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Cellular Dynamics International, Inc. v. Lonza Walkersville, Inc.

United States District Court, W.D. Wisconsin

September 12, 2017

CELLULAR DYNAMICS INTERNATIONAL, INC. and WISCONSIN ALUMNI RESEARCH FOUNDATION, Plaintiffs,
v.
LONZA WALKERSVILLE, INC., Defendant.

          OPINION AND ORDER

          STEPHEN L. CROCKER MAGISTRATE JUDGE

         Before the court is the motion of defendant Lonza Walkersville, Inc. to transfer this case to the United States District Court of Maryland on the ground that venue is not proper in this district. Dkt. 30. For the reasons discussed below, I am granting this motion.

         BACKGROUND

         This is a patent infringement action involving stem cell technology. On January 12, 2017, plaintiffs Cellular Dynamics International, Inc. (“CDI”) and Wisconsin Alumni Research Foundation (“WARF”) sued Lonza Walkersville, Inc., for patent infringement, alleging that Lonza had developed and sold induced pluripotent stem cells (“iPSCs”), as well as a platform (known as the “Lonza Kit”) for generating stem cells, that directly or indirectly infringed upon five CDI patents and two WARF patents licensed to CDI.

         Defendant Lonza Walkersville is a Delaware corporation with its principal place of business in Walkersville, Maryland. The patent venue statute, 28 U.S.C. § 1400(b), provides that “[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” Under controlling law at the time plaintiffs filed suit, for purposes of § 1400(b) a corporation was “deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court's personal jurisdiction with respect to the civil action in question.” VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1578 (Fed. Cir. 1990). However, on May 22, 2017, the United States Supreme Court overruled VE Holding and significantly narrowed the reach of the venue statute, finding that the term “reside” as used in the patent venue statute “refers only to the State of incorporation.” Id. at 1520 (citing In Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 226 (1957)). This means that venue no longer can be established in a patent case involving a non-resident corporate defendant merely by showing that the defendant is subject to personal jurisdiction. Instead, venue is proper only “where the defendant has committed acts of infringement and has a regular and established place of business.” 28 U.S.C. § 1400(b); Fourco, 353 U.S. at 226.

         Two days after TC Heartland was decided, defendant filed the instant motion pursuant to 28 U.S.C. § 1406, arguing that venue is no longer proper in this district and asking the court to transfer this case to the United States District Court for the District of Maryland. Dkt. 30.[1]In support, defendant cited to declarations filed by Dr. Thomas Fellner, Lonza Walkersville's Head of Commercial Development of Cell Therapy, in which he averred that:

• Lonza Walkersville was incorporated in Delaware in 1991, and its principal place of business is in Walkersville, Maryland;
• Lonza Walkersville is not registered to do business in Wisconsin and has no regular or established place of business in Wisconsin;
• Lonza Walkersville neither owns nor leases any real estate or other property in Wisconsin, and it has no telephone listings or bank accounts in Wisconsin;
• Lonza Walkersville has no regular employees, agents or distributors that reside in Wisconsin;
• Lonza Walkersville has no offices, no retail outlets, and no distribution centers, order centers or manufacturing facilities in Wisconsin;
• Lonza Walkersville has never had any employees, representatives or agents in Wisconsin at any time;
• Lonza Walkersville does not maintain any inventory in Wisconsin;
• Products bought from Lonza Walkersville are shipped directly from its facility in Walkersville, Maryland to the customer;
• Lonza Walkersville does not have any additional warehouses or facilities in which its products are stored prior to shipment in Wisconsin; and
• There is no long-standing, automatically renewing contract between the University of Wisconsin and Lonza Walkersville.

Dkts. 9, 26. 37.

         Fellner's declarations appeared to refute decisively any claim that defendant has a “regular and established place of business” in this district, but plaintiffs called defendant's due diligence into question when plaintiffs produced a document that appeared to contradict Fellner's denial that defendant had any long-standing contract with the University of Wisconsin. See dkts. 39-40. Accordingly, on June 20, 2017, I granted plaintiffs' request to conduct expedited discovery on venue, but limited it to “some very minimal discovery basically to prove up the due diligence either of Dr. Fellner or a 30(b)(6) representative.” Dkt. 41, 42. Specifically, I ordered defendant to respond to plaintiffs' First Set of Requests for Production, Numbers 1-3 and 7, and to “maybe have somebody sit for a two-hour deposition basically to confirm that due diligence was ...


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