Case 2:17-cv-00517-JRG Document 52 Filed 01/26/18 Page 1 of 12 PageID #: 640
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`Case No. 2:17-cv-517-JRG
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`JURY TRIAL DEMANDED
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`PLAINTIFF AGIS SOFTWARE DEVELOPMENT, LLC’S
`SUR-REPLY IN OPPOSITION TO DEFENDANTS’ MOTION (DKT. 38)
`TO DISMISS PLAINTIFF’S COMPLAINT FOR IMPROPER VENUE OR,
`IN THE ALTERNATIVE, TO TRANSFER VENUE
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`AGIS SOFTWARE DEVELOPMENT, LLC,
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`Plaintiff,
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`ZTE CORPORATION, ET AL.,
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`Defendants.
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`v.
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`Case 2:17-cv-00517-JRG Document 52 Filed 01/26/18 Page 2 of 12 PageID #: 641
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`I.
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`INTRODUCTION
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`Venue is proper over Defendant ZTE (TX), Inc. (“ZTX”) because ZTX is incorporated in
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`the state of Texas and resides in this District. Venue is also proper as to Defendant ZTE (USA)
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`Inc. (“ZTA,” together with ZTX, “Defendants”) because ZTA’s admissions establish that it
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`engages in its business at the iQor call center located in this District. Moreover, Defendants have
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`failed to show that transfer to the Northern District of California (“NDCA”) is warranted in the
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`interests of justice.
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`II.
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`VENUE IS PROPER AS TO DEFENDANT ZTX
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`Defendants’ argument that, despite being incorporated in Texas, ZTX does not reside in
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`this District for purposes of venue (Dkt. 51 at 2-3; Dkt. 38 at 14-15) contradicts statute and
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`precedent. Pursuant to 28 U.S.C. § 1400(b), a patent infringement case may be brought against a
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`domestic defendant in the judicial district where the defendant resides. In TC Heartland LLC v.
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`Kraft Foods Group Brands LLC, 137 S. Ct. 1514, 1517 (2017), the Supreme Court
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`unequivocally explained that “a domestic corporation resides . . . in its State of incorporation for
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`purposes of the patent venue statute.” (Emphasis added). Consistent with Supreme Court
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`precedent, this Court recently determined that “if th[e] state [where a domestic defendant resides]
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`contains more than one judicial district, the corporate defendant resides in each such judicial
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`district for venue purposes.” Diem LLC v. BigCommerce, Inc., 2017 WL 3187473, at *3 (E.D.
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`Tex. Jul. 26, 2017); see also B.W.B. Controls, Inc. v. C.S.E. Automation Eng’g & Servs., Inc.,
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`587 F. Supp. 1027, 1028 (W.D. La. 1984) (same); Byrnes v. Jetnet Corp., 1986 WL 15148, at *1
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`(D. Neb. June 2, 1986) (same); Steelcase, Inc. v. Smart Techs., Inc., 336 F. Supp. 2d 714, 719
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`(W.D. Mich. 2004) (same).1 Because ZTX is incorporated in Texas, it resides in this District.
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`1 Defendants’ attempt to distinguish Diem LLC (Dkt. 51 at 3) falls short. In Diem LLC, this Court held that a
`defendant that was incorporated in Texas resides in each judicial district in the state, including this District, for the
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`Case 2:17-cv-00517-JRG Document 52 Filed 01/26/18 Page 3 of 12 PageID #: 642
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`ZTX’s arguments to the contrary are unavailing. First, ZTX’s reliance on Stonite Prods.,
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`Co. v. Melvin Lloyd Co., 315 U.S. 561(1942) is misplaced because the only issue before the
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`Stonite court was whether the defendant had a regular and established place of business in the
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`district, not whether the defendant resided in the district . Second, ZTX’s argument that because
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`the statutory language of 1400(b) refers to “the district” in the singular ZTX can only reside in
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`the Western District of Texas where it maintains an office (Dkt. 51 at 3) is illogical because “the
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`district” also applies to the second prong of 1400(b)—regular and established place of
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`business—which can be satisfied in more than one district. See B.W.B. Controls, Inc., 587
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`F. Supp. at 1028. Finally, contrary to Defendants contention, AGIS is not arguing that venue is
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`proper as to ZTA because of ZTX’s residence in this District, but rather, that venue is proper as
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`to ZTA because ZTA committed acts of infringement and has a regular and established place of
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`business in this District. See infra Section III; Dkt. 46 at 15-20.
