Case 6:20-cv-00661-ADA Document 55 Filed 06/22/21 Page 1 of 10
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`WACO DIVISION
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`KOSS CORPORATION,
`Plaintiff,
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`v.
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`BOSE CORPORATION,
`Defendant.
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`6-20-CV-00661-ADA
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`ORDER GRANTING BOSE CORPORATION’S
`MOTION TO DISMISS FOR IMPROPER VENUE AND MOOTING BOSE
`CORPORATION’S ALTERNATE MOTION TO TRANSFER VENUE
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`Came on for consideration this date is Defendant Bose Corporation’s Motion to Dismiss
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`for Improper Venue, or Preferably to Transfer Venue to the District of Massachusetts. Def.’s
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`Mot., ECF No. 21. The Court has considered the Motion, all relevant filings, oral argument, and
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`the applicable law.1 For the reasons set forth below, the Court finds that Defendant’s Motion to
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`Dismiss for Improper Venue should be GRANTED.
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`I. BACKGROUND
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`Bose is incorporated in the state of Delaware with its corporate headquarters located in
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`the District of Massachusetts. Def.’s Mot. at 1. Until this year, Bose operated retail locations. Id.
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`As part of a decision to close all Bose retail stores, Bose closed down its Bose Factory Store in
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`San Marcos, Texas on February 29, 2020. Id at 1–2. Since then, Bose asserts that is has neither
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`owned nor operated any place of business in Texas. Id. at 2.
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`Bose sells its products in third-party retail stores present in the Western District of Texas.
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`Def.’s Mot. at 2. In some stores, Bose provides interactive display units for demonstration of
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`Bose products. Id. at 10. Bose employees do not conduct business at the Bose displays. Def.’s
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`1 Although Koss filed a sur-reply (ECF No. 32) in response to Bose’s reply, it did not seek leave from the Court to
`do so. In response, Bose filed a sur-sur-reply (ECF No. 34) but also did not seek leave from the Court. Accordingly,
`the Court strikes Koss’s sur-reply and Boses’s sur-sur-reply and will not consider these filings in its analysis.
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`Reply at 8, ECF No. 25-1. Bose contracts with a third-party vendor, ActionLink, to service and
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`maintain the Bose interactive displays. Id. at 2. Until March 2020, ActionLink also provided
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`Bose Display Representatives to third party retail stores. Id. at 9. Bose Display Representatives
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`were ActionLink employees whose task was to “engage and train retail associates on . . . Bose
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`products.” Id. at 10.
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`Plaintiff Koss Corporation filed its Complaint in this Court on July 22, 2020 against Bose
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`Corporation alleging direct and indirect infringement of U.S. Patent Nos. 10,206,025,
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`10,368,155, and 10,469,934 (the “Asserted Patents”). Pl.’s Compl. ECF No. 1. Each Patent
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`relates to wireless headphone technology, and Koss asserts that Bose infringes the Asserted
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`Patents by selling wireless headphone products. Id. at 15–21. Koss’s Complaint states that venue
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`is proper in the Western District of Texas under 28 U.S.C. §1400(b) because of the presence of
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`the Bose Factory Store in San Marcos and because Bose has regularly transacted business in this
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`District. Id. at ¶ 10.
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`Bose filed a Motion to Dismiss for Improper Venue, or Preferably to Transfer Venue to
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`the District of Massachusetts on December 17, 2020 alleging that the San Marcos store closed
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`before the Plaintiff’s action was brought, and that Bose neither resides in the Western District of
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`Texas nor has a “regular and established place of business” in Texas. Def.’s Mot. at 1. Koss filed
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`a response opposing the motion on February 12, 2021 stating that Bose does have a “regular and
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`established place of business” in this District. Pl.’s Resp., ECF No. 23-2. Bose filed a reply on
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`February 19, 2021. Def.’s Reply. ECF No. 25-1. Koss filed a sur-reply on February 26, 2021.
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`Pl.’s Sur-Reply, ECF No. 32. Bose filed a sur-sur-reply on March 4, 2021. Def.’s Sur-Sur-Reply,
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`ECF No. 34. The Court held a hearing on April 16, 2021 where both parties gave oral arguments
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`on the Motion to Dismiss.
