In Re SK HYNIX INC. ( 2021 )

Case: 21-114 Document: 18 Page: 1 Filed: 02/25/2021
NOTE: This order is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
In re: SK HYNIX INC., SK HYNIX AMERICA INC.,
Petitioners
______________________
2021-114
______________________
On Petition for Writ of Mandamus to the United States
District Court for the Western District of Texas in No. 6:20-
cv-00194-ADA, Judge Alan D. Albright.
______________________
ON MOTION
______________________
ORDER
Before DYK, BRYSON, and TARANTO, Circuit Judges.
TARANTO, Circuit Judge.
In March 2020, Netlist, Inc. sued SK hynix Inc. and SK
hynix America Inc. (collectively, “SK hynix,” unless other-
wise indicated) in the Western District of Texas, asserting
infringement of U.S. Patent Nos. 9,858,218 and 10,474,595.
In early May, SK hynix moved to transfer venue to the Cen-
tral District of California, and the papers were complete by
the end of May. In January 2021, with no ruling having
been issued, SK hynix sought mandamus from this court to
compel transfer. We ordered that district court
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2 IN RE: SK HYNIX INC.
proceedings be stayed until the district court ruled on the
transfer motion in a reviewable opinion. In re SK hynix
Inc., No. 2021-113, 2021 WL 321071 (Fed. Cir. Feb. 1,
2021). The next day, the district court denied the transfer
motion, issuing an opinion that explains why. Appx647–
63. SK hynix now petitions for mandamus again. We deny
the petition, concluding that SK hynix has not shown that
the district court clearly abused its discretion.
I
A
Netlist and SK hynix have opposed each other on a
number of Netlist patents in several forums, including the
International Trade Commission and the Patent Trial and
Appeal Board (PTAB). At present, four district-court ac-
tions by Netlist against SK hynix are pending, each includ-
ing claims for patent infringement and a counterclaim for
breach of contract. Two are in the Central District of Cali-
fornia; the present case and one other (consolidated with
this one) are in the Western District of Texas.
Several years before filing the Texas actions, Netlist
filed two actions against SK hynix in the Central District
of California. In the first, filed on August 31, 2016, Netlist
alleged that SK hynix infringed six patents, including U.S.
Patent No. 8,489,837, by manufacturing, selling, or using
certain memory modules. Appx196–215 (Case No. 8:16-cv-
01605) (California I). SK hynix counterclaimed, alleging
that Netlist breached a contractual commitment to offer li-
censes to a portfolio of Netlist patents, on reasonable and
nondiscriminatory (RAND) terms, to implementers of
memory-module standards of the Joint Electronic Device
Engineering Council (JEDEC). Appx229–49. Netlist filed
a second suit against SK hynix in the same forum on June
14, 2017, alleging that SK hynix infringed two other pa-
tents, including U.S. Patent No. 9,535,623, which issued
from a continuation of the application that issued as the
’837 patent. Appx298–310 (Case No. 8:17-cv-01030)
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IN RE: SK HYNIX INC. 3
(California II). SK hynix asserted the same JEDEC-based
contract counterclaim. Appx344–51.
Both California actions were fully stayed in February
2018, by which time challenges to patentability in the
PTAB were underway. In 2018 and 2019, in a number of
decisions, the PTAB ruled unpatentable all the patent
claims asserted in California I & II. See Pet. at 8; Appx80–
82; SAppx884–85. Besides the PTAB decision involving
the ’623 patent, the unpatentability decisions were final
and unreviewable before March 2020. Netlist appealed the
decision involving the ’623 patent (raising only an Appoint-
ments Clause challenge in its short January 2020 brief) but
dropped its appeal on June 25, 2020, after the present case
was filed (and motion for transfer briefed). Although SK
hynix suggests that Netlist “could attempt to amend its
complaint or infringement contentions” in California I & II
to assert previously unasserted claims of the patents at is-
sue in those cases, Reply at 4, all the patent claims asserted
in those actions are now due to be cancelled under 35
U.S.C. § 318(b). California I & II remain pending but in-
active.
