Federal Circuit Scolds Texas Court for Letting Transfer Motion Linger

The U.S. Court of Appeals for the Federal Circuit (CAFC) ruled on February 1 that Western District of Texas Judge Alan Albright’s handling of a motion to transfer by SK hynix “amounted to egregious delay and blatant disregard for precedent” and ordered the district court to stay all proceedings until it has issued a ruling on the transfer motion “capable of providing meaningful appellate review of the reasons for its decision.”

The order was in response to a petition for writ of mandamus filed by SK hynix Inc. and SK hynix America Inc. asking the CAFC to either direct the district court to transfer Netlist Inc.’s patent infringement suit against SK Hynix to the United States District Court for the Central District of California or to direct the district court to stay the proceedings in order to rule on the motion to transfer. Netlist had filed a suit against SK hynix in March 2020, alleging infringement of its standard essential patents relating to DDR4 [Double Data Rate 4] memory module standards, U.S. Patent No. 9,858,218 and U.S. Patent No. 10,474,595. In response, SK hynix moved to transfer the case and Netlist filed a response on May 18, while SK hynix replied to that response on May 26. However, the court has still not ruled on the motion and discovery has been ordered and Markman proceedings scheduled for March 2021. A December 2020 request to stay proceedings pending the decision on the transfer motion was denied in January 2021, when “the court informed the parties of its policy ‘to proceed with all deadlines while [it] resolves the jurisdictional issues in parallel.’” On January 28, after SK hynix’s petition to the CAFC had been filed, the district court issued an order setting a hearing on the transfer motion for the morning of February 2, 2021.

The CAFC called the district court’s handling of the matter “egregious,” said that it “amounted to egregious delay and blatant disregard for precedent,” and accused the court of allowing the transfer motion to linger “unnecessarily on the docket while the district court required the parties to proceed ahead with the merits.” Citing In re Apple Inc., 979 F.3d 1332, 1337 (Fed. Cir. 2020), the CAFC explained that “[a]lthough district courts have discretion as to how to handle their dockets, once a party files a transfer motion, disposing of that motion should unquestionably take top priority.”

While the CAFC stopped short of granting the writ of mandamus to compel the court to act on the motion, stating that court seemed to now be proceeding toward a resolution of the transfer, the appellate court said that “given the lengthy delay and upcoming Markman hearing, we find it appropriate to grant the petition to the extent that the district court must stay all proceedings concerning the substantive issues of the case and all discovery until such time that it has issued a ruling on the motion capable of providing meaningful appellate review of the reasons for its decision.”