Case 2:19-cv-00209-JRG Document 51 Filed 09/27/19 Page 1 of 21 PageID #: 2342
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`
`
`
`
` C.A. No. 2:19-cv-00209-JRG
`
`
`
`
`JURY TRIAL DEMANDED
`
`
`
`
`
`
`
`
`
`
`)
`
`
`
`
`
`))
`
`))))))))))
`
`
`THE HILLMAN GROUP, INC.,
`
`
`
`
`
`KEYME, LLC,
`
`
`
`Plaintiff,
`
`v.
`
`Defendant.
`
`HILLMAN’S OPPOSITION TO KEYME, LLC’S MOTION TO DISMISS FOR
`IMPROPER VENUE OR, IN THE ALTERNATIVE,
`TO TRANSFER TO THE SOUTHERN DISTRICT OF NEW YORK
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`

`

`Case 2:19-cv-00209-JRG Document 51 Filed 09/27/19 Page 2 of 21 PageID #: 2343
`
` 
`
`TABLE OF CONTENTS
`
`I.
`
`SUMMARY ........................................................................................................................ 1
`
`II. FACTUAL BACKGROUND ............................................................................................. 1
`
`A.
`
`B.
`
`C.
`
`D.
`
`E.
`
`F.
`
`KeyMe’s Business Is Self-Service Kiosks Where a Consumer Transacts Business
`by Paying Money and Receiving a Duplicate Key at the Kiosk Itself .................... 1
`
`
`KeyMe Conducts Business with EDTX Consumers at 30 Kiosks
` ............................................................... 2
`
` in the 30 EDTX Retail
`KeyMe Owns the Kiosks
`Stores....................................................................................................................... 3
`
`KeyMe Has Been Involved in Over
`Consumers, Generating Nearly
`
` Business Transactions with EDTX
` in Revenue ............................................ 4
`
`KeyMe
`
`
` ....................................... 4
`
`
`Like KeyMe, Hillman Conducts Its Key Duplication Business in EDTX,
` .............................................................................. 5
`
`III.
`
`LAW AND ARGUMENT .................................................................................................. 5
`
`A.
`
`B.
`
`Legal Standard ........................................................................................................ 5
`
`Venue is Proper in the Eastern District of Texas Under 28 U.S.C. § 1400(b) ....... 6
`
`
`
`
`
`1.
`
`2.
`
`KeyMe Does Not Dispute that Hillman’s Amended Complaint Alleges
`Acts of Infringement ................................................................................... 6
`
`KeyMe’s Kiosks in the Eastern District Are “Regular and Established
`Places of Business” Under § 1400(b) ......................................................... 7
`
`a.
`
`
`b.
`
`
`c.
`
`KeyMe’s Kiosks Are “Physical Places” Within the Eastern District
`......................................................................................................... 7
`
`KeyMe’s Kiosks are “Regular and Established Places of Business”
`....................................................................................................... 10
`
`KeyMe’s Kiosks Are “Places of the Defendant” .......................... 14
`
`IV. CONCLUSION ................................................................................................................. 15
`
`
`
`
`
`
`
`

