Case 2:17-cv-00517-JRG Document 28 Filed 09/26/17 Page 1 of 39 PageID #: 168
`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`
` Plaintiff,
`
`
`
`v.
`
`
`AGIS Software Development, LLC,
`
`
`
`
`
`ZTE CORPORATION AND
`ZTE (TX), INC.,
`
`
`
`
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`_______________________________________)
`
` Defendants
`
`.
`
`
`
`
`
`
`
`
`Case No. 2:17-CV-00517-JRG
`
`
`
`
`
`
`
`
`DEFENDANT ZTE (TX), INC.’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT
`FOR FAILURE TO STATE A CLAIM AND IMPROPER VENUE OR IN THE
`ALTERNATIVE TO TRANSFER
`
`
`
`
`
`

`

`Case 2:17-cv-00517-JRG Document 28 Filed 09/26/17 Page 2 of 39 PageID #: 169
`
`
`TABLE OF CONTENTS
`
`STATEMENT OF ISSUES TO BE DECIDED BY THE COURT PURSUANT TO
`LOCAL RULE 7(a)(1) ......................................................................................................... i
`
`I.
`
`II.
`
`III.
`
`INTRODUCTION: AGIS SOFTWARE HAS SUED THE INCORRECT
`DEFENDANT IN AN IMPROPER VENUE ..................................................................... 1
`
`PROCEDURAL HISTORY: AGIS SOFTWARE CANNOT ESTABLISH
`VENUE ............................................................................................................................... 2
`
`FACTUAL BACKGROUND: AGIS SUED THE WRONG DEFENDANT IN
`THE WRONG VENUE ...................................................................................................... 3
`
`
`A.
`
`B.
`
`
`
`Plaintiff AGIS Software .......................................................................................... 3
`
`Defendant ZTE (TX) Inc. ....................................................................................... 3
`
`IV.
`
`STATEMENT OF LAW..................................................................................................... 5
`
`A.
`
`
`
`B.
`
`
`
`The Complaint Must Plausibly Allege That The Defendant Can Infringe ............. 5
`
`Venue In Patent Cases Can Only Exists If Each Defendant Resides Or Has
`A Regular And Established Place of Business In the Forum .................................. 6
`
`
`
` 1.
`
`2.
`
`
`
`Residency Of Defendants In Patent Cases Is Determined On A
`District-by-District Basis, Not A State-By-State Basis .............................. 7
`
`Venue Over Non-Resident Defendants Requires A Regular And
`Established Place Of Business In The Forum ............................................. 9
`
`V.
`
`ARGUMENT: THE COMPLAINT SHOULD BE DISMISSED .................................... 10
`
`A.
`
`
`
`The Complaint Should Be Dismissed For Failure To State A Claim ................... 11
`
`1.
`
`
`
`2.
`
`
`
`AGIS Software Fails To Allege Or Plead Facts Sufficient To Prove
`Direct Infringement By ZTX .................................................................... 11
`
`AGIS Software Fails To Allege Or Plead Facts Sufficient To Prove
`Indirect Infringement By ZTX .................................................................. 13
`
`
`
` B.
`
`The Complaint Should Be Dismissed For Improper Venue ................................. 14
`
`1.
`
`
`
`2.
`
`
`
`3.
`
`
`
`ZTX Does Not Reside In This District ..................................................... 15
`
`ZTX Has Not Committed Acts Of Infringement In This District ............. 16
`
`ZTX Does Not Maintain A Regular And Established Place Of
`Business In This District ........................................................................... 17
`
`i
`
`

