Presby Patent Trust v. Infiltrator Water Technologies LLC et al
ORDER ON #14 MOTION TO DISMISS FOR IMPROPER VENUE By JUDGE JOHN A. WOODCOCK, JR. (ccs) [Transferred from Maine on 11/29/2017.]
UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
PRESBY PATENT TRUST,
and INFILTRATOR SYSTEMS, INC., )
ORDER ON MOTION TO DISMISS FOR IMPROPER VENUE
A wastewater treatment system manufacturer moves to dismiss a patent
infringement suit brought by a patent trust, arguing improper venue. Based on
intervening caselaw from the United States Supreme Court in TC Heartland LLC v.
Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017), because the defendant’s
characteristics do not meet the statutory requirements as interpreted by the Supreme
Court for proper venue in a patent infringement action, the Court finds that venue in
the District of Maine is improper. Concluding that transfer of the case is in the
interest of justice and that the District of Delaware is the proper venue for this action,
the Court transfers the case to the District of Delaware.
On February 22, 2017, Presby Patent Trust (Presby) filed suit alleging that
Infiltrator Water Technologies, LLC and Infiltrator Systems, Inc. (collectively
Infiltrator) infringed two of its patents. Compl. (ECF No. 1). On April 28, 2017,
Infiltrator moved to dismiss for improper venue pursuant to Federal Rule of Civil
Procedure 12(b)(3) and 28 U.S.C. § 1406(a). Defs.’ Mot. to Dismiss for Improper Venue
(Defs.’ Mot.) (ECF No. 14). In the alternative, Infiltrator requested that the Court
defer ruling on the motion until the Supreme Court issued a decision in a case
Infiltrator argued would control— TC Heartland LLC v. Kraft Foods Group Brands
LLC. Id. at 7. Infiltrator attached three exhibits. Id. Attachs. 1-3. Presby filed its
opposition on May 18, 2017. Pl.’s Obj. to Defs.’ Mot. to Dismiss for Improper Venue
(Pl.’s Opp’n) (ECF No. 15). On May 22, 2017, the Supreme Court issued its decision
in TC Heartland. Infiltrator replied to Presby’s opposition on June 1, 2017, attaching
a copy of the TC Heartland opinion. Defs.’ Reply in Supp. of its Mot. to Dismiss for
Improper Venue (Defs.’ Reply) (ECF No. 16); Defs.’ Reply Attach. 1.
Relevant Factual Allegations1
Infiltrator is a corporation organized and existing under the laws of the state
of Delaware.2 Defs.’ Mot. at 3. Its headquarters and principal place of business are
located in Old Saybrook, Connecticut. Compl. ¶ 2; Defs.’ Mot. at 3. Infiltrator has
sold, through Maine distributors or otherwise, products and systems that infringe
patents held by the plaintiff, or has caused the installation of products and systems,
The Court omits facts that do not bear on venue.
The Complaint alleges that Infiltrator is incorporated in Connecticut. Compl. ¶ 2. Infiltrator
says it is instead incorporated in Delaware. Defs.’ Mot. at 3 n.3. The discrepancy may have resulted
from confusion on Presby’s part arising out of the acquisition of Infiltrator Systems, Inc. by Infiltrator
Water Technologies, LLC in 2015. Defs.’ Mot. at 3. The former, when it existed, was incorporated in
Connecticut; the latter combined entity is incorporated in Delaware. Id.; see Defs.’ Mot. Attach. 1 Decl.
of Bryan Coppes in Supp. of Defs.’ Mot. to Dismiss ¶¶ 3, 4. The Court further discusses this issue infra
the use of which infringes patents held by the plaintiff, within the state of Maine.
Compl. ¶¶ 5, 23. Specifically, Infiltrator has directly infringed Presby’s patents by
making, using, importing, selling, and/or offering to sell its Advanced Leachfield
Treatment (ATL) product. Compl. ¶¶ 27, 29. Infiltrator has indirectly infringed the
patents by inducing its customers to directly infringe the claims of those patents or
by knowingly providing an infringing product (the ATL) that has no substantial noninfringing uses. Compl. ¶¶ 28, 30.
