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T-Jat Systems 2006 Ltd. v. Expedia, Inc.

United States District Court, D. Delaware

January 29, 2019

T-JAT SYSTEMS 2006 LTD., Plaintiff,
v.
EXPEDIA, INC. DE and ORBITZ WORLDWIDE, INC., Defendants.

          MEMORANDUM ORDER

         Presently before the Court is Plaintiffs motion for reconsideration (D.I. 47) of the Court's opinion and order (D.I. 45, 46) granting Defendants' motion to dismiss (D.I. 25) for improper venue over Expedia, Inc. (WA).[1] I have reviewed the parties' briefing (D.I. 47, 51) and related papers (D.I. 54, 58). I have also reviewed the parties' prior briefing in support of the motion to dismiss (D.I. 26, 28, 30) and related papers (D.I. 38, 41). I held oral argument for the motion to dismiss on November 16, 2017. (D.I. 43).

         I. BACKGROUND

         Plaintiff brought this action for patent infringement against Defendants Expedia, Inc. (DE) ("Expedia-DE"), Expedia, Inc. (WA) ("Expedia-WA"), and Orbitz Worldwide, Inc. (D.I. 1). Expedia-WA is a Washington corporation. (D.I. 24 14 (Second Amended Complaint)). In opposition to the prior motion to dismiss, Plaintiff argued that venue over Expedia-WA is proper under the second prong of 28 U.S.C. § 1400(b), which provides that a patent infringement action may be brought in any district "where the defendant has committed acts of infringement and has a regular and established place of business." I dismissed the case with respect to Expedia-WA on the grounds that Plaintiff failed to show Expedia-WA has a regular and established place of business in Delaware. (D.I. 45 at 14-16).

         Plaintiffs theory for venue was based on an alleged agency relationship between Expedia-WA and its parent company Expedia-DE. Plaintiff argued that Expedia-DE is a Delaware corporation and thus establishes proper venue in Delaware for its agent Expedia-WA. I found that Plaintiff conflated the two prongs of § 1400(b). The first prong provides that venue is proper in the district where the defendant resides (i.e., is incorporated). I held that while a principal's regular and established place of business may in some cases determine an agent's regular and established place of business, Plaintiff had no support for the proposition that "a principal's residence can determine an agent's regular and established place of business." (Id. (quotation marks omitted)).

         Plaintiff now raises a new theory for venue. Rather than focusing on Expedia-WA's relationship with its parent company, Plaintiff focuses on its relationship with a subsidiary. Plaintiff asserts that Expedia-WA wholly owns CSC Holdings Inc. ("CSC Holdings"), which wholly owns CruiseShip Centers International, Inc. ("CSC International"), which has a regular and established place of business in Delaware. (D.I. 47 at 3, Ex. 1). Both CSC Holdings and CSC International are Canadian corporations. (Id., Ex. 1).

         II. LEGAL STANDARD

         A. Reconsideration

         A court's decision "may be altered or amended if the party seeking reconsideration shows at least one of the following grounds: (1) an intervening change in the controlling law; (2) the availability of new evidence that was not available when the court granted the [motion]; or (3) the need to correct a clear error of law or fact or to prevent manifest injustice." Max's Seafood Cafe ex rel. Lou-Ann, Inc. v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999). "'[N]ew evidence,' for reconsideration purposes, does not refer to evidence that a party obtains or submits to the court after an adverse ruling. Rather, new evidence in this context means evidence that a party could not earlier submit to the court because that evidence was not previously available." Howard Hess Dental Labs. Inc. v. Dentsply Int'l, Inc., 602 F.3d 237, 252 (3d Cir. 2010).

         B. 28 U.S.C. § 1400(b)

         Federal Circuit law governs venue under § 1400(b). The plaintiff bears the burden of establishing proper venue. In re ZTE (USA) Inc., 890 F.3d 1008, 1013 (Fed. Cir. 2018). Under the second prong of § 1400(b), venue is proper in a district where the defendant has "committed acts of infringement" and has a regular and established place of business. 28 U.S.C. § 1400(b).

         "[T]he regular and established place of business standard requires more than the minimum contacts necessary for establishing personal jurisdiction or for satisfying the doing business standard of the general venue provision." In re Cray, 871 F.3d 1355, 1361 (Fed. Cir. 2017). In particular, the phrase "regular and established place of business" creates three distinct requirements-"(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.

         Under the first requirement, the "place" of business need not be a "fixed physical presence in the sense of a formal office or store," In re Cordis Corp., 769 F.2d 733, 737 (Fed. Cir. 1985), but it must be "a physical, geographical location in the district from which the business of the defendant is carried out." Cray, 871 F.3d at 1362.

         Under the second requirement, the place of business must be "regular" and "established." A business may be "regular" if it "operates in a steady, uniform, orderly, and methodological manner," as opposed to operating through "sporadic activity." Id. at 1362 (brackets and quotation marks omitted). A business is "established" if it is "settled certainly, or fixed permanently" for "a meaningful period of time." Id. at 1362 (brackets omitted). Thus, "a single act pertaining to a particular business" is not "regular," but a "series of such acts" may be. Id. Likewise, a presence at a semiannual trade show is not "established," but "a five-year continuous presence in the district" is. Id. (citing Knapp-Monarch Co. v. Casco Prods. Corp., 342 F.2d 622, 625 (7th Cir. 1965); Remington Rand Bus. Serv. v. Acme Card Sys. Co., 71 F.2d 628, 629 (4th Cir. 1934)).

         Under the third requirement, the place of business must be "of the defendant." It may not be a place that is "solely a place of the defendant's employee." Id. at 1363 (addressing the fact that the defendant's only connection to the district was through two employees working remotely from their homes in that district). Relevant considerations include (i) whether the defendant "owns or leases the place, or exercises other attributes of possession or control over the place," (ii) whether the defendant "conditioned employment on an employee's continued residence in the district or the storing of materials at a place in the district," (iii) whether the defendant "holds out a place for its business," such as by "list[ing] the alleged place of business on a website, or in a telephone or other directory[, ] or plac[ing] its name on a sign associated with or on the building itself," and (iv) "the nature ...


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