Case 1:15-cv-04219-TWT Document 116 Filed 08/03/17 Page 1 of 11
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF GEORGIA
`ATLANTA DIVISION
`
`IRONBURG INVENTIONS LTD.
`a United Kingdom Limited Company,
` Plaintiff,
` v.
`
`VALVE CORPORATION
`a Washington Corporation,
` Defendant.
`
` CIVIL ACTION FILE
` NO. 1:15-CV-4219-TWT
`
`OPINION AND ORDER
`
`This is an action for patent infringement. It is before the Court on the Defendant
`
`Valve Corporation’s Motion to Transfer [Doc. 110]. For the reasons set forth below,
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`the Court grants the Defendant’s Motion [Doc. 110] and transfers this case to the
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`Western District of Washington.
`
`I. Background
`
`The Plaintiff Ironburg Inventions Ltd. (“Ironburg”) – a corporation based in the
`
`United Kingdom – and the Defendant Valve Corporation (“Valve”) – a Washington
`
`corporation with its headquarters in Bellevue, Washington – compete in the video
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`game controller market.1 Ironburg asserts that Valve is infringing on three patents held
`
`1
`
`Compl. ¶¶ 1-3.
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`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF GEORGIA
`ATLANTA DIVISION
`
`IRONBURG INVENTIONS LTD.
`a United Kingdom Limited Company,
` Plaintiff,
` v.
`
`VALVE CORPORATION
`a Washington Corporation,
` Defendant.
`
` CIVIL ACTION FILE
` NO. 1:15-CV-4219-TWT
`
`OPINION AND ORDER
`
`This is an action for patent infringement. It is before the Court on the Defendant
`
`Valve Corporation’s Motion to Transfer [Doc. 110]. For the reasons set forth below,
`
`the Court grants the Defendant’s Motion [Doc. 110] and transfers this case to the
`
`Western District of Washington.
`
`I. Background
`
`The Plaintiff Ironburg Inventions Ltd. (“Ironburg”) – a corporation based in the
`
`United Kingdom – and the Defendant Valve Corporation (“Valve”) – a Washington
`
`corporation with its headquarters in Bellevue, Washington – compete in the video
`
`game controller market.1 Ironburg asserts that Valve is infringing on three patents held
`
`1
`
`Compl. ¶¶ 1-3.
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`Case 1:15-cv-04219-TWT Document 116 Filed 08/03/17 Page 2 of 11
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`by Ironburg. Ironburg filed a Second Amended Complaint on August 15, 2016.2 In
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`response, Valve filed a Motion to Dismiss under Federal Rule of Civil Procedure
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`12(b)(6)3 and filed an Answer.4 In its Answer, Valve denied that venue was proper
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`under 28 U.S.C. § 1391(b) and § 1400(b), but then later admitted it was proper in the
`
`counterclaims section of its Answer.5 Valve never filed a Motion to Dismiss under
`
`Federal Rule of Civil Procedure 12(b)(3). On June 28, 2017, Valve filed the present
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`Motion to Transfer the action, arguing that venue is improper. In addition, Valve seeks
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`leave to file an amended Answer, to the extent the Court deems it necessary. Ironburg
`
`argues that Valve waived the defense of improper venue by omitting the defense from
`
`its Motion to Dismiss. Valve contends that the defense was not waived because it was
`
`not available until the Supreme Court’s May 22, 2017 decision in TC Heartland LLC
`
`v. Kraft Foods Group Brands LLC.6 In TC Heartland, the Supreme Court held that “a
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`domestic corporation ‘resides’ only in its State of incorporation for purposes of the
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`2
`
`3
`
`4
`
`5
`
`6
`
`¶ 5.
`
`[Doc. 44].
`
`[Doc. 48].
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`[Doc. 49].
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`Def.’s Answer to the Pl.’s Second Am. Compl. ¶ 5; Id., Counterclaims
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`137 S. Ct. 1514 (2017).
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`-2-
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`Case 1:15-cv-04219-TWT Document 116 Filed 08/03/17 Page 3 of 11
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`patent venue statute.”7 Thus, under the Supreme Court’s holding, venue for this action
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`would be proper in the Western District of Washington.
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`II. Legal Standard
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`In patent infringement cases, venue is proper “in the judicial district where the
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`defendant resides, or where the defendant has committed acts of infringement and has
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`a regular and established place of business.”8 As noted above, in a patent infringement
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`action, a corporate defendant resides in its state of incorporation.9 “[I]n determining
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`whether a corporate defendant has a regular and established place of business in a
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`district, the appropriate inquiry is whether the corporate defendant does its business
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`in that district through a permanent and continuous presence there.”10
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`While the Plaintiff bears the burden of showing that the venue is proper,11 a
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`defendant may waive its privilege to demand a proper venue.12 In order to avoid
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`waiver, a defendant must raise an improper venue defense in a motion prior to
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`7
`
`8
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`9
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`10
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`11
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`12
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`Id. at 1517.
