Opinion
CIVIL ACTION NO. SA-17-CA-0098-FB
06-22-2017
LOGANTREE LP, Plaintiff, v. GARMIN INTERNATIONAL, INC., GARMIN USA, INC., and GARMIN, LTD., Defendants.
ORDER OF DISMISSAL WITHOUT PREJUDICE
Defendants have filed a Rule 12(b)(6) motion to dismiss for failure to state a claim and a Rule 12(b)(3) motion to dismiss for improper venue or, in the alternative, to transfer to the District of Kansas in this patent infringement lawsuit. (Docket no. 11). Plaintiff has responded and defendants have replied and a joint statement of issues has been filed by the parties. (Doc. nos. 17, 19-22, 25) After careful consideration, the Court finds that defendants' motion to dismiss for improper venue should be granted and this case should be dismissed without prejudice to refiling in A proper venue. This Court will not reach a decision on defendants' Rule 12(b)(6) motion and leaves resolution of that issue to another court should plaintiff elect to refile this case in a proper venue.
BACKGROUND
Plaintiff and defendants are involved with the manufacture of electronic sensors which track movement during physical activity. Plaintiff is the holder of a patent for "wearable accelerometer-based activity trackers." Plaintiff contends that defendants manufacture and distribute an activity tracker which infringes the patent. Defendants, residents of Kansas, do not have a physical location in Texas. However, defendants do business with dealers in Texas which distribute their products. Filings with the Texas Secretary of State also show that defendants are authorized as non-resident corporations to do business in Texas. Defendants also maintain a website which allows viewers to access a list of their distributors in the San Antonio/Austin area.
STANDARD OF REVIEW
In their motion to dismiss, filed pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure, defendants argue venue in the Western District of Texas is improper under the patent infringement venue statute, 28 U.S.C. § 1400(b). This provision provides that an action alleging patent infringement must be brought "where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business." Id. For purposes of this venue statute, a corporation is a resident only of the state in which it is incorporated. TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S.Ct. 1514, 1520 (2017); Fourco Glass Co. v. Transmirra Prod. Corp., 353 U.S. 222, 226 (1957). Because defendants are incorporated in Kansas, they are not residents of Texas.
Plaintiff thus relies on the second test to show that venue is proper in Texas. In order to prevail, plaintiff must establish that defendants have both committed acts of infringement in Texas and have "a regular and established place of business" in Texas. Cordis Corp. v. Cardiac Pacemakers, 599 F.2d 1085, 1086 (1st Cir. 1979). The 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, 28 U.S.C. § 1391(c). Action Commc'n Sys., Inc. v. Datapoint Corp., 426 F.Supp. 973, 975 (N.D. Tex. 1977). "[T]he appropriate inquiry is whether the corporate defendant does its business in that district through a permanent and continuous presence there and not . . . whether it has 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); Sterling Drug Inc. v. Intermedics, Inc., No. Civ. A.- 82-CA-578, 1986 WL 15561 (W.D. Tex. Aug. 6, 1986). Plaintiff has the burden of proving venue is proper in the Western District of Texas now that defendants have filed their motion to dismiss. Medical Designs, Inc. v. Orthopedic Tech., Inc., 684 F.Supp. 445, 476-77 (N.D. Tex. 1985).
DISCUSSION
Plaintiff has satisfied the "acts of infringement" requirement because it has submitted evidence indicating that defendants have distributed the alleged infringing products in Texas. However, plaintiff has not satisfied the "place of business" requirement. "The fact that [defendants] are authorized to do business in Texas is not controlling and will not establish the [§ 1400(b)] requirement." Gaddis v. Calgon Corp., 449 F.2d 1318, 1320 (5th Cir. 1971). Nor does defendants' website allowing viewers to access a list of San Antonio/Austin distributors provide venue under the patent infringement statute. See Hsin Ten Enter. USA, Inc. v. Clark Enter., 138 F.Supp.2d 449, 459 (S.D.N.Y. 2000) (finding venue improper in Southern District of New York pursuant to § 1400(b) even though defendant's website supported personal jurisdiction there). Finally, the fact that defendants sell their activity trackers to distributors in Texas Western will not establish venue. "It is well settled that the mere presence of independent sales representatives does not constitute a 'regular and established place of business' for purposes of Section 1400(b)." Kabb, Inc. v. Sutera, Civ. A. No. 91-3551, 1992 WL 245546, at *2 (N.D. Tex. Sept. 4, 1992) (citing cases); see also Dual Mfg. & Eng'g, Inc. v. Burris Indus., Inc., 531 F.2d 1382, 1387 (7th Cir. 1976) (noting that even "exclusive distributorship" and "exclusive, independent distributors" will not create venue under § 1400(b)). Therefore, the kind and degree of defendants' contacts do not support a finding that defendants have a permanent and continuous presence which shows a regular and established place of business in the Western District of Texas. Accordingly, venue is not proper in Texas Western under 28 U.S.C. § 1400(b).
In the event their motion is granted, defendants request dismissal or, in the alternative, a transfer to the District of Kansas, where defendants are incorporated. Plaintiff only "notes that [a] dismissal must be without prejudice to re-filing in a proper venue." In the absence of a transfer request from plaintiff, the Court will follow plaintiff's notation and dismiss this case without prejudice.
IT IS THEREFORE ORDERED that Garmin's Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(6) and 12(b)(3) is GRANTED in PART such that defendants' Rule 12(b)(3) motion is GRANTED and this case is DISMISSED WITHOUT PREJUDICE to refiling in a proper venue. Defendants' Rule 12(b)(6) motion is DISMISSED AS MOOT because this Court leaves resolution of that issue to another court should plaintiff elect to refile this case in a proper venue.
IT IS FURTHER ORDERED that pending motions, if any, are Dismissed as Moot and this case is CLOSED.
It is so ORDERED.
SIGNED this 22nd day of June, 2017.
/s/_________
FRED BIERY
UNITED STATES DISTRICT JUDGE