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`Accordingly, venue is proper as to ZTX. Diem LLC, 2017 WL 3187473, at *3
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`III. VENUE IS PROPER AS TO DEFENDANT ZTA
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`Defendants did not argue in its Motion to Dismiss that the “acts of infringement”
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`requirement of 1400(b) was not satisfied as to ZTA. Dkt. 38 at 15-20. ZTA has, therefore,
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`waived this argument, and its attempt to resurrect it in its Reply fails. Watson v. Astrue, 2013
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`WL 6662828, at *2 (E.D. Tex. Dec. 17, 2013). Nonetheless, AGIS has sufficiently alleged,
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`without contest, that ZTA manufactures, uses, sells, offers for sale, imports, and/or induces the
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`sale of infringing products in this District. See, e.g., Dkt. 32 ¶¶ 22 (ZTA “manufacture[s], use[s],
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`sell[s], offer[s] for sale, and/or import[s]” infringing electronic devices); id. ¶¶ 27, 36, 49, 62
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`(ZTA “instructs its customers [including those located in this District] to infringe through
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`purpose of venue, and disregarded the defendant’s argument that it had no business presence in the District. Diem
`LLC, 2017 WL 3187473, at *2-3.
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`2
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`Case 2:17-cv-00517-JRG Document 52 Filed 01/26/18 Page 4 of 12 PageID #: 643
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`training videos, demonstrations, brochures, installations and/or user guides”); id. ¶¶ 48, 61 (ZTA
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`“actively, knowingly, and intentionally induc[es] others to directly infringe, either literally or
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`under the doctrine of equivalents, by making, using, offering to sell, selling and/or importing into
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`the United States the Accused Devices and by instructing users of the Accused Devices to
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`perform methods claimed”); see also Intellectual Ventures II LLC v. Fedex Corp., 2017 WL
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`5630023, at *8 (E.D. Tex. Nov. 22, 2017) (Gilstrap, J.) (an allegation that defendant has done
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`one of the acts that qualify as an act of infringement (i.e., an allegation that the defendant either
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`“makes, uses, offers to sell, []sells any patented invention” or induces such conduct (35 U.S.C.
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`271 (a)-(b))), “is itself sufficient to establish venue and [the plaintiff] is not required to
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`demonstrate actual infringement by [the defendant]”). Therefore, even if Defendants’ untimely
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`argument were to be addressed, AGIS’s allegations satisfy the “acts of infringement”
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`requirement of § 1400(b). See In re Cordis Corp., 769 F.2d 733 at 737 (Fed. Cir. 1985);
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`Intellectual Ventures, 2017 WL 5630023, at *8.
