Case 2:17-cv-00517-JRG Document 63-1 Filed 05/17/18 Page 1 of 14 PageID #: 810
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`EXHIBIT A
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`EXHIBIT A
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`

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`Case 2:17-cv-00517-JRG Document 63-1 Filed 05/17/18 Page 2 of 14 PageID #: 811
`Case: 18-113 Document: 39 Page: 1 Filed: 05/14/2018
`
`United States Court of Appeals
`for the Federal Circuit
`______________________
`
`In re: ZTE (USA) INC.,
`Petitioner
`______________________
`
`2018-113
`______________________
`
`On Petition for Writ of Mandamus to the United
`States District Court for the Eastern District of Texas in
`No. 4:17-cv-00620-ALM-KPJ, Judge Amos L. Mazzant,
`III.
`
`______________________
`
`CHARLES M. MCMAHON, McDermott Will & Emery
`
`LLP, Chicago, IL, for petitioner. Also represented by
`BRIAN ANDREW JONES; MICHAEL S. NADEL, JAY REIZISS,
`Washington, DC.
`
`ALISON AUBREY RICHARDS, Global IP Law Group,
`
`Chicago, IL, for respondent American GNC Corporation.
`Also represented by DAVID P. BERTEN, ALEXANDER J.
`DEBSKI.
`
`______________________
`
`ON PETITION
`______________________
`
`Before REYNA, LINN, and HUGHES, Circuit Judges.
`LINN, Circuit Judge.
`
`O R D E R
`
`

`

`Case 2:17-cv-00517-JRG Document 63-1 Filed 05/17/18 Page 3 of 14 PageID #: 812
`Case: 18-113 Document: 39 Page: 2 Filed: 05/14/2018
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`2
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`
`
` IN RE: ZTE (USA) INC.
`
`ZTE (USA) Inc. (“ZTE USA”) petitions for a writ of
`mandamus directing the United States District Court for
`the Eastern District of Texas to dismiss this case for
`improper venue under 28 U.S.C. § 1406(a). See Am. GNC
`Corp. v. ZTE Corp., No. 4:17-cv-00620-ALM-KPJ (E.D.
`Tex. Nov. 7, 2017) (“Denial Order”). American GNC
`Corporation (“American GNC”) opposes. Because the
`district court incorrectly assigned the burden of proof on
`venue and failed to fully consider the factors relevant to
`the question of whether the call center in question was
`that of ZTE USA, we grant the petition to the extent of
`vacating the order denying the motion to dismiss and
`remanding the motion for reconsideration consistent with
`this order.
`
`I
`In February 2017, American GNC filed a complaint
`against ZTE USA and ZTE (TX) Inc.1 in the Marshall
`Division of the Eastern District of Texas alleging
`infringement of its patents. ZTE USA filed a motion to
`dismiss for improper venue under 28 U.S.C. § 1406 and
`§ 1400(b) in April 2017. While that motion was pending,
`ZTE USA and ZTE (TX) Inc.2 sought transfer to the
`United States District Court for the Northern District of
`Texas or the Northern District of California under 28
`U.S.C. § 1404(a).
`The magistrate judge concluded that venue was
`proper in the Eastern District of Texas for purposes of the
`§ 1404(a) convenience analysis but did not rule on the
`motion to dismiss for improper venue under § 1406(a). In
`September 2017, the case was transferred from the
`Eastern District of Texas’s Marshall Division to its
`
`
`1 ZTE Corporation was also named as a defendant
`but was dismissed without prejudice in July 2017.
`2 ZTE (TX) Inc. did not object to venue in this case.
`
`

