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Niazi v. St. Jude Medical S.C., Inc.

United States District Court, W.D. Wisconsin

November 7, 2017

IMRAN NIAZI, Plaintiff,
v.
ST. JUDE MEDICAL S.C., INC., Defendant. IMRAN NIAZI, Plaintiff,
v.
BOSTON SCIENTIFIC CORP., Defendant. IMRAN NIAZI, Plaintiff,
v.
BOSTON SCIENTIFIC CORP., Defendant. IMRAN NIAZI, Plaintiff,
v.
MEDTRONIC, INC., Defendant.

          OPINION & ORDER

          JAMES D. PETERSON District Judge

         In each of these four cases, plaintiff Imran Niazi is suing the defendant for alleged infringement of U.S. Patent No. 6, 638, 268, which discloses a type of heart catheter. Various motions are pending in each case, but all of the defendants have filed motions to dismiss for improper venue.

         In light of TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514 (2017), In re Cray Inc., 871 F.3d 1355 (Fed. Cir. 2017), and the evidence submitted by the parties, the court is persuaded that venue is not proper in this district as to any of the four cases because none of the defendants “reside[]” here or have a “regular and established place of business” here, as required by 28 U.S.C. § 1400(b). This conclusion makes it unnecessary to decide the other pending motions.

         Under 28 U.S.C. § 1406(a), a court has discretion to dismiss a case for improper venue or transfer it to a district where the plaintiff could have filed it. Although this court generally favors transfer over dismissal, Niazi has complicated the analysis by transferring ownership of the '268 patent to a corporation after he filed these cases, leading most of the defendants to file new motions to dismiss on the ground that Niazi no longer has standing to sue. To avoid questions about jurisdiction after a transfer, the court will dismiss the cases so that Niazi and the assignee can refile after determining the proper parties. Sinochem Intern. Co. Ltd. v. Malaysia Intern. Shipping Corp., 549 U.S. 422, 431 (2007) (“[A] federal court has leeway to choose among threshold grounds for denying audience to a case on the merits. . . . Jurisdiction is vital only if the court proposes to issue a judgment on the merits.”) (internal quotations and alterations omitted).

         ANALYSIS

         The dispositive question in each of these cases is whether venue is proper under 28 U.S.C. § 1400(b), which is the “sole and exclusive provision controlling venue in patent infringement actions.” Fourco Glass Co. v. Transmirra Prods. Corp., 353 U.S. 222, 229 (1957). Under § 1400(b), venue is proper in a judicial district if the defendant: (1) “resides” in that district; or (2) “has committed acts of infringement” and has “a regular and established place of business” in that district.

         After 1990, litigants rarely debated § 1400(b) because the Court of Appeals for the Federal Circuit held that a corporate patent defendant “resides” anywhere it is subject to personal jurisdiction, VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1584 (Fed. Cir. 1990), rendering the venue question redundant. But in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514, 1517 (2017), the Supreme Court overruled VE Holding, concluding that “a domestic corporation ‘resides' only in its State of incorporation for purposes of the patent venue statute.” With a much narrower interpretation of the first half of § 1400(b) now established by the Supreme Court, it was inevitable that challenges to venue would become more frequent and require courts to consider anew whether the requirements of the second half of the provision are satisfied in a particular case.

         In these cases, it is undisputed that none of the defendants are incorporated in Wisconsin, so none of them “reside” here. As to the second option for establishing proper venue, some of the defendants admit that they sell accused products in this district and some deny that they do, but all of the defendants deny that they have “a regular and established place of business” in the district, so the court will focus on that issue.

         In its first decision interpreting § 1400(b) since TC Heartland, the Federal Circuit provided guidance on the question of how district courts should determine whether a defendant has a regular and established place of business in a particular district. In re Cray Inc., 871 F.3d 1355 (Fed. Cir. 2017).[1] The court explained that Federal Circuit law rather than regional circuit law governs the interpretation of § 1400(b) because the provision is specific to patent cases. Id. at 1360. But the court cited as persuasive authority various decisions that predated the creation of the Federal Circuit, including several cases from the Seventh Circuit. Grantham v. Challenge-Cook Bros., Inc., 420 F.2d 1182, 1185-86 (7th Cir. 1969); Univ. of Ill. Found. v. Channel Master Corp., 382 F.2d 514, 516 (7th Cir. 1967); Knapp-Monarch Co. v. Casco Prods. Corp., 342 F.2d 622, 625 (7th Cir. 1965); Shelton v. Schwartz, 131 F.2d 805, 808 (7th Cir. 1942). The court identified three requirements for satisfying § 1400(b): (1) there must be a physical place in the district; (2) it must be a regular and established place of business; and (3) it must be the place of the defendant. If any statutory requirement is not satisfied, venue is improper under § 1400(b). Cray, 871 F.3d at 1360.

