Case 2:16-cv-00693-RWS-RSP Document 275 Filed 06/13/17 Page 1 of 11 PageID #: 19096
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`ALACRITECH, INC.,
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`Plaintiff,
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`v.
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`CENTURYLINK, INC., et al.,
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`Defendants.
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`ALACRITECH, INC.,
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`Plaintiff,
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`v.
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`DELL INC.,
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`Defendant.
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`Case No. 2:16-cv-693-RSW-RSP
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`LEAD CASE
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`Jury Trial Demanded
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`Case No. 2:16-cv-695-RWS-RSP
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`Jury Trial Demanded
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`DEFENDANT DELL INC.’S MOTION TO DISMISS FOR IMPROPER VENUE
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`INTEL EX. 1457.001
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`Case 2:16-cv-00693-RWS-RSP Document 275 Filed 06/13/17 Page 2 of 11 PageID #: 19097
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`TABLE OF CONTENTS
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`I.
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`II.
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`INTRODUCTION AND SUMMARY OF ARGUMENT ................................................. 1
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`NATURE AND STATE OF PROCEEDINGS................................................................... 1
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`III.
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`PLEADED FACTS ............................................................................................................. 1
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`IV.
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`LEGAL STANDARD ......................................................................................................... 2
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`ARGUMENT ...................................................................................................................... 3
`It Is Proper for the Court to Consider this Issue at this Stage of the
`A.
`Litigation ................................................................................................................. 3
`This Case Should Be Dismissed Because Venue is Improper in the Eastern
`District of Texas ...................................................................................................... 5
`In the Alternative, This Case Should Be Transferred to the Northern
`District of California ............................................................................................... 6
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`B.
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`C.
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`CONCLUSION ................................................................................................................... 7
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`V.
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`VI.
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`i
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`INTEL EX. 1457.002
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`

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`Case 2:16-cv-00693-RWS-RSP Document 275 Filed 06/13/17 Page 3 of 11 PageID #: 19098
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`I.
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`INTRODUCTION AND SUMMARY OF ARGUMENT
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`The Supreme Court recently issued a decision that clarified the standard for venue in patent
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`infringement cases. TC Heartland LLC v. Kraft Foods Group Brands LLC, -- S. Ct. --, No. 16-
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`341, 2017 WL 2216934 (May 22, 2017). In that decision, the Court held that venue is only proper
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`where a defendant is incorporated or where it has committed acts of infringement and has a regular
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`and established place of business. Id. Plaintiff’s Complaint contains no allegations that meet this
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`standard. Because Dell Inc. is not incorporated in Texas and does not have a regular and
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`established place of business in this District, the Court should dismiss this case for improper venue
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`or, at the very least, transfer this case to the Northern District of California in accordance with
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`Defendants’ motion to transfer venue (Case No. 2:16-cv-693, D.E. 59, 70, 95-1, 225).
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`II.
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`NATURE AND STATE OF PROCEEDINGS
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`Alacritech filed its original Complaint in this case on June 30, 2016 (Case No. 2:16-cv-
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`695, D.E. 1), and Dell filed its original Answer on August 25 and an amended Answer on February
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`28, 2017 (Case No. 2:16-cv-693, D.E. 27, 139). In its amended Answer, Dell alleged that venue
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`is improper in this District, given the Supreme Court’s recent grant of certiorari in the TC
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`Heartland case (Case No. 2:16-cv-693, D.E. 139). On September 29, 2016, Dell, along with the
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`defendants in related cases, filed a motion to transfer this case to the Northern District of California
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`(Case No. 2:16-cv-693, D.E. 59). Alacritech served its initial patent disclosures on September 9,
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`2016, and Dell served its Invalidity Contentions on November 11. Fact discovery and the claim
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`construction process are ongoing. Fact discovery is set to close on October 13, 2017, and trial is
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`currently set to begin on April 2, 2018 (Case No. 2:16-cv-693, D.E. 264).
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`III.
