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Presby Patent Trust v. Infiltrator Water Technologies, LLC

United States District Court, D. Maine

November 29, 2017




         A wastewater treatment system manufacturer moves to dismiss a patent infringement suit brought by a patent trust, arguing improper venue. Based on intervening caselaw from the United States Supreme Court in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S.Ct. 1514 (2017), because the defendant's characteristics do not meet the statutory requirements as interpreted by the Supreme Court for proper venue in a patent infringement action, the Court finds that venue in the District of Maine is improper. Concluding that transfer of the case is in the interest of justice and that the District of Delaware is the proper venue for this action, the Court transfers the case to the District of Delaware.

         I. BACKGROUND

         A. Procedural History

         On February 22, 2017, Presby Patent Trust (Presby) filed suit alleging that Infiltrator Water Technologies, LLC and Infiltrator Systems, Inc. (collectively Infiltrator) infringed two of its patents. Compl. (ECF No. 1). On April 28, 2017, Infiltrator moved to dismiss for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3) and 28 U.S.C. § 1406(a). Defs.' Mot. to Dismiss for Improper Venue (Defs.' Mot.) (ECF No. 14). In the alternative, Infiltrator requested that the Court defer ruling on the motion until the Supreme Court issued a decision in a case Infiltrator argued would control- TC Heartland LLC v. Kraft Foods Group Brands LLC. Id. at 7. Infiltrator attached three exhibits. Id. Attachs. 1-3. Presby filed its opposition on May 18, 2017. Pl.'s Obj. to Defs.' Mot. to Dismiss for Improper Venue (Pl.'s Opp'n) (ECF No. 15). On May 22, 2017, the Supreme Court issued its decision in TC Heartland. Infiltrator replied to Presby's opposition on June 1, 2017, attaching a copy of the TC Heartland opinion. Defs.' Reply in Supp. of its Mot. to Dismiss for Improper Venue (Defs.' Reply) (ECF No. 16); Defs.' Reply Attach. 1.

         B. Relevant Factual Allegations [1]

         Infiltrator is a corporation organized and existing under the laws of the state of Delaware.[2] Defs.' Mot. at 3. Its headquarters and principal place of business are located in Old Saybrook, Connecticut. Compl. ¶ 2; Defs.' Mot. at 3. Infiltrator has sold, through Maine distributors or otherwise, products and systems that infringe patents held by the plaintiff, or has caused the installation of products and systems, the use of which infringes patents held by the plaintiff, within the state of Maine. Compl. ¶¶ 5, 23. Specifically, Infiltrator has directly infringed Presby's patents by making, using, importing, selling, and/or offering to sell its Advanced Leachfield Treatment (ATL) product. Compl. ¶¶ 27, 29. Infiltrator has indirectly infringed the patents by inducing its customers to directly infringe the claims of those patents or by knowingly providing an infringing product (the ATL) that has no substantial non-infringing uses. Compl. ¶¶ 28, 30.

         C. The Parties' Positions

         1. Infiltrator's Motion

         In its motion, Infiltrator argues that the plain language of the relevant venue statutes and Supreme Court precedent at the time of the filing make clear that 28 U.S.C. § 1400(b) is the specific, unique provision that exclusively governs venue in patent infringement cases. Defs.' Mot. at 1-2, 4.

         Infiltrator argues that Presby's reliance in its Complaint on the more expansive, general venue statute, 28 U.S.C. § 1391, is misplaced. Id. at 1. Infiltrator acknowledges that the Federal Circuit endorsed borrowing the definition of corporate residence from § 1391(c) in patent infringement suits in its opinion in TC Heartland. Id. at 1-2 (citing In re TC Heartland LLC, 821 F.3d 1338, 1341 (Fed. Cir. 2016)). However, Infiltrator asserts that the Federal Circuit ruled incorrectly and predicted that the Supreme Court, which at the time of Infiltrator's filing had granted certiorari in that case, would reverse. Id. at 1-2, 4, 5-7; see In re TC Heartland LLC, 821 F.3d 1338 (Fed. Cir. 2016), cert granted, 137 S.Ct. 614 (U.S. Dec. 14, 2016) (No. 16-341).

         Infiltrator claims that applying § 1400(b) to the facts in this case reveals that venue is improper in the District of Maine. The statute provides that, for patent infringement actions, venue is proper only in a judicial district “(1) where the defendant resides, or (2) where the defendant has committed acts of infringement and has a regular and established place of business.” Id. at 4. In applying § 1400(b), Infiltrator quotes Fourco Glass Company v. Transmirra Products Corporation, 353 U.S. 222, 226 (1957): “28 U.S.C. § 1400(b) is the sole and exclusive provision controlling venue in patent infringement actions, and that it is not to be supplemented by the provisions of 28 U.S.C. § 1391(c).” 353 U.S. at 229. Infiltrator also cites the Supreme Court's holding in Fourco that, with respect to corporations, the phrase “where the defendant resides” in § 1400(b) means “the state of incorporation only.” Id. at 226. Infiltrator asserts that, because it is not incorporated in Maine, the first clause of § 1400(b) does not support proper venue in the District of Maine. Defs.' Mot. at 3.

         Infiltrator goes on to point out that the test in the second clause is equally inapplicable in this case because Infiltrator does not have “a regular and established place of business” in Maine. In support of this assertion, Infiltrator states that it does not maintain, own, or lease any offices, facilities, retail locations, warehouses, or other property of any kind in the state of Maine. Id. at 3. Infiltrator accepts all orders from its regular place of business in Old Saybrook, Connecticut, and it ships orders to its customers from manufacturing and warehouse facilities located outside of Maine. Id. The only presence of any kind that Infiltrator claims to have in Maine is one employee who resides in the state and works remotely from his own home by personal choice, not at the request of or for the business purposes of Infiltrator. Id. at 3 n.4. That employee is not involved in the sale or advertisement of Infiltrator products within Maine, and he does not keep an inventory of products at his home, nor does he provide technical consulting to any customers located in Maine. Id. It argues that this one employee working remotely from home does not constitute a “regular and established place of business.” Id. Therefore, Infiltrator concludes, § 1400(b) does not support proper venue in the District of Maine. Section 1400(b) being the exclusive provision governing venue in cases of this sort, venue is improper here.

         2. Presby's Opposition

         Presby does not dispute Infiltrator's arguments about how § 1400(b), under Fourco, would apply to the facts of this case. Nor does it dispute any of Infiltrator's assertions about its presence (or lack thereof) in Maine. Instead Presby argues that Fourco is dead letter and bases its opposition upon disputing the proposition that § 1400(b) is to be read without reference to § 1391(c) in interpreting where a corporate defendant “resides” for purposes of determining proper venue in patent infringement cases.

         Presby writes that “Fourco has not been controlling precedent for years, ” Pl.'s Opp'n at 1, and that, as such, the broad definition of corporate “residency” in § 1391(c) should be borrowed to give meaning to § 1400(b)'s reference to where a defendant “resides.” In support, Presby cites the Federal Circuit's decision in In re TC Heartland LLC, (then under review by the Supreme Court), as well as another Federal Circuit case, VE Holding Corporation v. Johnson Gas Appliance Company, 917 F.2d 1574, 1578 (Fed. Cir. 1990).[3]Pl's. Opp'n at 2-7. It goes on ...

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