Magee v. Essex-Tec Corp.

• Decision Date: 13 December 1988
• Docket Number: Civ. A. No. 86-543 LON.
• Citation: 704 F. Supp. 543
• Parties: John E. MAGEE, Plaintiff, v. ESSEX-TEC CORPORATION, Defendant.
• Court: U.S. District Court — District of Delaware

704 F. Supp. 543

John E. MAGEE, Plaintiff, v. ESSEX-TEC CORPORATION, Defendant.

Civ. A. No. 86-543 LON.

United States District Court, D. Delaware.

December 13, 1988.

Mary W. Bourke of Connolly, Bove, Lodge & Hutz, Wilmington, Del. (S.C. Yuter of Briarcliff Manor, New York City, of counsel), for plaintiff.

Douglas E. Whitney and Donald F. Parsons of Morris, Nichols, Arsht & Tunnell, Wilmington, Del. (John K. McCulloch of Learman & McCulloch, Saginaw, Mich., of counsel), for defendant.

LONGOBARDI, District Judge.

Pursuant to 28 U.S.C. § 1404(a), Defendant has moved to transfer this lawsuit, Docket Item ("D.I.") 47, to the United States District Court for the Central District of California.

Title 28, section 1404(a) of the United States Code provides: "For the convenience of the parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." As an initial matter, for a transferee district to be one where a civil action "might have been brought", the moving party must demonstrate that venue is proper in the transferee district and the transferee court could exercise in personam jurisdiction over all parties. Hoffman v. Blaski, 363 U.S. 335, 343-44, 80 S.Ct. 1084, 1089-90, 4 L.Ed.2d 1254 (1960); Shutte v. Armco Steel Corporation, 431 F.2d 22, 24 (3rd Cir.1970).

VENUE

Venue in suits for patent infringement is governed solely and exclusively by 28 U.S.C. § 1400(b)¹ which provides: "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." In an action for patent infringement, section 1400(b) provides two alternatives to establish venue. 1 Moore's Federal Practice 0.1449 at 1503. One alternative is to sue in the judicial district where the defendant "resides." L.D. Schreiber Cheese Co. v. Clearfield Cheese Co., 495 F.Supp. 313, 317 (W.D.Pa.1980). In the case of a corporation not subject to the general corporation venue statute, 28 U.S. C. § 1391(c), it is a "resident" of only the state of its incorporation. Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 226, 77 S.Ct. 787, 790, 1 L.Ed.2d 786 (1957). Although its sole place of business is Carpinteria, California, (Kaufman affidavit, D.I. 47, Exhibit A, ¶ 3), Essex does not contend that venue is proper in the United States District Court for the Central District of California by virtue of the residence prong of section 1400(b) because as a Delaware corporation Essex is a resident of the State of Delaware.

The second alternative of section 1400(b) to establish venue contains two requirements: (1) that the defendant has committed acts of infringement in the district; and (2) that the defendant has a regular and established place of business in the district. 1 Moore's Federal Practice 0.1449 at 1509 n. 38. With respect to the first requirement, the "acts of infringement" must be determined by reference to the definition of patent infringement in 35 U.S.C. § 271(a). Alco Standard Corp. v. Tennessee Valley Auth., 448 F.Supp. 1175, 1181 (W.D.Tenn.1978). Title 35, section 271(a) of the United States Code provides that patent infringement occurs whenever one "without authority makes, uses or sells any patented invention within the United States during the term of the patent therfor." It is well established that performance of only one of the three statutorily enumerated activities of manufacture, use or sale constitutes patent infringement. See, e.g., Roche Products v. Bolar Pharmaceutical Co., 733 F.2d 858, 861 (Fed.Cir.1984). Thus, an "act of infringement" may consist of either the manufacture, use or sale of the patented invention. 1 Moore's Federal Practice 0.1449 at 1509-10 n. 39. Essex argues that venue is proper in the Central District of California because "all of the alleged infringing elevator security systems equipment made by Essex were manufactured in Carpinteria, California." D.I. 47 at 6 (Kaufman affidavit, Exhibit A, ¶ 16). Essex's manufacture of the alleged infringing device constitutes an "act of infringement" sufficient to satisfy the first element of the test for venue under section 1400(b). In his brief, Plaintiff does not raise an argument on this issue.

