Case 2:17-cv-00517-JRG Document 55-2 Filed 02/14/18 Page 1 of 19 PageID #: 763
`Case 2:17-cv-00517-JRG Document 55-2 Filed 02/14/18 Page 1 of 19 PageID #: 763
`
` 
`
` 
`
` 
`
` 
`
` 
`
` 
`
` 
`
` 
`
`
`
`EXHIBIT B
`
`EXHIBIT B
`
`

`

`Case 2:17-cv-00517-JRG Document 55-2 Filed 02/14/18 Page 2 of 19 PageID #: 764
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`UNITED STATES DISTRICT COURT
`
`SOUTHERN DISTRICT OF CALIFORNIA
`
`
`
` Case No.: 16-CV-2590 JLS (AGS)
`
`ORDER GRANTING MOTION TO
`TRANSFER
`
`(ECF No. 38)
`
`WEST VIEW RESEARCH, LLC, a
`California corporation,
`
`Plaintiff,
`
`v.
`
`BMW OF NORTH AMERICA, LLC, a
`Delaware corporation; and BMW
`MANUFACTURING CO., LLC, a
`Delaware corporation,
`
`Defendants.
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`
`
`
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Presently before the Court is Defendants BMW of North America, LLC’s and
`
`BMW Manufacturing Co., LLC’s Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(3).
`
`(“MTD,” ECF No. 38.) Specifically, Defendants seek to dismiss or alternatively transfer
`
`this case for improper venue following the Supreme Court’s recent decision in TC
`
`Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017). (See
`
`generally MTD.) Also before the Court are Plaintiff’s Response in Opposition to,
`
`(“Opp’n,” ECF No. 45), and Defendants’ Reply in Support of, (“Reply,” ECF No. 46),
`
`the Motion to Dismiss. The Court vacated the hearing on the matter and took the motion
`
`under submission without oral argument pursuant to Civil Local Rule 7.1(d)(1). (ECF
`
`1
`
`16-CV-2590 JLS (AGS)
`
`

`

`Case 2:17-cv-00517-JRG Document 55-2 Filed 02/14/18 Page 3 of 19 PageID #: 765
`
`
`No. 47.) The Court also requested supplemental briefing concerning the application of
`
`the Federal Circuit’s decision in In re Cray, Inc., 871 F.3d 1355 (2017) to the present
`
`case; both Plaintiff, (“West View Supp. Br.,” ECF No. 58), and Defendants, (“BMW
`
`Supp. Br.,” ECF No. 61) filed briefs. After considering the parties’ arguments and the
`
`law, the Court rules as follows.
`
`BACKGROUND
`
`
`
`On October 17, 2016, Plaintiff filed its Complaint alleging patent infringement.
`
`(See ECF No. 1.) Both Defendants answered on November 28, 2016 and denied venue
`
`was proper. (ECF Nos. 16, 17, ¶ 4.) Defendants then filed a motion to transfer the case
`
`to a different court in this District, (ECF No. 21), which the Court denied, (ECF No. 25),
`
`and a motion to reduce the number of asserted claims, (ECF No. 30), which the Court
`
`granted, (ECF No. 32). On May 22, 2017, the Supreme Court rendered its judgment in
`
`TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017), which
`
`clarified the scope of the patent venue statute, 28 U.S.C. § 1400(b). On June 15, 2017,
`
`the parties filed their joint claim construction chart, worksheet, and hearing statement.
`
`(ECF Nos. 35–37.) Then, on July 11, 2017, Defendants filed the present motion.
`
`LEGAL STANDARD
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`
`
`Title 28 U.S.C. § 1406(a) provides that “[t]he district court of a district in which is
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`filed a case laying venue in the wrong division or district shall dismiss, or if it be in the
`
`interest of justice, transfer such case to any district or division in which it could have
`
`been brought.” A party may move to dismiss an action for improper venue pursuant to
`
`Federal Rule of Civil Procedure 12(b)(3). In deciding a Rule 12(b)(3) motion, a court
`
`need not accept the pleadings as true and may consider facts outside the pleadings.
`
`Murphy v. Schneider Nat’l, Inc., 362 F.3d 1133, 1137 (9th Cir. 2004). “Plaintiff bears
`
`the burden of showing that venue is proper.” Kaia Foods, Inc. v. Bellafiore, 70 F. Supp.
`
`3d 1178, 1183 (N.D. Cal. 2014) (citing Piedmont Label Co. v. Sun Garden Packing Co.,
`
`27
`
`598 F.2d 491, 496 (9th Cir. 1979)).
`
`28
`
`In patent infringement actions, venue is proper “in the judicial district where the
`
`2
`
`16-CV-2590 JLS (AGS)
`
`