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`Defendants’ arguments regarding regular and established place of business are incorrect
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`in light of settled facts and law.. ZTA has a regular and established place of business in this
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`District—the iQor call center (“iQor”). Within the last year and after the filing of this suit, this
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`Court has addressed the issue regarding to ZTA’s call center. The court in American GNC
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`agreed, holding that venue was properly pled in this District as to ZTA because the uncontested
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`allegations showed that ZTA “actually engage[s] in business” at iQor in this District which is
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`sufficient to support venue. Am. GNC, 2017 WL 5157700, at *1. The court in American GNC,
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`relying on Cray, was persuaded by the uncontested allegations showing that ZTA established
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`iQor in this District in order to service its customers here, and that the iQor representatives
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`located at iQor actually do service ZTA’s customers on behalf of ZTA in this District by
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`3
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`Case 2:17-cv-00517-JRG Document 52 Filed 01/26/18 Page 5 of 12 PageID #: 644
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`providing customer service and other support to ZTA’s customers regarding ZTA’s products
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`who call for assistance, making it difficult for ZTA’s customers to know whether they are
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`receiving assistance from a representative of iQor or ZTA itself. Am. GNC Corp. v. ZTE Corp.,
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`2017 WL 5163605, at *4 (E.D. Tex. October 4, 2017) report and recommendation adopted by
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`American GNC, 2017 WL 5157700. The same is true here, and ZTA has not, and cannot, show
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`otherwise. In an attempt to distinguish its previous losing argument, ZTA improperly chose to
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`inject new facts (which, if taken as true, would not alter the facts at the time the action was
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`filed) into a declaration for the first time in its Reply Brief. Dkt 51-2 ¶ 5; Dkt. 38-2 ¶¶ 6, 8-9, 14,
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`16-18. See Chrimar Sys., Inc. v. Dell, Inc., 2016 WL 9275408, at *1 (E.D. Tex. Feb. 29, 2016)
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`(“This Court has also similarly previously stated that while replies and sur-replies are permitted,
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`the purpose of those briefs are to respond to arguments raised, not to present ‘new’ information
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`that was known to a party at the time it filed its initial motion. The importance of presenting
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`facts known to a movant in a motion to transfer based upon convenience is particularly important
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`where the Court must analyze the convenience at the time the action was filed.”) (emphasis
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`added) (citation omitted).
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`ZTA does not contest that iQor is a physical place located in the District or that iQor is a
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`regular and established place of business in the District (Dkt. 51 at 4-6; Dkt. 38 at 17-20)—two
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`of the three Cray factors. In re Cray Inc., 871 F.3d 1355, 1360 (Fed. Cir. 2017) (“Cray”).
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`Defendants argue only that iQor is not a regular and established place of business of ZTA. Dkt.
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`51 at 4-6; Dkt. 38 at 17-20. But, based on ZTA’s own admissions, ZTA engages in its business
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`from iQor located in this District and, therefore, iQor is a regular and established place of
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`business of ZTA. American GNC Corp. v. ZTE Corp., 2017 WL 5157700, at *1 (E.D. Tex. Nov.
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`7, 2017) (venue is satisfied if there is a physical place in the district where the defendant
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`4
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`Case 2:17-cv-00517-JRG Document 52 Filed 01/26/18 Page 6 of 12 PageID #: 645
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`“actually engage[s] in business”); Intellectual Ventures, 2017 WL 5630023, at *5-6 (venue is
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`proper because the defendants failed to show that they did not actually engage in business from
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`the locations in the district); see also Cray, 871 F.3d at 1364.
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`Specifically, ZTA admits the following: (1) in 2015, ZTA established a local call center
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`with iQor located in Plano, Texas (Dkt. 51-2 ¶ 5; Dkt. 38-2 ¶ 8); (2) ZTA established iQor for
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`the purpose of providing customer support services to ZTA customers (Dkt. 51-2 ¶ 5); (3) ZTA
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`provides iQor with materials that explain the operation of and changes to ZTA products which
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`iQor uses to train customer service representatives (Dkt. 38-2 ¶ 14); (4) ZTA’s customer-facing
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`website advertises a customer support telephone number that automatically routes the call to
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`iQor in Plano (id. ¶ 9); (5) ZTA’s customer-facing website advertises a telephone number for
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`online purchase and sales support that automatically routes customers to iQor in Plano (id.);
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`(6) individuals call iQor in this District seeking assistance with, and the iQor representatives
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`provide advice about, ZTA products (id. ¶ 8); (7) ZTA employees visit iQor in this District and
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`perform work on behalf of ZTA at the call center in this District (id. ¶ 16); (8) ZTA sells its
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`products and realizes direct revenue from the sales of its products in this District (Dkt. 38-3
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`¶ 17); and (9) ZTA engages in marketing activities in this District (id. ¶ 18).
