Koninklijke Philips N.V. et al v. ASUSTeK Computer Inc. et al

Filing 215

MEMORANDUM. Signed by Judge Gregory M. Sleet on 7/19/2017. Associated Cases: 1:15-cv-01125-GMS et al.(mdb)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
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KONINKLIJKE PHILIPS N.V. and
U.S. PHILIPS CORPORATION,
Plaintiffs,
v.
ASUSTeK COMPUTER INC. and
ASUS COMPUTER INTERNATIONAL,
Defendants.

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MICROSOFT CORPORATION,
Intervenor-Plaintiff,
v.
KONINKLIJKE PHILIPS N.V.,
U.S. PHILIPS CORPORATION,
Intervenor-Defendants.

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KONINKLIJKE PHILIPS N.V.,
U.S. PHILIPS CORPORATION,
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IntervenorDefendants/Counterdaim
Plaintiffs in Intervention
v.
MICROSOFT CORPORATION,
IntervenorPlaintiff/Counterclaim
Defendant in
Intervention
AND
MICROSOFT Mobile Inc.
Counterclaim Defendant
Intervention

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C.A. No. 15-1125-GMS

KONINKLIJKE PHILIPS N.V. and
U.S. PHILIPS CORPORATION,
Plaintiffs,
v.
HTC CORP. and
HTC AMERICA, INC.
Defendants.
KONINKLIJKE PHILIPS N.V. and
U.S. PHILIPS CORPORATION,
Plaintiffs,
v.
VISUAL LAND INC.,

Defendant.
MICROSOFT CORPORATION,
Intervenor-Plaintiff,
v.
KONINKLIJKE PHILIP·s N.V.,
U.S. PHILIPS CORPORATION,
Intervenor-Defendants.
KONINKLIJKE PHILIPS N.V.,
U.S. PHILIPS CORPORATION,
IntervenorDefendants/Counterclaim
Plaintiffs in Intervention
v.
MICROSOFT CORPORATION,
IntervenorPlaintiff/Counterclaim
Defendant in

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C.A. No.15-1126-GMS

C.A. No. 15-1127-GMS

Intervention
AND
MICROSOFT Mobile Inc.
Counterclaim Defendant
Intervention
U.S. PHILIPS CORPORATION,
Plaintiffs,
v.
SOUTHERN TELECOM INC.,
Defendant.
KONINKLIJKE PHILIPS N.V. and
U.S. PHILIPS CORPORATION,
Plaintiffs,
v.
DOUBLE POWER TECHNOLOGY INC.,
ZOWEE MARKETING CO., LTD.,
SHENZEN ZOWEE TECHNOLOGY CO.,
LTD.,
Defendants.
MICROSOFT CORPORATION,
Intervenor-Plaintiff,
v.
KONINKLIJKE PHILIPS N.V.,
U.S. PHILIPS CORPORATION,
Intervenor-Defendants.
KONINKLIJKE PHILIPS N.V. and
U.S. PHILIPS CORPORATION,
Plaintiffs,

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C.A. No. 15-1128-GMS

C.A. No. 15-1130-GMS

v.
YIPANG USA, INC., d/b/a
E-FUN, INC.,
Defendant.
KONINKLIJKE PHILIPS N.V. and
U.S. PHILIPS CORPORATION,
Plaintiffs,
V.

ACER INC. and
ACER AMERICA CORPORATION,
Defendants.

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C.A. No. 15-1131-GMS

C.A. No. 15-1170-GMS

MEMORANDUM
I.

INTRODUCTION
Presently before the court in the above-captioned related patent infringement actions is

Defendants' Joint Motion to Transfer, seeking to transfer for improper venue under 28 U.S.C. §
1406(a), or alternatively to transfer all of the actions to the Northern District of California under
28 U.S.C. § 1404(a). 1 (D.I. 166) Addi~onally, Microsoft Corporation and Microsoft Mobile Inc.
("Microsoft") filed a Motion to Transfer venue to the Northern District of California pursuant to
28 U.S.C. § 1404(a) that is before th~ court. (D.I. 173.)2 For the reasons set forth below, the court
will deny Defendants' Joint Motion to Transfer and Microsoft's Motion to Transfer.

II.