`

`Case 2:17-cv-00517-JRG Document 28 Filed 09/26/17 Page 3 of 39 PageID #: 170
`
`C.
`
`
`
`Should The Court Not Dismiss This Case, It Should Be Transferred To
`The Western District of Texas or the Northern District of California .................. 19
`
`
`
` 1.
`
`The Private Interest Factors Favor Transfer To The Northern
`District of California Or The Western District of Texas .......................... 21
`
`a.
`
`b.
`
`c.
`
`d.
`
`The Relative Ease of Access To Sources of Proof Strongly
`Favors Transfer ............................................................................. 21
`
`The Availability Of Compulsory Process Favors Transfer ........... 24
`
`The Cost of Attendance For Willing Witnesses Favors
`Transfer ......................................................................................... 24
`
`The Remaining Private Interest Factor Is Neutral. ....................... 26
`
`2.
`
`
`
`The Public Interest Factors Favor Transfer To California ........................ 26
`
`a.
`
`b.
`
`c.
`
`The Northern District Of California Has A Substantial
`Connection To and Local Interest In Adjudicating This
`Case ............................................................................................... 26
`
`Administrative Difficulty From Court Congestion Is
`Neutral........................................................................................... 27
`
`The Remaining Public Interest Factors Are Neutral ..................... 27
`
`VI.
`
`CONCLUSION: THIS CASE SHOULD BE DISMISSED OR TRANSFERRED ......... 28
`
`
`
`
`
`
`
`
`
`ii
`
`

`

`Case 2:17-cv-00517-JRG Document 28 Filed 09/26/17 Page 4 of 39 PageID #: 171
`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Federal Cases
`
`“A” Co. v. Consyne Corp.,
`191 U.S.P.Q. (BNA) 126 (S.D.CA 1975) ..................................................................................8
`
`Action Commun. Sys. v. Datapoint Corp.,
`426 F.Supp. 973 (N.D. Tex. 1977) ................................................................................8, 15, 16
`
`American GNC Corp. v. ZTE Corp.,
`2:17-CV-00107 (E.D. Tex. Sep. 5, 2017) ................................................................................28
`
`In re Apple, Inc.,
`456 Fed.Appx. 907, 2012 WL 112893 (Fed. Cir. 2012) ..........................................................23
`
`Ashcroft v. Iqbal,
`556 U.S. 662 (2009) ...................................................................................................5, 6, 10, 14
`
`Bell Atl. Corp. v. Twombly,
`550 U.S. 544 (2007) ...................................................................................................5, 6, 10, 12
`
`In re Bill of Lading Transmission & Processing Sys. Patent Litig.,
`681 F.3d 1323 (Fed. Cir. 2012)............................................................................................5, 12
`
`Blue Spike, LLC v. Caterpillar, Inc.,
`6:16-CV-01361, 2017 WL 4129321 (E.D. Tex. Sep. 9, 2017) ............................................7, 14
`
`Bowlby v. City of Aberdeen,
`681 F.3d 215 (5th Cir. 2012) .....................................................................................................6
`
`California Irrigation Services, Inc. v. Bartron Corp.,
`654 F. Supp. 1, 227 U.S.P.Q. 414 (N.D. Cal. 1985) ..................................................................8
`
`City of Clinton, Ark. v. Pilgrim's Pride Corp.,
`632 F.3d 148 (5th Cir. 2010) .....................................................................................................5
`
`In re Cray,
`__ F.3d __, No. 2017-129 (Fed. Cir. Sept. 21, 2017) ...................................................... passim
`
`DSS Tech. Management, Inc. v. Apple, Inc.,
`No. 13-cv-00919, 2014 WL 6847569 (E.D. Tex. Nov. 17, 2014) ...........................................25
`
`DSU Med. Corp. v. JMS Co.,
`471 F.3d 1293 (Fed. Cir. 2006) (en banc) ...............................................................................13
`
`iii
`
`

