Opinion
A-23-CV-733-RP
04-18-2024
OPTRASCAN, INC., Plaintiff, v. MORPHLE LABS INC., Defendant.
HONORABLE ROBERT PITMAN UNITED STATES DISTRICT JUDGE
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
MARK LANE UNITED STATES MAGISTRATE JUDGE
Before the court is Motion to Dismiss First Amended Complaint Under FED. R. CIV. P. 12(b)(3) & 12(b)(6) (Dkt. 8) and Plaintiff's Motion to Strike Exhibits 4, 5, 6, and 7 to the Declaration of Paul V. Storm (Dkt. 12), and all related briefing.After reviewing the pleadings, the relevant case law, the entire case file, and finding a hearing not necessary, the undersigned issues the following Report and Recommendation to the District Court.
The motions were referred by United States District Judge Robert Pitman to the undersigned for a Report and Recommendation as to the merits or disposition, as appropriate, pursuant to 28 U.S.C. § 636(b), Rule 72 of the Federal Rules of Civil Procedure, and Rule 1 of Appendix C of the Local Rules of the United States District Court for the Western District of Texas. Text Orders dated Nov. 27, 2023.
I. Background
Optrascan, Inc., a California corporation, filed this patent infringement suit against Morphle Labs Inc., accusing Morphle of infringing two of its patents. Dkt. 7. Optrascan alleges that Morphle is incorporated in Delaware and has a Registered Agent at a co-working space in New York City. Id. ¶¶ 7-9. Optrascan also alleges Morphe is headquartered in India and has no permanent U.S. business address. Id. ¶¶ 6, 8. Optrascan contends venue is proper in the Western District of Texas because Morphle's website identifies an entity in Austin that purchased an infringing Morphle product.
Morphle moves to dismiss the suit under Rule 12(b)(3) and 12(b)(6). Morphle argues that venue is improper in this District and that Optrascan failed to plead sufficient facts to support its infringement claim. The court will first address venue and then, if venue is proper, turn to Morphle's Rule 12(b)(6) arguments.
II. Venue
Under Rule 12(b)(3) of the Federal Rules of Civil Procedure, a party may move to dismiss an action on the basis of improper venue. FED. R. CIV. P. 12(b)(3). The plaintiff has the burden to establish proper venue under the patent venue statute. Interactive Toybox, LLC v. Walt Disney Co., No. 1:17-CV-1137-RP, 2018 WL 5284625, at *1 (W.D. Tex. Oct. 24, 2018) (citing In re ZTE (USA) Inc., 890 F.3d 1008, 1013 (Fed. Cir. 2018)).
In a patent case, venue is governed by 28 U.S.C. § 1400(b):
Optrascan's recitation in its First Amended Complaint that, “Venue in this judicial district is proper under 28 U.S.C. §§ 1391(b), (c) and/or 1400(b) in that a substantial part of the events giving rise to the patent infringement claims herein have taken place and may still be taking place in this judicial district” is legally incorrect. Section 1400(b) “is the sole and exclusive provision controlling venue in patent infringement actions.” TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 581 U.S. 258, 266 (2017) (cleaned up).
Any 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 § 1400(b), “a domestic corporation ‘resides' only in its State of incorporation.” TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 581 U.S. 258, 262 (2017). To find a defendant “has a regular and established place of business” under § 1400(b), “(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.” In re Cray Inc., 871 F.3d 1355, 1360 (Fed. Cir. 2017). However, “suits against alien defendants are outside the operation of the federal venue laws” and can be brought in any judicial district. In re HTC Corp., 889 F.3d 1349, 1361, 1354 (Fed. Cir. 2018).
Morphle argues venue is not proper here because it does not reside here, nor does it have a regular and established place of business here. Optrascan argues Morphle should be treated as a foreign defendant under HTC Corp. because Morphle has no permanent physical presence in the United States. Optrascan contends that to hold otherwise would allow foreign defendants to forum shop and unilaterally decide which jurisdiction they can be sued in by incorporating in that district.
Optrascan offers no legal support for its disregard of Morphle's incorporation in Delaware. Instead, Optrascan reiterates its assertion that Morphle is a foreign entity despite its “piece of paper” from Delaware. Referencing 28 U.S.C. § 1404(a), Optrascan also argues that the W.D. Texas will be more convenient for third party witnesses. But section 1404(a) is not relevant here. Section 1404(a) applies when a case is filed in a proper venue and a party seeks to have it transferred to another venue “where it might have been brought.” 28 U.S.C. § 1404(a). In that circumstance, courts weigh the “convenience of parties and witnesses.” Id. But the patent venue statute, 28 U.S.C. § 1400(b) only provides venue (1) where the defendant resides or (2) where the defendant has committed acts of infringement and has a regular and established place of business. 28 U.S.C. § 1400(b).
It is undisputed that Morphle is not incorporated in the Western District of Texas and does not have a regular and established place of business here. Optrascan has failed to provide the court with any authority that Morphle's Delaware incorporation should be disregarded such that it could be sued for patent infringement here as a foreign entity. Accordingly, the undersigned will recommend Morphle's motion to dismiss be granted as to its improper venue argument and does not reach Morphle's Rule 12(b)(6) argument or Optrascan's related motion to strike.
III. Order and Recommendation
Because the court does not reach Plaintiff's Motion to Strike Exhibits 4, 5, 6, and 7 to the Declaration of Paul V. Storm (Dkt. 12), the court DISMISSES that motion.
For the reasons given above, the court RECOMMENDS Defendant's Motion to Dismiss First Amended Complaint Under FED. R. CIV. P. 12(b)(3) & 12(b)(6) (Dkt. 8) be GRANTED in part and the case be DISMISSED WITHOUT PREJUDICE.
IV. Objections
The parties may file objections to this Report and Recommendation. A party filing objections must specifically identify those findings or recommendations to which objections are being made. The District Court need not consider frivolous, conclusive, or general objections. See Battles v. United States Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987).
A party's failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen (14) days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report and, except upon grounds of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass v. UnitedServs. Auto. Ass'n, 79 F.3d 1415 (5th Cir. 1996) (en banc)