United States District Court, W.D. North Carolina, Charlotte Division
D. Whitney Chief United States District Judge.
MATTER is before the Court on Defendant's Motion to
Dismiss for Improper Venue, or in the alternative, to
Transfer Venue (Doc. No. 44). This motion has been fully
briefed by the parties, (Docs. Nos. 44, 45, 49), and is now
ripe for disposition. For the reasons that follow,
Defendant's Motion to Dismiss is DENIED and
Defendant's Motion to Transfer is GRANTED.
Ey k365, LLC, filed the instant action on November 14, 2016,
against Defendant Zmodo Technology Corporation Limited
alleging Defendant infringes one or more claims of a patent
held by Plaintiff. Defendant responded on January 23, 2017,
denying the allegations in its Answer and also moving to
dismiss the complaint for failure to state a claim under
Fed.R.Civ.P. 12(b)(6). (See Docs. Nos. 13, 15).
Neither Defendant's Answer nor its Motion to Dismiss
questioned whether venue was appropriate in this matter. The
Court denied Defendant's Motion to Dismiss on May 12,
2017. (Doc. No. 42).
22, 2017, the United States Supreme Court issued an opinion
ruling on the propriety of venue in patent infringement
cases: TC Heartland LLC v. Kraft Foods Group Brands
LLC, 137 S.Ct. 1514 (2017). On July 25, 2017,
Defendant filed the instant Motion to Dismiss pursuant to
Fed.R.Civ.P. 12(b)(3), arguing TC Heartland
constitutes an intervening change of law, and, accordingly,
venue is not proper in this Court. Defendant's motion
moved not only for dismissal of Plaintiff's Complaint,
but also in the alternative, to transfer the case to another
district where venue is appropriate. Plaintiff responded,
claiming Defendant waived its ability to challenge venue and
arguing Defendant's motion should be denied as untimely.
instant Motion raises several issues, the foremost is whether
Defendant waived its right to challenge venue. If Defendant
did not waive its right, the Court must consider whether
venue is appropriate in the Western District of North
Carolina, and, if not, whether this matter should be
dismissed or transferred.
survive a motion to dismiss for improper venue when no
evidentiary hearing is held, the plaintiff need only make a
prima facie showing of venue.” Mitrano v.
Hawes, 377 F.3d 402, 405 (4th Cir. 2004). “In
assessing whether there has been a prima facie venue showing,
[the court] view[s] the facts in the light most favorable to
the plaintiff.” Aggarao v. MOL Ship Mgmt. Co.,
Ltd., 675 F.3d 355, 366 (4th Cir. 2012). A court reviewing a
Rule 12(b)(3) motion may “consider evidence outside the
pleadings.” Id. at 365-66.
Improper Venue and Waiver
must raise improper venue in a motion made either before
responsive pleading or as part of the responsive pleading, or
the defense is waived. Fed.R.Civ.P. 12(h)(1). Also relevant
to Plaintiff's waiver arguments here, Rule 12(g) provides
that “a party that makes a motion under this rule must
not make another motion under this rule raising a defense or
objection that was available to the party but omitted from
its earlier motion.” Fed.R.Civ.P. 12(g)(2). Here, the
parties do not contest that Defendant failed to properly
preserve its venue argument under general application of Rule
12 of the Federal Rules of Civil Procedure.
exception to the general rule of waiver exists “when
there has been an intervening change in the law recognizing
an issue that was not previously available.”
Holland v. Big River Minerals Corp., 181 F.3d 597,
605 (4th Cir. 1999) (citations omitted). If an intervening
change in the law occurred, a court may consider an issue
previously “waived” if the court determines
“the failure to raise the issue was not unreasonable
and the opposing party was not prejudiced by the failure to
raise the issue sooner.” Holland, 181 F.3d at
606 (citing Curtis Publ'g Co. v. Butts, 388 U.S.
130, 145 (1967) (plurality opinion)). Thus, the Court's
initial inquiry turns to whether TC Heartland
constitutes an intervening change in the law such that the
defense of improper venue was unavailable to Defendant at the
time it filed its responsive pleadings.
understand the myriad of arguments concerning whether TC
Heartland “changed” the law, the Court
briefly notes that TC Heartland reaffirmed the 1957
decision in Fourco Glass v. Transmirrra Products
Corp., 353 U.S. 222 (1957), which found that, for
purpose of venue in a patent case, a corporation
“resides” in the state of its incorporation.
Pursuant to Fourco, 28 U.S.C. § 1400(b) is
“the sole and exclusive provision controlling venue in
patent infringement actions.” 353 U.S. at 229. Section
1400(b) provides venue is proper “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). While this seems clear, for close to twenty-seven
years, courts have followed precedent set by the Federal
Circuit in VE Holding Corp. v. Johnson Gas Appliance
Co., which held that, based on Congressional amendments
to 28 U.S.C. § 1391, patent infringement suits were
“governed by the general venue statutes, not by §
1400(b)” such that venue was appropriate in any
district where a defendant “resides.” VE
Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d
1574, 1583 (Fed. Cir. 1990).
addressing venue motions filed after initial
responsive pleadings, district courts across the country have
wrestled with the issue of whether TC Heartland
constituted an intervening change of law, contrary to VE
Holding, or whether TC Heartland simply
reaffirmed existing law from Fourco. Court decisions
remain inconsistent in their holdings, with rulings regularly
landing on opposite sides. See, e.g.,
Symbology Innovations, LLC v. Lego Sys., Inc., No.
2:17-CV-86, 2017 WL 4324841, at *5-6 (E.D. Va. Sept. 28,
2017) (Although some courts consider the Supreme Court's
recent decision in TC Heartland to constitute such a
change, this Court is not among them. . . . TC
Heartland did not change the law-it clarified that the
law had not changed.” (citations omitted)). The Federal
Circuit Court of Appeals has not resolved this dispute.
See, e.g., In re Hughes Network Sys., LLC,
No. 2017-130, 2017 WL 3167522, at *1 (Fed. Cir. July 24,
2017) (“Without necessarily agreeing with the district
court's conclusion that the Supreme Court's decision
in TC Heartland did not effect a change in the law,
we nonetheless find that the district court did not clearly
abuse its discretion in finding that [the defendant] waived
its right to move to transfer for improper venue.”);
but see In re Sea Ray Boats, Inc., No. 2017-124,
2017 WL 2577399, at *1 (Fed. Cir. June 9, 2017) (Newman, J.,
dissenting) (“There is little doubt that the
Court's decision in TC Heartland . . . was a
change in the law of venue . . . .”).
recent-almost identical-opinions from this district
meticulously contemplated the multitude of district court
decisions with conflicting conclusions, collecting cases on
both sides: those decisions who found TC Heartland
to be an intervening change in law and those courts that held
otherwise. See Simpson Performance Prod., Inc. v.
Mastercraft Safety, Inc., No. 5:16-CV-155-RLV, 2017 WL
3620001, at *5 (W.D. N.C. Aug. 23, 2017) (collecting cases);
Simpson Performance Prod., Inc. v. NecksGen, Inc.,
No. 5-16-CV-153-RLV, 2017 WL 3616764, at *5 (W.D. N.C. Aug.
23, 2017) ...