Case 2:17-cv-00517-JRG Document 38 Filed 11/21/17 Page 1 of 40 PageID #: 381
`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`
`Plaintiff,
`
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`
`v.
`
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`AGIS Software Development, LLC,
`
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`
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`ZTE CORPORATION,
`ZTE (USA) INC.,
`ZTE (TX), INC.
`
`
`
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`
`
`
`Defendants.
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`
`
`Case No. 2:17-CV-00517-JRG
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`DEFENDANTS ZTE (TX) INC.’S AND ZTE (USA) INC.’S MOTION TO DISMISS
`PLAINTIFF’S AMENDED COMPLAINT FOR IMPROPER VENUE OR IN THE
`ALTERNATIVE TO TRANSFER
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`
`
`
`
`

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`Case 2:17-cv-00517-JRG Document 38 Filed 11/21/17 Page 2 of 40 PageID #: 382
`
`
`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 FILED SUIT IN AN IMPROPER
`VENUE ............................................................................................................................... 1
`
`PROCEDURAL HISTORY: AGIS CANNOT ESTABLISH VENUE ............................. 1
`
`FACTUAL BACKGROUND: AGIS FILED SUIT IN AN IMPROPER VENUE ............ 3
`
`A.
`
`
`
`B.
`
`
`
`C.
`
`
`
`Plaintiff AGIS ......................................................................................................... 3
`
`Defendant ZTE (TX) Inc. ....................................................................................... 3
`
`Defendant ZTE (USA) Inc. ..................................................................................... 4
`
`IV.
`
`STATEMENT OF LAW..................................................................................................... 7
`
`A.
`
`
`
`Venue In Patent Cases Can Only Exists If Each Defendant Resides Or Has
`A Regular And Established Place of Business In the Forum .................................. 7
`
`1.
`
`
`
`2.
`
`
`
`Residency Of Defendants In Patent Cases Is Determined On A
`District-by-District Basis, Not A State-By-State Basis .............................. 8
`
`Venue Over Non-Resident Defendants Requires A Regular And
`Established Place Of Business In The Forum ........................................... 11
`
`V.
`
`ARGUMENT: THE AMENDED COMPLAINT SHOULD BE DISMISSED ............... 12
`
`A.
`
`
`
`The Amended Complaint Should Be Dismissed For Improper Venue................. 13
`
`1.
`
`
`
`Venue is Improper Under the First Prong of 28 U.S.C. § 1400(b) ........... 14
`
`a.
`
`b.
`
`ZTA Does Not Reside In This District. ........................................ 14
`
`ZTX Does Not Reside In This District. ........................................ 14
`
`2.
`
`
`
`Venue is Improper for the Defendants under the Second Prong of
`28 U.S.C. § 1400(b) .................................................................................. 15
`
`a.
`
`b.
`
`ZTX has not Committed Acts of Infringement in the
`District and Does not Maintain A Regular And Established
`Place Of Business In This District ................................................ 15
`
`ZTA Does not Maintain A Regular And Established Place
`Of Business In This District .......................................................... 17
`
`i
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`Case 2:17-cv-00517-JRG Document 38 Filed 11/21/17 Page 3 of 40 PageID #: 383
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`B.
`
`
`
`Should The Court Not Dismiss This Case, It Should Be Transferred To
`The Northern District of California ...................................................................... 20
`
`1.
`
`
`
`The Private Interest Factors Favor Transfer To The Northern
`District of California Or The Western District of Texas .......................... 22
`
`a.
`
`b.
`
`c.
`
`d.
`
`The Relative Ease of Access To Sources of Proof Strongly
`Favors Transfer ............................................................................. 22
`
`The Availability Of Compulsory Process Favors Transfer ........... 25
`
`The Cost of Attendance For Willing Witnesses Favors
`Transfer ......................................................................................... 26
`
`The Remaining Private Interest Factor Is Neutral. ....................... 28
`
`2.
`
`
`
`The Public Interest Factors Favor Transfer To California ........................ 28
`
`a.
`
`b.
`
`c.
`
`The Northern District Of California Has A Substantial
`Connection To and Local Interest In Adjudicating This
`Case ............................................................................................... 28
`
`Administrative Difficulty From Court Congestion Is
`Neutral........................................................................................... 29
`
`The Remaining Public Interest Factors Are Neutral ..................... 30
`
`VI.
`
`CONCLUSION: THIS CASE SHOULD BE DISMISSED OR TRANSFERRED ......... 30
`
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`ii
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`Case 2:17-cv-00517-JRG Document 38 Filed 11/21/17 Page 4 of 40 PageID #: 384
`
`
`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`Federal Cases
`
`Accord “A” Co. v. Consyne Corp.,
`191 U.S.P.Q. (BNA) 126 (S.D.CA 1975) ..................................................................................9
`
`Action Commun. Sys. v. Datapoint Corp.,
`426 F.Supp. 973 (N.D.TX. 1977) ................................................................................10, 14, 15
`
`In re Apple, Inc.,
`456 Fed. Appx. 907, 2012 WL 112893 (Fed. Cir. 2012) .........................................................25
`
`Blue Spike, LLC v. Caterpillar, Inc.,
`6:16-CV-01361, 2017 WL 4129321 (E.D. TX Sep. 9, 2017) ........................................8, 10, 13
`
`Blue Spike, LLC v. Nook Digital, LLC, No. 6:16-CV-1361-RWS-JDL, 2017 WL
`3263871 (E.D. Tex. July 28, 2017), report and recommendation adopted sub
`nom. Blue Spike, LLC v. Caterpillar, Inc., No. 6:16-CV-01361-RWS, 2017
`WL 4129321 (E.D. Tex. Sept. 19, 2017) ................................................................................10
`
`BNSF Ry. Co. v. Tyrrell,
`137 S. Ct. 1549 (2017) ............................................................................................................10
`
`California Irrigation Services, Inc. v. Bartron Corp.,
`654 F. Supp. 1, 227 USPQ 414 (N.D. Calif. 1985) ...................................................................9
`
`In re Cray,
`871 F.3d 1355, No. 2017-129 (Fed. Cir. Sept. 21, 2017) ................................................ passim
`
`Denver & R. G. W. R. Co. v. Bhd. of R. R. Trainmen,
`387 U.S. 556 (1967) ................................................................................................................10
`
`Diem LLC v. BigCommerce, Inc., No. 6:17-cv-00186-JRG, 2017 WL 3187473,
`(E.D. Tex. July 26, 2017) ........................................................................................................10
`
`DSS Tech. Management, Inc. v. Apple, Inc.,
`No. 13-cv-00919, 2014 WL 6847569 (E.D. Tex. Nov. 17, 2014) ...........................................28
`
`Elbit Sys. Land & C4I Ltd. v. Hughes Network Sys., LLC,
`No. 2:15-CV-37-RWS-RSP, 2017 WL 2651618 (E.D. Tex. June 20, 2017),
`report and recommendation adopted, No. 2:15-CV-00037-RWS, 2017 WL
`4693971 (E.D. Tex. July 31, 2017) ..........................................................................................10
`
`iii
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`

