Smart Wearable Technologies Inc. v. Microsoft Corporation

Brief / Memorandum in Support re MOTION to Dismiss for improper venue MOTION to Transfer Case to Northern District of California .

W.D. Va.July 12, 2017

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF VIRGINIA CHARLOTTESVILLE DIVISION SMART WEARABLE TECHNOLOGIES INC., Plaintiff, v. MICROSOFT CORPORATION, Defendant. _____________________________________ ) ) ) ) ) ) ) ) ) ) ) Case No. 3:16-cv-00047 REPLY IN SUPPORT OF MICROSOFT’S MOTION TO DISMISS FOR IMPROPER VENUE, OR IN THE ALTERNATIVE, TO TRANSFER VENUE TO THE NORTHERN DISTRICT OF CALIFORNIA Case 3:16-cv-00047-GEC Document 49 Filed 07/12/17 Page 1 of 19 Pageid#: 663 ii TABLE OF CONTENTS I. INTRODUCTION ................................................................................................................... 1 II. ARGUMENT .......................................................................................................................... 3 A. Microsoft Has Not Waived Its Venue Objection ................................................................. 3 B. Transfer Is Also Proper Under 28 U.S.C. § 1406 .............................................................. 10 III. CONCLUSION ..................................................................................................................... 12 Case 3:16-cv-00047-GEC Document 49 Filed 07/12/17 Page 2 of 19 Pageid#: 664 iii TABLE OF AUTHORITIES Page(s) Cases Caldwell v. Palmetto State Sav. Bank of S.C., 811 F.2d 916 (5th Cir. 1987) ...................................................................................................11 Chatman-Bey v. Thornburgh, 864 F.2d 804 (D.C. Cir. 1988) ...................................................................................................3 Cobalt Boats, LLC v. Sea Ray Boats, Inc., No. 2:15-cv-21, 2017 WL 2556679 (E.D. Va. June 7, 2017) ........................................4, 5, 7, 8 Curtis Publ’g. Co. v. Butts, 388 U.S. 130 (1967) .................................................................................................................10 Daimler AG v. Bauman, 134 S. Ct. 746 (2014) .................................................................................................................6 Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972) ...................................................................................................................9 In re Donaldson Co., 16 F.3d 1189 (Fed. Cir. 1994)....................................................................................................9 Elbit Sys. Land & C4I Ltd. v. Hughes Network Sys., LLC, No. 2:15-CV-00037-RWS- RSP, 2017 WL 2651618 (E.D. Tex. June 20, 2017) ......................................................................................................................................7, 8 Fourco Glass Co. v. Transmirra Prod. Corp., 353 U. S. 222 (1957) ........................................................................................................ passim Frontline Test Equip., Inc., v. Greenleaf Software, Inc., 10 F. Supp. 2d 583 (W.D. Va 1998) ..........................................................................................2 Gilmore v. Palestinian Interim Self-Govt. Auth., 843 F.3d 958 (D.C. Cir. 2016) ...........................................................................................3, 5, 6 Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011) ...............................................................................................................5, 6 Case 3:16-cv-00047-GEC Document 49 Filed 07/12/17 Page 3 of 19 Pageid#: 665 iv Gucci Am., Inc. v. Weixing Li, 768 F.3d 122 (2d Cir. 2014).......................................................................................................6 Halliburton Oil Well Cementing Co. v. Walker, 329 U.S. 1 (1946) .......................................................................................................................9 Holland v. Big River Minerals Corp., 181 F.3d 597 (4th Cir. 1999) ...........................................................................................3, 4, 10 Holzsager v. Valley Hosp., 646 F.2d 792 (2nd Cir. 1981).................................................................................................3, 4 iLife Techs., Inc. v Nintendo of Am., Inc., No. 3:13-CV-04987, 2017 WL 2778006 (N.D. Tex. June 27, 2017) ........................................8 Manley v. Engram, 755 F.2d 1463 (11th Cir. 1985) ...............................................................................................12 Robinson v. Bartlow, 2012 WL4718656 (W.D. Va 2013) ...........................................................................................2 Rotec Indus., Inc. v. Mitsubishi Corp., 215 F.3d 1246 (Fed. Cir. 2000)..................................................................................................9 In re Sea Ray Boats, 2017 WL 2577399 .....................................................................................................................7 TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (May 22, 2017)....................................................................................... passim Thomas v. Exxon Mobil Oil Corp., No. 2:06-CV-144-RL-PRC, 2007 WL 489225 (N.D. Ind. Feb. 8, 2007) ................................11 Thurston Motor Lines, Inc. v. Jordan K. Rand, Ltd., 460 U.S. 533 (1983) ...............................................................................................................8, 9 Trujillo v. Williams, 465 F.3d 1210 (10th Cir. 2006) ...............................................................................................11 United States v. Washington, 12 F.3d 1128 (D.C. Cir. 1994) ...................................................................................................6 VE Holding Corp. v. Johnson Gas Appliance Co., 917 F. 2d 1574 (1990) ...................................................................................................... passim Case 3:16-cv-00047-GEC Document 49 Filed 07/12/17 Page 4 of 19 Pageid#: 666 v Waldman v. Palestine Liberation Org., 835 F.3d 317 (2d Cir. 2016)...............................................................................................5, 6, 7 Westech Aerosol Corp. v. 3M Co., No. C17-5067-RBL, 2017 WL 2671297 (W.D. Wash. June 21, 2017)...............................9, 10 Other Authorities 28 U.S.C. § 1391 ..................................................................................................................1, 2, 3, 4 28 U.S.C. §1400 .......................................................................................................................1, 2, 4 28 U.S.C. § 1404 ............................................................................................................................11 28 U.S.C. § 1406 ............................................................................................................2, 10, 11, 12 28 U.S.C. § 1631 ............................................................................................................................11 35 U.S.C. § 112 ................................................................................................................................9 35 U.S.C. § 271(f) ............................................................................................................................9 Fed. R. Civ. P. 12 ...................................................................................................................1, 3, 11 Case 3:16-cv-00047-GEC Document 49 Filed 07/12/17 Page 5 of 19 Pageid#: 667 1 I. INTRODUCTION Plaintiff Smart Wearable Technologies, Inc.’s (“Plaintiff”) opposition does not dispute that venue is improper in this district. Instead, Plaintiff argues only that Microsoft waived its right to challenge venue when it filed its first Rule 12 motion because there has been no intervening change of law by the Supreme Court’s decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (May 22, 2017). Plaintiff is incorrect. The history of the relevant legal landscape is not in dispute. In Fourco Glass Company v. Transmirra Products Corporation, 353 U.S. 222 (1957), the Supreme Court held that for purposes of 28 U.S.C. § 1400(b) (the “patent venue statute”) a domestic corporation “resides” only in its State of incorporation, and rejected the argument that Section 1400(b) incorporates the broader definition of “residence” contained in 28 U.S.C. § 1391 (the “general venue statute”). Id. In 1988, Congress amended Section 1391 to state that, “[f]or purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced.” 28 U.S.C. § 1391(c) (1988) (emphasis added).1 Because Sections 1391 and 1400 are found in the same Chapter of the U.S. Code, this amendment raised the obvious question whether Congress had overruled Fourco. In VE Holding Corporation v. Johnson Gas Appliance Company, 917 F.2d 1574 (1990) the Federal Circuit answered that question in the affirmative, basing its holding on its interpretation of the newly added statutory language “[f]or purposes of venue under this chapter,” a holding the Supreme Court (at the time) declined to review. 1 Further amendments were made in 2011, but neither party contends they change the issues to be decided herein. Case 3:16-cv-00047-GEC Document 49 Filed 07/12/17 Page 6 of 19 Pageid#: 668 2 Thus, from 1990 until earlier this year, the “law of the land” was that the 1988 amendment to Section 1391 overruled the Supreme Court’s decision in Fourco because the authoritative judicial decision on the meaning of that amendment was the Federal Circuit’s decision in VE Holding.2 This is not a question of whether the Federal Circuit overruled the Supreme Court. It cannot and did not even purport to. Rather, it held that Congress did so by modifying the relevant statutory language of the general venue statute (Section 1391) so that its terms applied to the patent venue statute (Section 1400). The Federal Circuit’s ruling in VE Holdings regarding the 1988 