Weatherford Tech. Holdings, LLC v. Tesco Corp.

WEATHERFORD TECHNOLOGY HOLDINGS, LLC, WEATHERFORD U.S., L.P., Plaintiffs, v. TESCO CORPORATION, TESCO CORPORATION (US), TESCO OFFSHORE SERVICES, INC.,TESCO OFFSHORE SERVICES LLC, NABORS DRILLING TECHNOLOGIES USA, INC.,CANRIG DRILLING TECHNOLOGY CANADA LIMITED, Defendants.

CIVIL ACTION NO. 2:17-CV-00456-JRG

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS MARSHALL DIVISION

October 26, 2018

MEMORANDUM OPINION AND ORDER

Before the Court is Defendants Tesco Corporation, Tesco Corporation (US), and Tesco Offshore Services, Inc.'s (collectively, "Defendants" or "Tesco") Motion to Dismiss or Transfer Based on Improper Venue. (Dkt. No. 69.) Having considered the Motion, and for the reasons that follow, the Court finds that the Motion should be and hereby is DENIED.

I. BACKGROUND

On May 26, 2017, Plaintiffs Weatherford Technology Holdings, LLC and Weatherford U.S., L.P., (collectively, "Plaintiffs" or "Weatherford") filed suit against Tesco, alleging patent infringement of U.S. Patent No. 7,249,637 (the "'637 Patent") through the manufacture and sale of Tesco's "Pusher Arm" system (the "Pusher Arm" or "Accused Product"). (Dkt. No. 1, Complaint at 3-6.) The technology-at-issue generally relates to devices that position control lines at the surface of a well. (Id. at 4-5.) In its Answer, Tesco "den[ies] venue is proper within this district in accordance with 28 U.S.C. § 1391(b) and (c) and § 1400(b)." (Dkt. No. 8, Answer ¶ 9.) Interestingly, however, and in the same document, Tesco admits that "venue is proper, though not necessarily convenient, in this District pursuant to 28 U.S.C. §§ 1391 and 1400." (Id. ¶ 4.)

On October 17, 2017, Tesco filed a Motion to Transfer Venue to the Southern District of Texas Under § 1404(a). (Dkt. No. 21 (hereinafter, "First Venue Motion").) Importantly, Tesco's First Venue Motion relied solely on § 1404(a)—Tesco raised no arguments under § 1406(a). This Court denied the First Venue Motion and found that the Southern District of Texas was not clearly more convenient. (Dkt. No. 54 at 14.) The Federal Circuit denied Tesco's mandamus petition on September 20, 2018, and found that "the district court did not clearly abuse its discretion in denying Tesco's transfer motion." In re: Tesco Corp., Tesco Corp. (US), Tesco Offshore Servs., Inc., No. 2018-148, slip op. at 4 (Fed. Cir. Sept. 20, 2018).

On July 2, 2018,¹ Tesco filed a second Motion to Transfer Venue—this time under § 1406(a). (See generally Dkt. No. 69 (hereinafter, "Second Venue Motion").) In the Second Venue Motion, Tesco moves the Court to dismiss this case or transfer it to either the Southern District of Texas or the Western District of Louisiana. (Dkt. No. 69 at 5.)

Weatherford Technology Holdings is a Delaware corporation with its principal place of business in Houston. (Dkt. No. 1, Complaint at 1.) Weatherford U.S., L.P., is a Louisiana limited partnership with its principal place of business in Houston. (Id. at 1-2.) Tesco Corporation ("TC") is a Canadian corporation with its principal place of business in Houston. (Dkt. No. 8, Answer at 2.) Tesco Corporation (US) ("TCUS") is a Delaware corporation with its principal place of business in Houston. (Id.) Tesco Offshore Services, Inc. ("TOS") is a Nevada corporation with its principal place of business in Louisiana. (Id.) There is no dispute that as of the time of theComplaint, both parties had facilities in this District—Weatherford maintained a facility in Longview and Tesco maintained a facility in Kilgore. (Dkt. No. 21 at 3-4.)

II. LEGAL STANDARD

"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." 28 U.S.C. § 1400(b) (2012); see also TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514, 1519 (2017) ("§ 1400(b) 'is the sole and exclusive provision controlling venue in patent infringement actions.'" (quoting Fourco Glass Co. v. Transmirra Prods. Corp., 353 U.S. 222, 229 (1957))).

Under § 1400(b), a domestic corporation resides only in its state of incorporation. TC Heartland, 137 S. Ct. at 1521. Thus, venue for a domestic corporation is proper only where the defendant either (1) is incorporated, or (2) commits acts of infringement and has a regular and established place of business. Id. at 1519.

While it was previously unclear whether § 1400(b) was controlling for foreign defendants involved in patent infringement suits, the Federal Circuit recently reaffirmed the "long-established rule that suits against aliens are wholly outside the operation of all the federal venue laws, general and special." In re HTC Corporation, 889 F.3d 1349, 1361 (Fed. Cir. 2018). Thus, a foreign defendant may be sued in any judicial district under 28 U.S.C. § 1391(c)(3). See id. at 1357 ("[W]hile § 1400(b) governs venue in patent cases, it governs only to displace otherwise-applicable venue standards, not where there are no such standards due to the alien-venue rule.").