`

`Case 2:17-cv-00517-JRG Document 28 Filed 09/26/17 Page 5 of 39 PageID #: 172
`
`Ferrer v. Chevron Corp.,
`484 F.3d 776 (5th Cir. 2007) ...................................................................................................16
`
`Fourco Glass Co. v. Transmirra Products Corp.,
`353 U.S. 222 (1957) .............................................................................................................8, 15
`
`Frederick v. Advanced Fin. Solutions, Inc.,
`558 F.Supp.2d 699 (E.D. Tex. 2007) .......................................................................................19
`
`In re Genentech, Inc.,
`566 F.3d 1338 (Fed. Cir. 2009)........................................................................................ passim
`
`Groupchatter, LLC v. Itron, Inc.,
`No. 15-900, 2016 WL 2758480 (E.D. Tex. May 12, 2016)...............................................22, 24
`
`In re Hoffman-La Roche Inc.,
`587 F.3d 1333 (Fed. Cir. 2009)................................................................................................26
`
`Imation Corp. v. Koninklijke Philips Elecs. N.V.,
`586 F.3d 980 (Fed. Cir. 2009)....................................................................................................6
`
`Indus. Tech. Research Inst. v. LG Corp.,
`No. 6:10-cv-628 LED-JDL, 2011 WL 10622246 (E.D. Tex. Nov. 29, 2011) ...................19, 27
`
`Intelligent Automation Design, LLC v. Zimmer Biomet Holdings, Inc. et al.,
`No. 5:16-cv-11-CMC, 2016 WL 4424967 (E.D. Tex. July 21, 2016) ........................22, 24, 27
`
`LBS Innovations, LLC v. Nokia USA, Inc. et al.,
`No. 2:15-cv-1972, 2016 WL 3407611 (E D. Tex. June 21, 2016) ............................................6
`
`M2M Solutions LLC v. Telit Communs. PLC,
`2015 U.S. Dist. LEXIS 102349 (D. Del. 2015) .......................................................................11
`
`Macronix Int’l Co. v. Spansion Inc.,
`4 F.Supp.3d 797 (E.D. Va. 2014) ............................................................................................12
`
`Magnacoustics, Inc. v. Resonance Technology Co.,
`No. 97–1247, 1997 WL 592863 (Fed. Cir. Sept. 25, 1997).............................................2, 6, 14
`
`McZeal v. Sprint Nextel Corp.,
`501 F.3d 1354 (Fed. Cir. 2007)..................................................................................................6
`
`Melvin Lloyd Co. v. Stonite Products Co.,
`119 F.2d 883 (3d Cir. 1941), rev’d Stonite Products Co. v. Melvin Lloyd Co.,
`315 U.S. 561 (1942) ...................................................................................................................7
`
`In re Microsoft Corporation,
`630 F.3d 1361 (Fed. Cir. 2011)....................................................................................20, 23, 26
`
`iv
`
`

`

`Case 2:17-cv-00517-JRG Document 28 Filed 09/26/17 Page 6 of 39 PageID #: 173
`
`N. Am. Philips Corp. v. Am. Vending Sales, Inc.,
`35 F.3d 1576 (Fed. Cir. 1994)..................................................................................................16
`
`Network Protection Scis., LLC v. Juniper Networks, Inc.,
`No. 10-cv-00224, 2012 WL 194382 (E.D. Tex. Jan. 23, 2012) ..............................................20
`
`In re Nintendo Co., Ltd.,
`589 F.3d 1194 (Fed. Cir. 2009)....................................................................................20, 24, 25
`
`RAH Color Techs. LLC v. Ricoh USA Inc.,
`No. 2:15-CV-05203-JCJ, 2016 WL 3632720 (E.D. Pa. July 7, 2016) ......................................5
`
`Raindance Tech., Inc. v. 10X Genomics, Inc.,
`No. 15-152-RGA, 2016 WL 927143 (D. Del. Mar. 4, 2016) ....................................................5
`
`Ruby Sands LLC v. Am. Nat’l Bank of Texas, et al.,
`No. 2:15-cv-1955, 2016 WL 3542430 (E.D. Tex. June 28, 2016) ............................5, 6, 12, 13
`
`Samsonite Corp. v. Tex. Imperial Am., Inc.
`218 U.S.P.Q. (BNA) 325 (N.D. Tex. 1982) ...............................................................................9
`
`Shaw v. Quincy Mining Co.,
`145 U.S. 444 (1892) .........................................................................................................7, 8, 16
`
`Software Rights Archive, LLC v. Google, Inc.,
`No. 07-cv-00511, 2010 U.S. Dist. LEXIS 73972 (E.D. Tex. July 22, 2011) ..........................26
`
`Sprewell v. Golden State Warriors,
`266 F.3d 979 (9th Cir. 2001) ...................................................................................................16
`
`Sterling Drug Inc. v. Intermedics, Inc.,
`1986 U.S. Dist LEXIS 31320 (W.D. Tex. 1986) .......................................................................9
`
`Stonite Products Co. v. Melvin Lloyd Co.,
`315 U.S. 561 (1942) .........................................................................................................7, 8, 15
`
`TC Heartland LLC v. Kraft Food Brands Grp. LLC,
`137 S.Ct 1514 (2017) ....................................................................................................... passim
`
`In re Toa Techs., Inc.,
`543 F.App’x 1006 (Fed. Cir. 2013) .........................................................................................20
`
`In re Toyota Motor Corp.,
`747 F.3d 1338 (Fed. Cir. 2014)..........................................................................................20, 21
`
`In re TS Tech USA Corp.,
`551 F.3d 1315 (Fed. Cir. 2008)..........................................................................................19, 24
`
`v
`
`