`

`Case 2:17-cv-00517-JRG Document 55-2 Filed 02/14/18 Page 4 of 19 PageID #: 766
`
`
`defendant resides, or where the defendant has committed acts of infringement and has a
`
`regular and established place of business.” 28 U.S.C. § 1400(b); see also TC Heartland
`
`LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514, 1516–17 (2017) (reaffirming its
`
`previous decision in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 226
`
`(1957), and holding “that a domestic corporation ‘resides’ only in its State of
`
`incorporation for purposes of the patent venue statute”).
`
`ANALYSIS
`
`
`
`Defendants argue that Plaintiff fails to establish that venue is proper in the
`
`Southern District of California (the “District”), because Defendants are not incorporated
`
`in this state and do not maintain a regular and established place of business in this
`
`District. (See generally MTD.) Defendants also argue that their motion is timely, even
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`though such a motion is waivable. (Id. at 5.)1 The Court first addresses the threshold
`
`13
`
`issue of whether Defendants have waived venue before considering the merits of their
`
`14
`
`motion.
`
`15
`
`I. Whether BMW Defendants Waived Their Venue Objection
`
`16
`
`
`
`As an initial matter, Defendants admit that improper venue is a defense which can
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`be waived. (Id. (citing Leroy v. Great W. United Corp., 443 U.S. 173, 180 (1979);
`
`Commercial Cas. Ins. Co. v. Consol. Stone Co., 278 U.S. 177 (1929)).) Defendants note
`
`that their respective Answers did not admit that venue was proper. (Id.) Defendants
`
`counterclaimed seeking declaratory relief and, in the counterclaim, they admitted venue
`
`was proper. (E.g., ECF No. 16, at 51, ¶ 6.) However, Defendants argue that although
`
`they did not challenge venue when they filed their Answers, their motion is timely
`
`because they could not have challenged venue prior to the recent Supreme Court decision
`
`in TC Heartland. (MTD 5.) In other words, Defendants argue that this recent case
`
`constitutes an exception to the waiver rule as an intervening change in law. (Id.) They
`
`also argue that they did not waive a venue defense by admitting in their counterclaims
`
`
`
`1 Pin citations refer to the page numbers electronically stamped on the EM/CMF filings.
`
`3
`
`16-CV-2590 JLS (AGS)
`
`