`

`Case 2:17-cv-00517-JRG Document 63-1 Filed 05/17/18 Page 4 of 14 PageID #: 813
`Case: 18-113 Document: 39 Page: 3 Filed: 05/14/2018
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`IN RE: ZTE (USA) INC.
`
` 3
`
`Sherman Division, and assigned to a new district court
`judge and a new magistrate judge. After supplemental
`briefing on the issue of improper venue, the magistrate
`judge denied ZTE USA’s motion to dismiss for improper
`venue, finding that ZTE USA failed to show it did not
`have a regular and established place of business in the
`Eastern District of Texas as required under the second
`prong of 28 U.S.C. § 1400(b). See Am. GNC Corp. v. ZTE
`Corp., No. 4:17-cv-00620, 2017 WL 5163605 (E.D. Tex.
`Oct. 4, 2017) (“Magistrate Report”).
`The magistrate judge noted that “courts are not
`uniform in their views as to which party bears the burden
`of proof with respect to venue,” but, citing Fifth Circuit
`law, placed the burden on the objecting defendant to show
`improper venue. Id. at *2.
`The magistrate judge determined that ZTE USA had
`contracted with a call center in Plano, Texas, operated by
`First Contact LLC (a subsidiary of iQor US Inc.), which
`constituted a physical place, and that ZTE USA, through
`the call center employees dedicated to ZTE USA calls,
`transacted business there. Id. at *3–4. The magistrate
`judge explained that “ZTE USA has failed to meet its
`burden to show it does not have a regular and established
`place of business in the District.” Id. at *3.
`In its objections to the magistrate judge’s report, ZTE
`USA objected to the finding that the call center in Plano,
`Texas, established venue, arguing that it is inconsistent
`with In re Cray Inc., 871 F.3d 1355 (Fed. Cir. 2017). ZTE
`USA also argued that the magistrate judge erred by
`placing the burden of proof on ZTE USA to establish that
`venue was not proper. The district court judge disagreed
`with both objections and denied ZTE USA’s motion to
`dismiss for improper venue. ZTE USA’s petition for
`mandamus followed. Am. GNC Corp. v. ZTE Corp., No.
`4:17-cv-00620, 2017 WL 5157700 (E.D. Tex. Nov. 7, 2017).
`
`

`

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`4
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`
`
` IN RE: ZTE (USA) INC.
`
`II
`A
`A party seeking a writ of mandamus bears the heavy
`
`burden of demonstrating to the court that it has no
`“adequate alternative” means to obtain the desired relief,
`Mallard v. U.S. Dist. Court for the S. Dist. of Iowa, 490
`U.S. 296, 309 (1989), and that “the right to issuance of the
`writ is clear and indisputable,” Bankers Life & Cas. Co. v.
`Holland, 346 U.S. 379, 384 (1953) (internal quotation
`marks omitted). Further, even if these two prerequisites
`have been met, a court issuing a writ must, in its
`discretion, “be satisfied that the writ is appropriate under
`the circumstances.” Cheney v. U.S. Dist. Court for D.C.,
`542 U.S. 367, 380 (2004). Moreover, mandamus review of
`an improper venue decision under § 1406(a) is rarely
`granted in the absence of exceptional circumstances.
`Banker’s Life, 346 U.S. at 382–84; Cheney, 542 U.S. at
`380; In re Cray, Inc., 871 F.3d at 1358 (“Mandamus is
`reserved for exceptional circumstances.”); see also Comfort
`Equip. Co v. Steckler, 212 F.2d 371, 374–75 (7th Cir.
`1954) (denying mandamus review of a denied improper-
`venue motion); Gulf Research & Dev. Co. v. Leahy, 193
`F.2d 302, 304–06 (3d Cir. 1951) (similar).
`
`This court found exceptional circumstances to exist in
`§ 1406(a) mandamus petitions in Cray, 871 F.3d 1355 and
`In re Micron Technology, Inc., 875 F.3d 1091 (Fed. Cir.
`2017), because those decisions were necessary to address
`the effect of the Supreme Court’s decision in TC
`Heartland, which was yet another § 1406(a) mandamus
`case. 137 S. Ct. 1514, 1517 (2017), rev’g and remanding
`In re TC Heartland, LLC., 821 F.3d 1338 (Fed. Cir. 2016).
`Moreover, the Supreme Court and this court have
`confirmed that mandamus relief may be appropriate in
`certain circumstances to decide “basic” and “undecided”
`questions, Schlagenhauf v. Holder, 379 U.S. 104, 110
`(1964), and “to further supervisory or instructional goals
`
`

