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Rotex Global, LLC v. Gerard Daniel Worldwide, Inc.

United States District Court, W.D. Wisconsin

November 14, 2017

ROTEX GLOBAL, LLC, Plaintiff,
v.
GERARD DANIEL WORLDWIDE, INC., Defendant.

          OPINION AND ORDER

          WILLIAM M. CONLEY DISTRICT JUDGE

         Rotex Global, LLC (“Rotex”) filed suit in July 2016 claiming that screen panels manufactured and sold by Gerard Daniel Worldwide (“GDW”) infringed upon a Rotex patent. (See Am. Compl. (dkt. #6) 1-3.) Following the Federal Circuit's decision in In re Cray, Inc., 871 F.3d 1355 (Fed. Cir. 2017), GDW moved to transfer this lawsuit to the Middle District of Pennsylvania, arguing that venue was improper. (See Transfer Mot. (dkt. #47) 1.) Despite Rotex's objections (see Pl.'s Resp. (dkt. #57) 1-9), the court agrees with GDW and will order transfer.

         FACTUAL BACKGROUND

         In its initial and amended complaints, Rotex alleged that “[v]enue is proper in this judicial district pursuant to 28 U.S.C. §§ 1391(c) and 1400(b).” (Compl. (dkt. #1) 2; Am. Compl. (dkt. #6) 2.) In response to Rotex's assertion that venue was proper, GDW answered that it was not “because [this judicial district] is not the district where defendant resides, the district where a substantial part of the events giving rise to the claim occurred, or the district in which defendant is subject to personal jurisdiction under 28 U.S.C. § 1391.” (Answer (dkt. #12) 2.)

         The following month, the parties filed their joint Rule 26(f) Report, in which they stated there were no “contested issues relating to . . . venue” and that no venue discovery was necessary. (Rule 26(f) Report (dkt. #14) 2.) In December 2016, the court issued its pretrial conference order, specifying that dispositive motions were due September 8, 2017. (Pretrial Conference Order (dkt. #16) 5.) At the end of January 2017, GDW filed an early motion for summary judgment (dkt. #20), which was fully briefed in March (see Reply Br. (dkt. #33)).

         In May 2017, the United States Supreme Court issued its decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514 (2017), holding that a domestic corporation's “‘reside[nce]' in § 1400(b) refers only to the State of incorporation” and reiterating that § 1400(b) does not incorporate § 1391's “broader definition of corporate ‘residence.'” Id. at 1517. In September, the Federal Circuit issued its decision in In re Cray, which held that § 1400(b)'s other basis for venue in a patent case -- “where the defendant has committed acts of infringement and has a regular and established place of business” -- required the defendant to have “a ‘place of business, ' that is ‘regular' and ‘established.'” 871 F.3d at 1362. Four days later, relying on Cray, GDW filed the present motion seeking to transfer the case to the Middle District of Pennsylvania, which encompasses GDW's headquarters. (See Transfer Mot. (dkt. #47) 1; Fake Aff. (dkt. #49) ¶ 7.)

         OPINION

         Venue in patent cases is controlled by 28 U.S.C. § 1400(b), which states 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.” 28 U.S.C. § 1400(b). In TC Heartland, the Supreme Court --as it did in Fourco Glass Co. v. Transmirra Prods. Corp., 353 U.S. 222, 226 (1957) -- concluded that broad understanding of corporate residence in 28 U.S.C. § 1391's general venue provision did not apply to patent venue; rather under § 1400(b), a domestic corporation's residence “refers only to the State of incorporation.” TC Heartland, 1373 S.Ct. at 1519-21.

         Not surprisingly, “litigants and courts [began] raising with increased frequency the question of where a defendant has a ‘regular and established place of business, '” after the Supreme Court's decision in TC Heartland. In re Cray, 871 F.3d at 1359, (citing as examples Raytheon Co. v. Cray, Inc., No. 2:15-cv-01554-JRG, 2017 U.S. Dist. LEXIS 100887; RegenLab USA LLC v. Estar Techs. Ltd., No. 16-CV-08771 (ALC), 2017 U.S. Dist. LEXIS 131627, at *2 (S.D.N.Y. Aug. 17, 2017)). In re Cray also recognized existing “uncertainty surrounding and the need for greater uniformity” in interpreting the statutory language of § 1400(b). Id.[1]

         Accordingly, unlike TC Heartland -- which only addressed the first prong of the patent venue statute - In re Cray considered the meaning of “regular and established place of business.” Id. at 1360. As the Cray court explained,

The statutory language we need to interpret is “where the defendant . . . has a regular and established place of business.” 28 U.S.C. § 1400(b). The noun in this phrase is “place, ” and “regular” and “established” are adjectives modifying the noun “place.” The following words, “of business, ” indicate the nature and purpose of the “place, ” and the preceding words, “the defendant, ” indicate that it must be that of the defendant. Thus, § 1400(b) requires that “a defendant has” a “place of business” that is “regular” and established.” All of these requirements must be present.

Id. at 1362-63. Thus, “(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.” Id. at 1360.[2]The Federal Circuit also “stress[ed] that the analysis must be closely tied to the language of the statute.” Id. at 1362. Finally, the court went on to conclude that the fact a Cray employee's home is in the district did not satisfy the requirements of a “regular and established place of business, ” and thus that venue was improper. Id. at 1364-67.

         Turning to the present case, there can be little dispute that venue is improper in light of In re Cray, at least absent a finding of waiver. Plaintiff nevertheless argues that venue is proper under 28 U.S.C. §§ 1391(c), 1400(b). (See Amend. Compl. (dkt. #6) 2.) As clarified by the Supreme Court in TC Heartland, “the amendments to § 1391 did not modify the meaning of § 1400(b) as interpreted by Fourco” sixty years ago, so that “a domestic corporation ‘resides' only in its State of incorporation for purposes of the patent venue statute.” TC Heartland, 137 S.Ct. at 1517 (emphasis added). Further, the defendant here does not reside in the Western District of Wisconsin as it is incorporated only in Pennsylvania and Delaware. (See Mem. Supp. Mot. Transfer (dkt. #48) 1.)[3]

         Defendant also fails to meet the Federal Circuit's understanding of the “regular and established place of business” requirement of § 1400(b).[4] While plaintiff asserts that “the Accused Product is available for sale to customers located in this district, ” that is not sufficient to satisfy In re Cray's test. 871 F.3d at 1360, 1362-63. Instead, as detailed above, plaintiff would need to prove that defendant has an established physical location where it regularly conducts business within this district for venue to be proper. See id.; see also Niazi v. St. Jude Med. S.C., Inc., Nos. 17-cv-183-jdp, 17-cv-184-jdp, 17-cv-185-jdp, 17-cv-283-jdp, 2017 WL 5159784, at *1, *3-*4 (relying on In re Cray to determine that venue was improper in patent infringement case). Plaintiff cannot begin to make that showing. As defendant's Chief Financial Officer states, the company: has no place of business in Wisconsin, employs no salespeople in Wisconsin, and owns no property in ...


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