The Parties’ Positions
In its motion, Infiltrator argues that the plain language of the relevant venue
statutes and Supreme Court precedent at the time of the filing make clear that 28
U.S.C. § 1400(b) is the specific, unique provision that exclusively governs venue in
patent infringement cases. Defs.’ Mot. at 1-2, 4.
Infiltrator argues that Presby’s reliance in its Complaint on the more
expansive, general venue statute, 28 U.S.C. § 1391, is misplaced. Id. at 1. Infiltrator
acknowledges that the Federal Circuit endorsed borrowing the definition of corporate
residence from § 1391(c) in patent infringement suits in its opinion in TC Heartland.
Id. at 1-2 (citing In re TC Heartland LLC, 821 F.3d 1338, 1341 (Fed. Cir. 2016)).
However, Infiltrator asserts that the Federal Circuit ruled incorrectly and predicted
that the Supreme Court, which at the time of Infiltrator’s filing had granted certiorari
in that case, would reverse. Id at 1-2, 4, 5-7; see In re TC Heartland LLC, 821 F.3d
1338 (Fed. Cir. 2016), cert granted, 137 S. Ct. 614 (U.S. Dec. 14, 2016) (No. 16-341).
Infiltrator claims that applying § 1400(b) to the facts in this case reveals that
venue is improper in the District of Maine. The statute provides that, for patent
infringement actions, venue is proper only in a 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.” Id. at 4. In applying § 1400(b),
Infiltrator quotes Fourco Glass Company v. Transmirra Products Corporation, 353
U.S. 222, 226 (1957): “28 U.S.C. § 1400(b) is the sole and exclusive provision
controlling venue in patent infringement actions, and that it is not to be
supplemented by the provisions of 28 U.S.C. § 1391(c).” 353 U.S. at 229. Infiltrator
also cites the Supreme Court’s holding in Fourco that, with respect to corporations,
the phrase “where the defendant resides” in § 1400(b) means “the state of
incorporation only.” Id. at 226. Infiltrator asserts that, because it is not incorporated
in Maine, the first clause of § 1400(b) does not support proper venue in the District of
Maine. Defs.’ Mot. at 3.
Infiltrator goes on to point out that the test in the second clause is equally
inapplicable in this case because Infiltrator does not have “a regular and established
place of business” in Maine. In support of this assertion, Infiltrator states that it does
not maintain, own, or lease any offices, facilities, retail locations, warehouses, or
other property of any kind in the state of Maine. Id. at 3. Infiltrator accepts all orders
from its regular place of business in Old Saybrook, Connecticut, and it ships orders
to its customers from manufacturing and warehouse facilities located outside of
Maine. Id. The only presence of any kind that Infiltrator claims to have in Maine is
one employee who resides in the state and works remotely from his own home by
personal choice, not at the request of or for the business purposes of Infiltrator. Id.
at 3 n.4. That employee is not involved in the sale or advertisement of Infiltrator
products within Maine, and he does not keep an inventory of products at his home,
nor does he provide technical consulting to any customers located in Maine. Id. It
argues that this one employee working remotely from home does not constitute a
“regular and established place of business.” Id. Therefore, Infiltrator concludes, §
1400(b) does not support proper venue in the District of Maine. Section 1400(b) being
the exclusive provision governing venue in cases of this sort, venue is improper here.
Presby does not dispute Infiltrator’s arguments about how § 1400(b), under
Fourco, would apply to the facts of this case. Nor does it dispute any of Infiltrator’s
assertions about its presence (or lack thereof) in Maine. Instead Presby argues that
Fourco is dead letter and bases its opposition upon disputing the proposition that §
1400(b) is to be read without reference to § 1391(c) in interpreting where a corporate
defendant “resides” for purposes of determining proper venue in patent infringement
Presby writes that “Fourco has not been controlling precedent for years,” Pl.’s
Opp’n at 1, and that, as such, the broad definition of corporate “residency” in § 1391(c)
should be borrowed to give meaning to § 1400(b)’s reference to where a defendant
In support, Presby cites the Federal Circuit’s decision in In re TC
Heartland LLC, (then under review by the Supreme Court), as well as another
Federal Circuit case, VE Holding Corporation v. Johnson Gas Appliance Company,
917 F.2d 1574, 1578 (Fed. Cir. 1990).3 Pl’s. Opp’n at 2-7. It goes on to suggest, though
not expressly argue, that the facts here support a finding that Infiltrator “resides” in
Maine under § 1391(c). Id. at 2-3, 3 n.2.
