Case 6:20-cv-00973-ADA Document 108 Filed 10/19/21 Page 1 of 11
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`WACO DIVISION
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`TMT Systems, Inc.
`Plaintiff,
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`v.
`Medtronic, Inc.,
`Medtronic, USA, Inc.,
`Defendants.
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`6:20-CV-00973-ADA
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`(cid:51)(cid:56)(cid:37)(cid:47)(cid:44)(cid:38)(cid:3)(cid:57)(cid:40)(cid:53)(cid:54)(cid:44)(cid:50)(cid:49)
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`MEMORANDUM OPINION AND ORDER
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`Before the Court are Defendant Medtronic, Inc.’s (“Medtronic”) and Defendant Medtronic,
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`USA, Inc.’s (“Medtronic USA”) (collectively, “Defendants”) respective Motions to Dismiss for
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`Improper Venue under Fed. R. Civ. P. 12(b)(3). Dkts. 47 and 48. After careful consideration of
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`the relevant facts, applicable law, and the parties’ briefs and oral arguments, the Court DENIES
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`Medtronic’s Motion (Dkt. 47) and GRANTS Medtronic USA’s Motion (Dkt. 48).
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`I.
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`BACKGROUND
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`Plaintiff TMT Systems, Inc. (“TMT”) filed this action against Medtronic on October 16,
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`2020 and subsequently added Medtronic USA as a co-defendant in its Second Amended Complaint
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`(“SAC”). Dkts. 1 and 37. TMT alleges that Medtronic and Medtronic USA’s Endurant products
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`have infringed its U.S. Patent No. 7,101,393. Dkt. 47 a 2; Dkt. 62 at 1. Medtronic is a Minnesota
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`corporation headquartered in Minneapolis, Minnesota. Dkt. 47 at 2. Medtronic USA is a subsidiary
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`of Medtronic and is also a Minnesota company. Dkt. 48 at 1–2. Medtronic and Medtronic USA
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`filed separate motions to dismiss TMT’s SAC for improper venue under Rule 12(b)(3) and 28
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`U.S.C. 1400. Dkts. 47 and 48.
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`For propriety of venue, TMT alleges that the Defendants have a facility in San Antonio,
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`within this District. The San Antonio facility bears a Medtronic logo on its exterior, and Medtronic
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`Medtronic 1155
`Medtronic v. TMT
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`Case 6:20-cv-00973-ADA Document 108 Filed 10/19/21 Page 2 of 11
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`lists “San Antonio TX” on the Medtronic.com website as a “Medtronic Location.” Dkt. 47 at 6.
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`The San Antonio facility was leased by MiniMed Distribution Corp. (“MiniMed”), which is a
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`wholly-owned subsidiary of Medtronic MiniMed, Inc, which in turn is a wholly-owned subsidiary
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`of Medtronic. Id. at 3.
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` Dkt. 62 at 2.
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` Id. at 3.
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` Id.
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` Id. at 2–3.
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`TMT alleges that about 20 Medtronic employees, 54 Medtronic USA employees, and over
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`1,000 MiniMed employees work at the San Antonio facility. Id. at 2; Dkt. 47 at 4.
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` Dkt. 62 at 3.
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` Id. at 4.
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` Id.
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`TMT alleges that Medtronic announced in a 2009 press release that Medtronic chose the
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`San Antonio facility for the diabetes treatment center and Medtronic received millions of dollars
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`in grants and incentive from the Texas enterprise Fund and local government. Dkt. 62 at 1–2.
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`II. LEGAL STANDRD
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`Federal Rule of Civil Procedure 12(b)(3) allows a party to move to dismiss an action for
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`“improper venue.” FED. R. CIV. P. 12(b)(3). 28 U.S.C. § 1400(b) is the “sole and exclusive
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`provision controlling venue in patent infringement actions.” TC Heartland LLC v. Kraft Foods
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`Group Brands LLC, 137 S. Ct. 1514, 1519 (2017). “Whether venue is proper under § 1400(b) is
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`an issue unique to patent law and is governed by Federal Circuit law,” rather than regional circuit
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`law. In re ZTE (USA) Inc., 890 F.3d 1008, 1012 (Fed. Cir. 2018). “[U]pon motion by the Defendant
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`challenging venue in a patent case, the Plaintiff bears the burden of establishing proper venue.” Id.