In the present action, filed on March 17, 2020, Netlist
alleged that SK hynix, through its manufacture, use, and
sale of the same memory modules as those at issue in the
California actions, was infringing the ’218 and ’595 pa-
tents. Appx27–42 (Case No. 6:20-cv-00194). Those patents
issued from continuations of the application that issued as
the ’837, and thus are in the same family as the ’837 and
’623 patents in the California actions, and Netlist alleged
that they are essential to practice of JEDEC standards.
Appx27. SK hynix asserted a JEDEC-based RAND con-
tract counterclaim. Appx478–501. 1
1 On June 15, 2020, Netlist filed another action against
SK hynix in the same Texas forum, asserting infringement
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4 IN RE: SK HYNIX INC.
B
On May 4, 2020, SK hynix moved to transfer the pre-
sent case to the Central District of California. Notably, SK
hynix moved to transfer the entire case. It neither sought
severance of SK hynix Inc. (a foreign entity, to which the
venue requirement of 28 U.S.C. § 1400(b) is inapplicable)
nor sought transfer of the case against SK hynix Inc. even
if there was no transfer of the case against SK hynix Amer-
ica, Inc. (a domestic entity subject to § 1400(b), with head-
quarters in the Northern District of California). On
February 2, 2021, the day after our February 1 mandamus
order, the district court denied transfer. Appx647–63. The
court rejected the two arguments that SK hynix presses
now: that the first-to-file rule and 28 U.S.C. § 1404(a) re-
quire transfer to the Central District of California. 2
As to the first-to-file rule: The court initially concluded
that the rule is inapplicable because SK hynix had no pres-
ence in the Central District of California sufficient for
venue under 28 U.S.C. § 1400(b), so the present case could
of U.S. Patent No. 10,217,523. Appx61–73 (Case No. 6:20-
cv-00525). That patent, though not in the same family as
the ’218, ’595, ’837, and ’623 patents, is in the same family
as three other patents that were asserted in California I
(all of whose asserted claims were held unpatentable by the
PTAB in now-final rulings). With SK hynix’s agreement,
the two Texas actions were consolidated, Appx649, and the
parties stipulated that a ruling on transfer in the present
action “shall be binding upon and have the same effect” in
the second Texas action, Appx565.
2 28 U.S.C. § 1404(a) reads: “For the convenience of par-
ties and witnesses, in the interest of justice, a district court
may transfer any civil action to any other district or divi-
sion where it might have been brought or to any district or
division to which all parties have consented.”
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IN RE: SK HYNIX INC. 5
not “have been brought” in that forum within the meaning
of § 1404(a). Appx651 n.2. (This analysis focused on U.S.-
entity SK America Inc., because the motion sought transfer
only of the entire case, not of the case against foreign-entity
SK hynix Inc. alone.) The court explained that SK hynix
had cited no authority supporting use of the first-to-file
rule to compel a transfer that would flunk § 1404(a)’s
threshold requirement for the transferee forum—that the
case “might have been brought” there or “all parties have
consented” to adjudicating the case there. Appx651 n.2.
In any event, the court concluded, considerations of
“extent of overlap,” “likelihood of conflict,” and “compara-
tive advantage and the interest of each forum in resolving
the dispute” made transfer under the first-to-file rule un-
warranted. Appx651–54. Regarding overlap, the court
stated that “[t]ransfer under the first-to-file rule requires
far more than patents from the same family, same parties,
and same accused products,” and it discounted SK hynix’s
reliance on its RAND counterclaims because “there are no
viable RAND claims pending in the California cases con-
cerning the ’837 or ’623 patent” given that “the PTAB has
already invalidated both patents.” Appx652. For that for-
ward-looking reason, and given that the district judge in
California I & II stayed those cases before taking any sig-
nificant merits actions, the court determined that there
was little chance of conflict should transfer of the present
case be denied. Appx652–53. The court also compared the
two forums’ involvement in the case—including its own in-
volvement after the filing of the motion to transfer—and
found no comparative advantage or interest of the Califor-
nia forum. Appx653–54. On those bases, the court con-
cluded: “all three factors weigh against transfer under the
first-to-file rule.” Appx654.