`

`Case 2:19-cv-00209-JRG Document 51 Filed 09/27/19 Page 3 of 21 PageID #: 2344
`
`TABLE OF AUTHORITIES
`
`Federal Cases
`
`Automated Packaging Sys., Inc. v. Free-Flow Packaging Int’l, Inc.,
`No. 5:14-cv-2022, 2018 WL 400326 (N.D. Ohio Jan. 12, 2018) ..........................................7, 8
`
`In re Cray Inc.,
`871 F.3d 1355 (Fed. Cir. 2017)........................................................................................ passim
`
`Homebingo Network, Inc. v. Chayevsky,
`428 F. Supp. 2d 1232 (S.D. Ala. 2006)....................................................................................15
`
`Intellectual Ventures II LLC v. FedEx Corp.,
`No. 2:16-CV-00980-JRG, 2017 WL 5630023 (E.D. Tex. Nov. 22, 2017)..........................6, 15
`
`Kranos IP Corp. v. Riddell, Inc.,
`No. 2:17-CV-443-JRG, 2017 WL 370462 (E.D. Tex. Aug. 28, 2017) ......................................6
`
`Lites Out, LLC v. OutdoorLink, Inc.,
`No. 4:17-CV-00192, 2017 WL 5068348 (E.D. Tex. Nov. 2, 2017) ..........................................7
`
`Magee v. Coca-Cola Refreshments USA, Inc.,
`833 F.3d 530 (5th Cir. 2016) ...................................................................................................11
`
`Peerless Network, Inc. v. Blitz Telecom Consulting, LLC,
`No. 17-CV-1725 (JPO), 2018 WL 1478047 (S.D.N.Y. Mar. 26, 2018) ..................9, 12, 13, 14
`
`Pers. Audio, LLC v. Google, Inc.,
`280 F. Supp. 3d 922 (E.D. Tex. Dec. 1, 2017) ..................................................................12, 13
`
`Seven Networks, LLC v. Google LLC,
`315 F. Supp. 3d 933 (E.D. Tex. 2018) ............................................................................. passim
`
`Super Interconnect Techs. LLC v. Google LLC,
`No. 2:18-cv-00463-JRG, 2019 WL 3717683 (E.D. Tex. Aug. 7, 2019) .................................13
`
`TC Heartland LLC v. Kraft Foods Grp. Brands LLC,
`137 S. Ct. 1514 (2017) ...............................................................................................................6
`
`Tinnus Enters., LLC v. Telebrands Corp.,
`No. 6:17-CV-00170-RWS, 2018 WL 4560742 (E.D. Tex. Mar. 9, 2018) ................................7
`
`Tinnus Enters., LLC v. Telebrands Corp.,
`No. 6:17-CV-00170-RWS, 2018 WL 4524119 (E.D. Tex. May 1, 2018).................................9
`
`Trois v. Apple Tree Auction Ctr., Inc.,
`882 F.3d 485 (5th Cir. 2018) .....................................................................................................6
`
`
`
`

`

`Case 2:19-cv-00209-JRG Document 51 Filed 09/27/19 Page 4 of 21 PageID #: 2345
`
`United States v. Team Fin., L.L.C.,
`No. 2:16-CV-00432-JRG, 2019 WL 3976364 (E.D. Tex. Aug. 22, 2019)................................6
`
`In re ZTE (USA) Inc.,
`890 F.3d 1008 (Fed. Cir. 2018)..................................................................................................5
`
`Federal Statutes
`
`28 U.S.C. § 1400(b) ............................................................................................................... passim
`
`28 U.S.C. § 1406(a) .......................................................................................................................15
`
`Rules and Regulations
`
`Fed. R. Civ. P. 12(b)(3)................................................................................................................ 1, 6
`
`
`
`

`

`Case 2:19-cv-00209-JRG Document 51 Filed 09/27/19 Page 5 of 21 PageID #: 2346
`
`I.
`
`SUMMARY
`
`
`
`KeyMe’s business is key duplication, and it regularly conducts that business in this
`
`District via its self-service kiosks that it owns, in retail spaces that it selects. But in an attempt to
`
`dodge a patent infringement case in this Court—and this Court’s prior holdings—KeyMe distorts
`
`the facts. KeyMe’s Rule 12(b)(3) Motion to Dismiss says it has no “physical place” in this
`
`District because its kiosks are remotely operated from New York, which is plainly false.
`
`KeyMe’s kiosks in this District are “operated” by the Eastern District customers using them,
`
`
`
` KeyMe claims its kiosks are not “regular and
`
`established” and are only temporary. The truth,
`
`. Finally, KeyMe claims they have no places of business in this District, because their
`
`kiosks are inside of third party stores. But the facts don’t lie: KeyMe owns the kiosks,
`
`
`
`
`
`
`
`
`
`KeyMe’s distortions in its Motion include willfully omitting facts bearing on the venue analysis,
`
`including the over
`
` business transactions it has made in this District and the nearly
`
` it reaped from these transactions. KeyMe’s Motion also insists that KeyMe has no
`
`employees in Texas, while conveniently leaving out that
`
`
`
`. Applying the
`
`law to the true facts leads to the inevitable conclusion that venue is proper in this District.
`
`II. FACTUAL BACKGROUND
`
`A.
`
`KeyMe’s Business Is Self-Service Kiosks Where a Consumer Transacts
`Business by Paying Money and Receiving a Duplicate Key at the Kiosk Itself
`
`
`
`As KeyMe’s CEO Greg Marsh stated in his Declaration attached to KeyMe’s Motion,
`
`“KeyMe’s business focuses entirely on key duplication and locksmith services.” (D.I. 41-2 at
`
`
`
`
`
`