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`at 1013–14. Plaintiff may carry this burden by establishing facts that, if taken to be true, establish
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`proper venue. Castaneda v. Bradzoil, Inc., No. 1:20-CV-1039-RP, 2021 WL 1390423, at *1 (W.D.
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`Tex. Apr. 13, 2021). “On a Rule 12(b)(3) motion to dismiss for improper venue, the court must
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`accept as true all allegations in the complaint and resolve all conflicts in favor of the plaintiff.” Id.
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`(citing Braspetro Oil Servs. Co. v. Modec (USA), Inc., 240 F.App’x 612, 615 (5th Cir. 2007) (per
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`curiam)). In determining whether venue is proper, “the Court may look beyond the complaint to
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`evidence submitted by the parties.” Ambraco, Inc. v. Bossclib, B.V., 570 F.3d 233, 237–38 (5th
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`Cir. 2009).
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`Section 1400(b) provides that venue in patent cases is proper “[1] where the defendant
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`resides, or [2] where the defendant [a] has committed acts of infringement and [b] has a regular
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`and established place of business.” 28 U.S.C. § 1400(b). Under the first prong, the Supreme Court
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`has held that “a domestic corporation ‘resides’ only in its State of incorporation for purposes of
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`the patent venue statute.” TC Heartland, 137 S. Ct. at 1517. Under the second prong, the Federal
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`Circuit interpreted, in In re Cray Inc., 871 F.3d 1355 (Fed. Cir. 2017), “regular and established
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`place of business” to impose three general requirements: “(1) there must be a physical place in the
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`district; (2) it must be a regular and established place of business; and (3) it must be the place of
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`the defendant.” Id. at 1360. Subsequently, in In re Google LLC, 949 F.3d 1338 (Fed. Cir. 2020),
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`the Federal Circuit added a fourth requirement: “a ‘regular and established place of business’
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`requires the regular, physical presence of an employee or other agent of the defendant conducting
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`the defendant’s business at the alleged ‘place of business.’”1 Id. at 1345.
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`Regarding the first requirement, a “place” refers to a “‘building or a part of a building set
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`apart for any purpose’ or ‘quarters of any kind’ from which business is conducted.” Cray, 871 F.3d
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`at 1362 (citations omitted). However, a “place of business” does not require “real property
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`ownership or a leasehold interest in real property” and “leased shelf space or rack space can serve
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`as a ‘place’ under the statute.” Google, 949 F.3d at 1343–44. Regarding the second requirement,
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`“regular” means that the business must operate in a “‘steady, uniform, orderly, and methodical’
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`manner,” and “sporadic activity cannot create venue.” Cray, 871 F.3d at 1362 (citations omitted).
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`And the third requirement means that the place cannot be solely a place of the defendant’s
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`employee – “the defendant must establish or ratify the place of business.” Id. at 1363.
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`III. MEDTRONIC
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`The parties do not dispute that Medtronic does not “reside” in this District and therefore
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`the first prong of Section 1400(b) does not apply. In its motion, Medtronic argues that (a) it has
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`not committed the alleged acts of infringement in this District, and (2) it does not have a regular
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`and established place of business in this District. The Court addresses each argument advanced by
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`Medtronic in detail below.
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`1 In Google, Federal Circuit considered this requirement as part of the second Cray factor. In re Google
`LLC, 949 F.3d 1338, 1344 (Fed. Cir. 2020) (“We agree . . . that under the second Cray factor, a ‘place of
`business’ generally requires an employee or agent of the defendant to be conducting business at that
`place.”). However, this Google requirement is essentially a different requirement than the original second
`Cray requirement, which places more focus on the phrase “regular and established.” Therefore, this Court
`treats the Google requirement as a fourth requirement in addition to the three Cray requirements.
