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Infinity Computer Products, Inc. v. Oki Data Americas, Inc.

United States District Court, D. Delaware

February 23, 2018

INFINITY COMPUTER PRODUCTS, INC. Plaintiff
v.
OKI DATA AMERICAS, INC. Defendant INFINITY COMPUTER PRODUCTS, INC. Plaintiff
v.
LEXMARK INTERNATIONAL, INC. Defendant INFINITY COMPUTER PRODUCTS, INC. Plaintiff
v.
CANON USA, INC. Defendant INFINITY COMPUTER PRODUCTS, INC. Plaintiff
v.
EPSON AMERICA, INC. Defendant

          MEMORANDUM OPINION

          NITZA I. QUIÑONES ALEJANDRO, U.S.D.C. J.

         INTRODUCTION

         The above-captioned civil actions are part of twelve cases which were consolidated by Order dated January 11, 2018, [1] (collectively, the “Related Cases”) for discovery and pretrial purposes with Civil Action No. 12-6796 designated as the lead case. Before this Court are four motions to transfer the above-captioned cases based upon arguments of improper venue, and the recent Supreme Court decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514 (2017) and 28 U.S.C. § 1400(b). Defendant Toshiba America Business Solutions, Inc., (“Toshiba”) also filed a motion to transfer venue, however; said motion is based on 28 U.S.C. § 1404(a), forum non conveniens and, therefore, will be addressed by separate opinion. [See 12-cv-6799 at ECF 71].[2]

         Specifically, in their respective motions, Defendants OKI Data Americas, Inc. (“OKI”), Lexmark International, Inc., (“Lexmark”), Canon U.S.A, Inc., (“Canon”), and Epson America, Inc., (“Epson”) (collectively, the “Moving Defendants”) seek to transfer their cases as follows: Defendant OKI to the District of Delaware, [12-cv-6797 at ECF 80]; Defendant Lexmark to the Eastern District of Kentucky, [12-cv-6799 at ECF 71]; Defendant Canon to the Eastern District of New York, [12-cv-6800 at ECF 61]; and Defendant Epson to the Central District of California. [12-cv-6806 at ECF 61]. Plaintiff Infinity Computer Products, Inc. (“Plaintiff” or “Infinity”) opposes these motions on the basis of waiver, prejudice, and Dietz v. Bouldin, 136 S.Ct. 1885 (2016).[3]

         The issues raised in these four motions have been fully briefed by the parties and are now ripe for disposition. This Court notes that the issues and relevant facts relied upon in the various motions to transfer, responses and replies are similar, except where noted, and, therefore, these motions will be jointly addressed and decided. For the reasons set forth, Moving Defendants' respective motions to transfer are granted.

         BACKGROUND[4]

         To give context to the motions to transfer venue, a summary of the protracted procedural history in these cases is warranted:

On June 30, 2010, Plaintiff filed a patent infringement action against fifteen corporate defendants, including Moving Defendants, which was docketed at Civil Action No. 10-3175 (the “Original Case”), and assigned to the calendar of the Honorable Legrome D. Davis.[5] Subsequently, Plaintiff amended the complaint to assert additional patent infringement counts related to its Patent Nos. 6, 894, 811 (the “811 Patent”) and 7, 489, 423 (the “423 Patent”).[6] [Original Case ECF 158]. On October 5, 2012, the defendants filed motions to dismiss the complaint and/or sever based on misjoinder, [Original Case ECF 260, 261], which Plaintiff opposed. [Original Case ECF 265, 266]. On November 16, 2012, Judge Davis granted the motion to sever, [Original Case ECF 280], and ordered that the civil actions, other than the one involving Defendant Brother International Corporation, be severed, [7] and that Plaintiff file separate complaints against each defendant. On December 5, 2012, Plaintiff filed separate complaints (the Related Cases), [8] which alleged the infringement of the 811 and 423 Patents, as well as Patent Nos. 8, 040, 574 (the “574 Patent”) and Patent 8, 294, 915 (the “915 Patent”), [9] (Patents 811, 423, 574 and 915, will be referred to as collectively the “Patents”).
In January 2013, Defendant Epson filed a motion to dismiss the complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6), and in February 2013, Defendant OKI filed a motion for judgment on the pleadings as to the 811 Patent and a motion to dismiss the complaint pursuant to Rule 12(b)(6). Judge Davis denied these motions.
In the spring of 2013, defendants in the Related Cases, including Moving Defendants, moved to stay their respective actions pending the outcome of a reexamination of the Patents by the United States Patent and Trademark Office (“USPTO”). Notwithstanding Plaintiff's opposition, Judge Davis granted the motions and stayed all proceeding pending the conclusion of the reexamination.
On July 12, 2013, Plaintiff's then counsel, Attorney Robert Sachs, moved to withdraw as counsel. Judge Davis denied the motion. On November 18, 2013, Attorney Sachs renewed his motion to withdraw as counsel. By Order dated November 22, 2013, Judge Davis granted the motion and ordered Plaintiff to “promptly retain new counsel.” Despite the passage of more than three-and-one-half years, no attorney entered an appearance on behalf of Plaintiff. In June 2017, Moving Defendants filed individual motions to dismiss the complaints filed against them pursuant to Rule 41(b) based on Plaintiff's failure to prosecute its claims and comply with Judge Davis' orders.[10] On June 15, 2017, Judge Davis again ordered Plaintiff to obtain counsel and to file a response to the Rule 41(b) motions. On July 13, 2017, Attorney Edward Behm, Jr., entered his appearance on behalf of Plaintiff, and filed responses in opposition to the Rule 41(b) motions. On July 28, 2017, Plaintiff filed motions to lift the stay in the Related Cases, which were granted by Judge Davis by Order dated August 8, 2017.
Judge Davis retired in September 2017, and by Order dated October 3, 2017, the Related Cases were reassigned to the undersigned. By Order dated October 12, 2017, Moving Defendants' various Rule 41(b) motions were denied. Subsequently, Moving Defendants filed the instant motions to transfer for improper venue pursuant to 28 U.S.C. §§ 1400 and 1406.[11]