`

`Case 2:19-cv-00209-JRG Document 51 Filed 09/27/19 Page 6 of 21 PageID #: 2347
`
`¶ 6.) KeyMe generates revenue via its self-service key duplication kiosks, which, depending on
`
`the version, bear either the “KeyMe” or “Locksmith in a Box” brands. (D.I. 30 at ¶ 23; D.I. 30-
`
`4.) KeyMe contracts with retailers to place its kiosks in individual stores. Once a store is
`
`agreed, KeyMe
`
`
`
`. Ex. B (Abbott Tr.) at 89:1-4, 91:24-92:23. Once the kiosk is up
`
`and running, customers make purchases via a credit or debit card. See id. at 105:21-25. The
`
`customer inserts the key they wish to copy into the kiosk, and if it matches one of the key blanks
`
`stored inside, the kiosk cuts a duplicate key, which “eventually drops into the customer’s hand.”
`
`(D.I. 30-4 at 2.)
`
`B.
`
`KeyMe Conducts Business with EDTX Consumers at 30 Kiosks
`
`
`
`
`
`
`KeyMe does not conduct its business remotely from New York City; it conducts it from
`
`each one of its kiosks, a fact KeyMe acknowledged when it registered to do business in the state
`
`of Texas with the Secretary of State in April, 2015. Ex. A (O’Quinn Decl.) at ¶ 1; Ex. C. Since
`
`then, KeyMe has placed kiosks in
`
` retail locations within the Eastern District of Texas, with 30
`
`of those currently deployed. Ex. D (l
`
`). The first such installation occurred on
`
`, at a
`
`
`
`
`
`store in
`
`, Texas. Id. The current thirty KeyMe kiosks in the Eastern District are
`
`distributed among Bed Bath & Beyond (5 kiosks), Tom Thumb1 (9), Kroger (14), and Albertsons
`
`(2) stores. See id. KeyMe actively advertises the locations of its kiosks on its website, and also
`
`advertises its services within stores in this District. KeyMe
`
`. (See D.I. 42-2 at 9 (stating that
`
`
`
`
`
`
`1 Of note, Tom Thumb is a division of the Albertsons-Safeway supermarket chain headquartered
`in Roanoke, Texas, in Denton County within the Eastern District.
`
`2
`
`
`

`

`Case 2:19-cv-00209-JRG Document 51 Filed 09/27/19 Page 7 of 21 PageID #: 2348
`
` and that
`
`) KeyMe assigns a
`
`local telephone number to each of its kiosks, which is displayed on the KeyMe website and on
`
`the kiosk user interface. Ex. B (Abbott Tr.) at 90:10-16. For example, the KeyMe kiosk in
`
`Lufkin, Texas within this District has the local number (936) 427-3086. Ex. A (O’Quinn Decl.)
`
`at ¶ 2; Ex. E at 1-2. When the number is looked up online, it is listed as belonging to “KeyMe.”
`
`Ex. A (O’Quinn Decl.) at ¶ 3; Ex. F.
`
`C. KeyMe Owns the Kiosks
`Stores
`
` in the 30 EDTX Retail
`
`
`
`KeyMe’s contracts with retailers, including those with Kroger, Albertsons, and Bed Bath
`
`& Beyond that govern KeyMe kiosks in this District, emphasize that
`
`2 at 1-2.) Each agreement states
`
`
`
`
`
` (E.g., D.I. 42-
`
`
`
`
`
` (D.I. 42-1 at 1; D.I. 42-2 at 1; D.I. 42-3 at 1 (emphasis added).)
`
`KeyMe CFO Jimmy Abbott testified that
`
` Ex. B (Abbott Tr.) at 102:13-15.
`
` Mr. Abbott testified that
`
`89:1-4.
`
`at 92:8-10.
`
`
`
`
`
`
`
`
`
`
`
` Id. at
`
`. See id. at 91:24-92:23. Mr. Abbott confirmed
`
` Id.
`
`
`
`. Id. at 92:13-23.
`
`3
`
`
`

`

`Case 2:19-cv-00209-JRG Document 51 Filed 09/27/19 Page 8 of 21 PageID #: 2349
`
`D.
`
`KeyMe Has Been Involved in Over
`Consumers, Generating Nearly
`
` Business Transactions with EDTX
` in Revenue
`
`
`
`KeyMe’s business in the Eastern District is significant. Totaling all of (1) keys cut at
`
`kiosks, (2) keys ordered at kiosks sent to customers by mail, (3) car key fob duplication services
`
`booked at kiosks, and (4) orders for locksmith services booked in the District, more than
`
`
`
`unique orders have been received from customers within the Eastern District since KeyMe began
`
`doing business here. See Ex. G (
`
`); Ex. H (
`
`
`
`
`
`); see also Ex. B (Abbott Tr.) at 66:12-69:1 (explaining Ex. G), 73:6-74:8 (explaining Ex.
`
`H). Together, those orders have generated nearly
`
`in revenue for KeyMe.2 See id.
`
`KeyMe attempts to wave away its substantial business in the Eastern District by claiming its 30
`
`kiosks here “represent only 1.3% of KeyMe’s entire fleet of kiosks,” (D.I. 41 at 4), but this only
`
`makes sense numerically. For a nationwide distribution, it is reasonable that each of the 50
`
`United States might only receive 2% or fewer of KeyMe’s fleet, with one of four judicial
`
`districts in Texas receiving only a fraction of that number.
`
`E.
`
`KeyMe
`
`As discussed above, KeyMe
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`2
`
` See Ex. I (
`
`4
`
`
`
` Ex. B (Abbott Tr.) at 67:25-68:6.
`
`
`
`