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`28 U.S.C. § 1400(b).
`
`TC Heartland, 137 S. Ct. at 1517.
`
`In re Cordis Corp., 769 F.2d 733, 737 (Fed. Cir. 1985).
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`Wai v. Rainbow Holdings, 315 F. Supp. 2d 1261, 1268 (S.D. Fla. 2004).
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`Leroy v. Great W. United Corp., 443 U.S. 173, 180 (1979).
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`Case 1:15-cv-04219-TWT Document 116 Filed 08/03/17 Page 4 of 11
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`responsive pleading or as part of the responsive pleading.13 Stated differently, a
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`defendant “who does not initially raise certain [available] defenses – lack of personal
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`jurisdiction, improper venue, improper process, and improper service of process –
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`cannot invoke those defenses later on.”14 Nevertheless, there are generally accepted
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`exceptions to waiver. One such exception is that “a party cannot be deemed to have
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`waived objections or defenses which were not known to be available at the time they
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`could first have been made.”15 A defense is unavailable if “its legal basis did not exist
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`at the time of the answer or pre-answer motion.”16
`
`III. Discussion
`
`Valve’s Motion turns on a single issue: whether TC Heartland constitutes an
`
`intervening change in the law.17 TC Heartland affirmed the Supreme Court’s 1957
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`13
`
`FED. R. CIV. P. 12(b), 12(h)(1).
`
`Paleteria v. La Michoacana v. Productos Lacteos, 905 F. Supp. 2d 189,
`14
`192 (D.D.C. 2012).
`
`Holzsager v. Valley Hosp., 646 F.2d 792, 796 (2d Cir. 1981); see also
`15
`Holland v. Big River Minerals Corp., 181 F.3d 597, 605 (4th Cir. 1999) (noting that
`an exception to waiver exists “when there has been an intervening change in the law
`recognizing an issue that was not previously available”).
`
`Gilmore v. Palestinian Interim Self-Government Auth., 843 F.3d 958,
`16
`964-65 (D.C. Cir. 2016) (quoting Chatmen-Bey v. Thornburgh, 864 F.2d 804, 813 n.9
`(D.C. Cir. 1988)).
`
`Valve attempts to argue that it did not waive an improper venue defense
`17
`because it objected to venue in its Answer to the Plaintiff’s Second Amended
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`Case 1:15-cv-04219-TWT Document 116 Filed 08/03/17 Page 5 of 11
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`decision in Fourco Glass Co. v. Transmirra Products Corp.18 by holding that the patent
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`venue statute, 28 U.S.C. § 1400(b), not the general venue statute, 28 U.S.C. § 1391(c),
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`is the operative statute for determining where a domestic corporation resides for
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`purposes of patent infringement litigation.19 In 1988, Congress amended the general
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`venue statute to provide that “[f]or purposes of venue under this chapter,” a defendant
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`corporation is deemed “to reside in any judicial district in which it is subject to
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`personal jurisdiction at the time the action is commenced.”20 Then, in 1990, the
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`Federal Circuit held in VE Holding Corp. v. Johnson Gas Appliance Co. that – as a
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`matter of first impression – Fourco was superseded by the 1988 statutory
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`amendment.21 Relying on the phrase “[f]or purposes of venue under this chapter,” the
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`Federal Circuit concluded that the amended § 1391(c) “clearly applies to § 1400(b),
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`Complaint. But this argument is without merit. Under Federal Rule of Civil Procedure
`12(h), Valve needed to either raise a venue objection by a Rule 12(b)(3) motion or
`include a venue objection as an affirmative defense in its answer if no Rule 12(b)(3)
`motion was filed. See FED. R. CIV. P. 12(h). Valve filed multiple Rule 12 motions, but
`did not challenge venue in any of its motions. See [Docs. 13, 20, 48]. As a result,
`Valve waived the defense of improper venue.
`
`18
`
`353 U.S. 222 (1957).
`
`TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514,
`19
`1521 (2017).
`
`Id. at 1519 (quoting Judicial Improvements and Access to Justice Act, §
`20
`1013(a), 103 Stat. 4669).
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`21
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`917 F.2d 1574, 1584 (Fed. Cir. 1990).
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`Case 1:15-cv-04219-TWT Document 116 Filed 08/03/17 Page 6 of 11
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`and thus redefines the meaning of the term ‘resides’ in that section.”22 VE Holding
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`controlled patent venue law for almost thirty years until it was abrogated by TC
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`Heartland.