`

`Case 2:17-cv-00517-JRG Document 28 Filed 09/26/17 Page 7 of 39 PageID #: 174
`
`Van De Vliert v. Tam Int’l, Inc.,
`No. 6:15-CV-135-JRG, 2015 WL 6745811 (E.D. Tex. Oct. 30, 2015) .....................................6
`
`Vibber v. United States Rubber Co.,
`255 F.Supp. 47, 150 U.S.P.Q. 30 (S.D.N.Y. 1966) ...................................................................8
`
`In re Volkswagen of Am., Inc.,
`545 F.3d 304 (5th Cir. 2008) .................................................................................18, 19, 23, 24
`
`Windy City Innovations, LLC v. Microsoft Corp.,
`No. 16-CV-01729-YGR, 2016 WL 3361858 (N.D. Cal. June 17, 2016) ............................5, 23
`
`Wireless Recognition Techs. LLC v. A9.com, Inc.,
`No. 10-cv-00364, 2012 WL 506669 (E.D. Tex. Feb. 15, 2012) ..............................................21
`
`Wright Mfg., Inc. v. Toro Co.,
`No. 11-1373, 2011 WL 6211172 (D. Md. Dec. 13, 2011).......................................................14
`
`In re Zimmer Holdings, Inc.,
`609 F.3d 1378 (Fed. Cir. 2010)..........................................................................................20, 23
`
`Federal Statutes
`
`28 U.S.C. (1940 ed.) § 109 ..........................................................................................................7, 8
`
`28 U.S.C. § 1391(c) .........................................................................................................................8
`
`28 U.S.C. § 1400(b) ............................................................................................................... passim
`
`28 U.S.C. § 1404(a) ...........................................................................................................18, 19, 24
`
`28 U.S.C. § 1406(a) .......................................................................................................................18
`
`35 U.S.C. § 271(b) .........................................................................................................................12
`
`Rules
`
`Fed. R. Civ. P. 8(a)(2) ......................................................................................................................5
`
`Fed. R. Civ. P. 12 .............................................................................................................................1
`
`Fed. R. Civ. P. 12(b)(3)....................................................................................................................4
`
`Fed. R. Civ. P. 12(b)(6)................................................................................................................4, 5
`
`Fed. R. Civ. P. 45(c)(1)(A) ............................................................................................................23
`
`Fed. R. Civ. P. 84 .............................................................................................................................5
`
`vi
`
`

`

`Case 2:17-cv-00517-JRG Document 28 Filed 09/26/17 Page 8 of 39 PageID #: 175
`
`Other Authorities
`
`17 Moore's Fed. Practice 3d § 111.12[4][b] ....................................................................................2
`
`8-21 Chisum on Patents, §21.02 ......................................................................................................8
`
`Boost Mobile Corporate Office Headquarters HQ,
`CorporateOfficeHeadquarters.com,
`http://www.corporateofficeheadquarters.com/2011/07/boost-mobile.html (last
`visited Sept. 26, 2017) .............................................................................................................22
`
`Google Careers, https://careers.google.com/locations/mountain-view/ (last visited
`Sept. 26, 2017) .........................................................................................................................22
`
`www.ztetx.com (last visited Sept. 26, 2017) ...........................................................................11, 12
`
`www.agisinc.com/about/ (last visited Sept. 26, 2017)...................................................................23
`
`
`
`
`
`
`
`vii
`
`