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`Defendants also fail to contest that ZTA directs its customer service representatives at
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`iQor to affirmatively contact customers in order to resolve customer issues and concerns and that
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`the iQor customer service representatives research, draft, publish, and approve articles pertaining
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`to ZTE devices, polices, and procedures. Dkt. 46-12; see Dkt. 51 at 4-6.
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`These admissions are sufficient to show that ZTA’s business is carried out at iQor which,
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`pursuant to Federal Circuit precedent, is sufficient to show that iQor is a regular and established
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`5
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`Case 2:17-cv-00517-JRG Document 52 Filed 01/26/18 Page 7 of 12 PageID #: 646
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`place of business of ZTA. See Am. GNC, 2017 WL 515770, at *1; Intellectual Ventures, 2017
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`WL 5630023, at *506; Cray, 871 F.3d at 1363.
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`Accordingly, venue is proper as to ZTA. See Am. GNC, 2017 WL 515770, at *1-2;
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`Intellectual Ventures, 2017 WL 5630023, at *7;Cray, 871 F.3d at 1363.2
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`IV. AGIS IS ENTITLED TO VENUE DISCOVERY
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`A determination as to whether a defendant satisfies § 1400(b) is a fact-intensive inquiry.
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`Venue is proper as to Defendants, but should the Court determine otherwise, AGIS requests that
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`it be entitled to conduct discovery relating to ZTA’s relationship with iQor in this District. See
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`Oppenheimer Fund Inc. v. Sanders, 437 U.S. 340, 351 n.13 (1978); MobileMmedia Ideas LLC v.
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`HTC Corp., 2011 WL 13134889, at *2 (E.D. Tex. Sept. 14, 2011)
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`V.
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`TRANSFER TO CALIFORNIA IS NOT WARRANTED
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`Transfer is not appropriate because Defendants have failed to show that NDCA is
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`“clearly more convenient” for all parties, non-parties, expert witnesses, and in the interest of
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`justice. See Aloft Media, LLC v. Adobe Sys., 2008 WL 819956, at *3 (E.D. Tex. Mar. 25,
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`2008).3
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`The convenience factors weigh against transfer because Defendants have only identified
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`one ZTA employee located in NDCA, and have failed to provide evidence as to the “relevance
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`2 ZTA’s argument that, because iQor is owned by a third party, it cannot be a place of business of ZTA (Dkt. 51 at
`6) is wrong. In Intellectual Ventures, the court concluded that physical locations in the district owned by third
`parties were regular and established places of business of the defendants because the defendants’ failure to
`controvert allegations showing that the defendants’ services were offered at the physical locations in the district
`showed that the defendants engaged in business from those locations. 2017 WL 5630023, at *7. Similarly, ZTA
`admits that its business is carried out at iQor. See supra Section III. Personal Audio LLC v. Google, Inc., cited to by
`ZTA, is inapposite because in that case, unlike here, there was no physical place in the District from which the
`defendant was engaging in business. 2017 WL 5988868, at *10 (E.D. Tex. Dec. 1, 2017).
`3 Defendants also argue that the case should be transferred because all defendants joined in this case seek transfer to
`NDCA. Dkt. 51 at 8. But just because multiple defendants seek transfer does not mean that Defendants are relieved
`of their burden to demonstrate that NDCA is a clearly more convenient forum. See Mears Techs., Inc. v. Finisar
`Corp., 2014 WL 1652603, at *2 (E.D. Tex. Apr. 24, 2014) (Gilstrap, J.). Defendants have failed to meet that burden
`here.