`

`Case 2:17-cv-00517-JRG Document 55-2 Filed 02/14/18 Page 5 of 19 PageID #: 767
`
`
`because the counterclaim was compulsory. (Reply 7–8 (citing, e.g., Ironburg Inventions
`
`Ltd. v. Valve Corp., No. 15-CV-4219-TWT, 2017 WL 3307657, at *1 (N.D. Ga. Aug. 3,
`
`2017) (finding venue improper even though counterclaim pled venue was proper)).)
`
`A. Federal Rule of Civil Procedure 12(h)(1) Waiver
`
`
`
`Federal Rule of Civil Procedure 12(h)(1) provides that “[a] party waives any
`
`defense listed in Rule 12(b)(2)–(5) by: (A) omitting it from a motion in the circumstances
`
`described in Rule 12(g)(2).” Fed. R. Civ. P. 12(h)(1). Rule 12(g)(2) states “a party that
`
`makes a motion under this rule must not make another motion under this rule raising a
`
`defense or objection that was available to the party but omitted from its earlier motion.”
`
`Fed. R. Civ. P. 12(g)(2). A defense is unavailable if “its legal basis did not exist at the
`
`time of the answer or pre-answer motion.” Gilmore v. Palestinian Interim Self-Gov.
`
`Auth., 843 F.3d 958, 964–65 (D.C. Cir. 2016). The Ninth Circuit also recognizes that “an
`
`exception to the waiver rule exists for intervening changes in the law.” See, e.g., Big
`
`Horn Cnty. Elec. Coop., Inc. v. Adams, 219 F.3d 944, 953 (9th Cir. 2000). Thus, “[w]hen
`
`a decision from the Supreme Court has undercut the theory or reasoning underlying [a]
`
`prior circuit precedent in such a way that the cases are clearly irreconcilable . . . a three-
`
`judge panel of this court and district courts should consider themselves bound by the
`
`intervening higher authority and reject the prior opinion of this court as having been
`
`effectively overruled.” Phelps v. Alameida, 569 F.3d 1120, 1133 (9th Cir. 2009) (internal
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`quotation marks omitted).
`
`21
`
`
`
`The question here is whether the Supreme Court’s decision in TC Heartland LLC
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017), constituted an intervening
`
`change in the law such that Defendant’s venue defense was not available at the time of its
`
`answer or pre-answer motion. The Federal Circuit squarely addressed this question in In
`
`re Micron Technology, Inc., 875 F.3d 1091 (Fed. Cir. 2017). The court held that, as a
`
`matter of law, the venue defense was not available before the Supreme Court’s opinion.
`
`Id. at 1098 (“The venue objection was not available until the Supreme Court decided TC
`
`Heartland because, before then, it would have been improper, given controlling
`
`4
`
`16-CV-2590 JLS (AGS)
`
`

`

`Case 2:17-cv-00517-JRG Document 55-2 Filed 02/14/18 Page 6 of 19 PageID #: 768
`
`
`precedent, for the district court to dismiss or to transfer for lack of venue.”).
`
`Here, Defendants’ filed Answers on November 28, 2016, but did not pursue an
`
`affirmative defense based on venue. At the time of the Answers, a venue affirmative
`
`defense was not available; it was not available until May 22, 2017 when the Supreme
`
`Court decided TC Heartland. See id. at 1096, 1101. Defendants filed their Motion to
`
`Dismiss, based on improper venue, on July 11, 2017, (ECF No. 38)—less than two
`
`months after the Supreme Court’s decision. Further, the only activity in between the
`
`Supreme Court’s decision and Defendants’ filing was the submission of joint claim
`
`construction charts, worksheet, and hearing statement on June 15, 2017, (see ECF Nos.
`
`35–37). Defendants’ present venue defense is in close proximity in time to the TC
`
`Heartland decision and this factor weighs against finding waiver.
`
`B. Non-Rule Waiver
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`
`
`That is not the end of the inquiry, however. The Micron court also noted that there
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`might be circumstances where a defendant may have waived a venue defense even when
`
`the defense was not “available” under Rules 12(h)(1)(A) and 12(g)(2). See id. at 1100.
`
`The Supreme Court recently reiterated that the Federal Rules of Civil Procedure “are not
`
`all encompassing” and that there are “standard procedural devices trial courts around the
`
`country use every day in service of Rule 1’s paramount command: the just, speedy, and
`
`inexpensive resolution of disputes.” Id. (quoting Dietz v. Bouldin, Inc., 136 S. Ct. 1885,
`
`1891 (2016)). The Federal Circuit concluded, “apart from Rule 12(g)(2) and (h)(1)(A),
`
`district courts have authority to find forfeiture of a venue objection. This authority is
`
`properly exercised within the framework of Dietz, which requires respecting, and not
`
`“circumvent[ing],” relevant rights granted by statute or Rule. Id. at 1101 (alteration in
`
`original) (quoting Dietz, 136 S. Ct. at 1892). The court stated timeliness was a logical
`
`starting point to determine non-Rule waiver of venue. Thus, a court may inquire
`
`“whether based on timeliness or consent or distinct grounds[] a defendant’s tactical wait-
`
`and-see bypassing of an opportunity to declare a desire for a different forum, where the
`
`course of proceedings might well have been altered by such a declaration.” Id. at 1102.
`
`5
`
`16-CV-2590 JLS (AGS)
`
`

