Thursday, February 3, 2011

Texas Data v. Target: Transfer Motions in False Marking Cases in The Eastern District of Texas

In 2010, we witnessed a bit of a new trend in the Eastern District of Texas. A number of cases were transferred out of the district. In the case of patent infringement actions, this was often with the help of the Federal Circuit issuing a writ of mandamus. In the context of the recent wave of false marking cases, however, it was not uncommon for the district court to grant a defendant’s motion to transfer under 28 U.S.C. 1404(a). Once recent exception is Texas Data Co. L.L.C. v. Target Brands, Inc., 10-CV-269, (E.D. Tex.), a false marking case in which Judge Ward denied defendant’s motion to transfer. (Memorandum Opinion and Order, January 12, 2011, D.I. 43, “Opinion”). Transfer motions tend to be very fact specific, and Texas Data is no exception. Judge Ward’s 27 page opinion provides a thorough discussion of the law governing transfer motions in the Eastern District of Texas (5th Circuit law) and the facts of the case before him. Although Judge Ward has historically been reluctant to transfer cases out of his district, Texas Data clearly turns on its own facts and does not appear to signal a new direction for venue motions in false marking cases.


In Texas Data, the products that are allegedly improperly marked with an expired patent number are training pants that are sold by Target, a retailer which is based in Minnesota. The products was made for Target by Kimberly-Clark in a factory that is located in Paris, Texas in the Eastern District of Texas. Kimberly-Clark also has its headquarters in Irving, Texas. The packaging for the product, which allegedly has the improper patent marking printed on it, was made by Bemis, in a factory located in Longview, Texas, also in the Eastern District of Texas. Target provided evidence to establish that although the product and packaging were manufactured in the Eastern District of Texas, the decision to mark the product was primarily made in Kimberly-Clark’s facility in Neenah, Wisconsin, which is in the jurisdiction that Target sought to transfer to.

Movant’s Burden In False Marking Cases:

Target argued that less deference should be given to plaintiff’s in false marking cases. Judge Ward rejected this argument and held “that the burden of proof in a false marking case should be the same as the burden set forth in [In re Volkswagen of Am., Inc. (“Volkswagen II”), 545 F.3d 304 (5th Cir. 2008) en banc.] Opinion at 6.

In the Fifth Circuit, a defendant seeking to transfer a case must show “good cause” in order for the court to grant the motion. This burden is met when the moving party can demonstrate that the “transferee venue is ‘clearly more convenient’ than plaintiffs’ chosen forum.” Judge Ward notes that “plaintiff’s choice of venue is not an independent factor to be considered in the transfer analysis; instead deference to the plaintiff’s choice of venue is accounted for in the ‘clearly more convenient’ burden on the movant.” Opinion at 7.

Motion Denied:

In the analysis of the private factors and public factors set forth in Volkswagen II, the court did credit the fact that witnesses and other evidence related to the issue of “intent to deceive” was more likely to be found in Wisconsin and Minnesota, but also found that relevant evidence and witnesses relevant to other issues, such as damages, would be found in the Eastern District of Texas. In denying the transfer motion, the court held that
[i]n balancing the Gilbert convenience factors in this case, the Court observes that two factors slightly weigh in favor of transfer and one factor slightly weighs against transfer. Therefore, Target has not met its burden in showing the Eastern District of Wisconsin is ‘clearly more convenient than the Eastern District of Texas.   Opinion at 27.

Given the competing facts in Texas Data, this case does not stand out as a beacon of change for transfer motions in the Eastern District of Texas. The detailed opinion does, however, merit review for anyone considering bringing a motion to transfer out of the Eastern District of Texas.