In a recent decision from the Eastern District of Texas, Texas Data Co. LLC v. Target Brand, Inc., et. al., U.S. District Judge T. John Ward denied Target's Motion to Transfer to the Eastern District of Wisconsin by distinguishing this case from the Federal Circuit's decisions in In re Zimmer Holdings Inc. and In re Microsoft Corp.

An after-effect of this case may be more companies setting up shop in the Eastern District of Texas for the purpose of filing suit in that district.

By way of background, Texas Data Co. brought this false marking case against Target Brands Inc. and Target Corp. alleging that Target marked its Up & Up Training Pants with expired patents. The accused product is manufactured by Kimberly-Clark Corp. at its Paris, Texas, facility.

While the product is physically marked in Paris, Texas, the decision to mark the product with the specific patent numbers was made in Kimberly-Clark's facility in Neenah, Wisc.

In deciding whether to transfer the case, the U.S. Court of Appeals for the Federal Circuit examined several private and public factors.

The court found that only two of the factors --relative ease of access to sources of proof and cost of attendance for willing witnesses-- weighed slightly in favor of transfer and one factor --availability of compulsory process-- weighed slightly against transfer. The remaining factors were neutral.

Thus, the court concluded that Target had not met its burden of showing that the Eastern District of Wisconsin was "clearly more convenient" than the Eastern District of Texas.

The most interesting aspect of this decision was the court's reasoning with respect to the local interest factor. Target argued that Texas Data "appears to have created a weak business practice in the forum solely for the convenience of its litigation counsel," and "its choice of venue is a 'legal fiction' that is not to be given weight in the venue analysis."

The court distinguished the present case from recent Federal Circuit decisions in Zimmer and Microsoft since the president of Texas Data lived within the district more than a year and virtually all of Texas Data's activities and employees were located in the district.

The court did not view the present case as one in which the "plaintiff from out of state or country, as in Zimmer and Microsoft, created a company or office in the Eastern District of Texas to manipulate venue."

"There is no dispute that Texas Data was formed in anticipation of litigation, and its business model is solely to bring false marking lawsuits," the court wrote. "But there is a difference between forming a company in an attempt to manipulate venue and forming a company in anticipation of litigation."

As a result, the court gave some weight to Texas Data being incorporated in Texas and conducting relevant operations in that district.

This decision will likely encourage the formation of other companies in this district in anticipation of litigation.

Should Target seek review of this decision by the Federal Circuit, will the Federal Circuit agree with the District Court and find the facts of this case distinguishable from Zimmer and Microsoft?

The question becomes: is this district attempting to "carve" out an exception in light of Zimmer, Microsoft and In re Acer American Corp.? And if so, would it hold up on appeal?

All interesting questions -- we will have to wait and see whether Target will seek review of this decision by the Federal Circuit.

Anthoula Pomrening is a partner with McDonnell Boehnen Hulbert & Berghoff LLP in Chicago, Ill. She has experience in all areas of patent and trademark practice. She can be contacted at (312)935-2366 (direct) or pomrening@mbhb.com.