Action Communication Systems, Inc. v. Datapoint Corp., Civ. A. No. 3-76-1422-F.

• Decision Date: 27 January 1977
• Docket Number: Civ. A. No. 3-76-1422-F.
• Parties: ACTION COMMUNICATION SYSTEMS, INC., a corp. v. DATAPOINT CORPORATION, a corp.
• Court: U.S. District Court — Northern District of Texas

426 F. Supp. 973

ACTION COMMUNICATION SYSTEMS, INC., a corp. v. DATAPOINT CORPORATION, a corp.

Civ. A. No. 3-76-1422-F.

United States District Court, N. D. Texas, Dallas Division.

January 27, 1977.

John N. McCamish, Jr., San Antonio, Tex., Joe W. Matthews, Robert F. Henderson, Matthews & Thorpe, Dallas, Tex., for defendant.

Bryan V. Medlock, Jr., Richards, Harris & Medlock, Dallas, Tex., for plaintiff.

ORDER AND MEMORANDUM OPINION

ROBERT W. PORTER, District Judge.

This suit for patent infringement under 35 U.S.C. §§ 271, 283-85 (1970) with jurisdiction founded on 28 U.S.C. § 1338(a) is currently in search of a proper home. The case settled here in the Northern District of Texas on October 27, 1976, only to be disturbed on November 18, 1976 by the Defendant's timely motions to dismiss or transfer for improper venue. Rule 12(b)(3) F.R.C.P., 28 U.S.C.; 28 U.S.C. § 1406(a) (1970). For reasons hereinafter specified the motion for change in venue is GRANTED. The motion to dismiss is DENIED.

The Defendant's motions and the Plaintiff's response present a novel question concerning the scope of 28 U.S.C. § 1400(b), the special statute controlling venue in patent infringement actions such as the case at bar. Section 1400(b) recites that:

"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."

The Plaintiff contends that venue is proper in this district because the Defendant is doing business here even though its principal place of business is in the Western District of Texas at San Antonio. The stem around which the Plaintiff's argument is wound is that the Defendant "resides" in this district within the meaning of the statute.¹ Reference is made to 28 U.S.C. § 1391(c), the general venue statute, which provides that:

"A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes."

Plaintiff's argument would be most compelling but for the holding of the United States Supreme Court in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 77 S.Ct. 787, 1 L.Ed.2d 786 (1957). There the Court specifically ruled that the general venue statute § 1391(c) does not modify the special patent statute § 1400(b). Thus, venue was improper in a judicial district where the Defendant was merely "doing business" as provided in § 1391(c). The Court went on to rule that with regard to § 1400(b), the residence requirement meant domicile and a corporation could only be domiciled in the state of incorporation.²

This holding presents a question that has not been squarely decided in any other reported case but which must be faced here. That is, may a Defendant, incorporated in a multi-district state, be sued in any district of that state under § 1400(b)?

The answer must be provided by reference to the statute itself. The statute from which Congressional intent may be gleaned states that venue is proper in a judicial district where the Defendant resides. It does not say a state where the Defendant resides or even judicial districts where the Defendant resides. The conclusion to be drawn from this language is that Congress intended for there to be only one district wherein the Defendant resides in a patent infringement case. This conclusion is buttressed by the Supreme Court's rulings that § 1400(b) is not supplemented or modified by other venue provisions giving more expansive definitions of "residence".³

Furthermore, reference should be made to § 1400(a) which provides for venue in copyright infringement actions. That section states in pertinent part that "venue is proper in the district in which the defendant or his agent resides or may be found." The "or may be found" language has been construed to authorize suit in any district where the Defendant is doing business.⁴ If Congress intended for patent infringement suits to be brought in any district where the Defendant was doing business it would have undoubtedly used the same language in subsection (b) as found in subsection (a). Significantly, Congress did not modify the residence restriction in 1400(b) with the "or may be found" language of the section's previous paragraph.

I am led to the inescapable conclusion that a corporation may be sued under the § 1400(b) residence provision only in the state of incorporation and, within that state, only in the judicial district where its principal place of business is located. See Stanley Works v. Globemaster, Inc., 400 F.Supp. 1325, 1330 (D.Mass.1975). The patent venue statute reflects Congressional realization of the technical and intricate nature of patent litigation. In most such cases there is a mass of technical data produced at trial. Bradford Novelty Co. v. Manheim, 156 F.Supp. 489, 491 (S.D.N.Y. 1957) Congress sought to restrict venue in these actions to those places where that mass of technical data is located. One obvious place is the principal place of business. Another is the site of Defendant's regular and established place of business where acts of infringement have occurred.

It is just as obvious to me that this mass of data and witnesses are not available in every place where the Defendant does business. Theoretically under the Plaintiff's analysis, we could hear this case in Amarillo, Texas — over five hundred miles from Defendant's principal place of business — if the Defendant had some business activity there. This result does not comport with my reading of Congressional intent in enacting § 1400(b).

The Plaintiff has cited one case that discusses the question presented here. In "A" Co., Inc. v. Consyne Corp., 191 U.S.P.Q. 126 (S.D.Cal.1975) the district court, in an alternative holding, ruled that a Defendant doing "a significant amount of business" in a district in the state of incorporation may be sued in that district under § 1400(b). The court conceded that "the mere fact of state incorporation by itself, especially absent any business contacts with the judicial district, is insufficient to establish patent venue." See Hydro-Clear v. Aer-O-Flo, 317 F.Supp. 1317 (N.D.Ohio 1970).

The Consyne court did not cite any authority in support of its "significant amount of business" test for patent venue. I respectfully submit that this test is at odds with § 1400(b). Apparently the court was attempting to fashion a test that required something more than the just "doing business" requirement of § 1391(c). But this has already been done with regard to the alternative method of venue under § 1400(b). The "regular and established business" requirement has uniformly been held to mean something more than the "doing business" test of the general venue statute, § 1391(c). See, e. g., Bradford Novelty, supra.

What Consyne has done then is to permit venue in any district within a state where the Defendant has a regular and established place of business but without requiring acts of infringement to also occur in that district. Thus, at least with respect to the districts of the state of incorporation, the Consyne reasoning renders the acts of infringement requirement meaningless.

Finally, even if the Consyne alternative holding correctly states the law, I do not believe the Plaintiff has brought himself within the reach of the case. Consyne required that the Defendant conduct a "significant amount of...