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`Case 2:17-cv-00517-JRG Document 38 Filed 11/21/17 Page 5 of 40 PageID #: 385
`
`Fourco Glass Co. v. Transmirra Products Corp.,
`353 U.S. 222 (1957) .......................................................................................................9, 14, 15
`
`Frederick v. Advanced Fin. Solutions, Inc.,
`558 F. Supp. 2d 699 (E.D. Tex. 2007) .....................................................................................21
`
`In re Genentech, Inc.,
`566 F.3d 1338 (Fed. Cir. 2009)..............................................................................16, 22, 26, 29
`
`Groupchatter, LLC v. Itron, Inc.,
`No. 15-900, 2016 WL 2758480 (E.D. Tex. May 12, 2016)...............................................25, 27
`
`In re Hoffman-La Roche Inc.,
`587 F.3d 1333 (Fed. Cir. 2009)................................................................................................28
`
`Indus. Tech. Research Inst. v. LG Corp.,
`No. 6:10-cv-628 LED-JDL, 2011 WL 10622246 (E.D. Tex. Nov. 29, 2011) ...................21, 29
`
`Intelligent Automation Design, LLC v. Zimmer Biomet Holdings, Inc. et al.,
`No. 5:16-cv-11-CMC (E.D. Tex. July 21, 2016) .........................................................25, 27, 29
`
`Magnacoustics, Inc. v. Resonance Technology Co.,
`No. 97–1247, 1997 WL 592863 (Fed. Cir. Sept. 25, 1997).......................................2, 7, 13, 20
`
`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) ...................................................................................................................8
`
`In re Microsoft Corporation,
`630 F.3d 1361 (Fed. Cir. 2011)....................................................................................21, 25, 29
`
`Network Protection Scis., LLC v. Juniper Networks, Inc.,
`No. 10-cv-00224, 2012 WL 194382 (E.D. Tex. Jan. 23, 2012) ..............................................21
`
`In re Nintendo Co., Ltd.,
`589 F.3d 1194 (Fed. Cir. 2009)....................................................................................22, 26, 28
`
`Portsmouth Baseball Corp v. Frick,
`132 F. Supp. 922 (S.D.N.Y. 1955)...........................................................................................10
`
`Samsonite Corp. v. Tex. Imperial Am., Inc.
`218 U.S.P.Q. (BNA) 325 (N.D.TX. 1982) ..............................................................................10
`
`Shaw v. Quincy Mining Co.,
`145 U.S. 444 (1892) .........................................................................................................8, 9, 15
`
`Software Rights Archive, LLC v. Google, Inc.,
`No. 07-cv-00511, 2010 U.S. Dist. LEXIS 73972 (E.D. Tex. July 22, 2011) ..........................29
`
`iv
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`