`

`Case 2:17-cv-00517-JRG Document 28 Filed 09/26/17 Page 9 of 39 PageID #: 176
`
`
`STATEMENT OF ISSUES TO BE DECIDED BY THE COURT PURSUANT TO
`LOCAL RULE 7(a)(1)
`
`1) Whether the Court should dismiss this patent case under 28 U.S.C. § 1406 for improper
`venue because the Defendant does not reside in this Judicial District, has not committed
`alleged acts of infringement in this District, and does not have a regular and established
`place of business here, as required to support venue under 28 U.S.C. § 1400.
`
`2) Whether the Court should dismiss this patent case under Fed. R. Civ. P. 12(b)(6) for
`failure to state a claim because Plaintiff’s Complaint fails to plead or allege facts
`sufficient to prove that Defendant, an entity providing research and development and
`technical marketing services for a single customer, performs any allegedly infringing
`activities.
`
`3) Alternatively, whether the Court should transfer this case to the Western District of Texas
`or the Northern District of California under 28 U.S.C. § 1404, Districts where venue is
`proper and that are much more convenient for the parties and the witnesses.
`
`
`
`
`
`
`
`
`
`

`

`Case 2:17-cv-00517-JRG Document 28 Filed 09/26/17 Page 10 of 39 PageID #: 177
`
`
`I.
`
`INTRODUCTION: AGIS SOFTWARE HAS SUED THE INCORRECT
`DEFENDANT IN AN IMPROPER VENUE
`
`Pursuant to Rule 12 of the Federal Rules of Civil Procedure, Defendant ZTE (TX) Inc.
`
`(“ZTX”)1 moves to dismiss the Complaint of AGIS Software Development LLC (“AGIS
`
`Software”) for failure to state a claim upon which relief may be granted and for improper venue.
`
`To allege a claim for direct infringement, AGIS Software must recite facts sufficient to
`
`state a claim for relief that is plausible on its face. This includes facts plausibly establishing that
`
`the Defendant makes, uses, sells, or offers to sell accused products that meet each limitation of
`
`every asserted claim. AGIS Software’s Complaint does not plausibly set forth a case that ZTX
`
`infringes any claim of the asserted patents2 because it cannot.
`
`ZTX conducts research and development activities and provides technical marketing
`
`support for ZTE Corporation. Shan Decl. ¶ 4. ZTX does not make, sell or offer to sell in the
`
`Eastern District of Texas (“EDTX”) the allegedly infringing products identified by AGIS
`
`Software. Id. ¶ 8-10. ZTX does not import any products–including without limitation the
`
`allegedly infringing products–into the EDTX for third-party demonstrations, sales, offers for
`
`sale, qualification testing, or other commercial purposes. Id. ¶ 11. ZTX does not use any products
`
`– including without limitation the allegedly infringing products – in the EDTX, other than as an
`
`end-user of consumer wireless equipment similar to any other US consumer or company which
`
`conducts business by phone. Id. ¶ 12. As such, ZTX cannot be accused of infringing the Patents-
`
`in-Suit, and the case should be dismissed.
`
`
`
`1 Defendant ZTE Corporation has not yet been served with the Complaint in this case or
`appeared in this case, and thus this Motion is on behalf of ZTX only.
`2 U.S. Patent Nos. 8,213,970 (the “’970 patent”); 9,408,055 (the “’055 patent”); 9,445,251 (the
`“’251 patent”); and 9,467,838 (the “’838 patent”) (collectively, the “Patents-in-Suit”).
`
`
`
`