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`PLEADED FACTS
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`As Plaintiff pleaded, Defendant Dell is incorporated in Delaware and headquartered in the
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`Western District of Texas, in Round Rock (Case No. 2:16-cv-695, D.E. 1). As discussed
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`1
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`INTEL EX. 1457.003
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`Case 2:16-cv-00693-RWS-RSP Document 275 Filed 06/13/17 Page 4 of 11 PageID #: 19099
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`previously in a declaration by Bryan Kelly supporting Dell’s motion to transfer venue, Dell sells
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`computers, monitors, servers, and other devices that Dell sources and assembles from various
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`third-party suppliers (Case No. 2:16-cv-693, D.E. 59-20 ¶ 4). Alacritech’s infringement
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`allegations against Dell are directed to functionality in the network interfaces/adapters included in
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`various Dell products (id. ¶¶ 5, 8). Dell does not design or manufacture those components but
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`instead buys them from third-party suppliers such as Intel, Broadcom, Cavium, and Mellanox (id.
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`¶ 7). Dell does not have any regular and established place of business, including retail stores,
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`manufacturing plants, or other facilities, in the Eastern District of Texas (see id. ¶ 3; Case No.
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`2:16-cv-695, D.E. 1).1
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`IV.
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`LEGAL STANDARD
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`In patent cases, venue is only proper “in the judicial district where the defendant resides,
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`or where the defendant has committed acts of infringement and has a regular and established place
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`of business.” 28 U.S.C. § 1400(b). The Supreme Court recently held that the term “resides” in
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`§ 1400(b) “refers only to the State of incorporation.” TC Heartland LLC v. Kraft Foods Group
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`Brands LLC, -- S. Ct. --, No. 16-341, 2017 WL 2216934, at *1 (May 22, 2017).2 The Federal
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`1 Although one of Dell’s former subsidiaries, Dell Services, was located in the Eastern District of
`Texas, that subsidiary is not a named defendant and is not identified by name in Alacritech’s
`infringement contentions, and Dell sold the subsidiary in 2016 (see Case No. 2:16-cv-695, D.E. 1;
`Alacritech’s Patent Initial Disclosures for Dell Inc. (attached as Ex. 1)). Moreover, for venue
`purposes, “[i]t is well established that a subsidiary corporation which is incorporated as a separate
`entity from its parent corporation is considered to have its own principal place of business.”
`Burnside v. Sanders Assocs., Inc., 507 F. Supp. 165, 166 (N.D. Tex. 1980) (internal quotations
`omitted); see also L.D. Schreiber Cheese Co. v. Clearfield Co., 495 F. Supp. 313, 318 (W.D. Pa.)
`(“It is clear under 28 U.S.C. § 1400(b) that the mere existence of a wholly-owned subsidiary in a
`judicial district does not, by itself, suffice to establish venue over the subsidiary’s parent
`corporation.”).
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`2 Although the TC Heartland decision issued after Alacritech served its Complaint in this action,
`its holding must be applied to this case, as “the Supreme Court’s interpretation of federal civil law
`‘must be given full retroactive effect in all cases still open on direct review and as to all events,
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`2
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`INTEL EX. 1457.004
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`Case 2:16-cv-00693-RWS-RSP Document 275 Filed 06/13/17 Page 5 of 11 PageID #: 19100
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`Circuit has held that the appropriate inquiry for determining whether a corporate defendant has a
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`regular and established place of business in a district “is whether the corporate defendant does its
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`business in that district through a permanent and continuous presence there.” In re Cordis Corp.,
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`769 F.2d 733, 734-37 (Fed. Cir. 1985).
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`If a lawsuit is brought in an improper venue, a district court “shall dismiss, or if it be in the
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`interest of justice, transfer such case to any district or division in which it could have been
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`brought.” 28 U.S.C. § 1406(a). Once a defendant raises a motion to dismiss for improper venue,
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`the burden of sustaining venue lies with the plaintiff. See Langdon v. Cbeyond Commc’n, LLC,
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`282 F. Supp. 2d 504, 508 (E.D. Tex. 2004).