`

`Case 2:17-cv-00517-JRG Document 55-2 Filed 02/14/18 Page 7 of 19 PageID #: 769
`
`
`
`The Federal Circuit stated that its timeliness concerns were not limited to the
`
`proximity in time to TC Heartland a defendant might raise a venue defense. The Micron
`
`court declined to give a precedential answer as to “whether the timeliness determination
`
`may take into account other factors other than sheer time from when the defense becomes
`
`available to when it is asserted, including factors such as how near is the trial.” 875 F.3d
`
`at 1102. However, the court cited several cases where the Federal Circuit denied a writ
`
`of mandamus when district courts denied venue objections based on TC Heartland that
`
`were weeks or months before trial. Id. 1102 n.4 (citing, e.g., In re Nintendo of Am. Inc.,
`
`No. 2017-127, 2017 WL 4581670 (Fed. Cir. July 26, 2017) (venue motion less than three
`
`months before trial)). Thus, litigation that has proceeded to the eve of trial generally will
`
`have waived a venue defense, even if the defense itself was filed close in time to TC
`
`Heartland and would be allowed under Rules 12(g)(2) and (h)(1)(A).
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`
`
`Here, Plaintiff argues that prior to the present Motion, Defendants litigated in this
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Court for approximately nine months. (Opp’n 10.) Defendants took the following
`
`actions in this proceeding: (i) bringing a motion to transfer the case to another Judge
`
`within the same District, (ii) bringing a motion to reduce the number of claims asserted
`
`by Plaintiff, (iii) participating in an Early Neutral Evaluation, (iv) propounding discovery
`
`requests on Plaintiff, (v) serving invalidity contentions, (vi) exchanging claim
`
`construction positions, and (vii) negotiating and submitting a Joint Claim Construction
`
`Worksheet, Chart, and Hearing Statement with Plaintiff. (Id.) Plaintiff compares these
`
`facts to those in Infogation Corp. v. HTC Corp., No. 16-CV-01902-H-JLB, 2017 WL
`
`2869717, at *3 (S.D. Cal. July 5, 2017), where the district court found defendant’s course
`
`of conduct waived a venue defense. (Opp’n 12.) Infogation involved a defendant who
`
`had filed invalidity contentions, two motions to stay, a motion for judgment on the
`
`pleadings, and participated in claim construction. 2017 WL 2869717, at *3. Plaintiff
`
`states that the Infogation court found especially important the fact that the defendants
`
`there filed a motion for judgment on the pleadings because “courts have found implied
`
`waiver of venue where a party has . . . actively pursued substantive motions.” (Opp’n 12
`
`6
`
`16-CV-2590 JLS (AGS)
`
`

`

`Case 2:17-cv-00517-JRG Document 55-2 Filed 02/14/18 Page 8 of 19 PageID #: 770
`
`
`(quoting Infogation, 2017 WL 2869717, at *3).) Plaintiff contends that Defendants’
`
`motion to transfer this case within the District, (see ECF No. 21), and the motion to
`
`reduce the number of claims, (see ECF No. 30), rise to the level of “substantive
`
`litigation.” (Opp’n 13.)
`
`
`
`Defendants respond that they have not filed any substantive motions. (Reply 7.)
`
`Specifically, Defendants argue that their motion to transfer and motion to reduce
`
`Plaintiff’s claims do not rise to the level of waiving a venue defense because they are not
`
`substantive. (Id. (citing Maxchief Invs. Ltd. v. Plastic Dev. Grp., No. 16-CV-63, 2017
`
`WL 3479504, at *3–4 (E.D. Tenn. Aug. 14, 2017) (prior non-dispositive motion practice
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`did not waive venue)).)
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`The Court begins with the Federal Circuit’s guidance in Micron, the most recent
`
`pronouncement on venue waiver. The Micron court cited several cases where the Federal
`
`Circuit denied mandamus petitions challenging venue, based on TC Heartland, where the
`
`underlying cases were within weeks or months of trial. See 875 F.3d at 1102 n.4. Unlike
`
`the cases cited by the Micron court, this case is not within weeks or months of trial. For
`
`example, the Court has not conducted a claim construction hearing. Further, as the Court
`
`will discuss, Defendants have not filed any dispositive motions that would terminate this
`
`18
`
`litigation.
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Plaintiff contends that the facts here are “extremely similar” to the facts in
`
`Infogation. (Opp’n 12 (citing Infogation, 2017 WL2869717, at *3).) The Court
`
`disagrees. The Infogation court found it persuasive that a party that pursues “substantive
`
`motions” to have waived venue. 2017 WL2869717, at *3. The Court agrees with this
`
`analysis and examines whether Defendants’ conduct constitutes active pursuit of
`
`substantive motions. The district court in Meras Engineering Inc. v. CH20, Inc., No. C-
`
`11-389 EMC, 2013 WL 146341, at *8 (N.D. Cal. Jan. 14, 2013)), the case on which
`
`Infogation relies to define “substantive motions,” stated that “no waiver has been found
`
`where parties merely participated in pretrial motions, moved to dismiss after discovery
`
`has been completed, or where the opposing party was not prejudiced by dismissal.” 2013
`
`7
`
`16-CV-2590 JLS (AGS)
`
`