`

`Case 2:17-cv-00517-JRG Document 38 Filed 11/21/17 Page 6 of 40 PageID #: 386
`
`Sperry Prod. v. Ass'n of Am. Railroads,
`132 F.2d 408 (2d Cir. 1942) ....................................................................................................10
`
`Sterling Drug Inc. v. Intermedics, Inc.,
`1986 U.S. Dist LEXIS 31320 (W.D.TX. 1986) .......................................................................10
`
`Stonite Products Co. v. Melvin Lloyd Co.,
`315 U.S. 561 (1942) .............................................................................................................8, 15
`
`TC Heartland LLC v. Kraft Food Brands Grp. LLC,
`137 S.Ct 1514 (2017) ....................................................................................................... passim
`
`Touchscreen Gestures, LLC v. HTC Corp., 2013 WL 12204558 (E.D. Tex. Mar.
`27, 2013) .................................................................................................................................26
`
`In re Toa Techs., Inc.,
`543 F. App’x 1006 (Fed. Cir. 2013) ........................................................................................22
`
`In re Toyota Motor Corp.,
`747 F.3d 1338 (Fed. Cir. 2014)..........................................................................................22, 23
`
`In re TS Tech USA Corp.,
`551 F.3d 1315 (Fed. Cir. 2008)..........................................................................................21, 27
`
`Vibber v. United States Rubber Co.,
`255 F. Supp. 47, 150 USPQ 30 (S.D. N.Y. 1966) .....................................................................9
`
`In re Volkswagen of Am., Inc.,
`545 F.3d 304 (5th Cir. 2008) ...........................................................................20, 21, 22, 25, 27
`
`In re Zimmer Holdings, Inc.,
`609 F.3d 1378 (Fed. Cir. 2010)..........................................................................................21, 25
`
`Federal Statutes
`
`28 U.S.C. (1940 ed.) § 109 ..........................................................................................................8, 9
`
`28 U.S.C. § 1391(c) .........................................................................................................................9
`
`28 U.S.C. § 1400(b) ............................................................................................................... passim
`
`28 U.S.C. § 1404(a) ...........................................................................................................20, 21, 27
`
`28 U.S.C. § 1406(a) .......................................................................................................................20
`
`Rules
`
`Fed. R. Civ. P. 12 .............................................................................................................................1
`
`v
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`

