Bos. Scientific Corp. v. Cook Grp. Inc.

• Decision Date: 11 September 2017
• Docket Number: C.A. No. 15–980–LPS–CJB
• Citation: 269 F.Supp.3d 229
• Parties: BOSTON SCIENTIFIC CORPORATION and Boston Scientific SciMed, Inc., Plaintiffs, v. COOK GROUP INCORPORATED and Cook Medical LLC, Defendants.
• Court: U.S. District Court — District of Delaware

269 F.Supp.3d 229

BOSTON SCIENTIFIC CORPORATION and Boston Scientific SciMed, Inc., Plaintiffs,

v.COOK GROUP INCORPORATED and Cook Medical LLC, Defendants.

C.A. No. 15–980–LPS–CJB

United States District Court, D. Delaware.

Signed September 11, 2017

Karen L. Pascale and Pilar G. Kraman, YOUNG CONAWAY STARGATT & TAYLOR, Wilmington, DE, Matthew M. Wolf, Edward Han, Marc A. Cohn, Amy DeWitt, Nicholas Nyemah, Patrick Reidy, and Tara Williamson, ARNOLD & PORTER KAYE SCHOLER LLP, Washington, DC, Assad H. Rajani, ARNOLD & PORTER KAYE SCHOLER LLP, Palo Alto, CA, Ryan Nishimoto and Marty Koresawa, ARNOLD & PORTER KAY SCHOLER LLP, Los Angeles, CA, Attorneys for Plaintiffs.

David E. Moore, Bindu A. Palapura, and Stephanie E. O'Byme, POTTER ANDERSON & CORROON LLP, Wilmington, DE, Dominic P. Zanfardino, Bradley G. Lane, Jeff Nichols, Jason W. Schigelone, James M. Oehler, Andrew S. McElligott, David L. Bernard, and Andrea L. Shoffstall, BRINKS GILSON & LIONE, Chicago, IL, Attorneys for Defendants.

OPINION

STARK, U.S. District Judge:

Presently before the Court is Defendants Cook Group Incorporated ("CGI") and Cook Medical LLC's ("Cook Medical") (collectively, "Defendants" or "Cook") motion to dismiss for improper venue or, alternatively, to transfer venue in light of the Supreme Court's decision in TC Heartland LLC v. Kraft Foods Group Brands LLC , ––– U.S. ––––, 137 S.Ct. 1514, 197 L.Ed.2d 816 (2017). (D.I. 282)

It is undisputed that after TC Heartland , which held that a corporate defendant "resides" only in its state of incorporation for purposes of determining where venue is proper in a patent case, see 28 U.S.C. § 1400(b), Defendants, who are not Delaware corporations, can no longer be said to "reside" in Delaware. TC Heartland did not, however, address the second prong of § 1400(b), which makes venue proper in a district "where the defendant has committed acts of infringement and has a regular and established place of business."

After reviewing thorough briefing and hearing oral argument, the Court finds that Defendants do not have a "regular and established place of business" in Delaware. Therefore, the Court concludes that venue is improper in Delaware for this action. Accordingly, the Court will grant Defendants' motion and transfer this case to the United States District Court for the Southern District of Indiana, Indianapolis Division.

I. BACKGROUND

This is a patent infringement action brought by Plaintiffs Boston Scientific Corporation ("BSC") and Boston Scientific SciMed, Inc. ("BSSI") (collectively, "Plaintiffs" or "Boston Scientific"), alleging that Defendants infringe U.S. Patent Nos. 8,685,048 ; 8,709,027 ; 8,974,371 ; and 9,271,731, which generally describe and claim a hemostatic clip

apparatus and methods for using such clip, for example, to stop gastrointestinal bleeding. (D.I. 19 at ¶¶ 1, 10)

BSC is a Delaware corporation with its principal place of business in Marlborough, Massachusetts. (D.I. 19 at ¶ 2) It develops, manufactures, and supplies medical devices, including endoscopic products for the treatment of diseases of the digestive system, such as its Resolution™ Clip. (Id. at ¶¶ 2, 10) BSSI is a Minnesota corporation with its principal place of business in Maple Grove, Minnesota. (Id. at ¶ 3) A wholly-owned subsidiary of BSC, BSSI develops and manufactures endoscopic products, including hemostatic clips distributed by BSC. (Id. ) BSSI is the owner by assignment of the patents-in-suit. (Id. )

CGI is an Indiana corporation with its principal place of business in Bloomington, Indiana. (Id. at ¶ 4) It is alleged to be a major competitor of Plaintiffs in the endoscopic hemostatic clip market. (Id. at ¶ 15) Cook Medical is an Indiana limited liability company that also has its principal place of business in Bloomington. (Id. at ¶ 5) It, too, is alleged to be a major competitor of Plaintiffs in the endoscopic hemostatic clip market, and it has sold the Instinct™ Endoscopic Hemoclip since at least 2013. (Id. at ¶ 15; D.I. 52 at 4)