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`A.
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`Acts of Infringement in This District
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`“In assessing whether a defendant has committed an act of infringement within the District,
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`an allegation of infringement—even if contested—is sufficient to establish venue is proper.”
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`Intellectual Ventures II LLC v. FedEx Corp., 2:16-CV-00980-JRG, 2017 WL 5630023, at *8 (E.D.
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`Tex. Nov. 22, 2017). Moreover, “the ‘acts of infringement’ required to support venue [need not]
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`be acts of direct infringement, and [ ] venue [may] lie if the defendant only induced infringement
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`under 35 U.S.C.A. § 271(b) or contributed to infringement under 35 U.S.C.A. § 271(c).” Seven
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`Networks, LLC v. Google LLC, 315 F. Supp. 3d 933, 942 (E.D. Tex. 2018). Induced infringement
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`under § 271(b) requires “specific intent to encourage another’s infringement and not merely that
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`the defendant had knowledge of the acts alleged to constitute inducement.” Vanda Pharms. Inc. v.
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`W.-Ward Pharms. Int’l Ltd., 887 F.3d 1117, 1129 (Fed. Cir. 2018).
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`Medtronic does not dispute that TMT has sufficiently alleged direct infringement on the
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`part of Medtronic USA. Dkt. 47 at 9. Regarding induced infringement on the part of Medtronic,
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`Medtronic contends that “TMT makes no specific allegations at all as to how Medtronic, Inc., has
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`allegedly ‘encouraged’ Medtronic USA to sell [the accused] Endurant.” Id. at 14; see also Dkt. 71
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`at 6. However, TMT does include allegations of Medtronic’s specific intent to encourage
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`Medtronic USA’s alleged direct infringement: “Medtronic has infringed and continues to infringe
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`the ’393 patent . . . by (among other things) actively aiding and abetting infringement by others,
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`including Medtronic USA. . . . Medtronic has made and continues to make, offered to sell and sold,
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`and continues to offer to sell and sell, the Accused Products with the knowledge and specific intent
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`to encourage and facilitate infringing uses of such products by Medtronic USA and its customers.”
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`Dkt. 37 at ¶ 66 (emphasis added). Further, TMT has also alleged that Medtronic has contributed
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`to the alleged direct infringement committed by Medtronic USA. Id. at ¶ 67. In its motion,
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`Medtronic does not specifically challenge the sufficiency of TMT’s contributory infringement
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`allegations. Therefore, the Court finds that TMT has sufficiently alleged induced infringement and
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`contributory infringement on the part of Medtronic for venue purposes. See, e.g., Seven Networks,
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`315 F. Supp. 3d at 942. Because the Court finds that TMT’s allegations of induced infringement
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`and contributory infringement are sufficient to support venue in this District, the Court does not
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`need to address whether TMT has sufficiently alleged direct infringement on the part of Medtronic
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`for venue purposes.
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`B.
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`Regular and Established Place of Business in This District
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`For Medtronic to have “a regular and established placed of business” in this District, there
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`must be (1) a physical place in the district; (2) it must be a regular and established place of business;
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`and (3) it must be the place of the defendant. Cray, 871 F.3d at 1360. Medtronic does not dispute
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`that the San Antonio facility satisfies the first two requirements and does not dispute that it has
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`employees working in the San Antonio facility. Instead, it contends that the San Antonio facility
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`is MiniMed’s place of business, not Medtronic’s. Dkt. 47 at 15–18; Dkt. 71 at 8–10.
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`For a place of business to be “the place of the defendant,” “the defendant must establish or
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`ratify the place of business.” Cray, 871 F.3d at 1363. There is no bright-line rule for this inquiry.