`

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`Case: 18-113 Document: 39 Page: 5 Filed: 05/14/2018
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`IN RE: ZTE (USA) INC.
`
` 5
`
`where issues are unsettled and important,” In re Queen’s
`Univ. at Kingston, 820 F.3d 1287, 1291 (Fed. Cir. 2016)
`(citation omitted); see also Micron, 875 F.3d at 1095–96;
`Cray, 871 F.3d at 1358–59; In re BP Lubricants USA Inc.,
`637 F.3d 1307, 1313 (Fed. Cir. 2011).
`This case presents two such “basic” and “undecided”
`issues relating to proper judicial administration in the
`wake of TC Heartland; namely, whether Federal Circuit
`or regional circuit law governs the burden of proof for
`determining the propriety of venue under § 1400(b), and
`on which party that burden rests. These issues are likely
`to be repeated and present sufficiently exceptional
`circumstances as
`to be amenable
`to
`resolution
`via mandamus.
`
`B
`We generally defer to regional circuit procedural law
`on questions “not unique to patent law,” but apply our
`own law to issues “‘related’ to ‘substantive matters unique
`to the Federal Circuit,’ and thus committed to our law.”
`Biodex Corp. v. Loredan Biomed., Inc., 946 F.2d 850, 856
`(Fed. Cir. 1991) (citations omitted); see also Panduit Corp.
`v. All States Plastic Mfg. Co., 744 F.2d 1564, 1574–75
`(Fed. Cir. 1984) (per curiam) (establishing general rule).
`Whether venue is proper under § 1400(b) is an issue
`unique to patent law and is governed by Federal Circuit
`law. Cray, 871 F.3d at 1360. Which party bears the
`burden of persuasion in establishing proper or improper
`venue under § 1400(b) is intimately related to this
`substantive determination. Indeed, who has the burden
`of persuasion on the elements of a legal rule is treated
`across many contexts as a substantive aspect of the legal
`rule. See, e.g., Medtronic, Inc. v. Mirowski Family
`Ventures, LLC, 134 S. Ct. 843, 849 (2014); Raleigh v. Ill.
`Dep’t of Revenue, 530 U.S. 15, 20–21 (2000); Dir., Off. Of
`Workers’ Compensation Progs., Dep’t of Labor v.
`Greenwich Collieries, 512 U.S. 267, 271 (1994); Garret v.
`
`

`

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`6
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`
`
` IN RE: ZTE (USA) INC.
`
`248–49
`239,
`317 U.S.
`Moore-McCormack Co.,
`(1942). Therefore the burden of persuasion question is a
`substantive aspect of § 1400(b), whose interpretation is
`governed by our law, not of § 1406, the general improper-
`venue statute. Furthermore, because all appeals in cases
`in which § 1400(b) is implicated will come to this court,
`adopting a uniform law on the burden obviates any
`uncertainty at the district court as to whether to apply
`regional circuit or Federal Circuit law. See Biodex, 946
`F.2d at 859 (considering whether the application of
`Federal Circuit law would require the district court to
`“serve[] two masters”).
`The Supreme Court in TC Heartland stated that
`“[Congress] ‘placed patent infringement cases in a class
`by themselves, outside the scope of general venue
`legislation.’” 137 S. Ct. at 1518 (citing Brunette Machine
`Works, Ltd. v. Kockum Indus., Inc., 406 U.S. 706, 713
`(1972)). We conclude that the patent-specific nature of
`§ 1400(b) also implicates the burden for satisfying that
`statute, and should be analyzed under this court’s law.
`See 17 Moore’s Federal Practice—Civil § 110.01[5][c] (3d
`ed. 2017) (noting that the burden may be different under
`§ 1400(b) than under the general patent venue statute).
`The choice of law issue here is similar to one we
`resolved in Beverly Hills Fan Co. v. Royal Sovereign
`Corp., 21 F.3d 1558 (Fed. Cir. 1994). We concluded there
`that Federal Circuit law governs whether due process or
`Virginia’s long-arm statute preclude the exercise of
`personal jurisdiction over a foreign defendant whose only
`contact with the forum was indirect shipment of goods
`through the stream of commerce. Id. at 1564. We noted
`that the due process issue was procedural, but that “it is a
`critical determinant of whether and in what forum a
`patentee can seek redress for infringement of its rights.”
`Id. We also noted that applying regional circuit law
`would run contrary to this court’s “mandate of achieving
`national uniformity in the field of patent law” due to the
`
`