As to transfer under § 1404(a): The court explained
that SK hynix failed to establish “the threshold require-
ment,” namely, either that the present action “might have
been brought” in the Central District of California (where
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6 IN RE: SK HYNIX INC.
SK hynix America Inc. lacks the presence required by
§ 1400(b)) or that “all parties have consented” to that venue
for this action, § 1404(a). See Appx656. The court noted
that SK hynix did not dispute the inapplicability of the
“might have been brought” basis, but relied only on the al-
ternative threshold basis, arguing that “all parties have
consented” to venue in the Central District of California
over the present case. Id. (internal quotation marks omit-
ted). The district court rejected that contention. It noted
Netlist’s objection to the current transfer motion and ob-
served that SK hynix had “cited no mandatory or persua-
sive authority to show that by filing suits in CDCA [the
Central District of California] . . . , Netlist has automati-
cally consented to venue in that district for any following
suits involving different patents.” Id.
In the alternative, the court analyzed the public- and
private-interest factors relevant under § 1404(a). It con-
cluded that SK hynix had not shown that the Central Dis-
trict of California is “‘clearly more convenient’” than the
Western District of Texas. Appx657. Specifically, the court
determined that four factors weighed against transfer and
four factors were neutral. Appx661. For example, the
court determined that SK hynix had no presence in the
Central District of California, but it did have an office and
a major customer in the Texas forum; that SK hynix had
no documents in the California forum; that two former
Netlist employees (an inventor and licensing officer), who
are potential witnesses and who allegedly live in the Cali-
fornia forum, were not shown to be unwilling to testify vol-
untarily; the costs of attending proceedings are not
materially different between the forums; that, although
Netlist is headquartered in the California forum, Netlist
itself took that into account in choosing the Texas forum;
and that the Texas forum is likely to be faster in adjudicat-
ing the matter. Appx657–60. The court also again cited its
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IN RE: SK HYNIX INC. 7
own experience with the case since the filing and briefing
of the motion to transfer. Appx660. 3
SK hynix petitioned for mandamus. SK hynix also
moved for a stay of the proceedings because the district
court sua sponte moved the claim-construction hearing
scheduled for March 18, 2021, to March 1, 2021, and ad-
vanced the trial date.
II
Under the All Writs Act, federal courts “may issue all
writs necessary or appropriate in aid of their respective ju-
risdictions and agreeable to the usages and principles of
law.” 28 U.S.C. § 1651(a). “In general, three conditions
must be satisfied for a writ to issue: (1) the petitioner must
demonstrate a clear and indisputable right to issuance of
the writ; (2) the petitioner must have no other adequate
method of attaining the desired relief; and (3) the court
must be satisfied that the writ is appropriate under the cir-
cumstances.” In re Apple Inc., 979 F.3d 1332, 1336 (Fed.
Cir. 2020) (citing Cheney v. U.S. Dist. Ct. for D.C., 542 U.S.
367, 380–81 (2004)). We ask whether the denial of transfer
was such a “‘clear’ abuse of discretion” that refusing trans-
fer would produce a “‘patently erroneous result.’” In re TS
Tech USA Corp., 551 F.3d 1315, 1319 (Fed. Cir. 2008); see
also In re Apple, 979 F.3d at 1336; In re Nitro Fluids,
L.L.C., 978 F.3d 1308, 1310–11 (Fed. Cir. 2020). Under
Fifth Circuit law, where a decision applies transfer rules,
we must deny mandamus unless it is clear “that the facts
and circumstances are without any basis for a judgment of
discretion.” In re Volkswagen of America, Inc., 545 F.3d
304, 317 n.7 (5th Cir. 2008) (en banc), quoted in In re EMC
3 The district court denied SK hynix’s alternative re-
quest to transfer the case from the Waco division to the
Austin division of the Western District of Texas. Appx662.
SK hynix does not challenge that ruling here.
Case: 21-114 Document: 18 Page: 8 Filed: 02/25/2021
8 IN RE: SK HYNIX INC.
Corp., 501 F. App’x 973, 975 (Fed. Cir. 2013). We do not
find the required clear abuse resulting in a patently erro-
neous result.
