Agri-Labs Holding LLC v. Taplogic, LLC

304 F.Supp.3d 773

AGRI–LABS HOLDING LLC, Plaintiff,

v.TAPLOGIC, LLC, Defendant.

CAUSE NO.: 1:15–CV–26–TLS

United States District Court, N.D. Indiana, Fort Wayne Division.

Signed January 16, 2018

Dean E. McConnell, Indiano & McConnell LLP, Indianapolis, IN, for Plaintiff.

Julie A. Tennyson, PHV, Marcum Tennyson PLLC, Paducah, KY, Scott A. Davidson, Boehl Stopher & Graves LLP, Louisville, KY, for Defendant.

OPINION AND ORDER

THERESA L. SPRINGMANN, CHIEF JUDGE

This matter comes before the Court on Motions for Summary Judgment [ECF Nos. 129, 131] filed by Defendant Taplogic, LLC, and a Motion for Summary Judgment [ECF No. 142] filed by Plaintiff Agri–Labs Holding LLC. The Defendant has moved for summary judgment on non-infringement, invalidity, and lack of personal jurisdiction and venue. The Plaintiff has moved for summary judgment on infringement. These Motions are now fully briefed and ripe for review.

BACKGROUND

On January 22, 2015, the Plaintiff filed its Complaint [ECF No. 1] against the Defendant, alleging that the Defendant infringed the Plaintiff's U.S. Patent No. 8,286,857 ("the '857 Patent") regarding a "Soil Sample Tracking System and Method." The Defendant answered on February 17, 2015 [ECF No. 11], alleging numerous affirmative defenses and counterclaiming for a declaratory judgment that it has not infringed the '857 Patent and that the '857 Patent is invalid.

The '857 Patent involves a method and system directed to soil sampling to determine nutrient levels across various areas in fields. After samples were collected, they could then be tested to determine any nutritional deficiencies. The test results would be transferred to a fertilizer applicator, which would adjust the flow of nutrients according to recorded geographic positions. Previously, a farmer who wanted to evaluate the nutritional needs of soil would collect soil samples from various places and mark the containers into which the samples were placed with individual identifiers to memorialize the precise geographic position from which each sample was collected. Handwritten identifiers and pre-printed labels were two common methods for marking sample containers. However, both of these methods were time-consuming and prone to errors. Technicians could misread handwritten identifiers in a lab. They could also incorrectly enter the information on the pre-printed labels into a computer. The '857 Patent purported to solve these issues.

There are two independent claims at issue. Independent Claim 1 recites:

A method comprising: generating a plurality of soil sample containers each having a unique identifier associated therewith; manually pulling at least one soil sample from a field and placing said at least one soil sample in a respective one of said plurality of soil sample containers; scanning said unique identifier associated with said soil sample container containing said at least one soil sample with a handheld remote terminal, wherein said handheld remote terminal includes a handheld remote terminal sampling application, wherein said handheld remote terminal sampling application is configured to allow a sample taker to enter a farm/client name and a field identifier, and wherein said handheld remote terminal sampling application includes a handheld scanning application configured to allow said sample taker to scan said unique identifier with a scanner on said handheld remote terminal; obtaining a geographic coordinate reading associated with a location in said field from where said soil sample is obtained; and associating said soil sample with said unique identifier and said geographic coordinate reading.

Independent Claim 13 recites:

A system, comprising: a plurality of containers each containing a unique identifier; a handheld remote terminal including a device operable to read said unique identifiers and geographic position sensor, wherein a plurality of soil samples are manually taken from a field and as each said soil sample is placed in said container said handheld remote terminal includes an application operable to read said unique identifier and associate said unique identifier and thus said container with said soil sample, wherein said handheld remote terminal is operable to automatically use said geographic position sensor to obtain a position reading in said field and further associate said soil sample with said geographic position, wherein said unique identifier and said geographic position are stored in a database; a second application on said handheld remote terminal operable to sync the contents of said database to a lab device, wherein said lab device is operable to read said unique identifier upon receipt of said containers; a test instrument operable to test said soil samples and generate one or more test results as a function of said soil sample, wherein said test results are uploaded to said unique identifier.