`

`Case 2:17-cv-00517-JRG Document 63-1 Filed 05/17/18 Page 8 of 14 PageID #: 817
`Case: 18-113 Document: 39 Page: 7 Filed: 05/14/2018
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`IN RE: ZTE (USA) INC.
`
` 7
`
`lack of uniformity among our sister circuits and within
`the regional circuit from which the case arose. Id. The
`same circumstances apply here.
`The placement of the burden of persuasion on the
`propriety of venue is critical to determining in what forum
`a patentee can seek redress for infringement of its patent
`rights. Also, the burden for establishing the propriety of
`venue is not uniform among the Circuits, see 15 Charles
`A. Wright & Arthur R. Miller, Federal Practice and
`Procedure § 3826 (4th ed. 2017) (stating that “[t]he courts
`are divided on which party bears the burden of proof on a
`motion to dismiss for improper venue” and citing cases),
`and even varies within the Fifth Circuit, compare, e.g.,
`Williamson-Dickie Mfg. Co. v. M/V HEINRICH J, 762 F.
`Supp. 2d 1023, 1026 (S.D. Tex. 2011) (placing burden of
`establishing proper venue on Plaintiff), with, e.g., Tex.
`Marine & Brokerage, Inc. v. Euton, 120 F. Supp. 2d 611,
`612 (E.D. Tex. 2000) (placing the burden of showing
`improper venue on Defendant); see also Payne v. Grayco
`Cable Servs., No. 1:11-CV-487, 2011 WL 13076902, at *2
`(E.D. Tex. 2011) (recognizing inconsistency within Fifth
`Circuit). In this context, it is appropriate for us to adopt a
`uniform national rule to address the propriety of patent-
`specific venue. See Biodex, 946 F.2d at 856 (explaining
`that we have deferred to regional circuit law more readily
`“when there is existing and expressed uniformity among
`the circuits”).
`In opposing the petition, American GNC tries to draw
`a parallel between the Federal Rule of Civil Procedure
`12(b)(3) vehicle being used here and the traditional
`burdens applied under Rule 12(b)(6) and summary
`judgment for infringement and invalidity—the procedural
`aspects of which are governed by regional circuit law. See
`Boston Sci. Corp. v. Cook Grp. Inc., 269 F. Supp. 3d 229,
`236–37 (D. Del. 2017) (adopting this reasoning to conclude
`that regional circuit law governs the question of burden
`on improper venue). This is a false parallel. There is no
`
`

`

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`8
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`
`
` IN RE: ZTE (USA) INC.
`
`equivalent in that context to the patent-specific venue
`provisions of § 1400(b), nor is there a similar lack of
`uniformity between the circuits and within the Fifth
`Circuit.
`Nor does the application of regional circuit law to 28
`U.S.C. § 1404(a), see Winner Int’l Royalty Corp. v. Wang,
`202 F.3d 1340, 1352 (Fed. Cir. 2000), require applying
`regional circuit law to § 1406. Section 1406(a) requires a
`showing that venue is improper under the patent-specific
`venue statute § 1400(b). The same is not true of
`§ 1404(a), which concerns the convenience of the parties
`and the interests of justice, which are not patent-specific
`considerations. Moreover, when § 1404(a) is implicated,
`the movant “is seeking to disturb a plaintiff’s choice to file
`in a proper venue in compliance with applicable statutes
`and rules,” Personal Audio, LLC v. Google, Inc., 280
`F. Supp. 3d 922, 929 (E.D. Tex. 2017), a consideration not
`applicable to § 1406(a) challenges.
`For the above-stated reasons, we hold that Federal
`Circuit law governs the placement of the burden of
`persuasion on the propriety of venue under § 1400(b).
`C
`We next address the question of who bears the burden
`on venue and hold as a matter of Federal Circuit law that,
`upon motion by the Defendant challenging venue in a
`patent case, the Plaintiff bears the burden of establishing
`proper venue. Such a holding best aligns with the weight
`of historical authority among the circuits and best
`furthers public policy.
`This court has not heretofore considered which party
`bears
`the burden with respect
`to § 1400(b) as
`distinguished from § 1391. We have found no case in this
`court’s 37–year history dealing with this question. Prior
`to the formation of the Federal Circuit, regional circuits
`uniformly placed the burden to show proper venue in
`
`