`

`Case 2:17-cv-00517-JRG Document 28 Filed 09/26/17 Page 11 of 39 PageID #: 178
`
`Moreover, ZTX does not reside in the EDTX, has not committed alleged acts of
`
`infringement in this District (or anywhere), and lacks a regular and established place of business
`
`in this District. As such, under the test for venue case in patent cases recently affirmed by the
`
`Supreme Court and clarified by the Federal Circuit, this District is not a proper forum for this
`
`case. The Complaint should be dismissed as to ZTX for this additional reason.
`
`II.
`
`PROCEDURAL HISTORY: AGIS SOFTWARE CANNOT ESTABLISH VENUE
`
`On June 21, 2017, AGIS Software filed a complaint against ZTX and ZTE Corporation
`
`alleging direct and indirect infringement of the Patents-in-Suit. Dkt. No. 1 at ¶¶ 19, 20, 28, 29,
`
`41, 42, 54, 55. AGIS Software alleged that alleged certain electronic devices (in particular,
`
`Android-based smartphones and tablets including the Tempo, Axon 7, Axon 7 mini, Blade V8
`
`Pro, ZMax Pro, and ZMax 2) (collectively, the “Accused Devices”) infringe the Patents-in-Suit,
`
`because these electronic devices are allegedly pre-configured or adapted with certain mapping or
`
`GPS-related functionality. Id. at ¶¶ 16, 21, 22, 30-35, 43-48, 56-61.
`
`Plaintiff alleges venue in the EDTX based on 28 U.S.C. § 1400(b) because “ZTE (TX)
`
`Inc. is incorporated in the State of Texas and, thus, resides in Texas” and furthermore
`
`“Defendants together have regular and established places of business in this judicial district,
`
`including in Plano, are deemed to reside in this judicial district, have committed acts of
`
`infringement in this judicial district, and/or have purposely transacted business involving the
`
`accused products in this judicial district.” Id. at ¶ 6. But this is incorrect, because, as discussed in
`
`more detail below, ZTX is not a resident of the EDTX, has not committed acts of infringement in
`
`the EDTX, and lacks a regular and established place of business in the EDTX. See TC Heartland
`
`LLC v. Kraft Food Brands Grp. LLC, 137 S.Ct 1514 (2017); In re Cray, __ F.3d __, No. 2017-
`
`129 (Fed. Cir. Sept. 21, 2017).
`
`2
`
`

`

`Case 2:17-cv-00517-JRG Document 28 Filed 09/26/17 Page 12 of 39 PageID #: 179
`
`Moreover, AGIS Software improperly treats ZTX and ZTE Corporation as a single entity
`
`for venue purposes. Venue, however, must be determined as to each defendant separately.
`
`Magnacoustics, Inc. v. Resonance Technology Co., No. 97–1247, 1997 WL 592863, at *1 (Fed.
`
`Cir. Sept. 25, 1997) (“[A]s firmly established by judicial decisions, in an action involving
`
`multiple defendants venue and jurisdiction requirements must be met as to each defendant.”)
`
`(citing 17 Moore's Fed. Practice 3d § 111.12[4][b]) (emphasis added).
`
`III.
`
`FACTUAL BACKGROUND: AGIS SUED THE WRONG DEFENDANT IN THE
`WRONG VENUE
`
`A.
`
`
`
`Plaintiff AGIS Software
`
`
`
`AGIS Software is allegedly organized under the laws of the State of Texas, with a
`
`principal place of business at 100 W. Houston Street, Marshall, Texas 75670. Dkt. 1 at ¶ 1. AGIS
`
`Software’s mailing address, however, is in Austin, Texas, and AGIS Software formed on June 1,
`
`2017, just weeks before filing five patent infringement suits in the EDTX. Ex. A.
`
`B.
`
`
`
`Defendant ZTE (TX) Inc.
`
`ZTX is a wholly owned subsidiary of ZTE Corporation, ZTE Hong Kong Ltd., which is
`
`in turn a wholly owned subsidiary of ZTE Corporation, an entity incorporated under the laws of
`
`the People’s Republic of China. Shan Decl. ¶ 3. ZTX conducts research and development
`
`activities and provides technical marketing support for ZTE Corporation. Id. ¶ 4. ZTX’s research
`
`and development activities include designing telecommunications devices and developing
`
`telecom
`
`technology standards, solutions, and applications for
`
`the next generation of
`
`telecommunications technology. Id. ZTX operates in the areas of wireline technology, wireless
`
`technology, microwave technology, and handset technology. Id. ZTE Corporation is the only
`
`customer of ZTX. Id. ¶ 5. ZTX does not provide any services to third parties other than ZTE
`
`Corporation. Id. ¶ 6.
`
`3
`
`