Finally, Presby argues that the Court should determine whether venue is
proper at the commencement of the case, or, alternatively, at the time of the motion
to dismiss. Pl.’s Opp’n at 7, 7 n.5. It further suggests that subsequent changes in
circumstances that would have made venue inappropriate need not defeat venue that
was proper at the time of filing. Id. at 7-8.
Infiltrator filed its reply ten days after the Supreme Court issued its opinion
in TC Heartland. Infiltrator summarizes the Court’s holding and asserts that Presby
fails to meet the proper test for venue under TC Heartland. Defs.’ Reply at 1-4.
Infiltrator reiterates that it is not incorporated in Maine and does not have
regular and established business presence in Maine. It points out that Presby does
not allege nor argue to the contrary. Thus, Infiltrator concludes, venue in the District
of Maine is improper under § 1400(b). Infiltrator also disputes Presby’s intimation
that the Supreme Court’s decision in TC Heartland might not apply to this case, citing
Harper v. Virginia Department of Taxation, 509 U.S. 86, 97 (1993).
The Court does not repeat the details of the arguments that Presby makes on this score
because they are now moot following the Supreme Court’s clear holding in TC Heartland LLC v. Kraft
Foods Group Brands LLC, which vitiated those arguments.
A defendant may file a motion to dismiss an action for improper venue
pursuant to Federal Rule of Civil Procedure 12(b)(3). In ruling on a motion to dismiss,
a court is required to “accept as true all the factual allegations in the complaint and
construe all reasonable inferences in favor of the plaintiff.” Sanchez v. PereiraCastillo, 590 F.3d 31, 41 (1st Cir. 2009) (quoting Alt. Energy, Inc. v. St. Paul Fire &
Marine Ins. Co., 267 F.3d 30, 33 (1st Cir. 2001)). Under 28 U.S.C. § 1406(a), in the
event that a district court finds venue to be improper, the court “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.” Whether dismissal or transfer is appropriate lies within
the sound discretion of the district court. Cormier v. Fisher, 404 F. Supp. 2d 357, 363
(D. Me. 2005) (citing Minnette v. Time Warner, 997 F.2d 1023, 1026 (2d Cir. 1993)).
TC Heartland & the Standard for Proper Venue in Patent
On May 22, 2017 the Supreme Court issued TC Heartland LLC v. Kraft Foods
Group Brands LLC, 137 S. Ct. 1514 (2017). The Supreme Court rendered its opinion
after Presby filed its opposition and before Infiltrator filed its reply. The decision
spoke directly to the differing interpretations of the applicable standard for proper
venue in patent infringement cases that the parties in this case presented.
opinion in the TC Heartland case, the Federal Circuit borrowed the broad definition
of “residence” from 28 U.S.C. § 1391(c) in interpreting the term “resides” in § 1400(b).
In re TC Heartland, 821 F. 3d at 1341-43.
The Supreme Court reversed and
confirmed that its opinion in Fourco is still the controlling interpretation of 28 U.S.C.
§ 1400(b). TC Heartland, 137 S. Ct. at 1520-21 (citing Fourco, 353 U.S. at 228-29).