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`V.
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`ARGUMENT
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`A.
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`It Is Proper for the Court to Consider this Issue at this Stage of the Litigation
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`Generally, a motion to dismiss for improper venue must be made before a defendant files
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`its responsive pleading, or the defense is waived. See Fed. R. Civ. P. 12(b)(3), 12(h)(1). However,
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`“a party cannot be deemed to have waived objections or defenses which were not known to be
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`available at the time they could first have been made, especially when it does raise the objections
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`as soon as their cognizability is made apparent.” Holzsager v. Valley Hospital, 646 F.2d 792, 796
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`(2d Cir. 1981); see also Holland v. Big River Minerals Corp., 181 F.3d 597, 605 (4th Cir. 1999)
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`(“[A]n exception to the general rule of waiver . . . exists . . . when there has been an intervening
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`change in the law recognizing an issue that was not previously available.”). “[T]he mere failure
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`to interpose [] a defense prior to the announcement of a decision which might support it cannot
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`regardless of whether such events predate or postdate the Supreme Court’s announcement of the
`rule.’” NeuroRepair, Inc. v. The Nath Law Grp., 781 F.3d 1340, 1344 (Fed. Cir. 2015) (quoting
`Harper v. Va. Dep’t of Taxation, 509 U.S. 86, 97 (1993)).
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`3
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`INTEL EX. 1457.005
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`Case 2:16-cv-00693-RWS-RSP Document 275 Filed 06/13/17 Page 6 of 11 PageID #: 19101
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`prevent a litigant from later invoking such a ground.” Curtis Publ’g Co. v. Butts, 388 U.S. 130,
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`143 (1967).
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`When Alacritech filed its Complaint in this action on June 30, 2016, the Federal Circuit’s
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`interpretation of 28 U.S.C. § 1400(b) controlled venue in patent cases, where venue was proper in
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`any judicial district in which a defendant was subject to personal jurisdiction. See VE Holding
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`Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1583 (Fed. Cir. 1990). Because Dell was
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`subject to personal jurisdiction in this District through its sale of accused products in this District,
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`it could not have denied that venue was proper in good faith when this case was initially filed, and
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`filing such a motion could have potentially exposed Dell to sanctions. Dell’s original Answer,
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`filed on August 25, 2016, thus did not contend that venue was improper (Case No. 2:16-cv-693,
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`D.E. 27). Dell did, however, file a motion to transfer venue under 28 U.S.C. § 1404 on September
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`29, 2016 (Case No. 2:16-cv-693, D.E. 59).
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`The Supreme Court granted certiorari in TC Heartland on December 14, 2016. Thereafter,
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`on February 28, 2017, Dell timely filed an amended Answer to Alacritech’s Complaint, in which
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`it provisionally denied that venue is proper in this District, citing the potential outcome of the TC
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`Heartland case (Case No. 2:16-cv-693, D.E. 139 at ¶ 8). Dell could not have filed the instant
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`motion at that time, however, as this Court determined soon thereafter that “[t]he fact that the
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`Supreme Court has granted certiorari does not change the fact that the rule in VE Holding[] and
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`then affirmed by the Federal Circuit in TC Heartland is controlling, ‘remains good law[,] and
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`dictates venue.” Report and Recommendation at 1-2, MyMail Ltd. v. IAC Search & Media, Inc.,
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`No. 2:16-cv-1434-JRG-RSP (E.D. Tex. Mar. 17, 2017) (D.E. 32) (citation omitted).
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`Now that the Supreme Court has in fact changed the patent venue standard, Dell has moved
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`swiftly and diligently to file the instant motion. Because of the intervening change in law, Dell
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`4
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`INTEL EX. 1457.006
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`Case 2:16-cv-00693-RWS-RSP Document 275 Filed 06/13/17 Page 7 of 11 PageID #: 19102
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`did not waive its improper venue defense, which was not available to it prior to the TC Heartland
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`decision. See Engel v. CBS, Inc. , 886 F. Supp. 728, 730-31 (C.D. Cal. 1995) (holding that
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`defendants did not waive their right to challenge venue by not including the defense in their
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`original pleadings because there was an intervening change in law). The Court should thus
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`consider this issue at this time.