BACKGROUND
The plaintiffs Koninklijke Philips N.V. and U.S. Philips Corporation (collectively,

"Philips") initiated patent infringement lawsuits against ASUSTeK Computer Inc. et al., HTC
Corp. et al. ("HTC"), Visual Land Inc., Southern Telecom Inc., Double Power Technology Inc. et
al., Yi.Fang USA, Inc., and Acer Inc. et al. (collectively, "the defendants") betweenDecember 7,
2015 and December 18, 2015. 3

On March 8, 2016, defendants filed jointly-adrriinistered

contemporaneous motions to dismiss for improper venue under Rule 12(b)(3) and 28 U.S.C. §

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On June 6, 2017, defendants Acer Inc. and Acer America Corp. (CA. No. 15-1170, D.I. 201); ASUS
Computer International and ASUSTeK Inc. (C.A. No. 15-1125, D.I. 166); HTC Corporation and HTC America, Inc.
(C.A. No. 15-1126, D.I. 129); Southern Telecom, Inc. (C.A. No. 15-1128, D.I. 129); and YiFang USA, Inc. (C.A. No.
15-1131, D.I. 157) filed a motion to transfer venue to either the Northern District of California, Western District of
Washington, or Eastern District of New York pursuant to 28 U.S.C. § 1406 and alternatively transfer all actions to the
Northern District of California pursuant to 28 U.S.C. § 1404(a).

2 For simplicity, all references to the parties' briefing, unless otherwise indicated, will use the docket item
numbering from C.A. No. 15-1125-GMS.
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Of the defendants listed above, two (Visual Land Inc. and Double Power Technology Inc. et al.) have filed
separate motions. Accordingly, the court's reasoning and decision does not apply to these parties.

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1406(a). (D.I. 12.) On April, 11, 2016, Philips filed First Amended Complaints in these cases,
alleging infringement against defendants on either nine or ten asserted patents. (D .I. 18.)
On June 22, 2016 defendants withdrew their respective motions to dismiss for lack of venue
in light of the Federal Circuit's decision in Jn re TC Heartland, 2016 U.S. App. LEXIS 7753 (Fed.
Cir. Apr. 29, 2016). (D.I. 31.) The court entered a Scheduling Order inall of the related cases on
September_ 15, 2016 setting forth all dates leading up to trial. On November 23, 2016, Philips filed
a Second Amended Complaint asserting infringement of an additional patent. (D.I. 76.) On
December 22, 2016, defendants filed answers to the Second Amended Complaint. (D.I. 87.)
The court held a claim construction hearing on May 3, 2017. On June 6, 2017, Microsoft
filed a motion to transfer venue to the Northern District of California. (D.I. 173 .) On July 11,
2017, the court issued a claim construction order, construing the terms from the patents-in-suit.
(D.I. 212.)

III.

LEGAL STANDARDS
Federal Rule of Civil Procedure 12(b)(3) allows a defendant make a motion to dismiss for

improper venue. Upon such a motion, the district .court must determine whether venue is proper
according to the appropriate statutes. See Reed v. Weeks Marine, Inc., 166 F.Supp.2d 1052, 1054
(E.D. Pa. 2001); see also Kerobo v. Southwestern Clean Fuels Corp., 285 F.3d 531, 538 (6th Cir.
2002). The movant has the burden of proving that venue is improper in the selected forum. See

Myers v. American Dental Ass 'n, 695 F.2d 716, 724 (3d Cir. 1982).
Section 1406(a) provides that: "[t]he district court of a district in which is filed a case laying
venue in the wrong division or district shall dismiss, or if it 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).
In patent infringement actions, venue is proper "in the judicial district where the defendant resides,

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or where the defendant has committed acts of infringement and has a regular and established place
of business." 28 U.S.C. § 1400(b); see TC Heartland LLC v. Kraft Foods G1p. Brands LLC, 137
S. Ct. 1514, 1516 (2017). In TC Heartland, 137 S. Ct. at 1517, the Supreme Court reaffirmed its
decision in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 226 (1957), holding
''that a domestic corporation 'resides' only in its State of incorporation for purposes of the patent
venue statute."
Under 28 U.S.C. § 1404(a), a district court has "broad discretion to determine, on an
individualized, case-by-case basis, whether the convenience and fairness considerations weigh in
favor of transfer:" Jumara v. State Farm Ins. Co., 55 F.3d 873, 883 (3d Cir. 1995). The court
engages in a two-step inquiry. It first determines whether the action could have been brought
originally in the proposed transferee forum and then asks whether transfer would best serve the
convenience of the parties and witnesses as well as the interests of justice. Smart Audio Techs.,

LLC v. Apple, Inc., 910 F. Supp. 2d 718, 725 (D. Del. 2012). It is the defendant's responsibility to
demonstrate that transfer is appropriate at each step, Jumara, 55 F.3d at 879-80, and, "unless the
balance of convenience of the 'parties is strongly in favor of defendant, the plaintiffs choice of
forum should prevail." Shutte v. Armco Steel C01p., 431F.2d22, 25 (3d Cir. 1970).