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`Case 2:17-cv-00517-JRG Document 38 Filed 11/21/17 Page 7 of 40 PageID #: 387
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`Fed. R. Civ. P. 12(b)(3)....................................................................................................................7
`
`Fed. R. Civ. P. 12(b)(6)....................................................................................................................7
`
`Fed. R. Civ. P. 45(c)(1)(A) ............................................................................................................26
`
`Other Authorities
`
`17 Moore's Fed. Practice 3d § 111.12[4][b] ....................................................................................3
`
`8-21 Chisum on Patents, §21.02 ......................................................................................................9
`
`Boost Mobile Corporate Office Headquarters HQ,
`CorporateOfficeHeadquarters.com,
`http://www.corporateofficeheadquarters.com/2011/07/boost-mobile.html (last
`visited Nov. 19, 2017) ..............................................................................................................23
`
`Google Careers, https://careers.google.com/locations/mountain-view/ (last visited
`Nov. 19, 2017) .........................................................................................................................24
`
`www.agisinc.com/about/ (last visited Nov. 19, 2017) ...................................................................25
`
`
`
`
`
`vi
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`Case 2:17-cv-00517-JRG Document 38 Filed 11/21/17 Page 8 of 40 PageID #: 388
`
`
`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 Defendants do not reside in this Judicial District, have not committed
`alleged acts of infringement in this District, and do not have a regular and established
`place of business here, as required to support venue under 28 U.S.C. § 1400.
`
`
`2) Alternatively, whether the Court should transfer this case to the Northern District of
`California under 28 U.S.C. § 1404, a District where venue is proper and that is much
`more convenient for the parties and the witnesses.
`
`
`
`
`
`
`
`
`
`

`

`Case 2:17-cv-00517-JRG Document 38 Filed 11/21/17 Page 9 of 40 PageID #: 389
`
`
`I.
`
`INTRODUCTION: AGIS SOFTWARE HAS FILED SUIT IN AN IMPROPER
`VENUE
`
`Pursuant to Rule 12 of the Federal Rules of Civil Procedure, Defendants ZTE (TX) Inc.
`
`and ZTE (USA) Inc. (“ZTX” and “ZTA,” respectively)1 move to dismiss the Complaint of AGIS
`
`Software Development LLC (“AGIS”) for improper venue.
`
`AGIS’s Amended Complaint alleges patent infringement against three separate entities:
`
`ZTX, ZTA, and ZTE Corporation (“ZTC”). But for venue to be proper in this District for this
`
`case, AGIS must establish that venue is proper for each defendant separately. AGIS cannot, so it
`
`improperly lumps all three Defendants together for venue purposes. But no Defendant resides,
`
`has committed alleged acts of infringement, or has 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. Thus, the Amended Complaint should be dismissed.
`
`II.
`
`PROCEDURAL HISTORY: AGIS CANNOT ESTABLISH VENUE
`
`On June 21, 2017, AGIS filed a complaint against ZTX and ZTC. Dkt. No. 1. On
`
`September 26, 2017, defendant ZTX filed a Motion to Dismiss, or in the alternative to Transfer
`
`(the “Original Motion,” Dkt. No. 28). Rather than responding to the Original Motion, AGIS filed
`
`an Amended Complaint on October 17, 2017, alleging direct and indirect infringement of the
`
`Patents-in-Suit and adding ZTA as a defendant. See Dkt. No. 32 at ¶¶ 3, 23-83.
`
`In the Amended Complaint, AGIS alleged that 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,
`
`
`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 and ZTA only.
`
`
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`

