Case 6:20-cv-01131-ADA Document 96 Filed 03/10/22 Page 1 of 4
`
`STRATOSAUDIO, INC.,
` Plaintiff
`
`-vs-
`
`VOLKSWAGEN GROUP OF AMERICA,
`INC.,
` Defendant
`
`
`
`
`
`
`
`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`WACO DIVISION
`
`
`6:20-CV-01131-ADA
`
`
`§
`§
`§
`§
`§
`§
`§
`§
`
`
`MEMORANDUM OPINION AND ORDER
`
`Before the Court is Defendant Volkswagen Group of America, Inc.’s (“Volkswagen”) Rule
`
`12(b)(3) Motion to dismiss or transfer for improper venue pursuant to 28 U.S.C. §§ 1400(b) and
`
`1406(a). Dkt. 16. After careful consideration of the relevant facts, applicable law, the parties’ briefs
`
`and oral arguments, the parties’ supplemental memorandums, and the Federal Circuit’s Order (Dkt.
`
`94), the Court GRANTS Volkwagen’s Motion.
`
`I. BACKGROUND
`
`Plaintiff StratosAudio, Inc. (“StratosAudio”) filed this action against Volkswagen on
`
`December 11, 2020, asserting infringement of seven patents by Volkswagen’s vehicles with
`
`certain infotainment systems. Dkt. 1. On February 19, 2021, Volkswagen moved to dismiss or
`
`transfer the action for improper venue under Rule 12(b)(3). Dkt. 16.
`
`StratosAudio is a Delaware corporation headquartered in Kirkland, Washington. Dkt. 1 at
`
`1, ¶ 2. Volkswagen is a New Jersey corporation with its principal place of business in Herndon,
`
`Virginia. Id. at 2, ¶ 7. Volkswagen may be served through its registered agent for service in Austin,
`
`Texas, within this District, and has been registered to do business in the State of Texas since at
`
`least June 7, 1973. Id.
`
`
`
`1
`
`

`

`Case 6:20-cv-01131-ADA Document 96 Filed 03/10/22 Page 2 of 4
`
`For propriety of venue, Plaintiff alleges that Volkswagen conducts its business of the
`
`exclusive distribution of new Volkswagen and Audi automobiles to consumers in this District
`
`through its authorized dealers in Austin and Waco and exercises control over those dealerships.
`
`Id. at 3–5, ¶¶ 10–14.
`
`II. LEGAL STANDRD
`
`Federal Rule of Civil Procedure 12(b)(3) allows a party to move to dismiss an action for
`
`“improper venue.” Fed. R. Civ. P. 12(b)(3). 12 U.S.C. § 1440(b) is the “sole and exclusive
`
`provision controlling venue in patent infringement actions.” TC Heartland LLC v. Kraft Foods
`
`Group Brands LLC, 137 S. Ct. 1514, 1519 (2017). “Whether venue is proper under § 1400(b) is
`
`an issue unique to patent law and is governed by Federal Circuit law,” rather than regional circuit
`
`law. In re ZTE (USA) Inc., 890 F.3d 1008, 1012 (Fed. Cir. 2018). “[U]pon motion by the Defendant
`
`challenging venue in a patent case, the Plaintiff bears the burden of establishing proper venue.” Id.
`
`at 1013–14. Plaintiff may carry this burden by establishing facts that, if taken to be true, establish
`
`proper venue. Castaneda v. Bradzoil, Inc., No. 1:20-CV-1039-RP, 2021 WL 1390423, at *1 (W.D.
`
`Tex. Apr. 13, 2021). “On a Rule 12(b)(3) motion to dismiss for improper venue, the court must
`
`accept as true all allegations in the complaint and resolve all conflicts in favor of the plaintiff.” Id.
`
`(citing Braspetro Oil Servs. Co. v. Modec (USA), Inc., 240 F.App’x 612, 615 (5th Cir. 2007) (per
`
`curiam)). In determining whether venue is proper, “the Court may look beyond the complaint to
`
`evidence submitted by the parties.” Ambraco, Inc. v. Bossclib, B.V., 570 F.3d 233, 237–38 (5th
`
`Cir. 2009).
`
`Section 1400(b) provides that venue in patent cases is proper “[1] where the defendant
`
`resides, or [2] where the defendant [a] has committed acts of infringement and [b] has a regular
`
`and established place of business.” 28 U.S.C. § 1400(b). Under the first prong, the Supreme Court
`
`
`
`2
`
`

`

`Case 6:20-cv-01131-ADA Document 96 Filed 03/10/22 Page 3 of 4
`
`has held that “a domestic corporation ‘resides’ only in its State of incorporation for purposes of
`
`the patent venue statute.” TC Heartland, 137 S. Ct. at 1517. Under the second prong, the Federal
`
`Circuit interpreted, in In re Cray Inc., 871 F.3d 1355 (Fed. Cir. 2017), “regular and established
`
`place of business” to impose three general requirements: “(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. Regarding the first requirement, a “place” refers to a “‘building or a
`
`part of a building set apart for any purpose’ or ‘quarters of any kind’ from which business is
`
`conducted.” Id. at 1362 (citations omitted). Regarding the second requirement, “regular” means
`
`that the business must operate in a “‘steady, uniform, orderly, and methodical’ manner,” and
`
`“sporadic activity cannot create venue.” Id. (citations omitted). And the third requirement means
`
`that the place cannot be solely a place of the defendant’s employee – “the defendant must establish
`
`or ratify the place of business.” Id. at 1363. Subsequently, in In re Google LLC, 949 F.3d 1338
`
`(Fed. Cir. 2020), the Federal Circuit added a fourth requirement: “a ‘regular and established place
`
`of business’ requires the regular, physical presence of an employee or other agent of the defendant
`
`conducting the defendant’s business at the alleged ‘place of business.’”1 Id. at 1345.
`
`III. DISCUSSIION
`
`The main dispute before the Court is whether Volkswagen has “a regular and established
`
`place of business” in this District by way of its dealerships. The Federal Circuit held that
`
`“dealerships located in the Western District do not constitute regular and established places of
`
`
`1 In Google, Federal Circuit considered this requirement as part of the second Cray factor. In re Google
`LLC, 949 F.3d 1338, 1344 (Fed. Cir. 2020) (“We agree . . . that under the second Cray factor, a ‘place of
`business’ generally requires an employee or agent of the defendant to be conducting business at that
`place.”). However, this Google requirement is essentially a different requirement than the original second
`Cray requirement, which places more focus on the phrase “regular and established.” Therefore, this Court
`treats the Google requirement as a fourth requirement in addition to the three Cray requirements.
`
`
`
`3
`
`

`

`Case 6:20-cv-01131-ADA Document 96 Filed 03/10/22 Page 4 of 4
`
`business of Volkswagen and Hyundai under § 1400(b).” Dkt. 94 at 7. All of Plaintiff’s arguments
`
`hinge on the dealerships. Therefore, 12 U.S.C. § 1440 cannot be met.
`
`IV.
`
`CONCLUSION
`
`For the reasons above, the Court finds that Defendant lacks a “regular and established place
`
`of business” in the Western District of Texas and venue is improper in this District under Section
`
`1400(b). The Court therefore GRANTS Defendant’s Motion to Dismiss or Transfer.
`
`Because Volkswagen maintains a place of business in Auburn Hills, Michigan (Dkt. 16 at
`
`5), it is hereby ORDERED that this case is to be transferred to the United States District Court for
`
`the Eastern District of Michigan.
`
`SIGNED this 10th day of March, 2022.
`
`ALAN D ALBRIGHT
`UNITED STATES DISTRICT JUDGE
`
`4
`
`