Plaintiffs initiated this action on October 27, 2015, alleging that Defendants infringed three of the patents-in-suit. (D.I. 1) On March 9, 2016, Plaintiffs filed an amended and supplemental complaint for infringement as to all four patents. (D.I. 19) On July 15, 2016, Defendants filed an amended answer and counterclaims seeking declaratory judgment of non-infringement and invalidity of each of the asserted patents. (D.I. 52 at 15–17) Then, on December 19, 2016, Defendants filed a motion to stay pending inter partes reviews ("IPR"). (D.I. 74) That motion was initially denied without prejudice to renew at a time after the United States Patent and Trademark Office's Patent Trial and Appeal Board ("PTAB") decided whether to institute review on the IPR petitions at issue. After the PTAB's institution of IPR proceedings on many of the asserted claims, Defendants renewed their motion to stay on May 22, 2017. (D.I. 254) On August 16, 2017, the Court granted the motion to stay but excluded from the stay, inter alia , any efforts necessary for resolution of the instant motion. (D.I. 304 at 22)

In the meantime, on April 28, 2017, Defendants filed a motion for leave to file an amended pleading, seeking to add a defense and counterclaim of inequitable conduct.

(D.I. 218) After that motion was denied without prejudice on June 2, 2017 (D.I. 268), Defendants filed a renewed motion for leave to file an amended pleading on June 9, 2017 (D.I. 274). In addition to the inequitable conduct defense and counterclaim, this latest proposed amended pleading seeks to plead improper venue in light of the Supreme Court's decision in TC Heartland , which was issued on May 22, 2017. (Id. )¹

Defendants filed their improper venue motion on June 22, 2017, seeking dismissal or, in the alternative, transfer of this action to the Southern District of Indiana, pursuant to Federal Rule of Civil Procedure 12(b)(3) and 28 U.S.C. § 1406. (D.I. 282) They contend that venue is not proper under either prong of § 1400(b). (Id. ) Briefing on the motion was initially complete as of July 27, 2017 (see D.I. 283, 296, 298), although supplemental submissions have been filed (D.I. 307, 310, 312). The Court heard oral argument on August 24, 2017. (See Transcript ("Tr."))²

II. LEGAL STANDARDS

Generally, "venue provisions are designed, not to keep suits out of the federal courts, but merely to allocate suits to the most appropriate or convenient federal forum." Brunette Mach. Works, Ltd. v. Kockum Indus., Inc. , 406 U.S. 706, 710, 92 S.Ct. 1936, 32 L.Ed.2d 428 (1972). Rule 12(b)(3) authorizes a party to move to dismiss a lawsuit for improper venue. When such a motion is filed, the Court must determine whether venue is proper in accordance with the applicable statutes. See Albright v. W.L. Gord & Assocs., Inc. , 2002 WL 1765340, at *3 (D. Del. July 31, 2002). Venue in a patent infringement action is governed solely and exclusively by the patent venue statute, 28 U.S.C. § 1400(b). See TC Heartland , 137 S.Ct. at 1516. The general venue statute, 28 U.S.C. § 1391(c), does not have any application in a patent case. See id. at 1521.

If the Court grants a Rule 12(b)(3) motion based on improper venue, the Court "shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought." 28 U.S.C. § 1406(a).³

Generally, "it is not necessary for the plaintiff to include allegations in his complaint showing that venue is proper." Great W. Mining & Mineral Co. v. ADR Options, Inc. , 434 Fed.Appx. 83, 86–87 (3d Cir. 2011). Hence, when confronted with a motion to dismiss for improper venue, the Court may consider both the complaint and evidence outside the complaint. See 14D Wright & Miller, Federal Practice & Procedure § 3826 (4th ed. 2017). The Court will accept any venue-related allegations in the complaint as true, unless those allegations are contradicted by the defendant's affidavits. See Bockman v. First Am. Mktg. Corp. , 459 Fed.Appx. 157, 158 n.1 (3d Cir. 2012) ; In re First Solar, Inc. Derivative Litig. , 2013 WL 817132, at *2 (D. Del. Mar. 4, 2013). In addition, the Court may consider affidavits submitted by the plaintiff. See Bockman , 459 Fed.Appx. at 161 (affirming District Court's dismissal of complaint "because Defendants satisfied their burden of showing improper venue by offering evidence that the wrongful acts alleged in the Complaint did not occur in Pennsylvania, and Plaintiffs failed to rebut that evidence").

Courts are not uniform in their views as to which party bears the burden of proof with respect to venue. Some hold that a plaintiff must prove that venue is proper in its chosen district, while others hold instead that a defendant must prove that such district is an improper venue. See 14D Wright & Miller, Federal Practice & Procedure § 3826 (4th ed. 2017) ("There are many cases—predominantly, but not exclusively, from the Third and Fifth Circuits—holding that the burden is on the objecting defendant to establish that venue is improper, because venue rules are for the convenience and benefit of the defendant."). At present, it appears the majority view is that "when the defendant has made a proper objection, the burden is on the plaintiff to establish that the chosen district is a proper venue." Id. Notably, however, the Court of Appeals for the Third Circuit—the Circuit in which this District is located—has expressly held that the moving party has the burden of proving that venue is improper. See Myers v. Am. Dental Ass'n , 695 F.2d 716, 724 (3d Cir. 1982) ("[O]n a motion for dismissal for improper venue under Rule 12 the movant has the burden of proving the affirmative defense asserted by it."); see also Great W. Mining , 434 Fed.Appx. at 87 ("Because improper venue is an affirmative defense, the burden of proving lack of proper venue remains—at all times—with the defendant.").

While the parties here are in agreement as to what the Third Circuit has held with respect...