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`6
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`Case 2:17-cv-00517-JRG Document 52 Filed 01/26/18 Page 8 of 12 PageID #: 647
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`and materiality” of this employee and to provide “evidence (e.g., a declaration from the
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`[employee]) indicating that travel to Marshall would constitute an inordinate inconvenience or
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`expense.” Sanger Ins. Agency, Inc. v. HUB Int’l, Ltd., 2014 WL 5389936, at *2 (E.D. Tex. Mar.
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`2, 2014) (Gilstrap, J.). Defendants’ statements that “15 employees of ZTE-related companies”
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`and third-party employees with relevant knowledge, including Google witnesses, are located in
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`or near California (Dkt. 51 at 9-10; Dkt. 38 at 23, 27), without more, is insufficient because, inter
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`alia, Defendants fail to set forth evidence regarding the relevance and materiality of these
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`individuals or any purported inconvenience if transfer was denied. Sanger, 2014, WL 5389936,
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`at *2.
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`Defendants do not contest that this District is more convenient for AGIS witness,
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`Mr. Sietsema, and non-party witness Mr. Armstrong (Dkt. 51 at 10), but rather Defendants argue
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`that AGIS failed to set forth the relevance of these witnesses . Id. However, it is Defendants’
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`burden to provide evidence of the relevance and materiality of their witnesses. Sanger, 2014 WL
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`5389936, at *2. Nonetheless, AGIS detailed Messrs. Sietsema’s and Armstrong’s relevant
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`knowledge and anticipated testimony, including their knowledge relating to contracts and
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`licenses involving AGIS’s intellectual property and AGIS’s software development and quality
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`assurance which relates to, inter alia, AGIS’s damages. Dkt. 46 at 4, 5; Dkt. 46-1 ¶¶ 15-17.
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`Further, Defendants do not dispute that this District is the most convenient for AGIS’s technical
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`expert, who is located in this District (Dkt. 59-3) and whose convenience is, contrary to
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`Defendants’ contention, relevant to the transfer analysis. Aloft Media, 2008 WL 819956, at *5
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`(“[A] patent trial often revolves around the strength of expert witness testimony.”).
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`Defendants’ argument that the convenience of Messrs. Beyer and Blackwell is entitled to
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`little weight because they live outside this District (Dkt. 51 at 10) is in contravention of Fifth
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`Case 2:17-cv-00517-JRG Document 52 Filed 01/26/18 Page 9 of 12 PageID #: 648
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`Circuit law: “When the distance between an existing venue for trial of a matter and a proposed
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`venue under § 1404(a) is more than 100 miles, the factor of inconvenience to witnesses increases
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`in direct relationship to the additional distance to be traveled.” In re Volkswagen AG, 371 F.3d
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`201, 204–05 (5th Cir. 2004). NDCA is significantly more inconvenient for Messrs. Beyer and
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`Blackwell who would be required to travel an additional 1620 miles and 1054 miles,
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`respectively, if this action was transferred. See Dkt. 46-3.
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`With regard to access to sources of proof, Defendants have not identified a single
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`document of relevance outside of this District, let alone any relevant documents that are
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`inaccessible in this District. Aloft Media, 2008 WL 819956, at *4.4 Indeed, ZTX concedes that
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`ZTX’s technical documents and agreements are stored electronically (Dkt. 38-1 ¶ 16). As for
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`Google, to date, AGIS has not relied on any confidential Google code in its infringement
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`contentions, but rather, relied upon publicly available source code.5 Further, Defendants’
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`contention that no relevant sources of proof exist in this District (Dkt. 51 at 8-9) is wrong.
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`AGIS’s proof will come from, inter alia, records maintained in the office of its consultant, Eric
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`Armstrong, as well as from AGIS’s technical expert, both of whom are located in this District.
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`Dkt. 46-1 ¶ 13, 15; Dkt 46-2 ¶ 5. Thus, this factor weighs against transfer. Aloft Media, 2008
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`WL 819956, at *4; see also Odom v. Microsoft Corp., 596 F. Supp. 2d 995, 1000 (E.D. Tex.
