Lone Star Silicon Innovations Llc v. Toshiba Corporation et al

BRIEF

E.D. Tex.June 9, 2017

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS MARSHALL DIVISION LONE STAR SILICON INNOVATIONS LLC Plaintiff, v. TOSHIBA CORPORATION ET AL Defendants. Civil Action No. 2:16-cv-01170-JRG-RSP JURY TRIAL DEMANDED (LEAD CASE) LONE STAR SILICON INNOVATIONS LLC Plaintiff, v. NANYA TECHNOLOGY CORPORATION ET AL Defendants. Civil Action No. 2:16-cv-01117-JRG-RSP JURY TRIAL DEMANDED (Consolidated) NANYA’S SUPPLEMENTAL BRIEF IN SUPPORT OF MOTION TO DISMISS FOR IMPROPER VENUE Case 2:16-cv-01170-JRG-RSP Document 143 Filed 06/09/17 Page 1 of 8 PageID #: 3800 1 Pursuant to the Court’s May 31, 2017 Order (Dkt. No. 26), Defendants Nanya Technology Corporation (“NTC Taiwan”), Nanya Technology Corporation U.S.A. (“NTC USA”), and Nanya Technology Corporation Delaware (“NTC Delaware”) (collectively, “Nanya”) hereby provide this supplemental brief in support of its Motion to Dismiss for Improper Venue (“Motion”) (Dkt. No. 18) pursuant to Federal Rule of Civil Procedure 12(b)(3) and 28 U.S.C. § 1406(a). I. INTRODUCTION The U.S. Supreme Court’s ruling in TC Heartland LLC v. Kraft Food Group Brands LLC is clear and unambiguous: “a domestic corporation ‘resides’ only in its State of incorporation for purposes of the patent venue statute.” 581 U.S. ___ (2017), slip op. at 2. In light of that ruling, it is clear that venue is not proper in this district as to NTC USA or NTC Delaware, and Nanya’s motion to dismiss should be granted. II. LEGAL STANDARDS Venue in patent infringement actions is controlled exclusively by 28 U.S.C. § 1400(b) and is proper “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); In re Cordis Corp., 769 F.2d 733, 734–35 (Fed. Cir. 1985). “As applied to domestic corporations, “reside[nce]” in §1400(b) refers only to the State of incorporation.” Heartland, slip op. at 10. The Supreme Court’s interpretation of §1400(b) is retroactive and therefore applies to this case. See, e.g., Harper v. Virginia Department of Taxation, 509 U.S. 86, 97 (1993) (“[w]hen [the] 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 Case 2:16-cv-01170-JRG-RSP Document 143 Filed 06/09/17 Page 2 of 8 PageID #: 3801 2 direct review and as to all events, regardless of whether such events predate or postdate [the] announcement of the rule.”) III. VENUE IS IMPROPER IN THE EASTERN DISTRICT OF TEXAS 1. NTC USA and NTC Delaware Do Not Reside in Texas It is undisputed that NTC Delaware is incorporated in Delaware. See Complaint (Dkt. No. 1) at ¶5; Lewellen Decl. (Dkt. No. 18-2) at ¶4. It is likewise undisputed that NTC USA is incorporated in California. See Complaint (Dkt. No. 1) at ¶4; Donahue Decl. (Dkt. No. 18-1) at ¶5. Thus, neither NTC USA nor NTC Delaware reside in Texas. Heartland, slip op. at 2, 10. 2. NTC USA and NTC Delaware Do Not Have a Regular and Established Place of Business in this District The alternative basis for venue set forth in §1400(b) requires the defendant to “ha[ve] committed acts of infringement and ha[ve] a regular and established place of business” in the district. It is not necessary to reach the question of whether the defendants have committed acts of infringement in the district, as it is clear and beyond dispute that they do not have a regular and established place of business in this district. NTC Delaware does not maintain, and has never maintained, a place of business in the Eastern District of Texas. Lewellen Decl. at ¶5. NTC Delaware has no employees, independent contractors, or representatives who regularly reside or work in the Eastern District of Texas. Id. at ¶ 12. NTC Delaware does not have, and has never had, any corporate partnership, joint venture, ownership, or any other similar relationship with any person and/or entity in the Eastern District of Texas. Id. at ¶7. And, NTC Delaware does not maintain any bank accounts or personal property in the Eastern District of Texas. Id. at ¶8. Similarly, NTC USA does not maintain, and has never maintained, a place of business in the Eastern District of Texas, nor does it own, lease, or rent any real property in the Eastern Case 2:16-cv-01170-JRG-RSP Document 143 Filed 06/09/17 Page 3 of 8 PageID #: 3802 3 District of Texas. Donahue Decl. at ¶5. NTC USA has no employees, independent contractors, or representatives who regularly reside or work in the Eastern District of Texas. Id. at ¶ 11. In fact, NTC USA only has a total of 4 employees, all of whom work at NTC USA’s sole office in San Jose, California. Id. at ¶10. Plaintiff has not alleged that NTC USA or NTC Delaware have a regular and established place of business in this district, pointing instead to locations in San Jose, Austin, and Houston.1 See Complaint at ¶4. Nor has Plaintiff alleged that NTC Taiwan has a regular and established place of business in this district. Id. at ¶ 3. Thus, even if the Court were to consider the unfounded “alter ego” theory asserted in Plaintiff’s opposition and impute NTC Taiwan’s activities to NTC USA and NTC Delaware, it still would not establish the required regular and established place of business in this district. Since it is Plaintiff’s burden to establish venue is proper, even taking Plaintiff’s allegations as true, it has failed to establish venue is proper as to NTC USA or NTC Delaware. Indeed, the fact that Plaintiff has asserted specific personal jurisdiction over the Defendants based upon a stream of commerce theory indicates that Plaintiff has no basis to even allege that any of the Defendants have a regular and established place of business in the Eastern District of Texas. Given that NTC USA and NTC Delaware have neither a physical presence