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`II. LEGAL STANDARD
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`Under Federal Rules of Civil Procedure 12(b)(3), a court may dismiss a case when venue
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`is “wrong” or “improper” in the forum where the case was filed. Fed. R. Civ. P. 12(b)(3). The
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`plaintiff bears the burden of establishing proper venue. Slyce Acquisitions Inc. v. Syte – Visual
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`Conceptions Ltd., 422 F. Supp. 3d 1191, 1198 (W.D. Tex. 2019). The plaintiff need only make a
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`prima facie showing to establish venue if the court does not hold an evidentiary hearing.
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`Johnston v. Multidata Sys. Int’l Corp., 523 F.3d 602, 609 (5th Cir. 2008). The Court must accept
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`all allegations in the plaintiff’s complaint as true and resolve all conflicts in favor of the plaintiff.
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`Braspetro Oil Servs. Co. v. Modec (USA), Inc., 240 F. App’x 612, 615 (5th Cir). The Court may
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`consider evidence in the record beyond the facts alleged in the complaint and its admissible
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`attachments. Ambraco, Inc. v. Bossclip B.V., 570 F.3d 233, 238 (5th Cir. 2009). If venue is
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`improper and timely challenged, the court has discretion to dismiss or transfer the case. Caldwell
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`v. Palmetto State Savs. Bank of S.C., 811 F.2d 916, 919 (5th Cir.).
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`The patent venue statute, 28 U.S.C. § 1400, is the “sole and exclusive provisions
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`controlling venue in patent infringement actions.” TC Heartland LLC v. Kraft Food Grp. Brands
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`LLC, 137 S. Ct. 1514, 1519 (2017). Under the patent venue statute, a plaintiff may establish
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`venue in the district “where the defendant resides, or where the defendant has committed acts of
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`infringement and has a regular and established place of business.” 28 U.S.C. § 1400(b). A
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`defendant has a “regular and established place of business” in any district where (1) a defendant
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`has a physical place, (2) the physical place is a regular and established place of business, and
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`(3) the physical place is the place of the defendant. In re Cray Inc., 871 F.3d 1355, 1360 (Fed.
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`Cir. 2017). The standard for a regular and established place of business requires more than the
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`minimum contacts standard necessary under personal jurisdiction. In re Cray Inc., 871 F.3d at
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`1360.
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`A “place” requires a “building or part of a building set apart for any purpose” or “quarters
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`of any kind” where business is conducted. Id. at 1362. “Regular” indicates a steady, uniform,
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`orderly, and methodical manner of business operations. Id. “Established” denotes that the place
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`of business is settled certainly or fixed permanently. Id. Courts should consider whether the
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`defendant lists the place of business on its website or other directory, or whether the defendant’s
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`name appears on the building’s sign. Id. at 1363–64. The fact that the defendant advertised the
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`place as its place of business or has an office in that place is not sufficient to establish venue. Id.
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`at 1364. “The defendant must actually engage in business from that location.” Id.
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`A defendant need not own real property in the district to fulfill the venue requirement. In
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`re Google LLC, 949 F.3d 1338, 1343 (Fed. Cir. 2020). Rather, the defendant can meet the
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`statutory requirement by possessing or controlling any physical place in the district. Id.
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`III. ANALYSIS
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`Bose asserts that Koss cannot establish proper venue in the Western District of Texas
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`because Bose does not reside in or have a regular and established place of business in this
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`District. Def.’s Mot. at 1. Koss believes that, by owning interactive displays installed in third-
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`party retail stores, Bose leases and has control over a “place” in the Western District of Texas
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`and, thus, has a regular and established place of business in this District. Pl.’s Resp. at 1. Bose
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`contends that the interactive displays are not a “place” under §1400(b). Def.’s Reply at 1. In
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`addition, Bose argues that the installation and maintenance activities it performs with the
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`interactive displays are not enough to create a “regular and established place of business.” Def.’s
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`Reply at 1.