`

`Case 2:17-cv-00517-JRG Document 55-2 Filed 02/14/18 Page 9 of 19 PageID #: 771
`
`
`WL 146341, at *8 (quoting Ferraro Foods, Inc. v. M/V IZZET INCEKARA, 01 CIV.
`
`2682(RWS), 2001 WL 940562, at *4 (S.D.N.Y. Aug. 20, 2001)); see also Sherman v.
`
`Moore, 86 F.R.D. 471, 474 (S.D.N.Y. 1980) (finding defendant did not waive defense of
`
`improper venue by engaging in discovery after filing answer and before filing a motion to
`
`dismiss for improper venue).
`
`The Court finds that Defendants’ litigation in these proceedings does not constitute
`
`substantive motions. Defendants have not filed any motions that would terminate this
`
`litigation like a motion for judgment on the pleadings, see Infogation, 2017 WL 2869717,
`
`at *3, or a motion for summary judgment, see Amax, Inc., v. ACCO Brand Corp., No. CV
`
`16-10695-NMG, 2017 WL 2818986, at *2 (D. Mass. June 29, 2017) (“By filing an early
`
`motion for summary judgment, defendant abandoned its defense of improper venue.”).
`
`Defendants’ two motions—to transfer to a different court in this District and to narrow
`
`the claims—do not reach the merits of Plaintiff’s infringement claims. Further,
`
`Defendants’ participation in joint claim construction filings does not waive venue. Cf.
`
`Lites Out, LLC v. OutdoorLink, Inc., No. 17-CV-192, 2017 WL 5068348, at *4 (E.D.
`
`Tex. Nov. 2, 2017) (finding that defendant did not waive venue even when defendant
`
`participated in claim construction hearing after it filed venue challenge).
`
`In sum, this case is not within weeks or months of trial. Nor have Defendants filed
`
`substantive motions. Accordingly, the Court finds that Defendants did not waive their
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`objection to venue.
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`II. Whether Venue Is Proper in this District
`
`A. Legal Standard
`
`Having determined that Defendants did not waive their venue challenge, the Court
`
`must now consider whether venue is proper in this judicial district. As discussed, venue
`
`is proper (1) in the judicial district where the defendant resides, or (2) where the
`
`defendant (i) has committed acts of infringement and (ii) has a regular and established
`
`place of business. See 28 U.S.C. § 1400(b). A domestic corporation resides only in its
`
`state of incorporation. See TC Heartland, 137 S. Ct. at 1516–17. No party disputes that
`
`8
`
`16-CV-2590 JLS (AGS)
`
`