Specifically, the Court found that § 1400(b) is to be read without reference to §
1391(c), and it stated that “[a]s applied to domestic corporations, ‘reside[nce]’ in §
1400(b) refers only to the State of incorporation.” TC Heartland, 137 S. Ct. at 1521;
see Amax, Inc. v. ACCO Brands Corp., Civil Action No. 16-10695-NMG, 2017 WL
2818986 (D. Mass. Jun. 29, 2017) (“the [Supreme Court reversed VE Holding Corp.,
determining that, consistent with its prior holding in Fourco, venue in patent cases
is determined solely by 28 U.S.C. § 1400(b)). In summary, as the Federal Circuit
recently wrote in In re Micron Tech., Inc., No. 2017-138, 2017 U.S. App. LEXIS 22956
(Fed. Cir. Nov. 15, 2017), “[t]he Supreme Court changed the controlling law when it
decided TC Heartland in May 2017.” Id. at *14-15.
TC Heartland Applies to this Case
“When th[e Supreme] Court applies a rule of federal law to the parties before
it, that rule is the controlling interpretation of federal law and must be given full
retroactive effect in all cases still open on direct review and as to all events, regardless
of whether such events predate or postdate [its] announcement of the rule.” Harper,
509 U.S. at 97; see also Herman v. Hector I. Nieves Transp., Inc., 244 F.3d 32, 37-38
(1st Cir. 2001). This principle is equally applicable to cases pending in district courts
as it is to cases on appeal. “[I]f a new rule is applied to the parties in the rule-creating
case, then it must be applied retroactively to similarly situated parties in all pending
cases.” Crowe v. Bolduc, 365 F.3d 86, 93 (1st Cir. 2004); see, e.g., Mills v. State of Me.,
No. 2:92-cv-00410-DBH, 1996 WL 400510, at *1 (D. Me. Jul. 3, 1996).
Presby cites caselaw setting forth the general principle that venue, specifically
when governed by § 1391, must be determined based on the facts as they existed at
the time of the filing of the complaint. Pl.’s Opp’n at 7. It goes on to cite caselaw that
applies that principle by rejecting arguments that post-filing factual developments
render venue improper.
Id. at 7-8 (“In cases where subsequent changes in
circumstances would have made venue inappropriate, courts have held that such
events will not defeat venue that was proper at the time of filing”).
The Court has no quarrel with Presby’s contention that the propriety of venue
under § 1391 is determined by facts as they existed at the time the case was filed.
Chief Justice Marshall first announced this ancient principle in 1824 in Mollon v.
Torrance, 22 U.S. 537 (1822). Id. at 539 (“[J]urisdiction of the Court depends upon
the state of things at the time of the action brought, and that after vesting, it cannot
be ousted by subsequent events”).
But this age-old precept does not carry the day in this case for two reasons.
First, § 1400(b), not § 1391, governs venue in patent infringement cases, so the cases
Presby cites are inapposite. To the extent Presby is relying on the first prong under
§ 1400(b)—“the judicial district where the defendant resides”—there is no evidence
that Infiltrator has ever resided in the state of Maine. To the extent Presby is relying
on the second prong under § 1400(b)—“where the defendant committed acts of
infringement and has a regular and established place of business”—the rule for the
timing of critical facts under § 1400(b) may differ from the general rule under § 1391.
“Although few courts have considered the proper time frame for assessing whether a
defendant has a ‘regular and established place in a district,’ the courts that have
examined this issue held that the critical time period is when the claim has accrued
if the ‘suit is filed within a reasonable time thereafter.’” Free-Flow Packaging Int’l,
Inc. v. Automated Packaging Systems, Inc., No. 17-cv-01803-SK, 2017 WL 4155347,
at *4, 2017 U.S. Dist. LEXIS 156997, at *12-13 (N.D. Cal. Aug. 29, 2017) (collecting
cases); see also 14D CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE
PROCEDURE § 3823 (4th ed. 2017). The § 1400(b) analysis may be an exception
to the venue principle Chief Justice Marshall first articulated in 1822.
More to the point, irrespective of the proper time for the jurisdictional facts in
this case to have taken place, those facts have not changed either from the time the
claim accrued or from the time Presby filed suit. What has changed is the controlling
interpretation of the law. In TC Heartland, the Supreme Court clarified which
statute governs and its ruling was definitive. This Court, like all inferior courts, is
obligated to apply the teachings of the Supreme Court.