`

`Case 2:17-cv-00517-JRG Document 28 Filed 09/26/17 Page 13 of 39 PageID #: 180
`
`With its focus on R&D, ZTX does not manufacture or make, use, offer to sell, or sell any
`
`products in the EDTX, including without limitation any “Accused Devices.” Id. ¶¶ 8-10. ZTX
`
`does not import any products into the EDTX for third-party demonstrations, sales, offers for sale,
`
`qualification testing, or other commercial purposes. Id. ¶ 11. ZTX does not use any products in
`
`the EDTX, other than as an end-user of consumer wireless equipment similar to any other US
`
`consumer or company which conducts business by phone. Id. ¶ 12.
`
`Though ZTX is a Texas company, Id. ¶ 14, its principal place of business is located in
`
`Milpitas, California. Id. ¶ 13. ZTX maintains a server for storing technical documents and
`
`agreements for ZTX in San Diego, California. Id. ¶ 16. ZTX stores documents relevant to the
`
`research agreements between ZTX and ZTE Corporation at ZTX’s principal place of business in
`
`Milpitas, California. Id. ZTX also maintains offices in Durham, North Carolina; Morristown,
`
`New Jersey; San Diego, California, and Austin, Texas. Id. ¶ 13.
`
`ZTX does not have, and does not advertise or represent that it has, a physical place of
`
`business in the EDTX. Id. ¶ 14. Indeed, ZTX does not have any offices, warehouses, stores,
`
`facilities, and bank accounts in the EDTX. Id. ZTX's registered agent, who filed ZTX's
`
`incorporation papers, is located at 2500 Dallas Parkway, Plano, Texas 75093, but the agent's
`
`office is not a ZTX place of business.
`
`Though ZTX has no offices here, ZTX does have fourteen employees living in the EDTX
`
`who work remotely from home. Id. Eleven of those employees live in Plano, Texas, and three
`
`live in Allen, Texas. Id. These employees are free to live wherever they choose, as far as ZTX is
`
`concerned. Id. As such, ZTX has not conditioned the employment of any ZTX employee upon
`
`continued residence in the EDTX or upon carrying out business of ZTX in the EDTX. Id. ZTX
`
`employees in Texas are principally concerned with technical marketing support and research and
`
`4
`
`

`

`Case 2:17-cv-00517-JRG Document 28 Filed 09/26/17 Page 14 of 39 PageID #: 181
`
`development activities relating to microelectronics. Id. ¶ 15. None of ZTX’s employees in Texas
`
`are expected to have unique knowledge relevant to this case. Id.
`
`IV.
`
`STATEMENT OF LAW
`
`This case should be dismissed for failure to state a claim and for improper venue under
`
`Federal Rules of Civil Procedure 12(b)(6) and (3).
`
`A.
`
`
`
`The Complaint Must Plausibly Allege That The Defendant Can Infringe
`
`To state a claim for relief pursuant to Fed. R. Civ. P. 12(b)(6), a complaint must contain a
`
`“short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ.
`
`P. 8(a)(2). While Form 18 of Fed. R. Civ. P. 84 previously governed pleading requirements for
`
`allegations of direct infringement, this rule was abrogated on Dec. 1, 2015. See Ruby Sands LLC
`
`v. Am. Nat’l Bank of Texas, et al., No. 2:15-cv-1955, 2016 WL 3542430, at *2-3 (E.D. Tex. June
`
`28, 2016) (stating that “[f]orm 18 no longer provides a safe harbor for direct infringement
`
`claims.”); Raindance Tech., Inc. v. 10X Genomics, Inc., No. 15-152-RGA, 2016 WL 927143, at
`
`*2 (D. Del. Mar. 4, 2016). As a result, pleading requirements for direct infringement claims now
`
`must meet the same higher standard as those for indirect infringement. Ruby Sands LLC, 2016
`
`WL 3542430, at *3; In re Bill of Lading Transmission & Processing Sys. Patent Litig., 681 F.3d
`
`1323, 1336 (Fed. Cir. 2012); Windy City Innovations, LLC v. Microsoft Corp., No. 16-CV-
`
`01729-YGR, 2016 WL 3361858, at *4 n.8 (N.D. Cal. June 17, 2016); RAH Color Techs. LLC v.
`
`Ricoh USA Inc., No. 2:15-CV-05203-JCJ, 2016 WL 3632720, at *1 (E.D. Pa. July 7, 2016).
`
`Although detailed factual allegations are not required, to survive a motion to dismiss “a
`
`complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is
`
`plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 663, 678 (2009) (quoting Bell Atl. Corp.
`
`v. Twombly, 550 U.S. 544, 570 (2007)). Determining the plausibility of a complaint is “a
`
`5
`
`