If venue in the district in which the case is originally filed is improper, a defendant may move to dismiss the case or transfer it to a district in which the case could have been originally brought. Id. The plaintiff must establish that venue in the district in which the case is originallyfiled is proper. See In re ZTE (USA), Inc., 890 F.3d 1008, 1013 (Fed. Cir. 2018) ("[U]pon motion by the Defendant challenging venue in a patent case, the Plaintiff bears the burden of establishing proper venue."). However, the defendant still has the burden to establish that the proposed transferee venue is a "district in which the case could have originally been brought." See 28 U.S.C. § 1406(a).

A court may, in the interest of justice, transfer the case to any district or division in which the case could have been brought. 28 U.S.C. § 1406(a). This decision "rests within the sound discretion of the district court." Naartex Consulting Corp. v. Watt, 722 F.2d 779, 789 (D.C. Cir. 1983) (collecting cases). However, "[t]ransfer is typically considered more in the interest of justice than dismissal." Personal Audio, LLC v. Google, Inc., 280 F. Supp. 3d 922, 936 (E.D. Tex. 2017).

III. ANALYSIS

As the Federal Circuit recently clarified in ZTE, Weatherford has the burden of establishing that venue within this District is proper as to all Defendants.² See In re ZTE, 890 F.3d at 1013.

A. Venue is Proper as to Tesco Corporation

TC is a foreign corporation. (See Dkt. No. 8, Answer ¶ 3.) The fact that it may have its principal place of business in Houston, Texas does not alter its status as a foreign corporation for the purposes of § 1391(c)(3). As such, venue as to TC is proper in this District. See In re HTC, 889 F.3d at 1354.

B. Venue is Proper as to Tesco Corporation (US) and Tesco Offshore Services, Inc.

TCUS and TOS are domestic corporations. (Dkt. No. 8, Answer ¶¶ 4-5.) The Court notes that Tesco does not contest that its domestic entities have a regular and established place of business in this District. (Dkt. No. 69 at 4 (arguing only that Weatherford has no proof of infringing acts in this District); Dkt. No. 81 at 3-6 (same); see also Dkt. No. 8, Answer ¶ 6 ("The Tesco Defendants admit that TCUS has a maintenance facility at 1004 North Longview Street, Kilgore, Texas 75662.").) Moreover, Tesco admits that TOS was the primary entity that controlled operations of the Pusher Arm and that "TOS' Pusher Arm [wa]s a product within the purview of Defendant TC's Tubular Services Division." (Dkt. No. 8, Answer ¶ 31 (emphasis added); id. ¶ 29.) Tesco further admits that TOS was "a wholly owned subsidiary of TC," and TC's Form 10-K identified the Kilgore, Texas location as a "regional operations base for the Tubular Services segment in east Texas and northern Louisiana." (See Dkt. No. 8, Answer ¶ 5; Dkt. No. 27-8, Ex. H at 8 (emphasis added).)³ Based on these admissions, the Court is satisfied that TOS, at the very least, conducted some of the Pusher Arm operations out of the Kilgore office and thus, it had a regular and established place of business within this District as of the time of the Complaint. Pursuant to § 1400(b), the only issue for the Court to determine is whether Weatherford has proven that Tesco's domestic entities have committed acts of infringement in this District. See 28 U.S.C. § 1400 (b). It has.

Patent infringement occurs when one "makes, uses, offer to sell, or sells any patented invention . . . during the term of the patent." 35 U.S.C. §271(a). Relying on the Outer Continental Shelf Lands Act ("OCSLA"), Weatherford argues that TCUS and TOS "were involved in theoffering for sale, sale (via renting), and use of the infringing Pusher Arms on platforms in the Gulf of Mexico within 200 miles of Jefferson County (part of the Eastern District of Texas)." (Dkt. No. 74 at 9.) Tesco confirmed as much when it admitted that "Tesco has used the Pusher Arm in more than 15 completion operations in the Gulf of Mexico." (Dkt. No. 8, Answer ¶ 8.) Weatherford further alleges that TCUS and TOS performed completion work using Tesco's Pusher Arms on the Auger oil and gas platform (the "Auger Rig") and on an oil and gas rig in the High Island area of the Gulf of Mexico (the "High Island Rig"). (Id. (citing various Tesco emails and invoices concerning the Auger Rig); Dkt. No. 111 at 2-4; see also Dkt. No. 111-2, Ex. A (TOS invoice to Shell Oil Company for Auger Rig at Well Number GB 427 A-20); Dkt. No. 111-2, Ex. B (TCUS invoice to Walter Oil & Gas for Rig Number HERCULES 263 at Well Number HI A469 SS001).)

OCSLA provides that:

The Constitution and laws and civil and political jurisdiction of the United States are extended to the subsoil and seabed of the outer Continental Shelf and to all artificial islands, and all installations and other devices permanently or temporarily attached to the seabed, which may be erected thereon for the purpose of exploring for,

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