Indeed, the facts of this case and the crux of this venue dispute are remarkably
similar to TC Heartland. TC Heartland was a manufacturer of flavored drink mixes
organized under Indiana law and headquartered in Indiana. TC Heartland, 137 S.
Ct. at 1517. Kraft, organized under Delaware law with its principal place of business
in Illinois, was a competitor in the same market and sued TC Heartland in the
District Court for the District of Delaware, alleging patent infringement. Id. TC
Heartland was not registered to conduct business in Delaware and had no meaningful
local presence there, but it did ship the allegedly infringing products into Delaware.
Id. TC Heartland moved to dismiss the case or to transfer venue to the District Court
for the Southern District of Indiana, arguing that venue was improper in Delaware
and citing Fourco's holding that a corporation resides only in its state of incorporation
for patent infringement suits. Id. It further argued that it had no “regular and
established place of business” in Delaware under the second clause of § 1400(b). Id.
The district court denied the motion, and the Federal Circuit affirmed—both
borrowing § 1391(c)’s broader definition of “residency” in determining where TC
Heartland “resides” under § 1400(b). Id. at 1517-18; Kraft Foods Grp. Brands LLC v.
TC Heartland LLC, Civil Action No. 14-28-LPS, 2015 WL 5613160, at *2 (D. Del. Sep.
24, 2015); In re TC Heartland LLC, 821 F.3d at 1341-43. As noted, the Supreme
Court reversed, rejecting reference to § 1391(c) when applying § 1400(b) to domestic
Infiltrator is a domestic corporate defendant that, according to the plaintiff’s
allegations, merely remotely sells its allegedly patent-infringing product to customers
in Maine. It is not incorporated in Maine; nor does it have any regular or established
place of business in Maine.
Presby argues that § 1400(b) should be read with
reference to § 1391(c); Infiltrator argues that it should not. Given the substantial
factual and legal similarity to TC Heartland, the Supreme Court’s decision applies to
There is no dispute as to whether Infiltrator preserved its venue objection prior to the Supreme
Court’s decision in TC Heartland. See In re Micron Tech., 2017 U.S. App. LEXIS 22956, at *1-22.
Venue is Improper in the District of Maine under TC Heartland
28 U.S.C. § 1400(b) 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.” Infiltrator is incorporated in Delaware.5 Accordingly, Infiltrator “resides”
in Delaware for purposes of § 1400(b). See TC Heartland, 137 S. Ct. at 1521. The
defendant’s residence clause does not provide for proper venue in the District of
Transfer to Another District is in the Interest of Justice
Having determined that venue is improper under 28 U.S.C. § 1400(b), the
Court turns to the appropriate remedy and finds that transfer of this matter, as
opposed the dismissal Infiltrator seeks, is in the interest of justice. 28 U.S.C. §
1406(a) requires that, if it is in the interest of justice, a district court transfer a case
in which it finds venue to be improper “to any district or division in which it could
have been brought.” This provision is consistent with the “general purpose . . . of
The parties’ filings differ as to this fact, as discussed supra n.2. However, the Court suspects
there is no actual disagreement between the parties on this issue. For purposes of this motion, the
Court takes judicial notice of the fact that Infiltrator Water Technologies, LLC is a limited liability
company incorporated in Delaware. STATE OF DELAWARE, SECRETARY OF STATE, DIVISION OF
CORPORATIONS, website (May 27, 2015), https://icis.corp.delaware.gov/Ecorp/EntitySearch/
NameSearch.aspx; see generally Peterborough R.R. v. Bos. & Me. R.R., 239 F. 97, 99 (1st Cir. 1917)
(taking judicial notice of a defendant corporation’s state of incorporation); see also Swindol v. Aurora
Flight Scis. Corp., 805 F.3d 516, 518-19, 519 n.2 (5th Cir. 2015) (taking judicial notice of defendant
corporation’s principal place of business and collecting cases wherein courts have taken judicial notice
of facts pertaining to jurisdictional issues, including a corporation’s state of incorporation).
Presby has neither alleged nor argued that Infiltrator has a “regular and established place of
business” in the state of Maine. 28 U.S.C. § 1400(b); see In re Cray, 871 F. 3d 1355, 1359 (Fed. Cir.
