Motorola Solutions, Inc. v. Hytera Commc'ns Corp.

• Court: U.S. District Court — Northern District of Illinois
• Writing for the Court: John Robert Blakey, United States District Judge
• Citation: Motorola Solutions, Inc. v. Hytera Commc'ns Corp., 402 F.Supp.3d 450 (N.D. Ill. 2019)
• Decision Date: 12 August 2019
• Docket Number: Case No. 17-cv-01972
• Parties: MOTOROLA SOLUTIONS, INC., Plaintiff, v. HYTERA COMMUNICATIONS CORPORATION LTD., et al., Defendants.

402 F.Supp.3d 450

MOTOROLA SOLUTIONS, INC., Plaintiff,

v.HYTERA COMMUNICATIONS CORPORATION LTD., et al., Defendants.

Case No. 17-cv-01972

United States District Court, N.D. Illinois, Eastern Division.

Signed August 12, 2019

Brandon Hugh Brown, Adam R. Alper, Pro Hac Vice, Akshay S. Deoras, Pro Hac Vice, Kirkland & Ellis LLP, San Francisco, CA, Ali-Reza Boloori, Pro Hac Vice, Michael W. De Vries, Pro Hac Vice, Kirkland & Ellis LLP, Los Angeles, CA, David Rokach, Kirkland & Ellis LLP, Chicago, IL, Joshua L. Simmons, Pro Hac Vice, Kirkland & Ellis LLP, New York, NY, for Plaintiff.

Boyd T. Cloern, Pro Hac Vice, Steptoe & Johnson LLP, Edward Robert Yoches, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, Washington, DC, Daniel Steven Stringfield, Steptoe & Johnson LLP, John T. Schriver, William Charles Staes, Duane Morris LLC, Chicago, IL, John S. Cipolla, Mark Wallace McDougall, Pro Hac Vice, Todd R. Tucker, Calfee, Halter & Griswold LLP, Cleveland, OH, for Defendants.

MEMORANDUM OPINION AND ORDER

John Robert Blakey, United States District Judge

Plaintiff Motorola Solutions, Inc. sues Defendants Hytera Communications Corporation Ltd. (Hytera Corporation) and Hytera Communications America West Inc. (Hytera West) for patent infringement. [78]. Defendants jointly move to dismiss Plaintiff's amended complaint pursuant to Rule 12(b)(3) for improper venue as to Hytera West, and Rule 12(b)(6) for failure to state a claim as to Hytera Corporation. [80]. For the reasons explained below, this Court denies Defendants' motion.

I. Background¹

Plaintiff, an Illinois company, maintains its principal place of business in Chicago, Illinois. [78] ¶ 12. Hytera Corporation is a Chinese company with its principal place of business in Shenzhen, China. Id. ¶¶ 3, 13. Hytera Corporation established Hytera West as a California subsidiary in 2016. Id. ¶¶ 8, 14. Plaintiff researches, invents, and provides radio equipment and infrastructure technologies, including two-way digital radio products, technologies, and supporting infrastructure and systems. Id. ¶¶ 1, 31.

Plaintiff's claims concern six patents: (1) U.S. Patent No. 6,591,111 (the '111 Patent), id. ¶ 54; (2) U.S. Patent No. 7,369,869 (the '869 Patent), id. ¶ 42; (3) U.S. Patent No. 7,729,701 (the '701 Patent), id. ¶ 45; (4) U.S. Patent No. 8,032,169 (the '169 Patent), id. ¶ 39; (5) U.S. Patent No. 8,279,991 (the '991 Patent), id. ¶ 48; and (6) U.S. Patent No. 9,099,972 (the '972 Patent), id. ¶ 51. Plaintiff constitutes the sole owner of each patent (collectively, the Patents). Id. ¶¶ 37, 40, 43, 46, 49, 52, 55.

Plaintiff alleges that Hytera Corporation specifically intended to infringe the Patents by "luring away" three of Plaintiff's senior engineers. Id. ¶¶ 5, 20. Plaintiff asserts that Hytera Corporation induced these engineers to infringe because: (1) they had direct familiarity with Plaintiff's innovations and technologies related to the Patents; and (2) in their final days of employment with Plaintiff, they downloaded at least 7,000 technical, marketing, sales, and legal documents related to the Patents. Id. According to Plaintiff, Hytera Corporation then relied upon and copied patented information from these documents in creating its own digital mobile radio (DMR) products. Id. ¶¶ 4, 5, 9, 21. Finally, Plaintiff alleges that Hytera Corporation infringed the Patents by directly—and/or indirectly, through subsidiaries, divisions, groups, or distributors—advertising, marketing, offering for sale, importing for sale, and/or selling the infringing DMR products. Id. ¶ 17.

Similarly, Plaintiff alleges that Hytera West directly—and/or indirectly through subsidiaries, divisions, groups, or distributers—infringed the Patents by advertising, marketing, offering for sale, importing for sale, and/or selling the infringing DMR products in this District. Id. ¶ 24. Plaintiff also asserts that Hytera West employs one salesperson and at least three other employees in its Schaumburg, Illinois warehouse and repair facility. Id. ¶¶ 25, 29.

