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District Court Ordered to Take a Second Look at the First-To-File Rule

| Karen CassidyAndrew Morrell, Ph.D.

IN RE: NITRO FLUIDS

Before Reyna, Wallach, and Chen.  Petition for writ of mandamus to Western District of Texas.

Summary: The balance of transfer factors must favor keeping a case in a second-filed court in order to justify an exception to the first-to-file rule.

Cameron initially filed a patent infringement suit against Nitro in the Southern District of Texas concerning fracking technology.  Two years later, Cameron filed a second infringement suit on the same accused products in the Western District of Texas asserting additional patents from the same patent family as the first suit.  Nitro then moved for the Western District of Texas to decline jurisdiction or transfer to the Southern District of Texas relying on the first-to-file rule, which generally dictates that the court in which an action is first filed is the appropriate court to determine whether subsequently filed cases involving substantially similar issues should proceed.  The Western District of Texas, rejecting application of the first-to-file rule, denied the motion.  The court’s rejection of the first-to-file rule rested on the legal proposition that the first-to-file rule is only applicable when the balance of the 28 U.S.C. § 1404(a) transfer factors favors the first-filed court. The Western District of Texas found that, because a balance of the transfer factors did not weigh in favor of transfer, compelling circumstances existed to avoid application of the first-to-file rule.  Nitro then filed a mandamus petition.

On appeal, the Federal Circuit found that the district court’s reasoning was backwards, explaining that the proper legal proposition is that the first-to-file rule is applicable unless the balance of transfer factors favors keeping the case in the second-filed court, thereby providing compelling circumstances to justify an exception to the first-to-file rule.  Upon reviewing the district court’s finding that two factors favored transfer, two favored the second court, and the remainder where neutral, the Federal Circuit criticized the depth of the district court’s analysis.  It also indicated that additional proceedings were needed to address errors in assessing the two factors favoring the second court and the lynchpin of the district court’s analysis—it’s purported ability to hear the case quicker.  In vacating the district court’s order, the Federal Circuit instructed the district court to reconsider the transfer factors in view of the availability of multi-district procedures and whether keeping the case in the second-filed court would impermissibly thwart the first-to-file rule.

Editor: Paul Stewart