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`B.
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`This Case Should Be Dismissed Because Venue is Improper in the Eastern
`District of Texas
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`Under the Supreme Court’s decision in TC Heartland, venue is clearly improper in this
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`District. Alacritech “bears the burden of proving both acts of infringement and a regular and
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`established place of business in order to establish proper venue.” Med. Designs, Inc. v. Orthopedic
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`Tech., Inc., 684 F. Supp. 445, 446 (N.D. Tex. 1988). In its Complaint, however, Alacritech
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`acknowledges that Dell is incorporated in Delaware and does not allege that Dell has a regular and
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`established place of business in this District. Instead, to support its allegation that venue is proper
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`in this District, Alacritech merely alleges that “Dell is subject to personal jurisdiction in this
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`District” and that “Dell regularly conducts business in this District” (Case No. 2:16-cv-695, D.E.
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`1 at ¶ 6). Alacritech does not allege that Dell conducts such business “through a permanent and
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`continuous presence” in this District, which is required to show a regular and established place of
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`business. See In re Cordis Corp., 769 F.2d 733 at 737. Cavium and Intel are third parties that
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`provide the Ethernet controllers accused in this action, and they have intervened to defend Dell.
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`Alacritech has filed counterclaims against the Intervenors’ Complaints, but it never alleges that
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`5
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`INTEL EX. 1457.007
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`Case 2:16-cv-00693-RWS-RSP Document 275 Filed 06/13/17 Page 8 of 11 PageID #: 19103
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`Intel or Cavium are incorporated in Texas or have a regular and established place of business in
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`this District (see Case No. 2:16-cv-693, D.E. 137, 250).3
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`Alacritech has pleaded no facts that support a finding that Dell has a regular and established
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`place of business in this District. Because venue in this District is clearly improper under the
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`Supreme Court’s recent TC Heartland decision, the Court should dismiss this action. See 28
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`U.S.C. § 1406(a) (“The district court of a district in which is filed a case laying venue in the wrong
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`division or district shall dismiss . . . .”) (emphasis added).
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`C.
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`In the Alternative, This Case Should Be Transferred to the Northern District
`of California
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`If the Court determines not to dismiss this case for improper venue, it should transfer this
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`case under 28 U.S.C. § 1406(a), for the same reasons as delineated in Dell’s pending motion to
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`transfer this case to the Northern District of California under 28 U.S.C. § 1404 (Case No. 2:16-cv-
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`693, D.E. 59). As demonstrated in that motion, venue is clearly more convenient in the Northern
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`District of California because the overwhelming majority of the known and likely witnesses,
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`documents, and sources of evidence relevant to this case are in, near, or more convenient to that
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`District (see generally id.). And now, as discussed above, venue is not only less convenient in this
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`District, but also improper. Accordingly, if the Court does not dismiss this case for improper
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`venue, it should transfer the case (including Intervenors Intel and Cavium) to the Northern District
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`of California.4 See 28 U.S.C. § 1406(a) (“The district court of a district in which is filed a case
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`3 See Intervenor Cavium Inc.’s Supplemental Briefing in Support of Motion to Transfer (Case No.
`2:16-cv-693, D.E. 225); Intervenor Intel Corporation’s Supplemental Briefing in Support of
`Motion to Transfer (Case No. 2:16-cv-693, D.E. 95-1).
