RMH Tech LLC v. PMC Indus., Inc.

RMH TECH LLC, a Colorado limited liability company,and METAL ROOF INNOVATIONS, LTD., Plaintiffs, v. PMC INDUSTRIES, INC., a Connecticut corporation, Defendant.

Civil Action No. 16-cv-01762-CMA-KMT

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

March 30, 2018

Judge Christine M. Arguello

ORDER GRANTING DEFENDANT'S MOTION TO TRANSFER VENUE

This matter is before the Court on Defendant PMC Industries, Inc.'s ("PMC") Motion to Dismiss for Improper Venue or, in the Alternative, to Transfer Venue (the "Motion to Dismiss or Transfer"). (Doc. # 86.) For the reasons described herein, the Court grants Defendant's Motion to Transfer and transfers this litigation to the United States District Court for the District of Connecticut.

I. BACKGROUND

The Court detailed the factual background of this case in its Order on Claim Construction (Doc. # 66) and its Order Denying Partial Reconsideration of its Order on Claim Construction (Doc. # 85). Those orders are incorporated by reference, and the facts explained therein need not be repeated. The Court recounts only the facts necessary to address Defendant's instant Motion to Dismiss or Transfer.

Plaintiffs RMH Tech LLC ("RMH") and Metal Roof Innovations, Ltd. ("MRI") are the owner and licensee, respectively, of United States Patent No. 6,470,629 (the "'629 Patent"), which describes and claims a mounting assembly for mounting a cross member to a standing metal roof. (Doc. # 1 at 3.) RMH is a limited liability corporation registered in Colorado, with its principal place of business in Colorado Springs, Colorado. (Id. at 1.) MRI is a Colorado corporation and also has its principal place of business in Colorado Springs, Colorado. (Id.) In the underlying action, Plaintiffs allege that Defendant infringed certain claims of the '629 Patent. (Id. at 7-9.)

Defendant "is a corporation formed under the laws of Connecticut, having a principal place of business at . . . Plainville, Connecticut." (Id. at 1.) According to Defendant, its headquarters are in Connecticut, "[a]ll of [its] business operations are conducted from within Connecticut," and all "employees and staff are located in Connecticut." (Doc. # 86 at 4.) Defendant "does not have any buildings, facilities, offices, employees, or other physical presence in Colorado," and "does not uniquely target Colorado for the sale of its products." (Id. at 4-5.) Defendant also asserts that it has only ever made one sale to a customer in Colorado, which "was generated from an order received in June 2016 from an inquiry to its website." (Id.)

Plaintiffs initiated this action on July 11, 2016. (Doc. # 1.) The parties engaged in extensive claim construction briefing from December 16, 2016, through May 24, 2017. (Doc. ## 33, 37, 39, 44, 54, 55.) On October 2, 2017, this Court issued its Order on Claim Construction. (Doc. # 66.) Defendant subsequently moved for partialreconsideration of the Court's Order on Claim Construction (Doc. # 74), which the Court denied on January 8, 2018 (Doc. # 85.)

Also on January 8, 2018, Defendant filed the Motion to Dismiss or Transfer now before the Court.¹ (Doc. # 86.) Plaintiffs timely submitted their Response in Opposition to the motion on January 29, 2018, (Doc. # 88), to which Defendant replied on February 6, 2018 (Doc. # 91).²

II. LEGAL STANDARDS

Defendant brings its Motion to Dismiss or Transfer pursuant to Federal Rule of Civil Procedure 12(b)(3) and 28 U.S.C. § 1406(a). (Doc. # 86 at 1.)

Rule 12(b)(3) permits a defendant to file a motion to dismiss for improper venue.³ "Once venue is attacked, the plaintiff bears the burden to show proper venue." Ervin & Assoc., Inc. v. Cisneros, 939 F. Supp. 793, 796 (D. Colo. 1996) (citation omitted). A district court may "consider facts outside of the pleadings," such as the defendant's affidavits, when analyzing a Rule 23(b)(3) motion to dismiss. Cornice Tech., Inc. v. Affinity Dental Prod., Inc., No. 04-cv-01133, 2005 WL 1712124, *7 (D. Colo. July 21, 2005) (citing Argueta v. Banco Mexicano, S.A., 87 F.3d 321, 324 (9th Cir. 1996)); see Hancock v. American Tel. and Tel. Co., Inc., 701 F.3d 1248, 1260 (10th Cir. 2012). A plaintiff may rest on well-pled facts in his complaint to such a motion but "only to theextent that such facts are uncontroverted by [the] defendant's" evidence. Hancock, 701 F.3d at 1260 (quoting Pierce v. Shorty Small's of Branson Inc., 137 F.3d 1190, 1192 (10th Cir. 1998)).