`

`Case 2:19-cv-00209-JRG Document 51 Filed 09/27/19 Page 9 of 21 PageID #: 2350
`
`). KeyMe
`
`
`
`. See Ex. J (
`
`). KeyMe does not run its Eastern
`
`District kiosk business from New York;
`
`.
`
`F.
`
`Like KeyMe, Hillman Conducts Its Key Duplication Business in EDTX,
`
`
`Hillman has more than one hundred key duplication machines deployed in the Eastern
`
`
`
`
`
`
`
`District. (D.I. 30 at ¶ 10.) Additionally, as set forth in Hillman’s Opposition to KeyMe’s
`
`Motion to Transfer, filed concurrently with this paper, Hillman employs
`
` people in the
`
`Eastern District at its three facilities located in Lewisville and Tyler. The Lewisville distribution
`
`center is one of Hillman’s largest, and handles
`
` key duplication-related products each
`
`year that eventually translate into
`
` dollars in sales. These employees and
`
`operations generate
`
` business annually for Hillman, and also
`
`provide substantial monetary benefit to the local economy of the Eastern District.
`
`III.
`
`LAW AND ARGUMENT
`A.
`
`Legal Standard
`
`“Any civil action for patent infringement may be brought in the judicial district where the
`
`defendant resides, or where the defendant has committed acts of infringement and has a regular
`
`and established place of business.” 28 U.S.C. § 1400(b). Whether venue is proper in a patent
`
`infringement case under § 1400(b) is an issue unique to patent law, and is thus decided under the
`
`law of the Federal Circuit. See In re ZTE (USA) Inc., 890 F.3d 1008, 1012 (Fed. Cir. 2018).
`
`Once a defendant challenges venue in a patent case, “the [p]laintiff bears the burden of
`
`establishing proper venue.” See id. at 1013. In resolving a motion to dismiss for improper venue
`
`5
`
`
`

`

`Case 2:19-cv-00209-JRG Document 51 Filed 09/27/19 Page 10 of 21 PageID #: 2351
`
`pursuant to Fed. R. Civ. P. 12(b)(3), “the Court may consider both the complaint and evidence
`
`outside the complaint.” United States v. Team Fin., L.L.C., No. 2:16-CV-00432-JRG, 2019 WL
`
`3976364, at *3 (E.D. Tex. Aug. 22, 2019) (citing Trois v. Apple Tree Auction Ctr., Inc., 882 F.3d
`
`485, 493 (5th Cir. 2018)). Well-pleaded and uncontroverted facts in a plaintiff’s Complaint are
`
`accepted as true, unless they are contradicted by an affidavit of a defendant submitted in
`
`conjunction with a Rule 12(b)(3) motion to dismiss. Kranos IP Corp. v. Riddell, Inc., No. 2:17-
`
`CV-443-JRG, 2017 WL 3704762, at *2 (E.D. Tex. Aug. 28, 2017) (citations omitted).
`
`B.
`
`Venue is Proper in the Eastern District of Texas Under 28 U.S.C. § 1400(b)
`
`Section 1400(b) has two prongs, either of which confer proper venue. Either the
`
`defendant must “reside” in the judicial district, or the defendant must have both “committed acts
`
`of infringement” and have “a regular and established place of business” in the judicial district.
`
`28 U.S.C. § 1400(b); TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514, 1515
`
`(2017). The Supreme Court held in TC Heartland that a domestic corporation “resides” only in
`
`its state of incorporation. Id. at 1517. Hillman does not dispute that KeyMe is incorporated in
`
`Delaware, and thus does not “reside” in the Eastern District of Texas for purposes of venue. The
`
`venue inquiry thus centers on the second prong, which evaluates whether KeyMe has both
`
`“committed acts of infringement” and possessed a “regular and established place of business” in
`
`the Eastern District of Texas.
`
`1. KeyMe Does Not Dispute that Hillman’s Amended Complaint Alleges
`Acts of Infringement
`
`At this stage of the proceedings, only “an allegation of infringement—even if
`
`contested—is sufficient to establish venue is proper.” Intellectual Ventures II LLC v. FedEx
`
`Corp., No. 2:16-CV-00980-JRG, 2017 WL 5630023, at *8 (E.D. Tex. Nov. 22, 2017).
`
`Hillman’s Amended Complaint properly alleges infringement of at least one claim of U.S. Patent
`
`6
`
`
`

