Seven Networks, LLC v. Google LLC

• Citation: 315 F.Supp.3d 933
• Decision Date: 19 July 2018
• Docket Number: CIVIL ACTION NO. 2:17-CV-00442-JRG
• Parties: SEVEN NETWORKS, LLC, Plaintiff, v. GOOGLE LLC, Defendant.
• Court: U.S. District Court — Eastern District of Texas

315 F.Supp.3d 933

SEVEN NETWORKS, LLC, Plaintiff,

v.GOOGLE LLC, Defendant.

CIVIL ACTION NO. 2:17-CV-00442-JRG

United States District Court, E.D. Texas, Marshall Division.

Signed July 19, 2018

Adrienne Elizabeth Dominguez, Austin Chun Teng, Herbert J. Hammond, James Michael Heinlen, Justin S. Cohen, Matthew William Cornelia, Natalie Marguerite Cooley, Richard Lawrence Wynne, Jr., Vishal Hemant Patel, Bruce S. Sostek, Thompson & Knight LLP, Dallas, TX, Eric Sorensen Hansen, Erik Bruce Fountain, Theodore Stevenson, III, McKool Smith PC, Dallas, TX, Jennifer Leigh Truelove, Samuel Franklin Baxter, McKool Smith, Marshall, TX, Michael Ecuyer Schonberg, Michael Schonberg, Attorney at Law, Allen, TX, for Plaintiffs.

Charles Kramer Verhoeven, Brian E. Mack, Felipe Corredor, Jonathan Tse, Lindsay M. Cooper, Sean S. Pak, Quinn Emanuel Urquhart & Sullivan LLP, Matthew S. Warren, Warren Lex LLP, San Francisco, CA, Andrea Pallios Roberts, Quinn Emanuel Urquhart & Sullivan LLP, Redwood Shores, CA, Lance Lin Yang, Miles Davenport Freeman, Nithin Kumar, Quinn Emanuel Urquhart & Sullivan, LLP, Los Angeles, CA, Michael E. Jones, Patrick Colbert Clutter, IV, Potter Minton, a Professional Corporation, Tyler, TX, Patrick Curran, Quinn Emanuel Urquhart & Sullivan, LLP, New York, NY, Patrick Aubrey Fitch, Warren Lex LLP, Boston, MA, for Defendants.

FILED UNDER SEAL

MEMORANDUM OPINION AND ORDER

RODNEY GILSTRAP, UNITED STATES DISTRICT JUDGE

Before the Court is Google LLC's ("Google") Second Renewed Motion to Dismiss or, in the Alternative, Transfer under 28 U.S.C. § 1406 for Improper Venue. (Dkt. No. 125) ("the Motion"). Having considered the Motion, the Court is of the opinion that it should be DENIED for the reasons contained herein.

I. PROCEDURAL BACKGROUND

SEVEN Networks, LLC, ("SEVEN") filed suit against Google on May 17, 2017, alleging, inter alia , patent infringement. (Dkt. No. 1). On August 8, 2017, Google filed a Motion to Dismiss under Rule 12(b)(3). (Dkt. No. 25). In response, SEVEN filed the Amended Complaint that is the subject of the present motion. (Dkt. No. 34). On September 12, 2017, Google filed a Renewed Motion to Dismiss ("Second Motion to Dismiss"), again under Rule 12(b)(3). In response, along with its opposition to the Second Motion to Dismiss, SEVEN filed a Contingent Motion for Leave to Conduct Venue Discovery. (Dkt. No. 77).

On December 22, 2017, the Court entered a Venue Discovery Order, which directed the parties to conduct discovery on Google's venue motions by February 22, 2018, and directed Google to refile its venue motions no later than two weeks after the close of venue discovery. (Dkt. No. 107). The Court then granted the Parties' motion to extend venue discovery to March 1, 2018. (Dkt. No. 115). Following the close of venue discovery, Google filed the instant Motion and a related Motion to Transfer Venue to the Northern District of California. (Dkt. Nos. 125, 126). The Court held a hearing on the instant Motion on June 1, 2018. (Dkt. No. 186).

II. APPLICABLE LAW

In today's post- TC Heartland world, venue law in patent cases continues its development. See generally In re Cray Inc. , 871 F.3d 1355 (Fed. Cir. 2017) ; In re Micron Tech., Inc. , 875 F.3d 1091 (Fed. Cir. 2017) ; In re HTC Corp. , 889 F.3d 1349 (Fed. Cir. 2018) ; In re BigCommerce, Inc. , 890 F.3d 978 (Fed. Cir. 2018) ; In re ZTE (USA) Inc. , 890 F.3d 1008 (Fed. Cir. 2018) ; and In re Intex Recreation Corp. , No. 2018-131, 2018 WL 3089215 (Fed. Cir. June 13, 2018).