28 U.S.C. § 1406(a) requires that where a court has determined that venue is improper, the court must dismiss the action or transfer it to a jurisdiction with proper venue:

The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if 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). Though Section 1406(a) contains the word "shall," the Tenth Circuit has "interpreted the phrase 'if it is in the interest of justice' to grant the district court discretion in making a decision to transfer an action or instead to dismiss the action without prejudice." Trujillo v. Williams, 465 F.3d 1210, 1222-23 (10th Cir. 2006).

III. DISCUSSION

A. VENUE IN PATENT CASES

Venue in patent infringement actions is solely and exclusively controlled by 28 U.S.C. § 1400(b). Fourco Glass Co. v. Transmirra Prod. Corp., 353 U.S. 222, 229 (1957). Section 1400(b) provides that a patent infringement action may be brought in the judicial district (1) "where the defendant resides," or (2) "where the defendant has committed acts of infringement and has a regular and established place of business." 28 U.S.C. § 1400(b).

1. Where the Defendant Resides

The Supreme Court held in Fourco in 1957 that "where the defendant resides" in Section 1400(b) means, with regard to a corporate defendant, "the state of incorporation only." 353 U.S. at 790. The rule that a domestic corporation is subject to venue in a patent infringement action only in its state of incorporation "remained effectively unchanged until 1988, when Congress amended the general venue statute, [Section] 1391(c), to provide that 'for purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced." TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514, 1519 (2017). Thereafter, the Federal Circuit held in VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1578 (Fed. Cir. 1990), that Section 1391(c)'s wider definition of venue "clearly applie[d] to [Section] 1400(b), and thus redefine[d] the meaning of the term 'resides' in that section."⁴ The Federal Circuit announced that "the first test for venue under [Section] 1400(b) with respect to a [corporate defendant] . . . is whether the defendant was subject to personal jurisdiction in the district of suit at the time the action was commenced." Id. at 1584.

However, on May 22, 2017, the Supreme Court announced in TC Heartland that "resid[ence]" in Section 1400(b), as applied to a corporate defendant, "refers only to the State of incorporation," and reversed the Federal Circuit's VE Holding rule. 137 S. Ct. at 1520-21. The Supreme Court therefore held that "a domestic corporation 'resides'only in its State of incorporation for purposes of the patent venue statute." Id. at 1517. Venue does not lie where a corporate defendant merely does business.

2. Where the Defendant Has a Regular and Established Place of Business

In addition to where the defendant resides, a patent infringement action can also be brought "where the defendant has committed acts of infringement and has a regular and established place of business." 28 U.S.C. § 1400(b). Three elements bear on whether a corporate defendant has "a regular and established place of business": (1) the corporation must have "a physical place in the district"; (2) the place "must be a regular and established place of business"—that is, the defendant's place "must for a meaningful time period be stable, established"; and (3) the place must be "the place of the defendant." In re Cray Inc., 871 F.3d 1355, 1362-63 (Fed. Cir. 2017). If any of these three elements is not satisfied, venue is improper under Section 1400(b). Id. at 1360.

B. APPLICATION

1. Defendant Does Not Have a Regular and Established Place of Business in This District

Beginning with the second prong of Section 1400(b), the Court concludes that Defendant does not have a regular and established place of business in the District of Colorado. As to the first element of this prong, Defendant does not have "a physical place in the [D]istrict." See id. at 1362. Defendant lacks "a physical, geographical location in the district from which the business of the defendant is carried out." See id. It is undisputed that Defendant does not have any building, facilities, offices, or employees' residences in Colorado from which it carries out business. See (Doc. # 86at 4.) Because Defendant does not have a physical presence in this District, it follows that the second and third elements for a "regular and established place of business" are also not satisfied. Thus, venue is improper under the second prong of Section 1400(b).

2. Defendant Does Not Reside in This District

The Court also concludes that venue is improper under the first prong of Section 1400(b) because Defendant does not reside in this District. TC Heartland is clear: "As applied to domestic corporations, 'reside[nce] in [Section] 1400(b) refers only to the State of incorporation." 137 S. Ct. at 1521. Here, Plaintiffs acknowledge that Defendant is incorporated in Connecticut. (Doc. # 1 at 1.) Defendant therefore "resides" only in that state for purposes of a patent infringement action.

3. Defendant Did Not Waive Venue

Plaintiffs apparently do not dispute that venue is improper in this District. See generally (Doc. # 88.) Rather, Plaintiffs invoke the waiver...