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`Koss failed to establish that venue is proper in this District because it cannot show that
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`Bose resides in Texas or that Bose has a regular and established place of business in Texas.
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`A.
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`Bose Does Not Reside in the Western District of Texas.
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`Koss concedes that Bose is a Delaware corporation and does not reside in the Western
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`District of Texas. Pl.’s Compl. at 2. Therefore, it is undisputed that venue is not proper under the
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`first prong of the patent venue statute. TC Heartland, 137 S. Ct. at 1517; Def.’s Mot. at 5.
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`B.
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`Bose Does Not Have a Regular and Established Place of Business in the Western
`District of Texas.
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`The Court finds that Koss failed to prove that Bose has a regular and established place of
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`business in this District because (1) Bose does not lease or own any real property in Texas; (2) a
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`Bose interactive display is not a “regular and established place of business”; and (3) a Bose
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`interactive display is not a “place of the defendant.”
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`i. Bose Does Not Lease or Own Any Real Property in Texas.
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`Bose closed its San Marcos store on February 29, 2020, almost five months before Koss
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`filed its Complaint. Def.’s Mot. at 1. Koss now recognizes that, at the time the Complaint was
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`filed, Bose did not lease or own any real property in the Western District of Texas. Pl.’s Resp. at
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`1. Therefore, the Court finds that Bose does not lease or own any real property in Texas.
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`ii. A Bose interactive display is not a “regular and established place of business”.
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`Leased shelf space can serve as a “regular and established place of business” under the
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`patent venue statute if the defendant also has an employee or agent conducting business in that
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`district. In re Google LLC, 949 F.3d at 1343–44 (holding that shelf-space did not constitute a
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`regular and established place of business for the defendant within the district because the
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`defendant had no employee or agent regularly conducting its business at the alleged place).
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`Bose asserts, and Koss does not dispute, that Bose employees do not conduct business
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`from Bose interactive displays. Def.’s Reply at 8.
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` Koss argues that Bose operates regular business activities through ActionLink, a third
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`party. Pl.’s Resp. at 8. Pointing to contractual arrangements between Bose and ActionLink, Koss
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`asserts that ActionLink is acting as Bose’s agent when ActionLink employees perform
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`maintenance at Bose interactive displays. Id. Koss contends that the periodic maintenance
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`activities of ActionLink are an integral part of Bose’s business in the district, selling Bose
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`products. Id. Koss concludes that the Bose interactive displays are a “regular and established
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`place of business” because Bose’s agent, ActionLink, regularly contributes to Bose’s business
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`through the maintenance of the interactive displays. Id.
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`In reply, Bose points out that ActionLink engages only in field service calls and the repair
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`of broken displays. Def.’s Reply at 8. Bose further contends that maintenance operations are
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`insufficient to establish venue because they are wholly different from Bose’s true business in the
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`district, selling products. Id. Bose also argues that, by itself, the sale of products in a third-party
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`store is insufficient to establish venue. Def.’s Mot. at 9.
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`Koss asks the Court to find that ActionLink, through its periodic maintenance operations,
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`conducts Bose business at the interactive displays. Pl.’s Resp. at 7–8. Koss argues that the
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`activities of ActionLink are integral to the sale of Bose Products, and therefore Bose has a
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`regular and established place of business through the interactive displays. Id. at 8. However, the
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`Federal Circuit has held that, for purposes of the patent venue statute, “maintenance activities
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`cannot, standing alone, be considered the conduct of [the Defendant’s] business.” In re Google,
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`949 F.3d 1338, 1346 (Fed. Cir. 2020). The maintenance operations of ActionLink alone cannot
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`establish proper venue.
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`Koss also mentions that ActionLink provides “Bose Display Representatives”, employees
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`who conduct activities beyond maintenance at the interactive displays. Pl.’s Resp. at 3. Bose
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`counters that this program ended almost four months before Koss filed its Complaint. Def.’s
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`Reply at 9. When addressing whether venue is proper, “[i]t has long been the case that ‘the
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`jurisdiction of the court depends upon the state of things at the time of the action brought.’”