The second element of section 1400(b) is the requirement that the Defendant Essex Corporation maintain "a regular and established place of business" in the Central District of California. A regular and established place of business has been described as a place where a party is "engaged in carrying on in a continuous manner a substantial part of its ordinary business." IPCO Hospital Supply v. Les Fils D'Auguste, 446 F.Supp. 206, 208 (S.D.N.Y. 1978). Thus, where a defendant has a fixed business location evidenced by a business phone, letterheads and, in fact, carries on activities connected with the business at that location, then it has a regular and established place of business. See Federal Electric Products Co. v. Frank Adam Electric Co., 100 F.Supp. 8 (S.D.N.Y.1951); see also 1 Moore's Federal Practice 0.1449.

In the instant case, the Defendant Essex Corporation has carried its burden of proof on the question of whether its business activities in the Central District of California are sufficient to give rise to venue. According to the affidavit of Mr. Peter Kaufman, Chairman of the Board of Essex Corporation, Essex's place of business has been located solely in Carpinteria, California. D.I. 47, Exhibit A, ¶ 3. Therefore, Essex has satisfied both elements of the test to establish proper venue in the Central District of California had it been the only Defendant at the time the complaint was filed.

Venue may not have been proper in the Central District under section 1400(b) when there were four defendants in the case because Essex was the only one with a regular and established place of business in the district. However, when a defendant is no longer a party to the suit, it has been held that "a court is not required to confine its venue considerations to the facts of the case as they existed at the time of the complaint." In Re Fine Paper Antitrust Litigation, 685 F.2d 810, 819 (3rd Cir. 1982).² In In Re Fine Paper, the defendants as to whom venue would have been improper in the transferee district had settled with the plaintiff and were no longer parties at the time of the transfer. Id. Relying on Hoffman v. Blaski, 363 U.S. 335, 80 S.Ct. 1084, 4 L.Ed.2d 1254 (1960), the appellants in In Re Fine Paper claimed that section 1404(a)'s phrase "where it might have been brought" should be interpreted "to preclude a transfer notwithstanding the prior settlement of all parties as to whom venue in the transferee district would have been improper." In Re Fine Paper, 685 F.2d at 819. The Third Circuit refused to read Hoffman and section 1404(a) "to be so grudging." Id.

In Hoffman, the defendants themselves requested the transfer and consented to proceed in a district in which they could have objected to venue at the outset of the litigation. Hoffman, 363 U.S. at 340-41, 80 S.Ct. at 1088. The United States Supreme Court held that the power to transfer under section 1404(a) does not depend "upon the wish or waiver of the defendant" and concluded that the defendants may not establish venue in the transferee district by merely waiving its possible objections to venue. Hoffman, 363 U.S. at 343, 80 S.Ct. at 1089. The Third Circuit stated in In Re Fine Paper that Hoffman only "precludes transfer over a plaintiff's objections to a district in which venue would be improper as to a defendant who remained a party to the action." In Re Fine Paper, 685 F.2d at 819. In In Re Fine Paper, the parties as to whom venue in the transferee district would have been improper had settled and were no longer parties at the time of the transfer. Accordingly, the Third Circuit held that "a party's settlement of his portion of the action cures any objection to venue in the transferee district with respect to that party." Id.

Thus, this Court is not required to confine its venue consideration to the facts as they existed at the time of the complaint. Id.; see also Fairfax Dental Ltd. v. S.J. Filhol Ltd., 645 F.Supp. 89, 91 (E.D.N.Y. 1986) (plaintiff in patent infringement suit allowed to transfer action after two defendants settled where venue was proper in transferee district for all named defendants who were still parties to the suit); Hess Oil Virgin Islands Corp. v. UOP, Inc., 447 F.Supp. 381, 383 (N.D.Okla.1978) (court had authority in civil action for damages to transfer suit to another district after one of the defendants which could not have been served in transferee district settled with plaintiff).

As previously discussed, this action "might have been brought" against Essex in the District Court for the Central District of California if Essex had been the only Defendant at the time the complaint was filed. However, at the time the complaint was filed, Essex was one of four Defendants and venue was not available in California for the other three Defendants. On December 4, 1987, this action was dismissed as to all Defendants except Essex. D.I. 43. Because Essex is the sole party remaining in the case at the time of the requested transfer, venue is proper in the Central District under section 1400(b). As one court has noted: "It would elevate form over substance to forbid a transfer, sought by the plaintiff, on the basis of an objection — that the suit could not originally have been brought in the transferee district — that logically should be raised by defendants no longer in the case." Fairfax Dental, 645 F.Supp. at 92 (citing In Re Fine Paper, 685 F.2d at 819). It would, therefore, not constitute an abuse of this Court's discretion to transfer the case under section 1404(a) to the United States District Court for the Central District of...