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`2009).6
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`4 See also id. at *4 (“[P]atent litigation usually involves sources of proof that are readily convertible to an electronic
`medium” and “it is presumed that the parties will exchange discovery electronically.”); VCode Holdings, Inc. v.
`Cognex Corp., 2007 WL 2238054, at *3 (E.D. Tex. Aug. 3, 2007) (“the location of documents is of little
`consequence since they will almost certainly be produced electronically”).
`5 On November 28, 2017, Plaintiff informed Defendants that its infringement contentions rely solely on public
`documents, including source code excerpts taken from the Android 7 Nougat Release 1.0 which is publicly available
`at https://android.googlesource.com/. Ex. 11, at 18, to the Declaration of Vincent J. Rubino, III.
`6 Defendants reliance on Oyster Optics, LLC v. Coriant Am. Inc., 2017 WL 4225202, at *5 (E.D. Tex. Sept. 22,
`2017) is misplaced because in that case, the court determined that this factor weighed in favor of transfer because,
`unlike here, there were no witnesses or documents located in the transferor district.
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`Case 2:17-cv-00517-JRG Document 52 Filed 01/26/18 Page 10 of 12 PageID #: 649
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`Contrary to Defendants’ contention, NDCA is significantly more congested than this
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`District (Dkt. 46-8) and judicial economy would be served by denying transfer.
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`VI. CONCLUSION
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`For the foregoing reasons, AGIS respectfully requests that the Court deny Defendants’
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`Motion to dismiss, or in the alternative, transfer venue for convenience.
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`Dated: January 26, 2018
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`BROWN RUDNICK LLP
`
`
`
`/s/ Vincent J. Rubino, III
`Alfred R. Fabricant
`NY Bar No. 2219392
`Email: afabricant@brownrudnick.com
`Lawrence C. Drucker
`NY Bar No. 2303089
`Email: ldrucker@brownrudnick.com
`Peter Lambrianakos
`NY Bar No. 2894392
`Email: plambrianakos@brownrudnick.com
`Vincent J. Rubino, III
`NY Bar No. 4557435
`Email: vrubino@brownrudnick.com
`Alessandra C. Messing
`NY Bar No. 5040019
`Email: amessing@brownrudnick.com
`John A. Rubino
`NY Bar No. 5020797
`Email: jrubino@brownrudnick.com
`Enrique William Iturralde
`NY Bar No. 5526280
`Email: eiturralde@brownrudnick.com
`BROWN RUDNICK LLP
`7 Times Square
`New York, NY 10036
`Telephone: 212-209-4800
`Facsimile: 212-209-4801
`
`Samuel F. Baxter
`Texas State Bar No. 01938000
`sbaxter@mckoolsmith.com
`Jennifer L. Truelove
`Texas State Bar No. 24012906
`jtruelove@mckoolsmith.com
`McKOOL SMITH, P.C.
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`Case 2:17-cv-00517-JRG Document 52 Filed 01/26/18 Page 11 of 12 PageID #: 650
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`104 East Houston Street, Suite 300
`Marshall, Texas 75670
`Telephone: 903-923-9000
`Facsimile: 903-923-9099
`
`ATTORNEYS FOR PLAINTIFF, AGIS
`SOFTWARE DEVELOPMENT, LLC
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`Case 2:17-cv-00517-JRG Document 52 Filed 01/26/18 Page 12 of 12 PageID #: 651
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`CERTIFICATE OF SERVICE
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`The undersigned hereby certifies that, on January 26, 2018, all counsel of record who are
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`deemed to have consented to electronic service are being served with a copy of this document via
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`the Court's CM/ECF system per Local Rule CV-5(a)(3).
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`/s/ Vincent J. Rubino, III
` Vincent J. Rubino, III
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