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`Grupo Dataflux v. Atlas Glob. Group, L.P., 541 U.S. 567, 570 (2004) (quoting Mollan v.
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`Torrance, 22 U.S. 537, 539 (1824)). Therefore, the Court finds that any activities performed by
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`Bose Display Representatives are inappropriate to use as a basis for venue.
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`The Court finds that Koss has not met its burden of proof to show that Bose has a regular
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`and established place of business in this District. Therefore, venue is improper under the second
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`prong of the patent venue statute.
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`iii. A Bose interactive display is not a “place of the defendant”.
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`Ownership or a lease of real property is not required to establish venue under §1400(b).
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`In re Google LLC, 949 F.3d 1338, 1343 (Fed. Cir. 2020). Rather, the defendant can meet the
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`statutory requirement by possessing or controlling any physical place in the district. Id.
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`Koss contends that Bose owns a place in this district because Bose owns and controls the
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`interactive displays in third-party retail stores. Pl.’s Resp. at 7. Koss argues that because Bose
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`pays third-party retail stores to sell Bose products, Bose essentially leases space within the
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`stores. Id. at 2. In support of this argument, Koss points out that Bose controls many aspects of
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`the interactive displays through contractual agreements with third-party retailers. Id. at 4. Some
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`aspects of the displays that Bose controls include design, installation, maintenance, enforcement
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`of various advertising standards, and payment of taxes and insurance for the displays. Id. at 4.
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`Koss concludes that the degree of control that Bose possesses over these displays amounts to
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`Bose “conducting business” at these displays, thus making the displays “places of Bose”. Id. at 8.
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`In its Reply, Bose first argues that an interactive display is not a “place” but rather a
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`“thing.” Def.’s Reply at 3. Bose considers the displays as “fixtures” rather than leased space. Id.
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`Bose further argues that any control Bose has over the third-party retailers is insufficient to call
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`the stores or the space within them “places of Bose”. Id. at 6–7. Bose points out that it does not
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`control where the displays are located, the retailer’s employees, store management, what songs
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`are available through a Bose display, or what products are stocked on the display. Id. at 7.
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`Koss relies on the Federal Circuit’s recognition that leased shelf space can serve as a
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`“place” under the patent venue statute. Pl’s Resp. at 6. The Eastern District of Texas has held
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`that shelf-space can constitute a regular and established place of business for a defendant when a
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`defendant employs third parties to facilitate movement of products, manage the merchandisers,
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`help procure the best available space, and monitor sales data. Tinnus Enterprises, LLC v.
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`Telebrands Corp., No. 6:17-CV-00170-RWS, 2018 WL 4524119, at *1 (E.D. Tex. May 2,
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`2018). However, this Court is not persuaded that Bose exercises the degree of control necessary
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`to establish the stores and interactive displays as “places of Bose.” The facts of Tinnus, where
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`leased shelf space was an appropriate basis for venue, are distinguishable from this case. In
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`Tinnus, the defendant’s agent was responsible for sales-related operations, such as restocking
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`supplies, affixing pricing stickers, and arranging products. Id. at *4. Neither Bose nor its
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`maintenance agent, ActionLink, perform any of these activities. Def.’s Mot. at 12. Therefore,
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`ActionLink is not conducting Bose business when it services the interactive displays. Because no
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`employee or agent of Bose conducts Bose business at the interactive displays, they cannot be a
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`“place of Bose”.
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`Koss has not proven that there is a “place of Bose” present in this District. Therefore,
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`venue cannot be proper under the second prong of the patent venue statute.
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`Having found that Bose does not reside in, nor has a regular and established place of
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`business in the Western District of Texas, the Court concludes that venue is improper in this
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`District. Bose’s activities in this District satisfy neither the first nor second prong of the patent
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`venue statute. Accordingly, the Court finds that the case must be dismissed.
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`IV. CONCLUSION
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`For the reasons stated above, it is ORDERED that Bose’s Motion to Dismiss for
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`Improper Venue is GRANTED.
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`SIGNED this 22nd day of June, 2021.
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`ALAN D ALBRIGHT
`UNITED STATES DISTRICT JUDGE
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