Last week, the U.S. Court of Appeals for the Federal Circuit issued a decision in In re: Nitro Fluids LLC, No. 2020-142 (Fed. Cir. Oct. 28, 2020), granting mandamus relief and ordering further proceedings to determine if transfer of venue is required under the first-to-file rule.
Cameron International Corporation sued Nitro Fluids in 2018 in the Southern District of Texas where both parties are headquartered. Cameron alleged Nitro infringed patents related to fracturing-fluid delivery systems. In February 2020, Cameron filed the instant suit in the Western District of Texas alleging infringement of related patents. Nitro moved the Western District to decline jurisdiction or to transfer the action based on the first-to-file rule. The Western District found the first-to-file rule would apply, but refused to transfer the action. The Western District held there were compelling circumstances not to transfer because a balance of the convenience factors did not favor transfer.
Nitro filed a petition for a writ of mandamus with the Federal Circuit seeking an order directing the Western District to transfer the action based on the first-to-file rule. The Federal Circuit granted the petition. The Court noted that the district court applied an incorrect legal standard when it concluded the first-to-file rule only comes into play after it has been determined that the balance of convenience factors favors the first-filed court. The Court explained that the correct statement of law is that transfer to the first-filed court is proper unless, in weighing the convenience factors, compelling circumstances exist to justify an exception favoring the second-filed court. Because the district court’s decision was based on an incorrect statement of the relevant legal standard, the Court vacated the order denying transfer and remanded the case for the district court to reconsider the transfer motion under the proper legal standard. The Court also noted that, on remand, the district court’s consideration of the congestion factor should focus on the overall docket congestion as between the two districts rather than on the time the related case has been pending. Finally, the Court noted that, on remand, the district court’s consideration of the judicial economy factor should focus on avoiding the need for two courts to consider the same or similar issues rather than on speed of resolution.