Venue in patent infringement actions is defined by 28 U.S.C. § 1400(b). There is no doubt that any analysis of venue under 28 U.S.C. § 1400(b)"begin[s] with the language of the statute." In re BigCommerce , 890 F.3d at 982 (citing Mallard v. U.S. Dist. Court for the S. Dist. of Iowa , 490 U.S. 296, 300, 109 S.Ct. 1814, 104 L.Ed.2d 318 (1989) ). Section 1400(b) of Title 28, United States Code states:

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 Federal Circuits' first, and most general, guidance on how a district court should approach this venue statute was provided by In re Cray, 871 F.3d 1355. There, the Federal Circuit struck down this Court's suggested test as "not sufficiently tethered to this statutory language" and for "fail[ing] to inform each of the necessary requirements of the statute." Id. at 1362. The Circuit continued:

In deciding whether a defendant has a regular and established place of business in a district, no precise rule has been laid down and each case depends on its own facts. The "requirements" listed above and discussed below inform whether there exist the necessary elements, but do not supplant the statutory language. We stress that the analysis must be closely tied to the language of the statute.

Id. Accordingly, district courts must hew closely to an analysis which is guided by the language of the statute.¹

Beyond this admonition, the Federal Circuit provided additional guidance on what it believed to be the major requirements of the statutory language; these lodestars guide district courts in their application of the statute to case specific facts. Specifically, the Federal Circuit held that " § 1400(b) requires that 'a defendant has' a 'place of business' that is 'regular' and 'established.' All of these requirements must be present." Id. These requirements were further refined: "the first requirement is that there must be a physical place in the district"; "[t]he second requirement ... is that the place must be a regular and established place of business"; and "the third requirement ... is that the regular and established place of business must be the place of the defendant." Id. at 1362–63 (internal quotation marks omitted). Having set forth a three-part test² for the application of the statute, the Federal Circuit then examined each identified requirement in greater detail.

As to the requirement that there is a "physical place in the district," the Federal Circuit noted that a "place" is defined as "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 (citing William Dwight Whitney, THE CENTURY DICTIONARY, 4520 (Benjamin E. Smith, ed. 1911); Place , BLACK'S LAW DICTIONARY (1st ed. 1891) ) (internal quotations omitted). The Federal Circuit further noted that the statute "cannot be read to refer merely to a virtual space or to electronic communications from one person to another." In re Cray , 871 F.3d at 1362 (emphasis added).^{3 ,4 ,5} Turning to the requirement that the place "must be a regular and established place of business," the Federal Circuit has instructed that the place of business must be "regular," by, for example, operating in a "steady, uniform, orderly, and methodical manner." In re Cray , 871 F.3d at 1362 (cleaned up) (citing THE CENTURY DICTIONARY , supra , at 5050). This business may not be temporary or for some special work or particular transaction; a single act does not constitute business, but a series of such acts does. Id. (citations omitted).⁶ The Federal Circuit noted that the "established" limitation "bolsters this conclusion," as it requires the business not be "transitory" and possess "sufficient permanence." Id. at 1363. "[W]hile a business can certainly move its location, it must for a meaningful time period be stable, established." Id. Fulfillment of this requirement is closely linked to the third requirement. See In re ZTE , 890 F.3d at 1015.

The third requirement is that "the regular and established place of business must be the place of the defendant." In re Cray , 871 F.3d at 1363. "[T]he defendant must establish or ratify the place of business." Id. at 1364. In undertaking this inquiry, the Federal Circuit provided a number of relevant considerations to assist the district courts in their analyses, including "whether the defendant owns or leases the place, or exercises other attributes of possession or control over the place," "whether the defendant conditioned employment on an employee's continued residence in the district or the storing of materials at a place in the district so that they can be distributed or sold from that place," and whether "the defendant itself holds out a place for its business." Id. However, "it must be a place of the defendant , not solely a place of the defendant's employee." Id. (emphasis added). "[A] defendant's representations that it has a place of business in the district are relevant to the inquiry." Id. These representations might include "whether the defendant lists the alleged place of business on a website, or in a telephone or other directory; or places its name on a sign associated with or on the building itself." Id. at 1363–64. However, such ratification alone is not enough, as "the mere fact that a defendant has advertised that it has a place of business or has even set up an office is not sufficient; the defendant must actually engage in business from that location." Id. The Circuit further counseled district courts to readily compare "the nature and activity of the alleged place of business of the defendant in the district" to "that of other places of business of the defendant in other venues." Id.

The Federal Circuit elaborated on this specific requirement recently in In re ZTE. 890 F.3d 1008. In determining whether an alleged place of business was of the defendant, the Circuit encouraged the district court to consider, on remand, "whether [the defendant] itself possesses, owns, leases, or rents the office space for the call center or owns any of the equipment located there," "whether any signage on, about, or relating to the call center associates the space as belonging to [the defendant]," and "whether the location of the call center was specified by [the defendant] or whether [the defendant's call center contractor]...