The product accused of violating the claimed method and system is called the AgPhD Soil Test application ("the AgPhD App"), developed by the Defendant for use with smartphones. The Plaintiff accuses the Defendant of infringement because when the end-users of the AgPhD App use the smartphone app for its intended purpose, the Plaintiff asserts that both the method and system claims of the '857 Patent are infringed. The Plaintiff argues that the Defendant is liable for this infringement because all of the relevant steps of the method and all of the components of the system are attributable to the Defendant. The Plaintiff asserts that the Defendant is liable both for direct and indirect infringement.

JURISDICTION AND VENUE

First, the Court will address the Defendant's arguments regarding personal jurisdiction and improper venue. As to jurisdiction, the Plaintiff argues that the Defendant waived its right to challenge personal jurisdiction when it appeared, answered, and asserted counterclaims against the Plaintiff. The Court agrees. "[B]y asking the court for relief, [the Defendant] consented to jurisdiction in the same way a plaintiff consents to jurisdiction by filing an action with a court." Mallard v. Mallard , No. 90 C 3335, 1992 WL 47998, at *5 (N.D. Ill. Mar. 4, 1992) (citing Adam v. Saenger , 303 U.S. 59, 58 S.Ct. 454, 82 L.Ed. 649 (1938) ). "[E]ven when a valid personal jurisdiction defense exists, the defense is waived if the objecting party ... proceeds to litigate the case on its merits." Blockowicz v. Williams , 630 F.3d 563, 566 (7th Cir. 2010) (internal citation omitted); see also Continental Bank, N.A. v. Meyer , 10 F.3d 1293, 1296–97 (7th Cir. 1993) (finding that despite raising the defense in its answer, the defendant consented to the court's jurisdiction by failing to argue the point until summary judgment). In this case, the Defendant affirmatively requested declaratory relief, litigated this case on the merits for nearly three years, and only now, at summary judgment, argues the point. Therefore, the Defendant has waived this defense, and the Court has personal jurisdiction over the Defendant.

Venue in patent actions is governed exclusively by 28 U.S.C. § 1400(b), 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 TC Heartland LLC v. Kraft Foods Group Brands LLC , the Supreme Court affirmed that the "residence" of a domestic corporation for the purposes of § 1400(b) is where the corporation is incorporated. ––– U.S. ––––, 137 S.Ct. 1514, 1515, 197 L.Ed.2d 816 (2017). Thus, the Defendant argues, in this case, venue is improper because the Defendant resides in Kentucky and has no "regular and established" place of business in Indiana. The Defendant also argues that it has not waived its right to challenge venue because of this recent change in controlling law.

Resolving a split among the district courts, the Federal Circuit recently held that venue challenges based on TC Heartland were not previously available to defendants under the meaning of Rule 12(g)(2) and, thus, were not waived under Rule 12(h)(1)(A). In re Micron Tech., Inc. , 875 F.3d 1091, 1099–1100 (Fed. Cir. 2017). However, the Federal Circuit also noted that "Rule 12(h)(1) is not the sole basis on which a district court might, in various circumstances, rule that a defendant can no longer present a venue defense that might have succeeded on the merits." Id. at 1100. Rather, "Congress has provided express statutory confirmation of judicial authority to consider the timeliness and adequacy of a venue objection." Id. Under 28 U.S.C. § 1406(b), "[n]othing in this chapter shall impair the jurisdiction of a district court in any matter involving a party who does not interpose timely and sufficient objection to the venue." Thus, the Federal Circuit found it "clear that, apart from Rule 12(g)(2) and (h)(1)(A), district courts have authority to find forfeiture of a venue objection." Id.

However, the Federal Circuit has not "provided a precedential answer to the question of whether the timeliness determination may take account of factors other than the sheer time from when the defense becomes available to when it is asserted, including factors such as how near is the trial, which may implicate efficiency or other interest of the judicial system and of other participants in the case." Id. at 1102. Rather, the Federal Circuit explicitly declined to "explore the contours of timeliness outside Rule 12(g)(2) and (h)(1)(A) or how to assess what constitutes consent to venue or what if any other considerations could justify a finding of forfeiture even when the defendant has not waived its objection under Rule 12(g)(2) and (h)(1)(A)." Id. The Federal Circuit reiterated that the Federal Rules of Civil Procedure "are not all encompassing" and that there are "standard procedural devices trial courts around the country use every day in service of Rule 1's paramount command: the just,...