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`4 Although there may be other districts in which venue for this case is also proper under the
`standard set out in TC Heartland (for example, the District of Delaware (where Dell Inc. is
`incorporated) or the Western District of Texas (where Dell’s headquarters are located), the
`Northern District of California is the best district in which to litigate this case because, as stated in
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`6
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`INTEL EX. 1457.008
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`Case 2:16-cv-00693-RWS-RSP Document 275 Filed 06/13/17 Page 9 of 11 PageID #: 19104
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`laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice,
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`transfer such case to any district or division in which it could have been brought.”). After TC
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`Heartland, venue would still be proper against Dell after in the Northern District of California
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`because Dell maintains a large research and development center in that district.
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`Intervenors Cavium and Intel intervened in this case to defend Dell, but neither are
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`incorporated in Texas. See Intervenor Cavium Inc.’s Supplemental Briefing in Support of Motion
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`to Transfer (Case No. 2:16-cv-693, D.E. 225); Intervenor Intel Corporation’s Supplemental
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`Briefing in Support of Motion to Transfer (Case No. 2:16-cv-693, D.E. 95). Furthermore, neither
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`has a regular and established place of business in this district. See id. Because all parties agree
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`that venue would be proper against Alacritech, Dell, Cavium, and Intel (all four of which have
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`regular and established places of business in that district), transfer to N.D. Cal. is another potential
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`remedy, short of dismissal, available to the Court.
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`VI. CONCLUSION
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`The Eastern District of Texas is an improper venue for this case because Dell is not
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`incorporated in Texas and does not have a regular and established place of business in this District.
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`Accordingly, the Court should dismiss this case or, in the alternative, transfer this case to the
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`Northern District of California.
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`Defendants’ motion to transfer venue, it is the most convenient venue for the most witnesses and
`parties to this lawsuit, including Alacritech, the inventors, third-party suppliers, etc. (see generally
`Case No. 2:16-cv-693, D.E. 59).
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`7
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`INTEL EX. 1457.009
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`Case 2:16-cv-00693-RWS-RSP Document 275 Filed 06/13/17 Page 10 of 11 PageID #:
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` 19105
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`Dated: June 13, 2017
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`Respectfully submitted,
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`By: /s/ Michael J. Newton
`Michael J. Newton (TX Bar No. 24003844)
`Brady Cox (TX Bar No. 24074084)
`ALSTON & BIRD, LLP
`2828 North Harwood Street, 18th Floor
`Dallas, Texas 75201-2139
`Tel: (214) 922-3400
`Fax: (214) 922-3899
`mike.newton@alston.com
`brady.cox@alston.com
`
`Deron R. Dacus (TX Bar No. 00790553)
`THE DACUS FIRM, PC
`821 ESE Loop 323, Suite 430
`Tyler, Texas 75701
`(903) 705-1117
`(903) 581-2543 Fax
`ddacus@dacusfirm.com
`
`Kirk T. Bradley (NC Bar No. 26490)
`ALSTON & BIRD, LLP
`Bank of America Plaza
`101 South Tryon Street, Suite 4000
`Charlotte, NC 28280-4000
`Tel: (704) 444-1000
`Fax: (704) 444-1111
`kirk.bradley@alston.com
`
`Lindsey Yeargin (GA Bar No. 248608)
`Emily Chambers Welch (GA Bar No. 606071)
`ALSTON & BIRD, LLP
`One Atlantic Center
`1201 West Peachtree St NW #4900
`Atlanta, GA 30309
`Tel: 404-881-7000
`Fax:404-881-7777
`lindsey.yeargin@alston.com
`emily.welch@alston.com
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`ATTORNEYS FOR DEFENDANT DELL
`INC.
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`8
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`INTEL EX. 1457.010
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`Case 2:16-cv-00693-RWS-RSP Document 275 Filed 06/13/17 Page 11 of 11 PageID #:
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` 19106
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`CERTIFICATE OF SERVICE
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`I certify that a true and correct copy of the foregoing document has been served on all
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`counsel of record via the Court’s Case Management/Electronic Case Filing system and/or
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`electronic mail on June 13, 2017.
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`/s/ Michael J. Newton
`Michael J. Newton
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`9
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`INTEL EX. 1457.011
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