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`Case 2:17-cv-00517-JRG Document 38 Filed 11/21/17 Page 10 of 40 PageID #: 390
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`because these electronic devices are allegedly pre-configured or adapted with certain mapping or
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`GPS-related functionality. Dkt. No. 32 at ¶¶ 22, 25-28, 34-41, 47-54, 60-67, 73-80.
`
`AGIS alleges that venue is proper for ZTA in the EDTX based on 28 U.S.C. § 1400(b)
`
`because ZTA allegedly “established a call center in Plano, Texas” constituting “a regular and
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`established place of business in this Judicial District.” Id. at ¶ 9. But this is incorrect, at least
`
`because, as discussed in more detail below, the call center is not a “place of business” of ZTA.
`
`See TC Heartland LLC v. Kraft Food Grp. Brands LLC, 137 S.Ct 1514 (2017); In re Cray, 871
`
`F.3d 1355 (Fed. Cir. 2017); Brevel Prod. Corp. v. H & B Am. Corp., 202 F. Supp. 824 (S.D.N.Y.
`
`1962); McGah v. V-M Corp., 166 F. Supp. 662 (N.D. Ill. 1958).
`
`AGIS also alleges that venue is proper for ZTX 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.” Dkt. No. 32 at ¶ 10. But this is also 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 furthermore lacks a regular and established place of business in the EDTX. See TC
`
`Heartland LLC, 137 S.Ct 1514; In re Cray, 871 F.3d 1355.
`
`AGIS further alleges that “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.” Dkt. No. 32 at ¶ 11. But this
`
`improperly treats ZTX, ZTA, and ZTC as a single entity for venue purposes. Venue, however,
`
`must be determined as to each defendant separately. Magnacoustics, Inc. v. Resonance Tech.
`
`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
`
`2
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`

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`Case 2:17-cv-00517-JRG Document 38 Filed 11/21/17 Page 11 of 40 PageID #: 391
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`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 FILED SUIT IN AN IMPROPER VENUE
`
`
`Plaintiff AGIS
`
`A.
`
`
`
`AGIS was organized under Texas law on June 1, 2017, just weeks before filing five
`
`patent infringement suits in the EDTX. Ex. A. The patents-in-suit were assigned to AGIS shortly
`
`after formation. See AGIS Software Dev. LLC v. Apple Inc. Case No. 2:17-CV-516-JRG, Dkt.
`
`No. 53, at pp. 5-7 (E.D. Tex). According to its Certificate of Formation, AGIS has no managers;
`
`it is governed by AGIS Holdings Inc., which resides at the same address as AGIS, Inc. in
`
`Florida. Id. at 6. AGIS’s organizer, Thomas C. Meriam, is an attorney located in New York. Id.
`
`AGIS’s only connection to Texas appears to be a registered agent. Id. No AGIS entity appears to
`
`conduct any operations in the Eastern District of Texas. Id.
`
`B.
`
`
`
`Defendant ZTE (TX) Inc.
`
`ZTX is a wholly owned subsidiary of ZTE Hong Kong Ltd., which is in turn a wholly
`
`owned subsidiary of ZTC, 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 ZTC. 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. ZTC is the only customer of ZTX. Id. ¶ 5. ZTX does not provide any services to
`
`third parties other than ZTC. Id. ¶ 6.
`
`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
`
`3
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`

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`Case 2:17-cv-00517-JRG Document 38 Filed 11/21/17 Page 12 of 40 PageID #: 392
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`agreements for ZTX in San Diego, California. Id. ¶ 16. ZTX stores documents relevant to the
`
`research agreements between ZTX and ZTC 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. Id.
`
`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
`
`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.
`
`C.
`
`
`
`Defendant ZTE (USA) Inc.
`
`ZTA is a New Jersey Corporation with its principal place of business located in the
`
`Northern District of Texas, at 2425 North Central Expressway, Suite 800, Richardson, Texas.
`
`Wood Decl. ¶¶ 4, 5. ZTA is a wholly-owned subsidiary of ZTC. Dkt. No. 39.
`
`ZTA has no regular and established place of business in the Eastern District of Texas. Id.
`
`¶ 6. ZTA has no physical presence, such as a storefront, physical facility, or owned, leased, or
`
`4
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`