2017) (citations omitted) (collecting cases wherein, in the wake of TC Heartland, “litigants and courts
are raising with increased frequency the question of where a defendant has a ‘regular and established
place of business’”).
removing whatever obstacles may impede an expeditious and orderly adjudication of
cases and controversies on their merits.” Goldlawr, Inc. v. Heiman, 369 U.S. 463, 466
(1962). Whether dismissal or transfer is appropriate lies within the sound discretion
of the district court. Cormier, 404 F. Supp. 2d at 363 (citing Minnette, 997 F.2d at
1026). Although Infiltrator seeks dismissal, not transfer, it moved pursuant to §
1406(a), which directs courts to transfer if it is in the interest of justice. Furthermore,
“[i]t is well settled that a court may transfer a case sua sponte pursuant to 28 U.S.C.
§§ 1404(a) and 1406(a).” Desmond v. Nynex Corp., 37 F.3d 1484, (1st Cir. 1994) (per
Courts have transferred cases pursuant to § 1406(a) when plaintiffs have made
errors in their choices of where to file. See, e.g., Cormier, 404 F. Supp. 2d at 363-65;
Johnson v. Gen. Dynamics Info. Tech., Inc. 675 F. Supp. 2d 236, 242-43 (D. N.H. 2009);
Dindio v. First Babylon, Inc., 328 F. Supp. 2d 126, 129 (D. Mass. 2004) see also Biby
v. Kansas City Life Ins. Co., 629 F.2d 1289, 1294 (8th Cir. 1980) (transfer appropriate
when plaintiff makes good-faith erroneous selection of initial forum). The Supreme
Court has endorsed this practice: “[t]he language of § 1406(a) is amply broad enough
to authorize the transfer of cases, however wrong the plaintiff may have been in filing
his case as to venue . . . .” Goldlawr, 369 U.S. at 466.
At the time Presby filed its Complaint in the District of Maine, the Federal
Circuit’s interpretation of the law of venue in patent infringement actions at least
arguably supported the decision to file here. Infiltrator agreed. Defs.’ Mot. at 2 n.2
(“Infiltrator acknowledges that venue in Maine is proper in this case if the Supreme
Court affirms the Federal Circuit’s approach in TC Heartland”). Filing in a district
that later proves to be improper only after and because the Supreme Court clarified
an ambiguity in the law does not affect the underlying validity of the claims. See In
re Micron Tech., Inc., 2017 U.S. App. LEXIS 22956, at 1-22. The Court determines
that transfer, not dismissal, is in the interest of justice.
The District of Delaware
Infiltrator is incorporated in Delaware. Thus, its “residence” under § 1400(b)
is in Delaware, See TC Heartland, 137 S. Ct. at 1521. Therefore, venue is proper
there. In order to complete its determination of whether this case “could have been
brought” in the District of Delaware, the Court examines whether the District of
Delaware would have subject matter jurisdiction and personal jurisdiction over
Infiltrator. Presby’s claims arise under 35 U.S.C. § 271, granting all district courts
subject matter jurisdiction over the case. See 28 U.S.C. § 1338(a). A corporation’s
place of incorporation is a paradigm forum in which it is subject to general personal
jurisdiction. BNSF Ry. Co. v. Tyrrell, 137 S. Ct. 1549, 1558 (2017). Therefore,
Infiltrator’s Delaware incorporation assures that the District of Delaware would have
personal jurisdiction over Infiltrator. Hence, Presby could have brought this case in
the District of Delaware, and the Court may transfer it there pursuant to § 1406(a).
The Court GRANTS Defendant’s Motion to Dismiss for Improper Venue (ECF
No. 14) only insofar as it seeks a determination that venue is improper in the District
of Maine. The Court DIRECTS the Clerk of Court to transfer this matter to the
District of Delaware.
/s/ John A. Woodcock, Jr.
JOHN A. WOODCOCK, JR.
UNITED STATES DISTRICT JUDGE
Dated this 29th day of November, 2017
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