`

`Case 2:17-cv-00517-JRG Document 28 Filed 09/26/17 Page 15 of 39 PageID #: 182
`
`context-specific task that requires the reviewing court to draw on its judicial experience and
`
`common sense.” Iqbal, 556 U.S. at 679. Although a court must assume that the facts presented
`
`by the plaintiff are true, this assumption excludes “[t]hreadbare recitals of the elements of a
`
`cause of action, supported by mere conclusory statements.” Iqbal, 556 U.S. at 678; see also City
`
`of Clinton, Ark. v. Pilgrim's Pride Corp., 632 F.3d 148, 152-53 (5th Cir. 2010); Bowlby v. City of
`
`Aberdeen, 681 F.3d 215, 218 (5th Cir. 2012). It is not enough for a complaint to “plead[] facts
`
`that are ‘merely consistent’ with a defendant’s liability[.]” Iqbal, 556 U.S. at 678 (internal
`
`quotation marks omitted). And a complaint is insufficient if it offers only “labels and
`
`conclusions,” or “a formulaic recitation of the elements of a cause of action.” Iqbal, 556 U.S. at
`
`678 (quoting Twombly, 550 U.S. at 555).
`
`Indeed, courts in the Fifth Circuit3 routinely dismiss patent infringement complaints for
`
`failing to meet the pleading requirements of Twombly and Iqbal. See, e.g., Ruby Sands LLC,
`
`2016 WL 3542430, at *4-5; LBS Innovations, LLC v. Nokia USA, Inc. et al.,
`
`No. 2:15-cv-1972, 2016 WL 3407611, at *2-3 (E D. Tex. June 21, 2016); Van De Vliert v. Tam
`
`Int’l, Inc., No. 6:15-CV-135-JRG, 2015 WL 6745811, at *1-2 (E.D. Tex. Oct. 30, 2015).
`
`
`B.
`
`Venue In Patent Cases Can Only Exists If Each Defendant Resides Or Has A
`Regular And Established Place of Business In the Forum
`
`“Any civil 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.” TC Heartland LLC, 137 S. Ct. at 1516 (quoting 28 U.S.C. §
`
`
`3 A motion to dismiss a complaint for failure to state a claim upon which relief can be granted is
`a purely procedural question governed by the law of the regional circuit. See Imation Corp. v.
`Koninklijke Philips Elecs. N.V., 586 F.3d 980, 984 (Fed. Cir. 2009) (stating that “[t]he Federal
`Circuit defers to the law of the regional circuits on matters of procedural law that do not
`implicate issues of patent law.”) (emphasis added); see also McZeal v. Sprint Nextel Corp., 501
`F.3d 1354, 1355-56 (Fed. Cir. 2007).
`
`6
`
`

`

`Case 2:17-cv-00517-JRG Document 28 Filed 09/26/17 Page 16 of 39 PageID #: 183
`
`1400 (b)). In an action involving multiple defendants, venue and jurisdiction requirements must
`
`be met as to each defendant. Magnacoustics, Inc., 1997 WL 592863, at *1. When formal
`
`separation of entities is preserved, activities of a parent corporation do not establish venue over a
`
`wholly-owned subsidiary of the parent corporation. Blue Spike, LLC v. Caterpillar, Inc., 6:16-
`
`CV-01361, 2017 WL 4129321, *2-4 (E.D. TX Sep. 9, 2017).
`
`1.
`
`
`
`Residency Of Defendants In Patent Cases Is Determined On A
`District-by-District Basis, Not A State-By-State Basis
`
`By the plain terms of the statute, the first way to establish venue in patent infringement
`
`cases is to file suit “in the judicial district where the defendant resides.” 28 U.S.C. §1400(b)
`
`(emphasis added). The plain language of the statute and Supreme Court precedent make clear
`
`that residence is established in judicial districts, not entire states:
`
`[I]n a State containing more than one district, actions not local should “be brought
`
`in the district in which the defendant resides….” The whole purport and effect of
`
`[the then-venue statute at issue]… was not to enlarge, but to restrict and
`
`distribute, jurisdiction. It applied only to a State containing two or more districts;
`
`and directed suits against citizens of such a State to be brought in that district
`
`thereof in which they… resided. It did not subject defendants to any new liability
`
`to be sued out of the State of which they were citizens, but simply prescribed in
`
`which district of that State they might b