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`Case 2:17-cv-00517-JRG Document 38 Filed 11/21/17 Page 13 of 40 PageID #: 393
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`rented office space, in the Eastern District of Texas. Id. ¶ 7. ZTA has no bank accounts in the
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`Eastern District of Texas. Id. ¶ 8. ZTA does not have a registered agent within the Eastern
`
`District of Texas. Id. ¶ 9. ZTA realizes no significant amount of direct revenue, or significant
`
`numbers of direct sales, to customers in the Eastern District of Texas. Id. ¶ 17. ZTA does not
`
`target the Eastern District of Texas with any non-charitable marketing or promotional efforts. Id.
`
`¶ 18. ZTA does engage in generalized marketing and promotional efforts, but they are not
`
`targeted at the Eastern District. Id.
`
`ZTA has employee(s) who live in the Eastern District of Texas, and one or more of those
`
`employee(s) may work from home. Id. ¶ 14. However, ZTA does not own, lease, or otherwise
`
`exercise possession or control over the homes of these employees. Id. Furthermore, these
`
`employees are free to live wherever they choose, as far as ZTA is concerned. Id. As such, ZTA
`
`has not conditioned the employment of any ZTA employee upon continued residence in the
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`Eastern District of Texas or upon continued performance of ZTA business from his or her home
`
`in the Eastern District of Texas. Id.
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`ZTA does not advertise or represent, internally or externally, that it has a place of
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`business in the Eastern District of Texas, or that the homes of these employees are “places of
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`business” or “offices” of ZTA. Id. ¶ 15. ZTA does not store company products in the homes of
`
`its employees and customers cannot obtain products from ZTA’s employee home offices. Id.
`
`ZTA has no employee salespeople who operate out of their homes within the Eastern District of
`
`Texas. Id. ¶ 13. ZTA does not employ a secretarial service within the Eastern District of Texas to
`
`assist employees working from their homes in the Eastern District of Texas. Id. ¶ 16.
`
`While independent customer service representatives work on ZTA’s behalf out of a call
`
`center located in the Eastern District of Texas, these independent customer service
`
`5
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`

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`Case 2:17-cv-00517-JRG Document 38 Filed 11/21/17 Page 14 of 40 PageID #: 394
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`representatives are not employees of ZTA, they are employees of iQor, an independent company,
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`which is a vendor to ZTA. Id. ¶ 10. iQor services multiple other customers out of the call center,
`
`and ZTA is not the largest customer iQor services out of the call center. Id. ZTA does not own,
`
`lease, or rent the office space at the call center. Id. ¶ 11. ZTA does not own the equipment,
`
`computers, furniture, or office supplies for the call center. Id. ZTA does not store products at the
`
`call center. Id. iQor owns, operates, and controls the call center. ZTA employees may visit the
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`call center, but are not stationed there full time. Id. ¶ 12.
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`ZTA did not select the location of the iQor call center. ZTA did not require companies
`
`bidding for the customer service contract to have a presence in any particular location, and
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`entertained proposals from companies with facilities located within the Dallas-Fort Worth
`
`(“DFW”') Metro area, throughout Texas, and throughout the United States. Rayeksi Decl. ¶ 6.
`
`iQor independently chose Plano, Texas as the location for its new iQor facility. ZTA did not
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`dictate, request or influence iQor's selection of the location for its call-center facility. Id. ¶ 7.
`
`There is no ZTA signage at the iQor call center. Id. ¶ 11.
`
`ZTA does not control the operation of the iQor call center. The building housing the call
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`center displays the iQor logo. Id. ¶ 11. iQor is responsible for hiring all customer service
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`representatives that work in its Plano call center. Id. ¶ 12. iQor advertises for job applicants,
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`receives and reviews their application forms, interviews them, and makes the hiring decisions.
`
`Id. ZTA has no role in the hiring of customer service representatives that work in the Plano call
`
`center. Id. iQor decides how much to pay the customer service representatives that work in its
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`Plano call center, sets their work schedules, determines their specific assignments, reviews their
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`performance, and determines their benefits, raises and promotions. iQor issues their paychecks.
`
`Id. ¶ 13. ZTA has no role in any of these activities. Id. ¶ 13. iQor trains its customer service
`
`6
`
`

