Orthosie Systems, LLC v. Actsoft, Inc.

Filing 46

MEMORANDUM OPINION AND ORDER re 39 MOTION to Dismiss with Prejudice Second Amended Complaint for Patent Infringement Based on Improper Venue filed by Actsoft, Inc. ORDERED that Actsoft's Motion to Dismiss With Prejudice Second Amended Complaint for Patent Infringement Base on Improper Venue (Dkt. #39) is hereby DENIED. Signed by Judge Amos L. Mazzant, III on 7/25/2017. (kls, )

United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION

ORTHOSIE SYSTEMS LLC
v.
ACTSOFT, INC.

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Civil Action No. 4:16-CV-00873
Judge Mazzant

MEMORANDUM OPINION AND ORDER
Pending before the Court is Defendant Actsoft, Inc.’s (“Actsoft”) Motion to Dismiss With
Prejudice Second Amended Complaint for Patent Infringement Based on Improper Venue (Dkt.
#39). The Court, having considered the relevant pleadings, finds that Actsoft’s motion should be
denied.
BACKGROUND
On November 14, 2016, Orthosie Systems, LLC (“Orthosie”) sued Actsoft for
infringement of U.S. Patent No. 7,430,471 (“the ’471 Patent”) (Dkt. #1). In response, Actsoft filed
its Motion to Dismiss and Alternative Motion for More Definite Statement on January 31, 2017
(Dkt. #7). The basis for Actsoft’s motion to dismiss was failure to state a claim upon which relief
can be granted under Rule 12(b)(6). Actsoft made no assertion that venue was improper in this
motion. On February 6, 2017, Orthosie amended its complaint (Dkt. #13). Following the
amendment, Actsoft filed its Motion to Dismiss Amended Complaint for Patent Infringement and
Alternative Motion for More Definite Statement (Dkt. #15). Again, Actsoft made no assertion that
venue was improper. Instead, pursuant to Federal Rule of Civil Procedure 12(b)(6), Actsoft argued
that Orthosie failed to meet the pleading standard established by Federal Rule of Civil Procedure
8(a). Then, Orthosie requested leave to file a second amended complaint (Dkt. #16), which the

Court granted on March 20, 2016 (Dkt. #22). Subsequently, Actsoft filed its Motion to Dismiss
with Prejudice Second Amended Complaint for Patent Infringement arguing that Orthosie’s claims
are based on legally insufficient allegations under Federal Rule of Civil Procedure 12(b)(6) (Dkt.
#24). Actsoft made no argument that venue was improper.
After the Supreme Court issued its opinion in TC Heartland LLC v. Kraft Food Brands
Group LLC, Actsoft filed the present motion to dismiss arguing that the Supreme Court’s new
holding made venue improper in the Eastern District of Texas (Dkt. #39).
APPLICABLE LAW
If venue is not proper in the district or division where the case is filed, the case may be
dismissed under Federal Rule of Civil Procedure 12(b)(3). Alternatively, under § 1406(a), “[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).
However, Federal Rule of Civil Procedure 12(h)(1) “advises a litigant to exercise great
diligence in challenging personal jurisdiction, venue, or service of process. If he wishes to raise
any of these defenses he must do so at the time he makes his first defensive move.” Golden v. Cox
Furniture Mfg. Co. Inc., 683 F.2d 115, 118 (5th Cir. 1982). Under Federal Rule of Civil Procedure
12(h)(1), “[a] party waives any defense listed in rule 12(b)(2)-(5) by . . . omitting it from a motion
in the circumstances described in Rule 12(g)(2).” FED. R. CIV. P. 12(h)(1)(A). Federal Rule of
Civil Procedure 12(g) provides that “a party that makes a motion under this rule must not make
another motion under this rule raising a defense or objection that was available to the party but
omitted from its earlier motion.” FED. R. CIV. P. 12(g)(2). Accordingly, a party must assert any
Rule 12(b)(3) motion that is available at the time it files any Rule 12 motion. Elbit Sys. Land &