`

`Case 2:19-cv-00209-JRG Document 51 Filed 09/27/19 Page 11 of 21 PageID #: 2352
`
`Nos. 8,979,446, 9,914,179, and 10,400,474. (D.I. 30 at ¶¶ 25-140.) KeyMe does not assert
`
`otherwise, and indeed, KeyMe’s Motion does not even address this factor.
`
`2. KeyMe’s Kiosks in the Eastern District Are “Regular and Established
`Places of Business” Under § 1400(b)
`
`
`
`In re Cray Inc. sets forth “three general requirements” for 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.” 871 F.3d 1355,
`
`1360 (Fed. Cir. 2017). Cray stated these “general requirements…inform whether there exist the
`
`necessary elements, but do not supplant the statutory language,” and stressed “the analysis must
`
`be closely tied to the language of the statute.” Id. at 1362. Further, “[i]n deciding whether a
`
`defendant has a regular and established place of business in a district, no precise rule has been
`
`laid down and each case depends on its own facts.” Id.
`
`a. KeyMe’s Kiosks Are “Physical Places” Within the Eastern District
`
`
`
`Cray defined “place” for § 1400(b) purposes as “a building or a part of a building set
`
`apart for any purpose or quarters of any kind from which business is conducted.” Id. The Cray
`
`panel held that the statute did not require a “fixed physical presence in the sense of a formal
`
`office or store,” but did require “a physical, geographical location in the district from which the
`
`business of the defendant is carried out.” Id.; see also Tinnus Enters., LLC v. Telebrands Corp.,
`
`No. 6:17-CV-00170-RWS, 2018 WL 4560742, at *3 (E.D. Tex. Mar. 9, 2018).
`
`
`
`KeyMe’s trumped-up argument that its presence here is merely “virtual” appears to be a
`
`blatant attempt to meet the facts of Lites Out, LLC v. OutdoorLink, Inc. It is notable that KeyMe
`
`has to stretch the facts of its business beyond reasonable bounds to find any legal authority
`
`supporting its position. KeyMe stretches the law too, as Automated Packaging is readily
`
`distinguishable from the facts of this case. There, packaging machines accused of infringing
`
`7
`
`
`

`

`Case 2:19-cv-00209-JRG Document 51 Filed 09/27/19 Page 12 of 21 PageID #: 2353
`
`were placed in private homes, not stores, and no inventory for fulfilling customer orders was
`
`present. See Automated Packaging Sys., Inc. v. Free-Flow Packaging Int’l, Inc., No. 5:14-cv-
`
`2022, 2018 WL 400326, at *7 (N.D. Ohio Jan. 12, 2018). KeyMe makes much of the Ohio
`
`court’s reference to vending machines, but that was dicta in a footnote referring to a hypothetical
`
`raised at oral argument. Id. at *9 n.10. Moreover, this Court has previously rejected this
`
`argument on nearly identical facts. In Seven Networks, LLC v. Google LLC, this Court found
`
`that Google servers situated in rack space hosted by an ISP in Tyler, Texas constituted a
`
`“physical place” consistent with the Cray guidelines. 315 F. Supp. 3d 933, 950-54 (E.D. Tex.
`
`2018). As this Court held, “while a virtual space or electronic communications alone are
`
`insufficient to denote a ‘place’ within the meaning of the statute, they may, with more, be
`
`indicative of the requirement having been met.” Id. at 951 (emphasis in original).
`
`
`
`In Seven Networks, this Court analyzed Google’s service agreement with its host,
`
`Suddenlink, and found that Google’s servers constituted a “physical place” when (1) Google
`
`owned the servers, and (2) Google possessed a “right” for its servers to be “placed” in
`
`Suddenlink’s “physical location” by means of the service agreement. See id. Otherwise, Google
`
`would have been trespassing on Suddenlink’s private property. See id. Suddenlink possessed no
`
`rights to “open” the servers, and the location of the servers was mutually controlled and
`
`monitored by the parties. Id. at 952-53, 953 n.30. Movement or removal of the servers by
`
`Suddenlink required notice to Google pursuant to the agreement. Id. at 952-53.
`
`
`
`The same facts are present here, and the same result should hold. KeyMe concedes that it
`
`“owns” its kiosks. (D.I. 41 at 2, 6, 12.) KeyMe’s contracts with retailers state
`
`
`
`
`
`(D.I. 42-1 at 1;
`
`8
`
`
`