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`Since the Supreme Court issued its opinion, patent defendants have sought
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`venue transfers, arguing that TC Heartland is a “sea change” in venue law for patent
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`cases.23 They further contend that mandating defendants to raise a defense that is
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`contrary to controlling Federal Circuit precedent is unreasonable and ignores the
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`significant impact of VE Holding. In response, the patent plaintiffs contend that
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`because the Supreme Court never overruled Fourco, and circuit courts have no
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`authority to overrule Supreme Court precedent, Fourco should have always governed
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`venue in patent cases, irrespective of the Federal Circuit’s holding in VE Holding.
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`The majority of district courts that have addressed the issue have agreed with
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`the patent plaintiffs and have held that TC Heartland did not constitute an intervening
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`change in law.24 Many of these district courts have premised their holdings on the
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`22
`
`Id. at 1578-80.
`
`Westech Aerosol Corp. v. 3M Co., No. C17-5067-RBL, 2017 WL
`23
`2671297, at *2 (W.D. Wash. June 21, 2017).
`
`See, e.g., Cobalt Boats, LLC v. Sea Ray Boats, Inc., No. 2:15cv21, 2017
`24
`WL 2556679, at *3 (E.D. Va. June 7, 2017); Elbit Sys. Land & C4I Ltd. v. Hughes
`Network Sys., LLC, No. 2:15-CV-0037-RWS-RSP, 2017 WL 2651618, at *20 (E.D.
`Tex. June 20, 2017); Infogation Corp. v. HTC Corp., No. 16-CV-01902-H-JLB, 2017
`WL 2869717, at *4 (S.D. Cal. July 5, 2017); Amax, Inc. v. ACCO Brands Corp., No.
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`Case 1:15-cv-04219-TWT Document 116 Filed 08/03/17 Page 7 of 11
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`notion that VE Holding attempted to “overrule” Fourco.25 The Court disagrees with
`
`that notion. It is clear that the Federal Circuit did not attempt to overrule Supreme
`
`Court precedent in VE Holding. Indeed, as the Court noted above, the Federal Circuit
`
`viewed the issue as a matter of first impression:
`
`The issue, then, is not whether the prior cases, including Supreme Court
`cases, determined that under different statutory language Congress’
`intent was that § 1400(b) stood alone. The issue is, what, as a matter of
`first impression, should we conclude the Congress now intends by this
`new language in the venue act.26
`
`The Supreme Court in TC Heartland – appearing to acknowledge that the issue was
`
`a matter of first impression – noted that the Federal Circuit in VE Holding addressed
`
`whether “subsequent statutory amendments had effectively amended § 1400(b) as
`
`construed in Fourco, with the result that § 1391(c) now supplies the definition of
`
`‘resides’ in § 1400(b).”27 While the Supreme Court concluded that the Federal Circuit
`
`CV 16-10695-NMG, 2017 WL 2818986, at *3 (D. Mass. June 29, 2017).
`
`See Cobalt Boats, 2017 WL 2556679, at *3 (“The Supreme Court has
`25
`never overruled Fourco, and the Federal Circuit cannot overrule binding Supreme
`Court precedent.”).
`
`26
`
`VE Holding, 917 F.2d at 1579.
`
`TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514,
`27
`1517 (2017).
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`Case 1:15-cv-04219-TWT Document 116 Filed 08/03/17 Page 8 of 11
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`was incorrect in finding that the 1988 amendment had amended § 1400(b), it did not
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`conclude that the Federal Circuit had overruled Fourco.28
`
`TC Heartland undoubtedly changed the venue landscape.29 For twenty-seven
`
`years, countless courts relied on VE Holding to determine the proper venue in patent
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`infringement cases.30 The Supreme Court acknowledged this fact in TC Heartland,
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`stating that since its Fourco decision, the venue “landscape remained effectively
`
`unchanged until 1988, when Congress amended the general venue statute,” and that
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`following VE Holding in 1990, “no new developments occurred until Congress
`
`adopted the current version of § 1391 in 2011 (again leaving § 1400(b) unaltered).”31
`
`“Thus, the Supreme Court itself acknowledged that the venue landscape has changed
`
`and developed since its decision 60 years ago in Fourco, including when VE Holding
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`‘announced its view’ of the effect of Congress’ amendment of § 1391(c) on the patent
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`See OptoLum, Inc. v. Cree, Inc., No. CV-16-03828-PHX-DLR, 2017 WL
`28
`3130642, at *3 (D. Ariz. July 24, 2017) (“The Supreme Court disagreed with VE
`Holding in this regard, but it did not do so on the ground that VE Holding had
`improperly ‘overruled’ Fourco.”).
`
`See In re Sea Ray Boats, Inc., No. 2017-124, 2017 WL 2577399, at *1
`29
`(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 . . . .”).