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C41 Ltd. v. Hughes Network Sys, LLC, No. 2:15-cv-37, 2017 WL 2651618, at *20 (E.D. Tex. June
20, 2017) (citing e.g., Peacock v. Ins. & Bonds Agency of Tex., PLLC, No. 3:12-CV-1710-D, 2012
WL 3702920, at *1 (N.D. Tex. Aug. 28, 2012)).
ANALYSIS
Actsoft filed its first Rule 12 motion on January 31, 2017, by filing a 12(b)(6) motion to
dismiss for failure to state a claim upon which relief can be granted, and, in the alternative, a 12(e)
motion for a more definite statement. At that time, Actsoft did not attempt to file a motion to
dismiss under Federal Rule of Civil Procedure 12(b)(3) for improper venue. Moreover, Actsoft
filed two additional Rule 12 motions after Orthosie amended its complaint, neither of these
motions were based on improper venue under 12(b)(3). Thus, Actsoft waived its defense to
improper venue by failing to timely move or plead such a defense, assuming that such a defense
was available at the time Actsoft filed its 12(b)(6) motion. FED. R. CIV. P. 12(g)(2); FED. R. CIV.
P. 12(h)(1)(A).
Actsoft argues that “the defense of improper venue was not available to Actsoft until very
recently.” (Dkt. #39 at 1). Actsoft contends that the Supreme Court’s recent holding in TC
Heartland changed the law because it overruled the Federal Circuit’s decision in VE Holding
Corporation v. Johnson Gas Appliance Company, 917 F.2d 1574, 1584 (Fed. Cir. 1990). As such,
Actsoft maintains that it did not waive its improper venue defense.
However, the Supreme Court’s decision in TC Heartland does not constitute a change in
the law. See Elbit Sys., 2017 WL 2651618, at *20 (citing Cobalt Boats, LLC v. Sea Ray Boats,
Inc., No. 2:15-cv-21, 2017 WL 2556679, at *3 (E.D. Va. June 7, 2017)); Navico, Inc. v. Garmin
Int’l, Inc., No. 2:16-cv-190, Dkt. #163 (E.D. Tex. July 11, 2017) (citing Cobalt Boats, 2017 WL
2556679, at *3; Elbit Sys., 2017 WL 2651618, at *20; Chamberlin Grp., Inc. v. Techtronic Indus.

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Co., No 1:16-cv-6097, Dkt. #407 (N.D. Ill. June 28, 2017); iLife Techs. Inc. v. Nintendo of
America, Inc., No. 3:13-cv-4987, 2017 WL 2778006, at *7 (N.D. Tex. June 27, 2017); Amax, Inc.
v. ACCO Brands Corp., No. 16-CV-10695-NMG, 2017 WL2818986, at *3 (D. Mass. June 29,
2017); Infrogation Corp. v. HTC Corp., 16-CV-01902-H-JLB, 2017 WL 2869717, at *4 (S.D. Cal.
July 5, 2017)); see also Koninklijke Philips v. ASUSTeK Computer Inc., No. 1:15-cv-1125-GMS,
Dkt. #215 (D. Del. July 19, 2017). Contra Westech Aersol Corp. v. 3M Co., 3:13-cv-5067, 2017
WL 2671297, at *2 (E.D. Wash. June 21, 2107); Hand Held Prods. Inc. v. Code Corp., 2:17-cv167, Dkt. # 63 (D.S.C. July 18, 2017). The Supreme Court in TC Heartland reaffirmed its earlier
holding found in Fourco Glass Company v. Transmirra Products Corporation that 28 U.S.C.
§ 1400(b) is the “sole and exclusive provision controlling venue in patent infringement actions.”
353 U.S. 222, 229 (1957). Accord Elbit Sys., 2017 WL 2651618, at *20 (citing Cobalt Boats, 2017
WL 2556679, at *3); Navico, No. 2:16-cv-190, Dkt. #163, at *5. Further, the Supreme Court in
TC Heartland explained that in “Fourco, this Court definitively and unambiguously held that the
word ‘reside[nce]’ in § 1400(b) has a particular meaning as applied to domestic corporations: It
refers only to the State of incorporation.” TC Heartland LLC v. Kraft Food Group Brands LLC,
137 S.Ct. 1514, 1520 (2014) (alteration in original).
While VE Holding allowed parties to use 28 U.S.C. § 1391(c) to establish venue, this
holding did not overrule Fourco “because the Federal Circuit cannot overturn Supreme Court
precedent.” Elbit Sys., 2017 WL 2651618, at *20 (citing Thurston Motor Lines, Inc. v. Jordan K.
Rand, Ltd., 460 U.S. 533, 535 (1983)). Accord Navico, Inc., No. 2:16-cv-190, Dkt. #163.
Accordingly, the defense of improper venue, based on § 1400(b)’s definition of residence
established in Fourco, was available to Actsoft, and has been available to all defendants, since
1957. Thus, even though Actsoft initially relied on the Federal Circuit’s holding in VE Holding to

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determine whether venue was proper, it did so at its own risk of waiving the venue defense
established under Fourco, which has now been reaffirmed by TC Heartland.
CONCLUSION

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It is therefore ORDERED that Actsoft’s Motion to Dismiss With Prejudice Second
Amended Complaint for Patent Infringement Base on Improper Venue (Dkt. #39) is hereby
DENIED.

SIGNED this 25th day of July, 2017.

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AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE

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