`

`Case 2:17-cv-00517-JRG Document 38 Filed 11/21/17 Page 15 of 40 PageID #: 395
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`representatives in Plano. Id. ¶ 14. ZTA provides iQor with materials that explain the operation
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`of, or changes to, ZTA products. Id. iQor uses this information to create its own training
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`materials, and trains its customer service representatives. Id. ZTA has no role in determining a
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`dress code for customer service representatives in its Plano call center. Id. ¶ 15. No customer
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`service representative is required to wear any clothing or accessory bearing ZTA's name or logo.
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`Id. It is not typical for call center representatives to wear apparel with the ZTE logo. Id.
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`ZTA does not maintain an office at the iQor facility in Plano for employees. Id. ¶ 16.
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`ZTA employees may visit the call center at times, but they work from a cubicle set aside for
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`visitors and are not stationed there full time. See Rayeksi Decl. ¶ 16; Wood Decl. ¶ 12.
`
`IV.
`
`STATEMENT OF LAW
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`This case should be dismissed for improper venue under Federal Rules of Civil Procedure
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`12(b)(3).
`
`A.
`
`
`
`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
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`defendant resides, or where the defendant has committed acts of infringement and has a regular
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`and established place of business.” TC Heartland LLC, 137 S. Ct. at 1516 (quoting 28 U.S.C. §
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`1400(b)). “The Supreme Court changed the controlling law when it decided TC Heartland . . . by
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`severing § 1400(b) from § 1391(c) . . . .” In re Micron Tech., Inc., No. 2017-138, 2017 WL
`
`5474215, *6 (Fed. Cir. Nov. 15, 2017). Further, in an action involving multiple defendants,
`
`venue and jurisdiction requirements must be met as to each defendant. Magnacoustics, 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,
`
`7
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`

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`Case 2:17-cv-00517-JRG Document 38 Filed 11/21/17 Page 16 of 40 PageID #: 396
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`LLC v. Caterpillar, Inc., 6:16-CV-01361-RWS, 2017 WL 4129321, *2-3 (E.D. Tex. 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:
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`[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 be sued.
`Shaw v. Quincy Mining Co., 145 U.S. 444, 447-448 (1892). Thus, a corporation can “be sued
`
`only in the State and district in which it has been incorporated.” Id. at 449 (emphasis added).
`
`The Supreme Court has confirmed the principle announced in Shaw. For example, in
`
`Stonite Prods. Co. v. Melvin Lloyd Co., 315 U.S. 561 (1942), the Court applied the principle in a
`
`patent case, interpreting 28 U.S.C. §1400(b)’s predecessor, 28 U.S.C. (1940 ed.) §109.
`
`Defendant Stonite Products was a Pennsylvania corporation with its principal place of business
`
`in the Eastern District of Pennsylvania. Melvin Lloyd Co. v. Stonite Prods. Co., 119 F.2d 883,
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`884, (3d Cir. 1941), rev’d, 315 U.S. 561 (1942). But in Stonite Products Co., the Court affirmed
`
`that venue over defendant Stonite Products was improper in Western District of Pennsylvania.
`
`Stonite Prods., 315 U.S. at 563. The Court found that Stonite Products was only “an inhabitant of
`
`the Eastern District of Pennsylvania,” not of every district in the state. Id. at 562. Like 28 U.S.C.
`
`8
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`

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`Case 2:17-cv-00517-JRG Document 38 Filed 11/21/17 Page 17 of 40 PageID #: 397
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`§1400(b) today, the similarly-worded predecessor statute restricted venue in a patent case to “the
`
`di