`

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`IN RE: ZTE (USA) INC.
`
` 9
`
`patent cases on the Plaintiff following a motion by the
`Defendant challenging venue.
` See Cordis Corp. v.
`Cardiac Pacemakers, 599 F.2d 1085, 1086 (1st Cir. 1979);
`Grantham v. Challenge-Cook Bros., Inc., 420 F.2d 1182,
`1184 (7th Cir. 1969); Phillips v. Baker, 121 F.2d 752, 754–
`55 (9th Cir. 1941) (applying earlier version of patent
`venue statute); see also Personal Audio, 280 F. Supp. 3d
`at 927–28 (“This court has not found any Circuit Court
`case holding that in a § 1400(b) motion to dismiss based
`on improper venue, the burden of proof is on the movant,
`so long as the motion was timely filed.”). This is
`persuasive authority. Abbott Labs. v. Cordis Corp., 710
`F.3d 1318, 1325 (Fed. Cir. 2013) (“While patent law
`decisions of the regional circuits do not bind us, we may
`consider
`them as persuasive authority.”
`(citation
`omitted)).
`Section 1400(b), like its predecessor statutes, is
`intended to be restrictive of venue in patent cases
`compared with the broad general venue provision. See
`Stonite Prods. Co. v. Melvin Lloyd Co., 315 U.S. 561, 566-
`67 (1942) (“[T]he Act of 1897 [a predecessor to § 1400(b)]
`was a restrictive measure, limiting a prior, broader venue
`[statute].”); Cray, 871 F.3d at 1361 (“[Section 1400(b)]
`clearly narrows jurisdiction relative to the courts that
`previously allowed patent suits wherever the defendant
`could be served.”); Grantham, 420 F.2d at 1184 (“[T]he
`patent venue statute should not be liberally construed in
`favor of venue” (citing Schnell v. Peter Eckrich & Sons,
`Inc., 365 U.S. 260, 264 (1961))). Section 1400(b)’s
`intentional narrowness supports placing the burden of
`establishing proper venue on the Plaintiff. See 17 Moore’s
`Federal Practice—Civil § 110.01[5][c] (2018) (explaining
`that, although by default the burden should be on the
`movant, “in a case involving an exclusive venue statute,
`such as in patent infringement cases,” the burden should
`shift to plaintiff).
`
`

`

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`10
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`
`
` IN RE: ZTE (USA) INC.
`
`American GNC argues that the burden should be on
`the movant/defendant because venue
`is properly
`considered an affirmative defense, see Dillon v. Rogers,
`596 F.3d 260, 272 (5th Cir. 2010) (“Exhaustion resembles
`personal jurisdiction and venue in that it is an affirmative
`defense.”), and the defendant generally bears the burden
`to establish an affirmative defense. The statement in
`Dillon on which American GNC relies is dictum—the
`issue there was whether administrative exhaustion was
`an affirmative defense. Venue was merely used as an
`analogy. American GNC has not identified any other
`cases that make this point or refute the conclusions
`reached above on which party should bear the burden on
`a venue challenge directed to § 1400(b). Indeed, in the
`parallel case of personal jurisdiction, upon challenge by
`the defendant, plaintiff bears the burden of affirmatively
`establishing the first two elements of the due process
`requirement. Celgard, LLC v. SK Innovation Co., 792
`F.3d 1373, 1378 (Fed. Cir. 2015).
`III
`On the merits, the text of § 1400(b) is self-evident that
`“[t]he requirement of venue is specific and unambiguous;
`it is not one of those vague principles which, in the
`interests of some overriding policy, is to be given a liberal
`construction.’’
` Cray, 871 F.3d at 1361
`(internal
`quotations and citation omitted). In applying § 1400(b), it
`is important “not to conflate showings that may be
`sufficient for other purposes, e.g., personal jurisdiction or
`the general venue statute, with the necessary showing to
`establish proper venue in patent cases.” Id.
`As established in Cray, there are “three general
`requirements relevant to the inquiry: (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. “If any statutory
`
`

