsoft’s motion to transfer pursuant to 28 U.S.C. §1404(a). The Federal Circuit determined that the denial was a clear abuse of discretion and ordered the case to be transferred to the Western District of Washington as the more convenient forum.