II. Legal Standard

To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint must provide a "short and plain statement of the claim" showing that the pleader merits relief, Fed. R. Civ. P. 8(a)(2), so the defendant has "fair notice" of the claim "and the grounds upon which it rests," Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007) (quoting Conley v. Gibson , 355 U.S. 41, 47, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957) ). A complaint must also contain "sufficient factual matter" to state a facially plausible claim to relief—one that "allows the court to draw the reasonable inference" that the defendant committed the alleged misconduct. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ). This plausibility standard "asks for more than a sheer possibility" that a defendant acted unlawfully. Williamson v. Curran , 714 F.3d 432, 436 (7th Cir. 2013).

In evaluating a complaint under Rule 12(b)(6), this Court accepts all well pleaded allegations as true and draws all reasonable inferences in the plaintiff's favor. Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. This Court does not, however, accept a complaint's legal conclusions as true. Brooks v. Ross , 578 F.3d 574, 581 (7th Cir. 2009).

With respect to venue, the plaintiff bears the burden of establishing that venue is proper in a given case. Bartlett v. Bartlett , No. 16 CV 6595, 2017 WL 106043, at *1 (N.D. Ill. Jan. 11, 2017) (citing Grantham v. Challenge-Cook Bros., Inc. , 420 F.2d 1182, 1184 (7th Cir. 1969) ). In assessing venue for a 12(b)(3) motion, however, courts take the plaintiff's allegations as true and resolve factual conflicts in the plaintiff's favor. RAH Color Techs., LLC v. Quad/Graphics, Inc. , No. 17 C 4931, 2018 WL 439210, at *1 (N.D. Ill. Jan. 16, 2018) (citing Deb v. SIRVA, Inc. , 832 F.3d 800, 809 (7th Cir. 2016) and Faulkenberg v. CB Tax Franchise Sys., LP , 637 F.3d 801, 809-10 (7th Cir. 2011) ).

III. Analysis

A. Venue Is Proper As To Hytera West

In TC Heartland LLC v. Kraft Foods Group Brands LLC , ––– U.S. ––––, 137 S. Ct. 1514, 197 L.Ed.2d 816 (2017), the Supreme Court held that the patent venue statute, 28 U.S.C. § 1400(b), serves as the exclusive venue provision for patent infringement cases. Id. at 1517. Under Section 1400(b), plaintiffs may bring an action for patent infringement either: (1) in the judicial district where the defendant resides; or (2) where the defendant has committed acts of infringement and has a regular and established place of business. TC Heartland , 137 S. Ct. at 1517.

As to the first prong, a corporate defendant "resides" only in its state of incorporation. Id. Because Hytera West is incorporated in California, this Court finds—and Plaintiff concedes—that Plaintiff cannot establish this first prong. See [78] ¶¶ 13, 14, 29. Instead, Plaintiff relies upon the second prong of Section 1400(b) in attempting to demonstrate proper venue in this district as to Hytera West. [88] at 9-10. Under this prong, three general requirements exist: (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. In re Cray Inc. , 871 F.3d 1355, 1360 (Fed. Cir. 2017).

Here, Defendants concede—and this Court agrees—that Hytera West currently operates a regular and established place of business in this District based upon their Schaumburg, Illinois warehouse and repair facility. [95] at 1. The Schaumburg facility consists of a rented space in an office park, and Hytera West has leased the space and operated it as a warehouse, distribution center, and service station since it entered into a three-year lease in 2017. [78] ¶¶ 25, 29; [81] at 4-5, 13; [89-4]; see also Cray , 871 F.3d at 1362 -63. Defendants argue, however, that Hytera West did not possess this "regular and established" place of business at the time period applicable for establishing venue in this suit. [81] at 3.

According to Defendants, this Court should evaluate venue based upon the "date of filing the original complaint"—March 14, 2017. [81] at 5-6; [1]. Defendants contend that although Plaintiff signed the lease on March 5, 2017, [89-4], the terms of Plaintiff's Schaumburg facility three-year lease did not permit it to occupy the facility until April 1, 2017, and Plaintiff could not operate a "regular and established" business from there until it finished "setting up" in August 2017. [81] at 4 n.2; [95] at 1, 10. As such, Defendants argue that Plaintiff cannot demonstrate proper venue as of March 14, 2017. [95] at 1.

Defendants base this argument upon Talsk Research, Inc. v. Evernote Corporation , in which the court found the plaintiff failed to demonstrate a regular and established place of business based upon the activities of independent contractors, referred to by the plaintiff as "community members," in part because those contractors were not associated with plaintiff's business "when th[e] case was filed. " No. 16-CV-2167, 2017 WL 4269004, at *3 (N.D. Ill. Sept. 26, 2017) (citing Welch Scientific Co. v. Human Eng'g Inst., Inc. , 416 F.2d 32, 35 (7th Cir. 1969) ). Talsk remains inapposite for several reasons.

As an initial matter, in Welch , upon which Talsk relies, the Seventh Circuit rejected defendant's argument that venue was improper because plaintiff "did not have a regular and established place of business at the time the suit was filed." 416 F.2d at 35. In doing so, the court made clear that "under the patent venue statute, venue is properly lodged in the district if the defendant had a regular and established place of business at the time the cause of action accrued and suit is filed within a reasonable time thereafter." Id. , cert. denied , 396 U.S. 1003, 90 S.Ct. 552, 24 L.Ed.2d 494 (1970) ; see also Datascope Corp. v. SMEC, Inc. , 561 F. Supp. 787, 790 (D. N.J. 1983) (holdin...