Summary
holding that a § 1400(b)-based venue defense was not available between the denial of certiorari in VE Holding Corp. and the issuance of the TC Heartland decision
Summary of this case from CG Tech. Dev., LLC v. FanDuel, Inc.Opinion
CASE NO. C17-5067-RBL
06-21-2017
WESTECH AEROSOL CORPORATION, Plaintiff, v. 3M COMPANY, et al. Defendants.
ORDER GRANTING DEFENDANTS' MOTION FOR LEAVE TO AMEND DKT. #35
THIS MATTER is before the Court on Defendants 3M Company and NorthStar Chemical's Motion for Leave to Amend [Dkt. #35] their Second Motion for Dismissal. It involves whether Defendants infringed Plaintiff Westech Aerosol Corporation's patent for an aerosol adhesive and the canister system that dispenses it. The Court must consider whether the defense of improper venue was available to the Defendants before the Supreme Court decided TC Heartland LLC v. Kraft Foods Group Brands LLC, No. 16-341, 2017 U.S. LEXIS 3213 (May 22, 2017).
DISCUSSION
Defendants moved to dismiss Westech's complaint on March 27, 2017. Westech amended its complaint as a matter of right. On May 4, Defendants brought a second motion to dismiss noted for May 26. On the day Westech's response was due, May 22, the Supreme Court decided TC Heartland. From the opinion, they believed they had gained grounds to assert an improper venue defense, Defendants immediately alerted Westech's counsel and renoted their motion. Westech responded to Defendants' motion to dismiss later that same day.
TC Heartland affirmed the Supreme Court's 1957 decision in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 226, 77 S.Ct. 787, 1 L.Ed.2d 786 (1957), and corrected the Federal Circuit's 1990 decision in VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (1990), announcing that the patent venue statute (28 U.S.C. § 1400(b)), not the general venue statute (28 U.S.C. § 1391(c)), defines where a domestic corporation "resides." See 2017 U.S. LEXIS 3213, *14 (For patent law cases, it "resides" in its state of incorporation.). A "civil action for patent infringement" against a domestic corporation therefore "may be brought in the judicial district where the defendant [is incorporated], or where the defendant has committed acts of infringement and has a regular and established place of business." See 1400(b); see also 2017 U.S. LEXIS 3213, *14.
Defendants 3M and NorthStar ask the Court for permission to add to their motion for dismissal their argument that venue is improper under § 1400(b) because they are incorporated in Delaware and Massachusetts, respectively, and neither has a regular and established place of business in Washington. They argue they did not waive this defense (by not including it in their initial pleading or prior motions to dismiss) because it was unavailable to them until the Supreme Court decided TC Heartland. Westech contends an argument for an improper venue was available to Defendants, and has been since 1957 when the Supreme Court announced Fourco.
A defendant waives the defense of improper venue if it was available but the defendant omitted it from its responsive pleading or from a motion made before its responsive pleading. See Fed. R. Civ. Pro. 12(g)(2). A defense is unavailable if "its legal basis did not exist at the time of the answer or pre-answer motion." Gilmore v. Palestinian Interim Self-Government Auth., 843 F.3d 958, 964-65 (D.C. Cir. 2016).
TC Heartland abrogated approximately 27 years of patent law precedent. The Supreme Court announced in Fourco that for patent law, a domestic corporation "resides" only in its state of incorporation. See 353 U.S. at 229. It rejected the argument that § 1400 incorporates the broader definition of corporate "residence" contained in § 1391. See id. After Congress amended § 1391, however, the Federal Circuit concluded in VE Holdings that § 1391 "clearly applies to § 1400(b), and thus redefines the meaning of the term 'resides.'" 917 F.2d at 1578. It redefined a defendant's venue in cases of alleged patent infringement as "any judicial district [where the] defendant is subject to the court's personal jurisdiction." 917 F.2d at 1578-80 (referencing 28 U.S.C. § 1391(c)(2)). The Supreme Court denied certiorari, allowing the Federal Circuit's decision to stand, and district courts have since had to follow it—until now.
TC Heartland changed the venue landscape. For the first time in 27 years, a defendant may argue credibly that venue is improper in a judicial district where it is subject to a court's personal jurisdiction but where it is not incorporated and has no regular and established place of business. Defendants could not have reasonably anticipated this sea change, and so did not waive the defense of improper venue by omitting it from their initial pleading and motions.
Allowing Defendants to bring this newly-available defense will not result in unnecessary delay, nor will it unduly prejudice Westech. This case is only at the pleading stage. Defendants withdrew their first motion to dismiss after Westech amended its complaint as a matter of right. Immediately after the Supreme Court decided TC Heartland, they renoted their second motion to dismiss and notified Westech's counsel and the Court of their intention to argue improper venue. Westech did not need to respond to Defendants' second motion by their original response date, and even though it did, and it can nevertheless recycle these arguments in response to Defendants' amended motion.
CONCLUSION
Defendants raised the defense of improper venue as soon as it was available. Their Motion for Leave to Amend their Second Motion to Dismiss [Dkt. #35] is GRANTED. Defendants' current Motion to Dismiss [Dkt. #31] is STRICKEN.
Dated this 21st day of June, 2017.
/s/_________
Ronald B. Leighton
United States District Judge