A
As to § 1404(a), we see no clear abuse regarding the
district court’s determination that SK hynix did not meet
the threshold requirement for transfer under the statute.
SK hynix did not differentiate between the foreign and do-
mestic SK hynix entities for purposes of its transfer mo-
tion. The district court properly focused on whether the
present action “might have been brought” against the do-
mestic entity and whether, in the alternative, “all parties
have consented” to venue in the Central District of Califor-
nia. It concluded that neither alternative basis for a
§ 1404(a) transfer is met. SK hynix has not established a
clear legal right to relief from those conclusions, which suf-
fice to deny transfer.
When the statute contained only the “might have been
brought” alternative, the Supreme Court explained: “[W]e
do not see how the conduct of a defendant after suit has
been instituted can add to the forums where it might have
been brought. In the normal meaning of words this lan-
guage of Section 1404(a) directs the attention of the judge
who is considering a transfer to the situation which existed
when suit was instituted.” Hoffman v. Blaski, 363 U.S.
335, 343–44 (1960) (cleaned up). The Supreme Court also
cautioned against an interpretation of § 1404(a) that per-
mitted transfer based on the “wish or waiver of the defend-
ant.” Id. The current language of § 1404(a) reinforces the
understanding that the “might have been brought” alter-
native is not met by the defendant asserting that it would
consent to venue in the proposed transferee forum. After
Hoffman was decided, Congress amended § 1404(a) to add
that a district court may transfer venue “to any district or
division to which all parties have consented.” (emphasis
added). SK hynix has not shown a clear right to have the
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IN RE: SK HYNIX INC. 9
“might have been brought” standard applied other than by
applying the governing venue statutes for reaching a de-
fendant without consent.
Here, SK hynix has not shown error in the district
court’s conclusion that 28 U.S.C. § 1400(b) governs venue
over SK hynix America Inc. in this case and does not sup-
port venue. Under § 1400(b), venue is proper “in the judi-
cial district where the defendant resides, or where the
defendant has committed acts of infringement and has a
regular and established place of business.” SK hynix
America Inc. is a California corporation with its principal
place of business in the Northern District of California,
Appx95–96, and it resides there, not in the Central District
of California, see In re BigCommerce, Inc., 890 F.3d 978,
986 (Fed. Cir. 2018) (“[W]e hold that for purposes of deter-
mining venue under § 1400(b) in a state having multiple
judicial districts, a corporate defendant shall be considered
to ‘reside’ only in the single judicial district within that
state where it maintains a principal place of business, or,
failing that, the judicial district in which its registered of-
fice is located.”). And SK hynix has not pressed any argu-
ment that SK hynix America Inc. has “a regular and
established place of business” in the Central District of Cal-
ifornia. For that reason, SK hynix has not shown clear
abuse in the district court’s conclusion that this is not an
action that “might have been brought” against SK hynix in
that district. 4
4 Nor has SK hynix established that § 1404(a), which is
written in terms where the “action” sought to be trans-
ferred might have been brought, is clearly satisfied if the
same claims might have been presented by amending a
complaint in an earlier action, especially if there was no
right to amend. Cf. Phillips Petroleum Co. v. Fed. Energy
Admin., 435 F. Supp. 1234, 1238 (D. Del. 1977) (“Th[e] de-
pendence on other parties and a Court’s discretion is
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10 IN RE: SK HYNIX INC.
We also see no basis for disturbing, on this mandamus
petition, the district court’s conclusion that SK hynix also
failed to establish applicability of the alternative threshold
basis for a § 1404(a) transfer—namely, that all parties
have consented to venue over this action in the Central Dis-
trict of California. Netlist has objected, not consented, to
such venue over this “action,” § 1404(a). And SK hynix has
identified no legal authority establishing a clear legal right
to an inference of consent as to this action from Netlist’s
conduct regarding other actions, including its filing of Cal-
ifornia I & II in the Central District of California.