in this district nor any employees in this district, it is impossible to establish that they have a regular and established place of business in this district. IV. DISCOVERY IS NOT APPROPRIATE While Plaintiff previously argued that it should be allowed to conduct discovery, that proposed discovery related to its claim of personal jurisdiction under the stream of commerce 1 Nanya has not admitted these allegations, but even if true they do not establish that venue is proper in this district. Case 2:16-cv-01170-JRG-RSP Document 143 Filed 06/09/17 Page 4 of 8 PageID #: 3803 4 theory. See Opposition (Dkt. No. 20) at 23-24. That, however, is no longer relevant for purposes of establishing venue. Instead, the question before the Court is the much narrower one of whether any of the Defendants have a regular and established place of business within the district. See, e.g., Mastantuono v. Jacobsen Mfg. Co., 184 F. Supp. 178, 180 (S.D.N.Y. 1960) (“Mere “doing business” in a district is not of itself sufficient to confer venue in patent suits. Something more is required.”) Moreover, allowing discovery would be inappropriate here where the complaint does not even contain allegations that would support that venue is proper in this district. “Venue is based on the facts alleged in the well-pleaded complaint.” Hoover Grp., Inc. v. Custom Metalcraft, Inc., 84 F.3d 1408, 1410 (Fed. Cir. 1996). To permit discovery in this case would allow a party to ignore the requirements of venue when filing their complaint, in hopes that discovery will turn up something that can later be claimed to support venue. That approach is not proper under the Federal Rules of Civil Procedure. Finally, the facts necessary to support venue under the properly interpreted §1400(b) should not require discovery. Unlike the issues involved in proving personal jurisdiction under a stream of commerce theory, which may involve activities known only to the defendant, a company’s place of incorporation is a matter of public record. Likewise, if it cannot be publicly determined that a company has either a physical presence or employees located in a district, it is difficult to understand how any unknown connection with the district can represent either an “established” or “regular” place of business. Thus, any discovery by Plaintiff would be nothing more than a fishing expedition (and in this case, fishing in an empty pond). V. TRANSFER Where venue is improper, section 1406(a) provides 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 Case 2:16-cv-01170-JRG-RSP Document 143 Filed 06/09/17 Page 5 of 8 PageID #: 3804 5 brought.” 28 U.S.C. § 1406(a). Any consideration of transfer, therefore, requires first determining the district(s) in which venue would be proper. Based upon place of incorporation, venue for NTC USA is proper in California, while venue for NTC Delaware is proper in Delaware. However, “the interest of justice” includes the consideration judicial economy. See, e.g., Regents of the Univ. of California v. Eli Lilly & Co., 119 F.3d 1559, 1565 (Fed. Cir. 1997). Judicial economy can hardly be said to be served by requiring simultaneous litigation in multiple courts. Turning to the second prong of the venue statute, Plaintiff’s Complaint alleges that NTC USA has personnel and offices in San Jose, California, and that NTC Delaware has a “principal place of business” in Santa Clara, California. Assuming these allegations as true, and assuming arguendo that those facts are sufficient to allege a “regular and established place of business,” venue may be appropriate for both NTC USA and NTC Delaware in the Northern District of California.2 However, judicial economy still would not be served as litigation would still take place in multiple courts. VI. CONCLUSION In light of the Supreme Court’s ruling in Heartland, it is clear that venue is not appropriate in this district for either NTC Delaware or NTC USA. It is even more clear that the facts alleged in the operative complaint do not support venue in this district. For the foregoing reasons, as well as those discussed in the motion briefing, Nanya respectfully requests that the Court grant its motion and dismiss NTC Delaware and NTC USA for improper venue. 2 Although the Court can take these allegations as true for purposes of this motion, NTC Delaware has denied them and shown that it maintains offices only in Vermont and Houston. Thus, even if this Court were to transfer NTC Delaware to the Northern District of California, this would only lead to further motion practice on the propriety of venue in that district, which is contrary to the interest of justice. Case 2:16-cv-01170-JRG-RSP Document 143 Filed 06/09/17 Page 6 of 8 PageID #: 3805 6 Respectfully submitted, Dated: June 9, 2017 By: /s/ Casey H. Kempner Casey H. Kempner Vincent K. Yip California Bar No. 170665 Peter J. Wied California Bar No. 198475 Casey H. Kempner California Bar No. 272149 LTL ATTORNEYS LLP 300 South Grand Ave., 14th Fl. Los Angeles, CA 90071 Telephone: (213) 612-8900 Facsimile: (213) 612-3773 vincent.yip@ltlattorneys.com peter.wied@ltlattorneys.com Counsel for Nanya Technology Corporation; Nanya Technology Corporation U.S.A.; and Nanya Technology Corporation Delaware Case 2:16-cv-01170-JRG-RSP Document 143 Filed 06/09/17 Page 7 of 8 PageID #: 3806 7 CERTIFICATE OF SERVICE The undersigned certifies that on June 9, 2017, all counsel of record who are deemed to have consented to electronic service are being served with a copy of this document via the Court’s CM/ECF system per Local Rule CV-5(a)(3). /s/ Casey H. Kempner Casey H. Kempner Case 2:16-cv-01170-JRG-RSP Document 143 Filed 06/09/17 Page 8 of 8 PageID #: 3807