         LEGAL STANDARD

         In deciding a motion to transfer for improper venue, courts must generally accept as true the allegations in the complaint, although the parties may submit affidavits in support of their positions.[12] See Myers v. Am. Dental Ass'n, 695 F.2d 716, 724 (3d Cir. 1982); see also Anderson v. TransUnion, LLC, 2018 WL 334495, at *1 (E.D. Pa. Jan. 9, 2018). The court may examine facts outside the complaint to determine proper venue, but must draw all reasonable inferences and resolve all factual conflicts in the plaintiff's favor. See Heft v. AAI Corp., 355 F.Supp.2d 757, 762 (M.D. Pa. 2005). The movant bears the burden of proving that venue in the selected judicial district is improper. Myers, 695 F.2d at 724; see also Bockman v. First Am. Mktg. Corp., 459 Fed.Appx. 157, 160 (3d Cir. 2012).

         As noted, these civil actions are based on claims of patent infringement. The applicable venue statute provides that a “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). For purposes of venue under § 1400(b), a domestic corporation “resides” only in its state of incorporation. TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514, 1521 (2017). Further, to have a “regular and established place of business” in a district, a defendant must have “a physical, geographical location in the district from which the business of the defendant is carried out.” In re Cray Inc., 871 F.3d 1355, 1362 (Fed. Cir. 2017).[13] The place of business must be both “regular, ” which means that it operates in a “steady[, ] uniform[, ] orderly [, and] methodical” manner, and “established, ” which means that it is not transient but instead “settle[d] certainly, or fix[ed] permanently.” Id. at 1362-63. Finally, the place of business must be the defendant's place, and not simply a place of the defendant's employees-the defendant must be the one that established or ratified the business. Id. at 1363.

         If a district court determines that venue is improper, the court may either dismiss the case or, if it is in the interest of justice, may transfer the case to any district in which it properly could have been brought. 28 U.S.C. § 1406(a). The court may transfer the entire case or may sever the claims for which venue is improper and transfer only those claims. Cottman Transmission Sys., Inc. v. Martino, 36 F.3d 291, 296 (3d Cir. 1994). The decision of whether to transfer an action is a matter within the district court's discretion. See 28 U.S.C. § 1404(b). The moving party bears the burden of establishing the need for transfer. Myers, 695 F.2d at 724.

         DISCUSSION

         With this legal framework in mind, Moving Defendants argue that venue is improper in the United States District Court for the Eastern District of Pennsylvania because each Moving Defendant is a domestic corporation incorporated in a state other than Pennsylvania, and none maintains headquarters, or a place of business, or offices, in Pennsylvania. As such, Defendant OKI seeks transfer of its case to the District of Delaware, the state in which it is incorporated. Defendant Lexmark seeks transfer of its case to the Eastern District of Kentucky, arguing that its principal place of business is in Lexington, Kentucky. Defendant Canon seeks transfer of its case to the Eastern District of New York as it is incorporated in New York and its principal place of business is in the Eastern District of New York. Defendant Epson seeks transfer of its case to the Central District of California because it is incorporated in California and maintains its headquarters in the Central District of California.

         Plaintiff objects to any transfer and argues that (1) Moving Defendants waived any right to assert improper venue, (2) any transfer would cause Plaintiff to suffer prejudice, and (3) any transfer would be inappropriate under the holding of Dietz v. Bouldin, 136 S.Ct. 1885 (2016). Plaintiff also argues that as to Defendants Canon and Lexmark, venue is proper because both Defendants maintain a presence in this federal district. Because Plaintiff's waiver, Dietz, and prejudice arguments apply to all Moving Defendants, these arguments will be jointly addressed.

         Plaintiff's Waiver of Improper Venue Argument

         Moving Defendants rely exclusively on the Supreme Court decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514 (2017), decided on May 22, 2017, to support their improper venue arguments. In that case, the Supreme Court definitively established that consistent with 28 U.S.C § 1400(b), “any civil action for patent infringement may be brought in the judicial district where the defendant resides”, and that a domestic corporation “resides” only in its state of its incorporation. TC Heartland, 137 S.Ct. at 1521. Thereafter, on November 15, 2017, the Federal Circuit Court, whose decisions in patent cases are binding on this Court, held that the TC Heartland decision constituted an intervening change of law. In re Micron Tech., Inc., 875 F.3d 1091, 1099-1100 (Fed. Cir. 2017). The Micron ruling established binding authority that a TC Heartland-based venue objection became available only after the TC Heartland decision was rendered. Thus, a defendant wishing to file a motion asserting a TC Heartland venue argument is not barred from doing so by operation of Rule 12(h) waiver provisions, merely because it filed a previous Rule 12(b) motion prior to TC Heartland. Id. at 1096-1100;[14] see also Fed. R. Civ. P. 12(h).

         Plaintiff does not strenuously dispute that TC Heartland is a change of law.[15] Instead, Plaintiff argues that Moving Defendants waived any right to raise this improper venue argument based on their actions and/or inactions after TC Heartland was decided. Specifically, Plaintiff argues that Moving Defendants waived their improper venue argument because they: (1) waited approximately six months or longer after the TC Heartland decision was issued on May 22, 2017, to file the improper venue motions and (2) filed ...


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