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`Id. at 1362 (“In deciding whether a defendant has a regular and established place of business in a
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`district, no precise rule has been laid down and each case depends on its own facts.”). The Federal
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`Circuit set forth a number of considerations to determine whether the defendant has ratified the
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`place of business, including: (1) “whether the defendant owns or leases the place, or exercises
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`other attributes of possession or control over the place”; (2) “whether the defendant conditioned
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`employment on an employee’s continued residence in the district or the storing of materials at a
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`place in the district so that they can be distributed or sold from that place”; (3) whether the
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`defendant has made “representations that it has a place of business in the district”; and (4) “the
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`nature and activity of the alleged place of business of the defendant in the district in comparison
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`with that of other places of business of the defendant in other venues.” Id. at 1363–64. These
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`considerations are not exhaustive but are more illustrative in nature. Blitzsafe Texas, LLC v.
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`Bayerische Motoren Werke AG, No. 2:17-CV-00418-JRG, 2018 WL 4849345, at *6 (E.D. Tex.
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`Sept. 6, 2018).
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`More recently, the Federal Circuit found additional factors relevant to this analysis,
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`including: “the nature of [the defendant’s] relationship with [its] representatives [in the District],
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`or whether it has any other form of control over any of them”; “whether [the defendant] possesses,
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`owns, leases, or rents the [facility] . . . or owns any of the equipment located there”; “whether any
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`signage on, about, or relating to the [facility] associates the space as belonging to [the defendant]”;
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`and “whether the location of the [facility] was specified by the defendant or whether [a third party]
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`would need permission from the defendant to move [the facility] outside of the . . . District or to
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`stop working for [the defendant].” ZTE (USA), 890 F.3d at 1015–16.
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`Based on the evidence of record, the Court finds that the San Antonito facility is
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`Medtronic’s place of business for venue purposes since it has established and ratified the facility.
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`1. Medtronic has established the San Antonio Facility.
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`As TMT alleges, Medtronic announced in a 2009 press release that after an extensive
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`nationwide search it has chosen San Antonio, TX as the home of its new Diabetes Therapy
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`Management and Education Center. Dkt. 62 at 2. In establishing the facility in San Antonio,
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`Medtronic received millions of dollars in grants and incentive from the Texas Enterprise Fund and
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`local government. Id. Although MiniMed is the tenant on the facility’s lease,
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`. Id. at 2–3.
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`. Id. at 3. As TMT alleges,
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`at 10.
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`Viewing all these facts together, the Court finds that Medtronic has established, or at least
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`has played a crucial role in establishing, the San Antonio facility. The evidence of Medtronic’s
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`role in establishing the San Antonio facility alone is sufficient for finding that venue is proper in
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`this District for Medtronic. The Court further finds below that venue is also proper for Medtronic
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`under the ratification theory as the Federal Circuit explained in Cray.
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`2. Medtronic exercises attributes of possession or control over the San Antonio
`facility.
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`As discussed above, Medtronic chose the location of the San Antonio facility,
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` Dkt. 62 at 11. As TMT alleges, Medtronic has 20 employees working at the San Antonio
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`facility on a regular basis, and MiniMed has no practical authority to give instructions to Medtronic
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`as to who can work at the facility. Id. 12–13. Further,
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`. Id. at 12.
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`3. Medtronic requires its employees to work at the San Antonio facility.
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`TMT has produced testimonial evidence showing that Medtronic requires its 20 employees
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`to work at the San Antonio facility. Dkt. 62 at 15–16
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`). Further, certain Medtronic employees are required to be on-site at the San Antonio
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`facility to maintain and manage the facility. Id. Therefore, at least for these employees, Medtronic
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`conditioned their continued employment with Medtronic on their presence in this District.
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`4. Medtronic represents to the public that it has a place of business in this District.
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`Under this factor, “[p]otentially relevant inquiries include whether the defendant lists the
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`alleged place of business on a website, or in a telephone or other directory; or places its name on
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`a sign associated with or on the building itself.” Cray, 871 F.3d at 1363–64. “But the mere fact
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`that a defendant has advertised that it has a place of business or has even set up an office is not
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`sufficient; the defendant must actually engage in business from that location.” Id. at 1364.