`

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`IN RE: ZTE (USA) INC.
`
` 11
`
`requirement is not satisfied, venue is improper under §
`1400(b).” Id.
`In determining whether the “place of business” in the
`venue is “of the defendant,” this court in Cray set forth a
`series of non-exclusive factors to be considered. These
`include “whether the defendant owns or leases the place,
`or exercises other attributes of possession or control over
`the place,” and “whether the defendant lists the alleged
`place of business on a website, or in a telephone or other
`directory; or places its name on a sign associated with or
`on the building itself.” Id. at 1363–64.
`In denying the motion to dismiss, the district court
`found no error in the magistrate judge’s conclusion that
`ZTE USA failed to meet its burden. But, as we have now
`held, the burden was not ZTE USA’s to carry. Moreover,
`the district court concluded that, unlike the issue in Cray
`in which the location at issue was an employee’s home,
`the question in this case was “whether a business location
`established in partnership with a third party . . . qualifies
`as a regular and established place of business.” Denial
`Order at 2. This court disagrees both with the summary
`characterization of the iQor-ZTE USA relationship as a
`“partnership” and the district court’s holding that such
`determination ended the analysis. To be complete, the
`district court must give reasoned consideration to all
`relevant factors or attributes of the relationship in
`determining whether those attributes warrant iQor’s call
`center being deemed a regular and established place of
`business of ZTE USA. This the district court did not do.
`Counsel for ZTE USA at the September 1, 2017
`hearing characterized the call center as having been
`established in partnership with iQor, but the record is
`unclear as to the nature of that relationship, beyond the
`existence of iQor’s arms-length contract for services. The
`mere presence of a contractual relationship between iQor
`and ZTE USA pursuant to which iQor provides call center
`
`

`

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`12
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` IN RE: ZTE (USA) INC.
`
`services to ZTE USA’s customers does not necessarily
`make iQor’s call center “a regular and established place of
`business” of ZTE USA in the Eastern District of Texas.
`While
`iQor’s call center “has more than sixty
`dedicated ZTE USA customer service representatives,”
`neither the magistrate judge nor the district court made
`any findings on the nature of ZTE USA’s relationship
`with those representatives or whether it has any other
`form of control over any of them. Magistrate Report, 2017
`WL 5163605, at *4. While the magistrate judge found
`that ZTE USA “has at least two full-time employees
`(supervisors) on site at the call center,”
`id., the
`determining factor is whether those employees render the
`call center “a place of the defendant, not solely a place of
`the defendant’s employee[s],” Cray, 871 F.3d at 1363.
`The magistrate judge did not consider whether ZTE
`USA itself possesses, owns, leases, or rents the office
`space for the call center or owns any of the equipment
`located there. The magistrate judge also made no
`findings as to whether any signage on, about, or relating
`to the call center associates the space as belonging to ZTE
`USA. Finally, the magistrate judge did not make findings
`regarding whether the location of the call center was
`specified by ZTE USA or whether iQor would need
`permission from ZTE USA to move its call center outside
`of the Eastern District of Texas or to stop working for ZTE
`USA. Id. at 1363–64. These and any other factors
`relevant to the question of whether American GNC has
`met its burden to show that the call center was “of the
`defendant” should be considered on remand.3
`
`
`3 We do not imply that every one of these factors
`will be relevant or needs to be considered in every § 1406
`case, but those considerations are potentially relevant
`
`

`

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`IN RE: ZTE (USA) INC.
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` 13
`
`Accordingly,
`IT IS ORDERED THAT:
`The petition is granted to the extent that the district
`court’s November 7, 2017 order denying ZTE USA’s
`motion to dismiss for improper venue is vacated, and the
`district court is instructed to reconsider ZTE USA’s
`motion to dismiss consistent with this order, placing the
`burden of persuasion on the propriety of venue on
`American GNC.
`
`
`
`
`
`
`
`
`
` May 14, 2018
`
` Date
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` FOR THE COURT
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` /s/ Peter R. Marksteiner
` Peter R. Marksteiner
` Clerk of Court
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`here and should be considered by the district court on
`remand.
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