`

`Case 2:19-cv-00209-JRG Document 51 Filed 09/27/19 Page 13 of 21 PageID #: 2354
`
`D.I. 42-2 at 1; D.I. 42-3 at 1 (emphasis added).) Indeed, KeyMe kiosks bear the disclaimer
`
`“Retailer assumes no responsibility for this machine” on the housing. See, e.g., Ex. A (O’Quinn
`
`Decl.) at ¶ 4; Ex. K (photograph of a KeyMe kiosk located in a Randall’s store in Austin, Texas).
`
`
`
`Like in Seven Networks, KeyMe’s contracts
`
`
`
` Each of the contracts with KeyMe’s retail partners in the
`
`Eastern District states that
`
`
`
`
`
`
`
` (D.I. 42-1 at 1; D.I. 42-2 at 1; D.I. 42-3 at 1
`
`(emphases added).) This Court and others, including the S.D.N.Y. in KeyMe’s cited Peerless
`
`Network case, have found this granted space in a retail establishment to suffice as a “physical
`
`place” under § 1400(b) and Cray. See Peerless Network, Inc. v. Blitz Telecom Consulting, LLC,
`
`No. 17-CV-1725 (JPO), 2018 WL 1478047, at *3 (S.D.N.Y. Mar. 26, 2018) (holding that “a
`
`shelf containing a piece of Local Access’s telecommunications equipment” “is a ‘physical place
`
`in the district’ insofar as it is ‘[a] building or a part of a building set apart for any purpose.’”)
`
`(citing Cray, 871 F.3d at 1362); see also Seven Networks, 315 F. Supp. 3d at 950 n.25.
`
`
`
`KeyMe’s
`
`,
`
`further illustrates KeyMe’s control over the space. See Tinnus Enters., LLC v. Telebrands Corp.,
`
`No. 6:17-CV-00170-RWS, 2018 WL 4524119, at *1 (E.D. Tex. May 1, 2018) (finding a
`
`“physical place” when
`
`Networks,
`
`D.I. 42-2 at 2
`
`9
`
`
`
`
`). As in Seven
`
`. (E.g.
`
`
`
`

`

`Case 2:19-cv-00209-JRG Document 51 Filed 09/27/19 Page 14 of 21 PageID #: 2355
`
`); id.
`
`
`
`
`
`
`
`
`
`) And as in Seven Networks,
`
` (See D.I. 42-2 at 2
`
`); see also Seven Networks, 315 F. Supp. 3d at
`
`952-53 (“Google’s ownership of the server and its contents is absolute, as is Google’s control
`
`over the server’s location once it is installed.”))
`
`KeyMe indisputably owns its kiosks, and
`
`those kiosks within retail establishments in the Eastern District. See Ex. D (
`
`; Ex. B (Abbott Tr.) at 75:16-76:2.)
`
` place
`
`
`
`Accordingly, the kiosks within the store space constitute a “building or a part of a building set
`
`apart for any purpose,” and thus a “physical place” under § 1400(b) and Cray.
`
`b. KeyMe’s Kiosks are “Regular and Established Places of Business”
`
`
`
`KeyMe’s Motion next asserts that its kiosks in the Eastern District are neither “regular
`
`and established” nor “places of business.” (D.I. 41 at 8-11.) KeyMe is incorrect on both counts.
`
`i.
`
`KeyMe’s Kiosks Are “Regular and Established” in the
`Eastern District
`
`In Cray, “regular” means a “steady, uniform, orderly, and methodical manner,” i.e. not a
`
`
`
`“temporary” or “single” act. See Seven Networks, 315 F. Supp. 3d at 940 (quoting Cray, 871
`
`F.3d at 1362). “[E]stablished” means “not transient” and either “settle[d] certainly or fix[ed]
`
`permanently.” Cray, 871 F.3d at 1363. Cray allows that “while a business can certainly move
`
`its location, it must for a meaningful time period be stable, established.” Id.
`
`10
`
`
`

