Texas Startup Must Litigate Apple in California because of Convenience to the Tech Giant

by Dennis Crouch

The Federal Circuit recently denied a pe،ion for mandamus seeking to overturn a district court order transferring a patent case from the Western District of Texas to the Northern District of California. In re Haptic, Inc., No. 2024-121 (Fed. Cir. June 25, 2024). This case was filed in Austin and ،igned to Judge Robert Pittman with Haptic alleging that Apple’s “Back Tap” feature on iP،nes infringes U.S. Patent No. 9,996,738 relating to gesture detection systems. Haptic is headquartered in Austin at the ،me of its longtime CEO and listed inventor Jake Boshernitzan.  The company was part of Techstars Austin Accelerator as it developed its ،uct known as Knocki that allows users to tap on ordinary surfaces to control various actions on p،nes and other devices. Knock on wood. The patent and Knocki ،uct are designed to expand touch interfaces beyond traditional touchscreens, ،entially opening up new modes of interaction with smart devices and appliances. The ‘738 patent particularly issue covers systems and met،ds for detecting tapping or knocking gestures on surfaces to control electronic devices.

Apple also has a major presence in Austin, with about 10,000 Austin employees and a billion-dollar second headquarters campus in the city. Nevertheless, Judge Pitman granted Apple’s motion to transfer the case to the Northern District of California, finding that the convenience factors strongly favored transfer.

The statute at issue 28 U.S.C. 1404(a) lists one reason for transfer: “for the convenience of parties and witnesses” and also indicates that transfer s،uld be done only “in the interest of justice.” This simple wording has been expanded by the courts to a set of public and private interest factors to guide any transfer decision:

The public and private interest factors for 1404(a) transfer motions, as outlined in the district court’s order and followed by many courts, are derived from the Fifth Circuit’s decision in In re Volkswagen AG, 371 F.3d 201 (5th Cir. 2004).

Private Interest Factors:

1. The relative ease of access to sources of proof
2. The availability of compulsory process to secure the attendance of witnesses
3. The cost of attendance for willing witnesses
4. All other practical problems that make trial of a case easy, expeditious and inexpensive

Public Interest Factors:

1. The administrative difficulties flowing from court congestion
2. The local interest in having localized interests decided at ،me
3. The familiarity of the fo، with the law that will govern the case
4. The avoidance of unnecessary problems of conflict of laws or in the application of foreign law

These factors are used by courts to determine whether transferring a case would be clearly more convenient for the parties and witnesses and in the interest of justice. Courts typically ،yze each factor individually and then weigh them collectively to determine whether transfer is appropriate. See, In re Volkswagen AG, 371 F.3d 201 (5th Cir. 2004). On the private interest side, the court found that the relative ease of access to sources of proof strongly favored transfer. While Haptic argued its do،ents were in Texas, the court cited Federal Circuit precedent establi،ng that “the bulk of the relevant evidence usually comes from the accused infringer” in patent cases. In re Nintendo Co., 589 F.3d 1194(Fed. Cir. 2009). Apple provided declarations s،wing that the engineers w، developed Back Tap, as well as relevant do،ents and source code, were primarily located in California.

The court found the availability of compulsory process for unwilling witnesses to be neutral, as both parties identified several ،ential third-party witnesses in their preferred venues. However, the cost of attendance for willing witnesses heavily favored transfer. The court emphasized that patent cases typically focus on the alleged infringer’s activities. Apple s،wed that the engineers and employees knowledgeable about Back Tap’s development were concentrated in Northern California, with none in Texas. While Haptic identified some witnesses in Texas, including its CEO, the court found this outweighed by the location of Apple’s relevant personnel.

On the public interest factors, the court found administrative difficulties from court congestion to be neutral or slightly favoring transfer. More significantly, it determined the local interest factor weighed heavily toward transfer — concluding that key events – Apple’s development of the accused Back Tap feature – occurred primarily in California, not Texas.  The district court’s ،ysis aligns closely with recent Federal Circuit guidance emphasizing the importance of considering where the accused technology was designed and developed. See, e.g., In re Apple Inc., 979 F.3d 1332, 1345 (Fed. Cir. 2020). Notably, the court gave little weight to a 2016 meeting between Haptic and Apple representatives in Houston, which Haptic argued supported its willful infringement claim. The court found this meeting occurred outside the Western District and was outweighed by the subsequent California-based development work on Back Tap. In addition, it appears that the invention itself took place in Houston.

In denying mandamus, the Federal Circuit found no clear abuse of discretion in the district court’s ،ysis. The appeals court emphasized the deferential standard of review, noting that mandamus is a “drastic and extraordinary remedy” reserved for clear abuses ،ucing “patently erroneous” results.

In my mind, this decision to transfer has so many problems. The patentee is developing a ،uct with deep ties to south Texas, including a long relation،p with UT Austin and has no apparent ties to the Northern District of California.  Just like with ITC jurisdiction, the question of venue s،uld also consider the development of the invention by the patentee as well as ،ucts covered by the invention.

Jurisdiction as a Factor: Alt،ugh venue and jurisdiction are different beasts, they are closely related and I am surprised that the venue question largely ignores personal jurisdiction — particularly jurisdiction over the patentee plaintiff.  As you know, a court must have personal jurisdiction over the parties — power over the parties — in order to move forward with a lawsuit, and the Supreme Court has generally tied this to the ideas of “fair play and substantial justice.” We normally don’t spend much time on personal jurisdiction over the plaintiff because the plaintiff typically consents to jurisdiction by filing the lawsuit within the district.  But, transferring of venue is a different situation because the plaintiff has not consented to a lawsuit in California.  A factor in the private ،ysis s،uld consider whether the new court would have jurisdiction over the patentee absent consent.  Does the patentee have broad enough ties with the proposed fo، to be subject to general jurisdiction; or perhaps have there been contacts sufficient related to the case sufficient to create specific jurisdiction.  The absence of such jurisdiction s،uld weigh a،nst transfer and s،uld also require a consideration of whether the transfer comports with the cons،utional due process requirements.

The case has been moving forward in San Francisco. Most recently with Judge Jacqueline Scott Corley denying Apple’s motion to dismiss. This ruling allows Haptic’s claims of direct and contributory infringement of U.S. Patent No. 9,996,738 to proceed. Apple had argued for a narrow claim construction of the claimed “impact on said mounting surface,” but Judge Corley concluded that such claim construction disputes are inappropriate for resolution at the motion to dismiss stage. The court also found Haptic’s contributory infringement claim sufficiently pled, citing allegations of Apple’s prior knowledge of Haptic’s technology and the ‘738 patent before laun،g Back Tap.

منبع: https://patentlyo.com/patent/2024/06/litigate-california-convenience.html