There has been a long-standing practice that a suit filed in the Eastern District of Texas stayed in the Eastern District of Texas. Well, no longer. There are limits, although they are apparently only recognized by the appellate court. (In Re Microsoft Corp.)
Allvoice Developments U.S. LLC, a non-practicing entity if ever there was one, filed suit against Microsoft in the happy hunting grounds of eastern Texas, alleging patent infringement by the software giant. Allvoice is controlled from the United Kingdom by John Mitchell, who is the patent’s co-inventor and the company’s managing member. Microsoft, of course, has its headquarters in Redmond, Washington.
In an effort to insure venue in the preferred court, Mr. Mitchell registered Allvoice in Texas a mere 16 days before filing the suit. However, as subsequently noted by the appellate court, “Allvoice’s offices here … staffed no employees, were recent, ephemeral, and an artifact of litigation and appeared to exist for no other purpose than to manipulate venue.” Microsoft moved to transfer the case to the Western District of Washington where its witnesses and relevant documents were located. The Texas Court, exalting form over substance, denied this motion. Microsoft appealed.
Reversed. “Allvoice’s argument … rests on the fallacious assumption: that this court must honor connections to a preferred forum made in anticipation of litigation and for the likely purpose to make that forum appear convenient. The Supreme Court has long urged courts to ensure that the purposes of jurisdictional and venue laws are not frustrated by a party’s attempt at manipulation … the doctrine of forum non conveniens … resists formalization and looks to the realities that make for doing justice.”
THE LESSON TO BE LEARNED: Don’t try to game the system; some courts look to the realities of a case.