`

`Case 2:19-cv-00209-JRG Document 51 Filed 09/27/19 Page 15 of 21 PageID #: 2356
`
`KeyMe’s kiosks in the Eastern District meet these definitions. Since first deploying a
`
`KeyMe kiosk in the Eastern District on
`
`, KeyMe has not only
`
`
`
` – it has made
`
` additional
`
`installations. Ex. D.
`
`. Id. The
`
`kiosks that KeyMe
`
`in the Eastern District all remain deployed and operational today, generating continuous
`
`revenue for KeyMe
`
`. Id. Indeed, KeyMe has represented that
`
`” Ex. B (Abbott Tr.) at 94:22-24; see also Ex. L (
`
`
`
`
`
`
`
`
`
`).
`
`KeyMe’s statement that “KeyMe or the third party retailer can remove the kiosks at any
`
`time for any reason” is exaggerated. See Ex. B (Abbott Tr.) at 102:13-15 (
`
`
`
`). Similarly,
`
`KeyMe’s attempt to argue that their kiosks are not “established” in Texas by alluding to the
`
`“soda machines” in Magee also fails. (D.I. 41 at 9.) Indeed, this Court has specifically stated
`
`that Magee is inapplicable to this analysis. See Seven Networks, 315 F. Supp. 3d at 955 (“As to
`
`Magee, the Court first notes that the Fifth Circuit was not considering whether a vending
`
`machine was a regular and established place of business but, rather, a ‘sales establishment’ under
`
`the ADA….This is not a beneficial comparison.” (internal citation omitted)). KeyMe’s thirty
`
`kiosks,
`
`of which have been in continuous operation for
`
` and
`
` of which
`
`have been operating
`
`, are “regular and established” for purposes of § 1400(b).
`
`
`
`
`
`11
`
`
`

`

`Case 2:19-cv-00209-JRG Document 51 Filed 09/27/19 Page 16 of 21 PageID #: 2357
`
`ii.
`
`KeyMe’s Kiosks Are “Places of Business” in the Eastern
`District for KeyMe
`
`KeyMe devotes barely a page to arguing that its kiosks are not “places of business” under
`
`§ 1400(b), and much of that is devoted to minimizing the allegedly “small amount of kiosks and
`
`sales from the kiosks within this District.” (D.I. 41 at 10.) The Court may quickly dispense with
`
`this argument, as it has previously rejected it. E.g., Seven Networks, 315 F. Supp. 3d at 957:
`
`Examining the “effect” on a company’s business which a particular place or
`places of business have is not in keeping with a strict statutory application. In fact,
`it undermines it. Reading a non-statutory requirement that the place of business
`for § 1400(b) requires the place of business to be a substantial part of a
`defendant’s ordinary business or have a material effect on a business’s
`provisioning of goods or services does violence to the language of the statute and
`is precisely the kind of statutory deviation the Federal Circuit cautioned against
`in [Cray].
`
`
`See also Pers. Audio, LLC v. Google, Inc., 280 F. Supp. 3d 922, 933 (E.D. Tex. Dec. 1, 2017)
`
`(“The court is not going to read into § 1400(b) a requirement that defendant's ‘main’ or ‘central’
`
`business is at the location….Nowhere in § 1400(b) or other patent statutes has the court found a
`
`‘small infringer’ exception.”).
`
`
`
`Indeed, KeyMe has reaped nearly
`
` in revenue from kiosk and locksmith services
`
`in this District in just
`
`, representing more than
`
` unique orders from the
`
`District. See § II.D, supra; Exs. F-G. KeyMe has also registered to conduct business with the
`
`Texas Secretary of State (Ex. C), a seemingly unnecessary move if KeyMe were carrying out its
`
`business from New York and not Texas as it claims in its Motion.
`
`KeyMe’s case citations to Peerless Network and Personal Audio are unavailing. In
`
`Peerless Network, the New York court found that the “shelf” in a facility holding defendants’
`
`telecom equipment was not a “place of business” because “Defendants’ employees do
`
`not…accept orders, make business decisions, or solicit new clients from the shelf.” Peerless
`
`12
`
`
`

