Albright’s Denial of Patent Case Transfer Upheld by Split Court

Judge Alan Albright’s rejection of Monolithic Power Systems Inc.'s request to transfer a patent infringement suit to California was backed by a divided Federal Circuit panel, marking one of the few times the appeals court agreed with the Waco, Texas, judge in a binding decision.

Bel Power Solutions Inc. accused Monolithic of infringing their patents by selling some power modules to original equipment manufacturers. There’s enough evidence that Kirkland, Wash.-based Monolithic has sufficient ties to keep the case in the Western District of Texas, the US Court of Appeals for the Federal Circuit ruled 2-1 in a Friday precedential order.

For example, the company has employees whose homes are within the Texas jurisdiction, Judges Raymond T. Chen and Leonard P. Stark found.

Judge Alan D. Lourie dissented, cautioning that the ruling could have greater implications given the increasing popularity of remote work.

“The dissent may well be correct that the issue of imputing employee homes to a defendant for purposes of venue will become an issue of greater concern given the shift to remote work,” the majority wrote. “But, in our view, at present, the district court’s ruling does not involve the type of broad, fundamental, and recurring legal question or usurpation of judicial power that might warrant immediate mandamus review.”

The order is one of the few examples of the Federal Circuit issuing a precedential denial of a mandamus petition involving transfer, and is even rarer for upholding one of Albright’s transfer decisions.

Albright’s tendency to balk at transferring patent cases drew scrutiny from the Federal Circuit, Congress, and Chief Justice John Roberts, ultimately coming to a head as the chief judge of the Western District issued an order rerouting patent cases away from Waco.

Home Base

Monolithic argued that, as a Delaware corporation, it doesn’t “reside” in the Western District of Texas.

Albright denied the request to transfer the case to the Northern District of California, ruling that Monolithic had a business presence in the Western District from soliciting employees in Austin to support local original equipment manufacturers. He also said the semiconductor manufacturer provides employees in the area with lab equipment and products.

The majority found that one employee in particular had a large amount of equipment that would not typically be found in a home office. The employee uses the equipment to conduct validation tests for “at least one” of Monolithic’s customers in the Western District, meaning that the employee’s location in Texas was “material” to Monolithic, according to the order.

Lourie disagreed, writing that four employees having homes in the Western District doesn’t constitute a “regular and established” place of business, as is required for venue to be proper. The case is another example of attempts to find loopholes to sue out-of-state defendants, Lourie wrote.

‘Leaky Sieve’

A previous Federal Circuit decision that mentioned an employee’s home as a ratification of an established place of business wasn’t meant to be a “leaky sieve to accommodate avoidance” of venue rules, according to the dissent.

The district court and the majority threaten to confuse the law on where a patent infringement suit can be filed if the standard is based on where employee homes are located, Lourie wrote. Because of the increased prominence of remote work, the Federal Circuit should have immediately reviewed the case to maintain uniformity and precedent, according to the dissent.

“And, in my view, we should not stand back and let the requirements of the statute be eroded by the details of what an employee stores in his or her home, even if the legal issue on appeal relates to the demanding requirements of mandamus,” Lourie wrote. “Reviewability on appeal does not provide adequate remedy for mistaken denials of mandamus, as the judicial system should not be stressed by having cases tried in venues not permitted by statute, and then retried as they should have been in proper venue.”

Morrison & Foerster LLP represent Monolithic. Katten Muchin Rosenman LLP represent Bel Power.

The case was In re Monolithic Power Systems Inc., Fed. Cir., No. 22-153, mandamus denied 9/30/22.