Case 6:20-cv-01131-ADA Document 16 Filed 02/19/21 Page 1 of 7
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`UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`WACO DIVISION
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`Case No. 6:20-CV-1131
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`STRATOSAUDIO, INC.,
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`Plaintiff,
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`v.
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`VOLKSWAGEN GROUP OF AMERICA,
`INC.,
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`Defendant.
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`VOLKSWAGEN GROUP OF AMERICA, INC.’S
`MOTION TO DISMISS OR TRANSFER FOR IMPROPER VENUE
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`Because Volkswagen Group of America, Inc. (“Volkswagen”) does not have “a regular
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`and established place of business” in this District, venue is not properly laid in this Court.
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`Pursuant to 28 U.S.C. §§ 1400(b) and 1406(a), and Fed R. Civ. P. 12(b)(3), defendant
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`Volkswagen respectfully moves the Court to dismiss the case, or to transfer it to a district where
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`it might properly have been brought. Volkswagen respectfully suggests that it would be in the
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`interest of justice to transfer this case to the United States District Court for the Eastern District
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`of Michigan.
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`1. Plaintiff’s Venue Allegations
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`It is Plaintiff’s burden to establish that venue is proper. See, e.g., Omega Patents, LLC v.
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`BMW of North America et al., 1:20-cv-01907-SDG, 2020 WL 8184342 (N.D. Ga. December 21,
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`2020), at *1.
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`In its complaint, Plaintiff avers, “Venue is proper in this District under 28 U.S.C.
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`§ 1400(b) because, among other things, Defendant has transacted business in this District and has
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`Case 6:20-cv-01131-ADA Document 16 Filed 02/19/21 Page 2 of 7
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`committed acts of infringement in and has a regular and established place of business in this
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`judicial district.”1
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`The only places of business that Plaintiff identifies in the complaint are Volkswagen and
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`Audi dealerships (D.I. 1 at 10). Plaintiff does not allege that these dealerships are anything other
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`than independent franchises. Indeed, the fact is that:
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`The VW-brand dealerships located in the Western District of
`Texas are owned and operated by entities independent of VWGoA
`(and Volkswagen altogether). VWGoA has no ownership interest
`in any of the dealerships in the Western District of Texas. In fact,
`the state laws of Texas prohibit VWGoA from owning or operating
`any dealerships in the state of Texas.
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`Hahn Decl. (accompanying this motion) at ¶ 10.
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`Volkswagen neither owns nor leases any real estate in this District, id. at ¶ 4, and does
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`not employ personnel stationed in the District, id. at ¶ 7. Plaintiff does not allege otherwise. In
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`short, “VWGoA does not have any offices, warehouses, or other places of business within the
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`Western District of Texas.” Hahn Decl. at ¶ 5.
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`2. A Franchised Automotive Dealership Is Not an Automaker’s Own Place of Business
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`Three district courts have recently considered whether an automaker’s authorized
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`dealerships are the automaker’s places of business for purposes of the patent venue statute. On
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`the one hand, both the United States District Court for the Northern District of Georgia and the
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`United States District Court for the Southern District of California concluded that the presence of
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`dealerships does not confer venue for a suit against the automaker, because the dealerships are
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`Plaintiff did not allege that Volkswagen is resident in this District. Indeed, Plaintiff
`pleads, correctly, that Volkswagen is a New Jersey corporation (D.I. 1 at ¶ 7), which is an
`admission that for venue purposes Volkswagen is resident only in New Jersey. See, e.g.,
`TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S.Ct. 1514, 1520 (2017)
`(holding that for corporate venue purposes, residence “refers only to the State of
`incorporation”).
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`Case 6:20-cv-01131-ADA Document 16 Filed 02/19/21 Page 3 of 7
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`not “the place of the defendant.” Omega Patents, 2020 WL 8184342, citing In re. Cray Inc., 871
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`F.3d 1355, 1360 (Fed. Cir. 2017); see West View Research, LLC v. BMW of North America, LLC,
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`et al., 16-cv-2590 JLS (AGS), 2018 WL 4367378 (S.D. Cal. February 5, 2018).
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`On the other hand, in a since-vacated decision, the United States District Court for the
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`Eastern District of Texas concluded that the presence of dealerships did make venue proper. See
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`Blitzsafe Texas, LLC v. BMW of North America, LLC, et al., 2:17-cv-00418-JRG, 2018 WL
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`4849345 (E.D. Tex. September 6, 2018), vacated by Blitzsafe Texas LLC v. Mitsubishi Electric
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`Corp. et al., 2:17-cv-00418-JRG, 2019 WL 3494359 (E.D. Tex., August 01, 2019).
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`In the Blitzsafe case, Judge Gilstrap, citing Cray, found that venue was proper because
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`BMW had “adopted and ratified the dealerships within this District as its place of business.”
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`2018 WL 4849345 at *7–8. The Omega Patents court considered Judge Gilstrap’s reasoning at
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`length, 2020 WL 8184342 at *4–6, but, having analyzed the case law, including Cray, concluded
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`that venue was not proper:
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`A finding that venue is proper in this District as to BMWNA
`under the facts alleged would, in this Court’s view,
`significantly expand the scope of § 1400(b)—a result it does not
`believe the Federal Circuit intended with its decision in Cray.