`

`Case 2:19-cv-00209-JRG Document 51 Filed 09/27/19 Page 17 of 21 PageID #: 2358
`
`Network, 2018 WL 1478047 at *4. KeyMe does all of those things at its kiosks in the Eastern
`
`District. There can be no dispute that KeyMe kiosks accept orders from customers at the kiosks,
`
`and solicit new clients from the kiosks via advertising constantly displayed on its user interface
`
`and housing; indeed, KeyMe included photographs to that effect in its Motion. (D.I. 41 at 3-4.)
`
`
`
`As for Personal Audio, this Court has twice indicated that it does not agree with that
`
`case’s ultimate holding. See Seven Networks, 315 F. Supp. 3d at 950 (“A revisiting of the
`
`ultimate decision of Personal Audio on this issue is not only possible but compelled by the facts
`
`of this case. Additionally, in this Court’s opinion, neither the statute nor the Federal Circuit’s
`
`guidance in [Cray] permit the result reached by that court.”); Super Interconnect Techs. LLC v.
`
`Google LLC, No. 2:18-cv-00463-JRG, 2019 WL 3717683, at *1 n.2 (E.D. Tex. Aug. 7, 2019)
`
`(“The Court disagrees with the legal analysis in CUPP for the same reasons it declined to follow
`
`Personal Audio in SEVEN.”). As Cray prescribes, “each case depends on its own facts” when it
`
`comes to determining whether a defendant has a regular and established place of business in a
`
`particular place. 871 F.3d at 1362. Indeed, this Court has recently reiterated that “the specific
`
`and fact-based nature, extent, and type of business will inform whether a particular place in a
`
`district qualifies as a ‘regular and established place of business’ of the defendant.” Super
`
`Interconnect, 2019 WL 3717683 at *2.
`
`
`
`In the case of KeyMe, it is clear that its kiosks are its business. See, e.g., D.I. 41-2 at ¶ 6
`
`(“KeyMe’s business focuses entirely on key duplication and locksmith services.”). KeyMe
`
`argues that it “operates” these kiosks from New York, not Texas, but at his deposition, KeyMe’s
`
`CFO
`
`
`
`
`
` Ex. B (Abbott Tr.) at 105:9-106:19. Consumers in this District have “operated”
`
`13
`
`
`

`

`Case 2:19-cv-00209-JRG Document 51 Filed 09/27/19 Page 18 of 21 PageID #: 2359
`
`KeyMe kiosks
`
`, and put roughly
`
` in KeyMe’s coffers. This
`
`Court has noted that “there are opinions by numerous courts squarely holding that vending
`
`machines or similar objects are places of business.” Seven Networks, 315 F. Supp. 3d at 955,
`
`955 n.32 (emphasis in original) (collecting cases). There is no “human-centric” requirement for
`
`a “place of business” in § 1400(b) (see id. at 962), and thus KeyMe’s kiosks are “places of
`
`business.”
`
`c. KeyMe’s Kiosks Are “Places of the Defendant”
`
`
`
`The third Cray factor is whether the regular and established place of business is the
`
`“place of the defendant.” 871 F.3d at 1363. In other words, “the defendant must establish or
`
`ratify the place of business.” Id. at 1364. Also, “a defendant’s representations that it has a place
`
`of business in the district are relevant to the inquiry,” so long as the defendant “actually
`
`engage[s] in business from that location.” KeyMe kiosks, when placed in retail stores in the
`
`Eastern District, are indisputably places of KeyMe.
`
`As discussed above, KeyMe owns its kiosks,
`
`
`
`. See § III.B.2.a, supra. There is little doubt that KeyMe
`
`exerts possession and control of the kiosks within the stores once they are placed. Peerless
`
`Network, cited by KeyMe, found a shelf locked within another entity’s facility—unseen by any
`
`consumer—to be a “place of the defendant,” even if not ultimately a “place of business.” 2018
`
`WL 1478047 at *3. This Court has also found a “place of the defendant” on similar facts,
`
`adopting the Peerless Network court’s reasoning. Seven Networks, 315 F. Supp. 3d at 965-66.
`
`KeyMe openly advertises the presence of its kiosks within the Eastern District to
`
`consumers on its website. E.g., Ex. E. The website presents the location of the kiosk, the hours
`
`the kiosk can be accessed, and key blanks currently in stock at the kiosk. Id. Notably, the
`
`website lists a local telephone number KeyMe associates with that particular kiosk. When the
`
`14
`
`
`

`

`Case 2:19-cv-00209-JRG Document 51 Filed 09/27/19 Page 19 of 21 PageID #: 2360
`
`phone number is searched in an online directory, it comes back with a listing for “KeyMe.” Ex.
`
`F. KeyMe’s CFO confirmed
`
` Ex.
`
`B (Abbott Tr.) at 70:11-15. This Court has found “ratification” of this nature to meet the
`
`standard of Cray and confer proper venue. FedEx, 2017 WL 5630023 at *7.
`
`KeyMe’s citation to Homebingo is inapposite. As this Court has explained, Homebingo
`
`involved “individual (natural person) defendants.” Seven Networks, 315 F. Supp. 3d at 954
`
`(emphasis in original) (citing Homebingo Network, Inc. v. Chayevsky, 428 F. Supp. 2d 12