`

`Case 2:17-cv-00517-JRG Document 55-2 Filed 02/14/18 Page 10 of 19 PageID #: 772
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`Defendants are both incorporated in Delaware, (see, e.g., Compl. ¶¶ 2–3, ECF No. 1;
`
`Declaration of Jessica Kelleher (“Kelleher Decl.”) ¶¶ 2, 4, ECF No. 38-2). Venue is not
`
`proper under § 1400(b)(1). Thus, the Court must determine whether Defendants have
`
`committed acts of infringement and have a regular and established place of business in
`
`this District. Defendants do not dispute that they have committed an act of infringement
`
`in this District, so the Court need not reach that issue.2
`
`
`
`Section 1400(b) does not define what constitutes “a regular and established place
`
`of business.” The Federal Circuit recently clarified the analysis to determine what
`
`constitutes a regular and established place of business. See In re Cray, Inc., 871 F.3d
`
`1355 (Fed. Cir. 2017). There are three general requirements to determine a regular and
`
`established place of business: (1) there must be a physical place in the district; (2) it must
`
`be a regular and established place of business; and (3) it must be the place of the
`
`defendant. Id. at 1360. The first element requires a “physical, geographical location in
`
`the district from which business is carried out.” Id. at 1362. The second element requires
`
`a business to be both regular and established. Regular means a business that operates in a
`
`“steady[,] uniform[,] orderly[, and] methodical manner.” Id. (alterations in original)
`
`(quoting William Dwight Whitney, The Century Dictionary 5050 (Benjamin E. Smith,
`
`ed. 1911)). Furthermore, an “established” business means one that is fixed and not
`
`transient—“while a business can certainly move its location, it must for a meaningful
`
`time period be stable, established.” Id. at 1363.
`
`The third element requires that the place of business must be the defendant’s and
`
`not solely the place of the defendant’s employee. Id. “[T]he defendant must establish or
`
`ratify the place of business.” Id. “Relevant considerations include whether the defendant
`
`owns or leases the place, or exercises other attributes of possession or control over the
`
`
`
`2 Furthermore, whether any act of infringement has occurred is reserved for trial; allegations of
`infringement are sufficient for a venue determination. In re Cordis Corp., 769 F.2d 733, 737 (Fed. Cir.
`1985). Plaintiff alleges Defendant committed, or made meaningful preparations to commit, acts of
`infringement in the Southern District. (See, e.g., ECF No. 1, ¶ 5.) Therefore, such allegations are
`sufficient for venue determination.
`
`9
`
`16-CV-2590 JLS (AGS)
`
`

`

`Case 2:17-cv-00517-JRG Document 55-2 Filed 02/14/18 Page 11 of 19 PageID #: 773
`
`
`place.” Id. Additionally, a court may consider if the employer “conditioned employment
`
`on an employee’s continued residence in the district or the storing of materials at a place
`
`in the district so that they can be distributed or sold from that place.” Id. Finally, a court
`
`can consider whether the defendant represents to the public that the location is a place of
`
`business by listing the alleged place on a website, phone book or other directory, or
`
`places a sign on the building itself. Id.
`
`B. Application of In re Cray Standard
`
`With the forgoing analysis in mind, the Court now turns to its application in the
`
`present case. Here, Defendants argue that venue is not proper in this District because
`
`they do not maintain a regular and established place of business in this District. BMW
`
`Manufacturing Co. (“BMWMC”) operates a plant in Greer, South Carolina, where it
`
`produces BMW-brand Sports Activity Vehicles. (Kelleher Decl. ¶ 2.) BMWMC
`
`employs over 9,000 people at its South Carolina plant. (Id.) By contrast, BMWMC (1)
`
`has no facilities and no employees in the Southern District of California; (2) neither owns
`
`nor leases any property in this District; (3) does not sell any products and has no
`
`customers in this District; and (4) is not licensed to do business in California. (Id. ¶ 3.)
`
`BMW of North America (“BMWNA”) imports and distributes BMW and MINI
`
`brand vehicles in the United States. (Id. ¶ 4.) Its headquarters is located in Woodcliff
`
`Lake, New Jersey and it has regional offices in several locations in the United States,
`
`including in the Los Angeles, California area. (Id.) BMWNA is licensed to do business
`
`in California. (Id.) BMWNA has no facilities in this District, and neither owns nor
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`leases any property therein. (Id. ¶ 5.)
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`BMWNA distributes vehicles to five BMW and MINI dealers in this District. (Id.)
`
`Defendants state that these dealers are independent businesses that are not owned or
`
`controlled by BMWNA, and the employees in these dealers work for the dealer, not
`
`BMWNA. (Id.) These dealerships make up approximately 2% of BMWNA’s U.S. sales.
`
`(Id.) BMWNA also employs one person who lives and works in the Southern District.
`
`(Id. ¶ 6.) The Court discusses each ground for venue in turn.
`
`10
`
`16-CV-2590 JLS (AGS)
`
`