`871 F.3d at 1361. See also Uni-Sys., 2020 WL 1694490, at *15
`(“Reading the statute as [plaintiff] suggests would read out any
`distinction between the ‘doing business’ inquiry of the general
`venue statute, 28 U.S.C. § 1391, and the ‘regular and established
`place of business’ inquiry of the patent venue statute, 28 U.S.C. §
`1400(b).”); Tour Tech., 377 F. Supp. 3d at 209 (distinguishing
`Blitzsafe and holding “[a]lthough RTV's actions and contacts
`within the district would likely be sufficient to satisfy the general
`venue statute, the Court is mindful that the patent venue statute is
`narrower.”). In sum, the Court finds that venue is not proper in this
`District against BMWNA under § 1400(b).
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`Id. at *6 (Emphasis added; brackets in original).
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`The Court of Appeals for the Federal Circuit considered its Cray precedent in In re.
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`Google LLC, 949 F.3d 1338 (2020). The Court noted that, per Cray, there are three requirements
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`Case 6:20-cv-01131-ADA Document 16 Filed 02/19/21 Page 4 of 7
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`for a regular and established place of business for purposes of the patent venue statute: “(1) there
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`must be a physical place in the district; (2) it must be a regular and established place of business;
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`and (3) it must be the place of the defendant.” 949 F.3d at 1343; see Cray, 871 F.3d at 1360. “In
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`the final analysis, the court must identify a physical place, of business, of the defendant.” Cray,
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`871 F.3d at 1364.
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`But Volkswagen does not have any places of business in this District. See generally Hahn
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`Decl.
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`As noted above, in finding venue for BMWNA to be proper, the Blitzsafe court relied on
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`a “ratification” theory: “Here, BMWNA has undoubtedly adopted and ratified the dealerships
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`within this District as its places of business.” 2018 WL 4849345 at *8. The court found that
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`BMW had “ratified” the dealerships as its own places of business because only authorized
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`dealers are permitted to sell new BMWs, the dealerships have “BMW” in their names and
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`display BMW’s trademarks, and because BMW’s own web site points consumers at the
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`dealerships. Id. But both the West View Research court and the Omega Patents court explicitly
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`rejected this reasoning. See generally 2020 WL 8184342; 2018 WL 4367378.
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`Those courts were correct to do so, because regardless of the fact that dealerships sell
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`cars, and use the car makers’ trademarks to do so, and regardless of the fact that the car makers
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`refer consumers to the dealers, the dealerships are nonetheless separate entities from the car
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`makers. Volkswagen and Audi dealers have physical places of business, but they are the dealers’
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`own places of business, not Volkswagen’s.
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`In Google, the Federal Circuit (though talking about computer server farms) articulated
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`another reason why dealerships are not the car makers’ places of business: To qualify under the
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`venue statute, a place of business “generally requires an employee or agent of the defendant to be
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`Case 6:20-cv-01131-ADA Document 16 Filed 02/19/21 Page 5 of 7
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`conducting business at that place.” 949 F.3d at 1344. Volkswagen has no employees or agents
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`located at the dealerships. Hahn Decl. at ¶ 7.
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`The Omega Patents and West View Research decisions are correct, and the now-vacated
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`Blitzsafe decision is wrong. Volkswagen does not have a regular and established place of
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`business in this District, and so, pursuant to 28 U.S.C. §§ 1400(b) and 1406(a), this case must be
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`dismissed or transferred.
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`Volkswagen does maintain a place of business in Auburn Hills, Michigan. See Hahn
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`Decl. at ¶ 11. Volkswagen therefore respectfully submits that it would be in the interest of justice
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`to transfer the case to the United States District Court for the Eastern District of Michigan.
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`Case 6:20-cv-01131-ADA Document 16 Filed 02/19/21 Page 6 of 7
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`Dated: February 19, 2021
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`Respectfully submitted,
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`By:
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`SHEARMAN & STERLING LLP
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` /s/ David P. Whittlesey
`David P. Whittlesey
`300 W. 6th Street, Suite 2250
`Austin, Texas 78701
`Telephone: 512.647.1907
`Facsimile: 512.857.6602
`David.Whittlesey@shearman.com
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`Mark Hannemann
`599 Lexington Avenue
`New York, NY 10022
`Telephone: 212.848.7696
`Facsimile: 646.848.7696
`Mark.Hannemann@shearman.com
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`Thomas R. Makin
`599 Lexington, Avenue
`New York, NY 10022
`Telephone: 212.848.7698
`Facsimile: 646.8487698
`Thomas.Makin@shearman.com
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`Attorneys for Defendant Volkswagen Group of
`America, Inc.
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`Case 6:20-cv-01131-ADA Document 16 Filed 02/19/21 Page 7 of 7
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`CERTIFICATE OF SERVICE
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`The undersigned certifies that on February 19, 2021 all counsel of record who are deemed to
`have consented to electronic service are being served with a copy of this document via the Court’s
`CM/ECF system.
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`/s/ David P. Whittlesey
`David P. Whittlesey
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