IV.

DISCUSSION
Defendants argue that the actions should be transferred for improper venue because the

defendants neither "reside[]" nor "ha[ve] a regular and established place of business" within the
District of Delaware. (D.I. 167 at 4-5.) In response, Philips argues that defendants "expressly and
irrevocably" waived their defense of improper venue. (D.I. 191 at 2, 8-12.) The court agrees with
Philips.

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A defense of improper venue may be waived because of a party's conduct that is
inconsistent with asserting the privilege. See Wyrough Loser, Inc. v. Polmor Labs., Inc., 376 F.2d
543, 546 (3d Cir. 1967) ("defendant may waive the [venue] defense by action or conduct other
than his voluntary appearance."); Davis v. Smith, 253 F.2d 286, 288 (3d Cir. 1958) ("The
underlying theory of waiving venue or consenting to suit is that the litigant performs some act
which indicates to the court that he elects not to raise his privilege of venue."). Federal Circuit
precedent also makes clear that "[a] defendant may waive such affirmative defenses by actively
litigating the suit, even where the defenses are properly included in the defendant's answer."

United States v. Ziegler Bolts & Parts Co., 111 F.3d 878, 882 (Fed. Cir. 1997).4
Here, defendants waived any challenge to venue in this court through their conduct actively
litigating this case since December 2015. On JUne 22, 2016, defendants voluntarily and expressly
withdrew their original pending motion to dismiss for improper venue under Rule 12(b)(3)
following the Federal Circuit's TC Heartland, 821F.3d1338 (Fed. Cir. 2016) decision. (D.I. 31.)
Defendants' subsequent conduct further demonstrated abandonment of the venue defense.
Foflowing withdrawal of the motion, defendants: (1) participated in a scheduling conference; (2)
conducted discovery, (3) entered into a stipulation and protective order with the plaintiff; and (4)
moved the court to allow their out of state counsel to appear pro hac vice. See Plunkett v. Valhalla

Inv. Servs., Inc., 409 F. Supp. 2d 39, 41 (D. Mass. 2006) (finding that a defendant had abandoned
defense of improper venue based on ostensible conduct which demonstrated consent to venue in
the district). Thus, the court finds that such conduct coupled with withdrawing their motion
establishes waiver. See Davis, 253 F.2d at 289 ("This voluntary act subjected the [defendant] to
suit because it unequivocally demonstrated waiver of the venue privilege.").

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Applying either the Third Circuit or Federal Circuit law, the court's analysis and ultimate conclusion does
not change.

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Defendants contend that they preserved their venue challenge by pleading improper venue.
(D.I. 199 at 5-7.) Specifically, defendants assert that they preserved their objections to venue in
their answers to Philips' Second Amended Complaints, alleging that none of the defendants
resided in Delaware under the proper interpretation of§ 1404 (b). (See, e.g., D.I. 87, if 14.) 5 The
court need not grapple with the procedural arguments concerning preservation under Rules
12(g)(2) and 12(h)(l ). As the court underscores above, the affirmative de~ense of improper venue
may be waived by a defendant's actions through the course oflitigation. Though the court is aware
that defendants may have formally revived their venue defense through the responsive pleading,
the defendants' conduct, here, is dispositive-contest it or lose it. The onus is on defendants to
preserve all arguments on behalf of their clients, and voluntary withdrawal of the original improper
venue motion is inconsistent with that burden.

In addition to the conduct demonstrating consent to venue prior to the Answers, defendants
waived their venue defense by repeatedly seeking affirmative relief after the responsive pleading.