In these circumstances, the district court did not
clearly abuse its discretion causing a patently erroneous
result when it determined that SK hynix did not meet the
threshold conditions for transfer under § 1404(a). We need
not separately review whether the district court clearly
abused its discretion, causing a patently erroneous result,
in applying the multi-factor analysis under that provision.
B
As to the first-to-file rule, we conclude that the stand-
ard for mandamus relief is not met for the same reason.
Specifically, SK hynix has not shown a clear legal right to
a transfer under the first-to-file rule to a federal forum that
could not be a transferee forum under the threshold re-
quirements of § 1404(a).
The Supreme Court has long recognized that § 1404(a)
modified common-law principles involving transfer be-
tween federal forums. See Norwood v. Kirkpatrick, 349
U.S. 29, 32 (1955) (“When Congress adopted § 1404(a), it
intended to do more than just codify the existing law on
inconsistent with Hoffman v. Blaski, supra, and its prog-
eny which teach that a party must have a right to be in the
transferee forum before transfer to that forum can be or-
dered.”).
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IN RE: SK HYNIX INC. 11
forum non conveniens. . . . Congress, in writing § 1404(a),
which was an entirely new section, was revising as well as
codifying.”); cf. Van Dusen v. Barrack, 376 U.S. 612, 616
(1964) (noting that the “transfer power is . . . expressly lim-
ited by the final clause of § 1404(a) restricting transfer to
those federal districts in which the action ‘might have been
brought’”). The first-to-file doctrine certainly has not been
displaced, where § 1404(a)’s threshold conditions are met,
as a tool affecting the customary multi-factor analysis of
convenience and interests of justice. See In re Nitro Fluids,
978 F.3d at 1311. But it is a different question whether
there is a legal right under the first-to-file rule to compel a
transfer between federal forums when § 1404(a)’s thresh-
old conditions are not met.
SK hynix has not shown that there is a clear right to
use the first-to-file rule in that way. The Ninth Circuit has,
in fact, answered that question against SK hynix’s position.
It has concluded: “A contrary understanding of the interac-
tion between the first-to-file rule and § 1404(a) would allow
a judge-made doctrine to contravene a congressionally en-
acted statute—a result that the Supreme Court has made
clear we cannot countenance.” In re Bozic, 888 F.3d 1048,
1054 (9th Cir. 2018). SK hynix has identified no contrary
authority.
SK hynix cites Cadle Co. v. Whataburger of Alice, Inc.,
174 F.3d 599 (5th Cir. 1999), but that decision is not to the
contrary. In that case, involving review of a dismissal un-
der the first-to-file rule, the Fifth Circuit concluded that
the court with the second-filed case, in considering applica-
tion of the first-to-file rule, need not decide whether the
court with the first-filed case had jurisdiction over the first-
filed case—a question, the Fifth Circuit ruled, that is
properly left to the court with the first-filed case in front of
it. Id. at 605. In contrast, the present matter involves the
court with the second-filed case deciding whether the sec-
ond-filed case (the one in front of it) could have been
brought in the court with the first-filed case. Cadle does
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12 IN RE: SK HYNIX INC.
not address that question, which is a question that
§ 1404(a) affirmatively directs the court with the second-
filed case to consider.
We conclude that SK hynix has not shown a clear legal
entitlement to a different conclusion from the one the dis-
trict court reached as to what is one sufficient basis on
which the district court rejected transfer under the first-to-
file rule. We need not separately address the district
court’s analysis of the non-threshold factors for application
of the rule. This conclusion hardly leaves the two district
courts at issue, in Texas and California, without means, in-
cluding stays, to try to fulfill the first-to-file rule’s objective
of avoiding “inconsistent judgments or waste of party and
judicial resources.” In re: VoIP-Pal.com, Inc., No. 2021-112,
2021 WL 650626, at *2 (Fed. Cir. Feb. 19, 2021).
IT IS ORDERED THAT:
(1) The petition is denied
(2) The motion to stay is denied.
FOR THE COURT
February 25, 2021 /s/ Peter R. Marksteiner
Date Peter R. Marksteiner
Clerk of Court
s29