`

`MAWNt—I
`\OOO\]O\
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`Case 2:17-cv-00517-JRG Document 55-2 Filed 02/14/18 Page 12 of 19 PageID #: 774
`ase 2:17-cv-00517-JRG Document 55-2 Filed 02/14/18 Page 12 of 19 PageID #: 774
`
`1. Whether BMW and MINI Dealerships Establish Venue
`
`Plaintiff argues that despite no physical BMWNA or BMWMC office, venue is
`
`proper because of the numerous sales people and dealerships in this District (1) which
`
`BMWNA controls, and (2) for which BMWMC is the sole manufacturer of the allegedly
`
`infringing product.
`
`(Opp’n 15.) As to BMWNA, Plaintiff argues that it exercises “near-
`
`complete control” over
`
`the dealers in this District pursuant
`
`to strict contractual
`
`relationships with these dealers.
`
`(Id.; see also West View Supp. Br. 11.)3 The parties
`
`conducted limited venue-related discovery and produced an operating agreement between
`
`BMWNA and a dealership (or “Center”), which the parties stipulated is representative of
`
`similar agreements with BMW and MINI dealerships across the District. (Plaintiff Supp.
`
`Br., Ex. E, at 149—50.) Plaintiff zeroes in on the language in Cray that “[r]elevant
`
`considerations include whether the defendant owns or leases the place, or exercises other
`
`attributes of possession or control over the place.” (Id. at 11 (quoting Cray, 871 F.3d at
`
`1363).)
`
`Plaintiff then rigorously examines the operating agreement, which consists of the
`
`agreement
`
`itself, (see id., Ex. A (Sealed Document), at 34), and the requirements
`
`addendum, (see id., Ex. B (Sealed Document), at 53). Plaintiff lists at least thirty
`
`examples of BMWNA’s control in the operating agreement. A non—exhaustive list of
`
`
`examples of BMWNA’s control over the dealerships includes:—
`
`
`
`
`
`
`
`
`(Id. at 11—12.) In sum, Plaintiff argues that
`
`the thirty separate provisions from the operating agreement are illustrative of BMWNA’s
`
`control over the dealerships. (See id. at 11—18.)
`
`(See
`3 The Cornt granted Plaintiff‘ 3 Motion to file its supplemental briefmg and exhibits under seal.
`ECF No. 62.) Plaintiff did not distinguish which portions of its supplemental briefing rely on redacted
`material; therefore, the Corut will redact any references in this Order relying on the sealed exhibits, but
`not statements of law or argtnnents not relying on sealed exhibits.
`
`1 1
`
`16-CV—2590 JLS (AGS)
`
`
`
`28
`
`20
`
`21
`
`22
`
`23
`
`24
`
`26
`
`27
`
`

`

`Case 2:17-cv-00517-JRG Document 55-2 Filed 02/14/18 Page 13 of 19 PageID #: 775
`
`
`
`Plaintiff also argues that Defendants meet Cray’s consideration that a defendant
`
`can condition employment on an employee’s continued residence in the district. (Id. at
`
`18 (quoting Cray, 871 F.3d at 1363).)
`
`
`
`
`
` (Id.)
`
`According to Plaintiff, this provision in the operation agreement essentially conditions
`
`employment on sales performance in the Southern District. (See id.)
`
`Next, Plaintiff argues that BMWNA prominently advertises the BMW brand at the
`
`dealerships, which meets
`
`the Cray court’s consideration
`
`that “[m]arketing or
`
`advertisements also may be relevant, but only to the extent they indicate that the
`
`defendant itself holds out a place for its business.” (Id. at 19 (quoting Cray, 871 F.3d at
`
`1363).) Finally, Plaintiff distinguishes the employees in Cray with the BMW dealership
`
`employees. That is, the employees in Cray did not serve the customers in the judicial
`
`district there, but here the dealership employees are serving customers in the Southern
`
`District. (Id. at 24–25.) Taking all these facts together, Plaintiff contends that
`
`Defendants effectively control all aspects of its dealers’ operations. (Id. at 29.)
`
`In reply, Defendants concedes that the dealerships in the Southern District meet the
`
`first two elements of the Cray standard, but argues that the dealerships fail the third
`
`element: the dealerships are not owned or controlled by Defendants. (See BMW Supp.
`
`Br. 6.) Defendant argues the dealerships are separate corporate entities; the operator of
`
`the dealership in the operating agreement is
`
`, the owner dealership is
`
`. (Id. at 7 (citing West View Supp. Br., Ex. A).)
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`
`
`The Court begins its analysis with the Cray standard. Both parties agree the first
`
`24
`
`25
`
`26
`
`27
`
`28
`
`two elements are met as to the dealerships. The only dispute is whether the dealerships
`
`are owned or controlled by Defendants or whether they are independent businesses that
`
`are not owned or controlled by Defendants. The third Cray element requires the physical
`
`location to be the place of Defendants, not solely a place of Defendants’ employees.
`
`Plaintiff would have the Court find Defendants’ control over the dealerships, evidenced
`
`12
`
`16-CV-2590 JLS (AGS)
`
`