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`“Marketing or advertisements also may be relevant, but only to the extent they indicate that the
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`defendant itself holds out a place for its business.” Id. at 1363.
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`As TMT alleges, Medtronic lists “San Antonio, TX” as one of the “Medtronic Locations”
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`and
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`“Regional Locations”
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`in
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`States
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`on www.medtronic.com/us-
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`en/about/locations.html, a website registered to Medtronic. Dkt. 62 at 17. The San Antonio facility
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`bears the “Medtronic” logo, not MiniMed’s, on the exterior of the facility. In addition, Medtronic
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`stated in its 2009 press release that it has chosen San Antonio, TX as its new facility. Id. Therefore,
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`evidence shows that Medtronic holds out to the public that the San Antonio facility is a place for
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`its business.
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`5. Medtronic owns equipment at the San Antonio facility.
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`As TMT alleges, Medtronic owns equipment at the San Antonio facility, including
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` used by Medtronic, Medtronic USA, and MiniMed
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`employees at the facility. Dkt. 62 at 19.
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`In its Motion and Reply, Medtronic argues that each of TMT’s allegations separately is
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`insufficient to establish proper venue, including the fact that Medtronic has employees working at
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`the San Antonio facility,
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`, the San Antonio facility bears the
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`“Medtronic” sign, Medtronic’s webpage lists San Antonio as a regional location, and Medtronic
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`provides furnishing at the facility. Dkt. 47 at 15–18; Dkt. 72 at 8–10. Medtronic misinterprets the
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`test for under Cray: all relevant factors must be viewed together as a whole, rather than viewed
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`individually and separately, to determine the propriety of venue. See Cray, 871 F.3d at 1363.
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`In view of the above, the Court finds that Medtronic has also ratified the San Antoni facility
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`as its place of business. Accordingly, the Court finds that the San Antonio facility is the place of
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`business for Medtronic and it is therefore subject to venue in this District.
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`IV. MEDTRONIC USA
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`The parties do not dispute that Medtronic USA does not “reside” in this District and
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`therefore the first prong of Section 1400(b) does not apply. In addition, under the second prong of
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`Section 1400(b), the parties do not dispute that Medtronic USA has committed the alleged acts of
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`infringement in this District. Instead, Medtronic USA argues that it does not have a regular and
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`established place of business in this District. More specifically, Medtronic USA contends that the
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`San Antonio facility is not a place of business of Medtronic USA. The Court agrees.
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`The vast majority of TMT’s venue allegations concern Medtronic. TMT’s main allegations
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`that concern Medtronic USA include: (1) the lease of the San Antonio facility allows Medtronic
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`USA, as an affiliate to Medtronic and MiniMed, to use the facility, (2) Medtronic USA has 54
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`employees working at the facility and requires them to work at the facility, and (3) the exterior of
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`the facility bears a “Medtronic” logo. However, unlike its comprehensive allegations concerning
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`Medtronic, TMT does not specifically allege Medtronic USA’s role in establishing the San
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`Antonio facility, or how Medtronic USA exercises any attributes of possession or control over the
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`facility. Due to this lack of allegations concerning Medtronic USA, the Court finds that TMT has
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`not shown that the San Antonio facility is Medtronic USA’s place of business for venue purposes.
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`See, e.g., ZTE (USA), 890 F.3d at 1014–15 (the mere fact that a defendant has full-time employees
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`working at a facility in the district belonging to another party is insufficient to establish proper
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`venue). Therefore, the Court finds that TMT has not carried its burden to show that venue is proper
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`against Medtronic USA in this District.
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`V. CONCLUSION
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`For the reasons above, the Court finds that venue is proper against Medtronic in this District
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`under Section 1400(b), but is not proper against Medtronic USA. Accordingly, the Court DENIES
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`Medtronic’s Motion to Dismiss (Dkt. 47) and GRANTS Medtronic USA’s Motion to Dismiss
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`(Dkt. 48).
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`SIGNED this 11th day of October, 2021.
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`ALAN D ALBRIGHT
`UNITED STATES DISTRICT JUDGE
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