`
`See, e.g., Trintec Indus., Inc. v. Pedre Promotional Prod., Inc., 395 F.3d
`30
`1275, 1280 (Fed. Cir. 2005).
`
`31
`
`TC Heartland, 137 S. Ct. at 1519.
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`Case 1:15-cv-04219-TWT Document 116 Filed 08/03/17 Page 9 of 11
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`venue statute.”32 As a result, the Court finds that TC Heartland is an intervening
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`change in the law. Valve did not waive the defense of improper venue by failing to
`
`assert it in its prior Motions to Dismiss.33
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`In response, Ironburg argues that Valve should have preserved its improper
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`venue defense, despite years of Federal Circuit precedent to the contrary. Ironburg,
`
`quoting Elbit Systems Land v. Hughes Network Systems, asserts that the Defendant
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`“would have ultimately succeeded in convincing the Supreme Court to reaffirm
`
`Fourco, just as the petitioner in TC Heartland did.”34 The Court is unconvinced. If
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`Valve had asserted such a defense, it would have been found to be totally without
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`merit. To argue otherwise “ignores the significant impact of VE Holding and the
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`patent bar’s reliance on the case for nearly three decades.”35 The Court agrees with the
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`District of Arizona’s reasoning in OptoLum:
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`[Valve], of course, could have incurred the time and expense of
`appealing to the Federal Circuit and losing, . . . and then filing a petition
`with the Supreme Court in the hope that it would grant certiorari and
`reverse VE Holding. But the Court does not find that this lengthy and
`
`32
`
`OptoLum, 2017 WL 3130642, at *3.
`
`See id. at *4; Westech Aerosol Corp. v. 3M Co., No. C17-5067-RBL,
`33
`2017 WL 2671297, at *2 (W.D. Wash. June 21, 2017).
`
`See Pl.’s Resp. Br., at 11-12 (quoting No. 2:15-CV-00037-RWS-RSP,
`34
`2017 WL 2651618, at *20 (E.D. Tex. June 20, 2017)).
`
`35
`
`OptoLum, 2017 WL 3130642, at *4.
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`Case 1:15-cv-04219-TWT Document 116 Filed 08/03/17 Page 10 of 11
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`expensive litigation strategy, with the mere possibility that VE Holding
`might be overturned, rendered the defense of improper venue “available”
`to [Valve] when it filed its answer and initial motion to dismiss.36
`
`The Court also finds that granting Valve’s Motion to Transfer does not unduly
`
`prejudice Ironburg. The case is not on the eve of trial.37 While there has been a
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`Markman hearing, the Court has not issued a claim construction order. Nor has the
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`matter reached the summary judgment stage. Moreover, the Court finds that there was
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`no intentional delay on the part of Valve with regard to its Motion to Transfer. Valve
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`filed its Motion a little over a month after TC Heartland was decided.
`
`Because the Court concludes that Valve may assert the defense of improper
`
`venue, the burden is now on Ironburg to demonstrate that venue is proper in the
`
`Northern District of Georgia.38 As the Court previously discussed, under § 1400(b)
`
`any 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.”39 The parties do not dispute that Ironburg
`
`36
`
`Id.
`
`See, e.g., Elbit Sys., 2017 WL 2651618, at *19 (noting that the defendant
`37
`raised the issue of improper venue less than two months from trial).
`
`38
`Cir. 1979).
`
`Piedmont Label Co. v. Sun Garden Packing Co., 598 F.2d 491, 496 (9th
`
`39
`
`28 U.S.C. § 1400(b).
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`Case 1:15-cv-04219-TWT Document 116 Filed 08/03/17 Page 11 of 11
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`resides in the Western District of Washington. Thus, the only remaining question is
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`whether Valve “has committed acts of infringement and has a regular and established
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`place of business” in the Northern District of Georgia.40 In its Response Brief,
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`Ironburg does not argue that Valve has a regular and established place of business in
`
`the Northern District of Georgia. And the Court has not seen any evidence that it does.
`
`As a result, the Court has the option to either dismiss the case or transfer it to the
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`Western District of Washington. In the interest of justice, the Court will transfer the
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`case to the District Court for the Western District of Washington. The Court will also
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`grant Valve’s request for leave to amend its Answer to Ironburg’s Second Amended
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`Complaint for the purpose of asserting the defense of improper venue.41
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`IV. Conclusion
`
`For these reasons, the Court GRANTS the Defendant Valve Corporation’s
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`Motion to Transfer [Doc. 110].
`
`SO ORDERED, this 3 day of August, 2017.
`
`/s/Thomas W. Thrash
`THOMAS W. THRASH, JR.
`United States District Judge
`
`40
`
`41
`
`Id.
`
`See FED. R. CIV. P. 15(a)(2).
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