`

`Case 2:17-cv-00517-JRG Document 55-2 Filed 02/14/18 Page 14 of 19 PageID #: 776
`
`
`by the operating agreement, to meet the third requirement. The Court disagrees.
`
`Plaintiff’s argument ignores the difference between separate and distinct corporate
`
`entities.
`
`
`
`One theory under which the Court could find that the dealerships belong to the
`
`Defendants is if they are merely alter egos of Defendants. In Minnesota Mining &
`
`Manufacturing Co. v. Eco Chem, Inc., the Federal Circuit held “a court which has
`
`jurisdiction over a corporation has jurisdiction over its alter egos.” 757 F.2d 1256, 1265
`
`(Fed. Cir. 1985) (citing, e.g., Lakota Girl Scout Council v. Havey Fund-Raising Mgmt.,
`
`Inc., 519 F.2d 634, 637 (8th Cir. 1975)). The court also held that piercing the corporate
`
`veil, in order to ascertain the alter ego entity, is appropriate in order to establish venue
`
`under the patent venue statutes. Id. (citing Acme Card Sys. Co. v. Remington Rand Bus.
`
`Serv., Inc., 21 F. Supp. 742 (D. Md. 1937); and Leach Co v. General Sani-Can Mfg. Co.,
`
`393 F.2d 183 (7th Cir. 1968)). In re Cray did not appear to disturb the holding in
`
`Minnesota Mining. See Javelin Pharms., Inc. v. Mylan Labs. Ltd., No. 16-224-LPS, 2017
`
`WL 5953296, at *3 (D. Del. Dec. 1, 2017). However, in order to pierce the corporate veil
`
`the Court would need to find several factors—none of which are present here—including:
`
`whether a single individual owns substantially all the stock of a corporation, whether
`
`insistence on the corporate form to enable the stockholder to avoid legal liability. See
`
`Minn. Mining, 757 F.2d at 1264–65. Here, Defendants are two distinct corporate entities:
`
`BMW of North America, LLC and BMW Manufacturing Co., LLC. The dealerships are
`
`also separate corporate entities; the operator of the dealership listed in the representative
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`operating agreement is
`
`., the owner dealership is
`
`
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`(BMW Supp. Br. 7 (citing West View Supp. Br., Ex. A.).) There is no evidence that
`
`suggests that these entities are alter egos of Defendants. See, e.g., Post Consumer
`
`Brands, LLC v. General Mills, Inc., No. 17-CV-2471 SNLJ, 2017 WL 4865936, at *2
`
`(E.D. Mo. Oct. 27, 2017) (“[E]xcept where corporate formalities are ignored and an alter
`
`ego relationship exists, the presence of a corporate relative in the district does not
`
`establish venue [under the patent venue statute].” (citations omitted)).
`
`13
`
`16-CV-2590 JLS (AGS)
`
`

`

`Case 2:17-cv-00517-JRG Document 55-2 Filed 02/14/18 Page 15 of 19 PageID #: 777
`
`
`
`
`A second possible theory is that the Court could ignore the formal corporate
`
`separateness of Defendants and the dealerships. The separate and distinct corporate
`
`forms are not easily brushed aside. Generally, “when separate, but closely related,
`
`corpo