         Before discussing the application of Cray to these cases, there is a threshold question that Niazi and some defendants dispute, which is whether the plaintiff or the defendant has the burden of proof to show that venue is proper or improper in this district. The court in Cray did not discuss the issue and the parties do not cite any other Federal Circuit authority addressing it. All the parties assume that Seventh Circuit law is controlling (presumably because proving proper venue is not an issue that is unique to patent law), but they disagree on what that law is. Defendants cite Grantham, 420 F.2d at 1184, in which the court stated that the “[p]laintiff has the burden of establishing proper venue.” Niazi cites Matter of Peachtree Lane Assocs., Ltd., 150 F.3d 788, 792 (7th Cir. 1998), in which the court stated that “the party challenging venue bears the burden of establishing by a preponderance of the evidence that the case was incorrectly venued.”

         As a number of district courts have recognized, the Seventh Circuit has not resolved the tension between these two cases or even acknowledged the tension. E.g., Timm v. Goodyear Tire & Rubber Co., 2014 WL 6909015, at *3 (N.D. Ind. Dec. 8, 2014); Robinson Steel Co. v. Caterpillar Inc., 2011 WL 923415, at *5 (N.D. Ind. Mar. 14, 2011). Niazi asks this court to follow Peachtree because it is the more recent decision, but that is not how the doctrine of stare decisis works in the context of intermediate appellate decisions. Rather, the general rule is that “[o]ne panel of a circuit court cannot overrule another panel, ” at least in the absence of an intervening statute or Supreme Court decision. 18 James Wm. Moore, Moore's Federal Practice § 134.02[1][c] (3d ed. 2016). In this circuit, when one panel disagrees with a previous panel's decision, the proper procedure is to seek approval from the full court to overrule the earlier decision. 7th Cir. Rule 40(e). See also Hively v. Ivy Tech Cmty. Coll., S. Bend, 830 F.3d 698, 718 (7th Cir. 2016) (declining in context of panel decision to overturn previous panel decisions despite noting serious criticisms with earlier holdings). In Peachtree, the court did not seek full court approval to overturn Grantham; in fact, the court did not even acknowledge Grantham. Thus, Peachtree could not overrule Grantham.

         Courts have a duty to attempt to reconcile seemingly inconsistent precedents when possible. Fields v. Wharrie, 740 F.3d 1107, 1119 (7th Cir. 2014) (Sykes. J., concurring in part and dissenting in part) (“[W]e should try to harmonize the two cases if we can.”). The obvious way of doing that in this case is to look at the context of the holdings in Grantham and Peachtree. In Peachtree, the court was applying the venue provision in 28 U.S.C. § 1408, which applies only in the bankruptcy context. In Grantham, the court was applying § 1400(b), the very provision at issue in these cases. Because Grantham is directly on point, the court will follow that case. See also 14D Charles Alan Wright, et al., Federal Practice and Procedure § 3826 (4th ed.) (“The weight of judicial authority appears to be that when the defendant has made a proper objection, the burden is on the plaintiff to establish that the chosen district is a proper venue. This may be considered the better view because it is consistent with the plaintiff's threshold obligation to show that the case belongs in the particular district court in which suit has been instituted.”) (footnotes omitted).

         Together, TC Heartland, Cray, and Grantham are dispositive of the venue question in all four of Niazi's cases. Each of the defendants has submitted affirmative evidence that it does not own or rent offices or any other facilities in this district. No. 17-cv-183, Dkt. 15; No. 17-cv-184, Dkt. 27; No. 17-cv-185, Dkt. 21; No. 17-cv-283, Dkt. 17. Niazi does not dispute this evidence. Instead, to support a finding that defendants have a regular and established place of business in this district, Niazi cites evidence that each of the defendants employs sales representatives who live or work in this district. Niazi also alleges that some of the defendants have registered with the Wisconsin Department of Financial Institutions. But these allegations show only that the defendants do business in this district, not that they have a place of business.

         In Cray, the court rejected the view of the district court, which had held that “‘a fixed physical location in the district is not a prerequisite to proper venue.'” 871 F.3d at 1362 (quoting Raytheon Co. v. Cray, Inc., No. 2:15-cv-01554, 2017 WL 2813896, at *11 (E.D. Tex. June 29, 2017). Rather, ‚Äúthere must . . . be a physical, geographical location in the district from which the business of the defendant is carried out. . . . The ...


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