See Bel-Ray Co. Chemrite (Pty) Ltd., 181 F.3d 435, 443 (3d Cir. 1999) ("[W]here a party seeks
affirmative relief from a court, it normally submits itself to the jurisdiction of the court with respect
to the adjudication of claims arising from the same subject matter."). Defendants affirmatively
asked the court to decide the merits of this action by challenging the validity and enforceability of
two patents-in-suit in their Joint Motion for Judgment on the Pleadings. (D.I. 89, 91.) Defendants

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In the Answers, defendants allege the following:

Venue is improper under 28 U.S.C. § l 400(b ), which states that patent infringement actions may
be brought only "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." For
corporate entities, a defendant "resides" in its state of incorporation. Defendants are not
incorporated in Delaware, and do not have a "regular and established place of business" in
Delaware. Under § l 400(b), venue is therefore improper in this District. The Supreme Court
has recently granted certiorari with respect to the decision in In re TC Heartland, 821 F.3d 1338
(Fed. Cir. 2016), to address this issue. Pending resolution of this issue oflaw, Defendants object
to venue in this district.

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also affirmatively challenged the merits of this action throughout claim construction by seeking to
invalidate several claims based on alleged indefiniteness in their briefing and at the Markman
hearing. (D.I. 118 at 2, 20-21; D.I. 134 at 1, 3, 6, 18; D.I. 143 at 96.) To counter, defendants
contend that they have not sought affirmative relief by "merely defend[ing] against Philips' claims
of patent infringement." (D.I. 199 at 7.) The court is not persuaded. The totality of defendants'
active litigation effort makes clf'.ar that they have submitted to venue in the District of Delaware.
Accordingly, the court denies defendants' joint motion to transfer.
Finally, the defendants' assert that the court should grant their motion because the venue
defense was unavailable prior TC Heartland which, according to defendants, effected a "sea
change in the law:" (D.I. 199 at 2-3.) The court does not agree. An exception to the general rule
of waiver "is recognized when an intervening decision from a superior court changes the
controlling law." Beazer E., Inc. v. Mead Corp., 525 F.3d 255, 263 (3d Cir. 2008). Several district
courts have held that the Supreme Court's decision in "TC Heartland does not qualify for the
intervening law exception to waiver because it merely affirms the viability of Fourco." Cobalt
Boats, LLC v. Sea Ray Boats, Inc., No. 2:15-CV-21, 2017 WL 2556679, at *3 (E.D. Va. June 7,
2017); accord iLife Techs., Inc. v. Nintendo ofAm., Inc., No. 3:13-CV-04987, 2017 WL 2778006,
at *5-7 (N.D. Tex. June 27, 2017); Infogation Corp. v. HTC Corp., No. 16-CV-01902-H-JLB,
2017 WL 2869717, at *4 (S.D. Cal. July 5, 2017); Elbit Sys. Land & C4l Ltd. v. Hughes Network
Sys .. , LLC, No. 2:15-cv-000037, 2017 2651618, at *20 (E.D. Tex. June 20, 2017); Navico, Inc. v.
Garmin Int'!, Inc., No. 2:16-CV-190, 2017 WL 2957882, at *2 (E.D. Tex. July 11, 2017); Amax,
Inc. v. ACCO Brands Corp., No. CV 16-10695-NMG, 2017 WL 2818986, at *3 (D. Mass. June
29, 2007). The court agrees with the analysis and conclusions announced in these district court
decisions. Thus, it joins in what appears to be a growing consensus that TC Heartland did not

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effect an intervening change in the law. The result in this case is to deprive defendants of the
benefit of the intervening law exception to waiver.

V.

CONCLUSION
Because the court finds that defendants waived the available defense of improper venue

and have implicitly conceded that venue is proper in this court, the court declines to consider the
merits of venue ?-Uder 28 U.S.C. § 1404(b). 6 For the foregoing reasons, the court will deny
Defendant's Joint Motion to Transfer (D.I. 166) and Microsoft's Motion to Transfer (D.I. 173.)

Dated: July

\<J..~ 2017

,I...

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With respect to defendants' alternative argument and Microsoft's Motion to Transfer under§ 1404(a), the
court concludes that transfer of the related actions would not be in the interests of justice. The court notes that it and
the parties have invested significant time and resources in resolving the parties' motions and claim construction
disputes. Particularly, the court has devoted time to review relevant materials from the United States Patent and
Trademark Office, the Patent Trial and Appeal Board, and the Federal Circuit regarding the asserted patents and prior
art. Given the advanced stage ofthis litigation, there is no credible argument that transferring venue in this case would
further judicial economy or the interests of justice.

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