amendment was the law applicable in all patent cases for the past 27 years. The Supreme Court’s decision in TC Heartland this May overturned VE Holding not by addressing its decision in Fourco, but by analyzing the scope of the 1988 amendment to the general venue statute (Section 1391). See TC Heartland, 137 S. Ct. at 1520 (“Congress has not amended § 1400(b) since Fourco, and neither party asks us to reconsider our holding in that case. Accordingly, the only question we must answer is whether Congress changed the meaning of § 1400(b) when it amended § 1391.”) (emphasis added). That was an issue never before addressed by the Supreme Court. Because the resolution of that issue overturned the settled law applicable to this case, it provided Microsoft a venue objection that was not available prior to the change. Microsoft therefore has not waived that objection, and the Court should dismiss or transfer this improperly venued case. Moreover, Microsoft alternatively moved to transfer based on 28 U.S.C. § 1406, which 2 This Court has implicitly recognized the authoritative nature of the Federal Circuit’s decision in VE Holding at least twice by applying that decision rather than Fourco. See, e.g., Frontline Test Equip., Inc., v. Greenleaf Software, Inc., 10 F. Supp. 2d 583, 589-90 (W.D. Va. 1998); Robinson v. Bartlow, No. 3:12-cv-00024, 2012 WL4718656, *3-4 (W.D. Va. 2013). Case 3:16-cv-00047-GEC Document 49 Filed 07/12/17 Page 7 of 19 Pageid#: 669 3 Plaintiff does not even address in its response. Thus, the proper result here is clear – the case should be dismissed or transferred based on improper venue. II. ARGUMENT A. Microsoft Has Not Waived Its Venue Objection Rule 12’s waiver provision does not apply to Microsoft’s venue challenge because a party cannot waive an objection that was not available to it. Holzsager v. Valley Hosp., 646 F.2d 792, 796 (2nd Cir. 1981) (“[A] party cannot be deemed to have waived objections or defenses which were not known to be available at the time they could first have been made, especially when it does raise the objections as soon as their cognizability is made apparent.”). Rule 12 specifically reflects this principle by providing 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) (emphasis added). An objection is not “available” if “its legal basis did not exist at the time of the answer or pre-answer motion.” See Gilmore v. Palestinian Interim Self-Govt. Auth., 843 F.3d 958, 964 (D.C. Cir. 2016); Chatman-Bey v. Thornburgh, 864 F.2d 804, 813 n.9 (D.C. Cir. 1988). This includes situations where an intervening change in the law made available an objection that was previously unavailable. See Holland v. Big River Minerals Corp., 181 F.3d 597, 605 (4th Cir. 1999) (an “exception to the general rule of waiver” exists “when there has been an intervening change in the law recognizing an issue that was not previously available”). The intervening change in the law relevant here is the altered interpretation of the language of Section 1391, language that was first added to that section in 1988, first interpreted Case 3:16-cv-00047-GEC Document 49 Filed 07/12/17 Page 8 of 19 Pageid#: 670 4 by the Federal Circuit in 1990, and first addressed by the Supreme Court in May of 2017. The Supreme Court did not, and could not have, addressed that language in its 1957 decision in Fourco because that language did not exist in 1957. The Supreme Court’s decision in TC Heartland accordingly changed the law because it interpreted that new statutory language and in doing so, overturned decades of binding circuit court precedent. Thus, the legal basis for Microsoft’s venue argument here – i.e., that the 1988 amendment to Section 1391 does not apply to Section 1400 – did not exist at the time Microsoft filed its answer or motion to dismiss in this case because such an argument was foreclosed by VE Holding. The law of waiver does not require a party to raise every theoretical defense or objection, no matter how unlikely to prevail. To hold otherwise would be to impose a level of “clairvoyance” that is “inconsistent with the doctrine of waiver.” Holzsager, 646 F.2d at 796. Rather, the intervening law exception to the general rule of waiver applies where, as here, “‘there was strong precedent’ prior to the change … such that the failure to raise the issue was not unreasonable and the opposing party was not prejudiced by the failure to raise the issue sooner.” Holland, 181 F.3d at 605-06 (quoting Curtis Publ’g. Co. v. Butts, 388 U.S. 130, 143 (1967)). V.E. Holding was just such a “strong precedent.” When viewed in the context of this statutory and decisional history, moreover, the cases cited by Plaintiff rest on reasoning that does not withstand scrutiny. For example, Plaintiff cites Cobalt Boats, LLC v. Sea Ray Boats, Inc., No. 2:15-cv-21, 2017 WL 2556679 (E.D. Va. June 7, 2017) and parenthetically quotes the court’s statements that TC Heartland “merely affirms the viability of Fourco” which “has continued to be binding law since it was decided in 1957, and Case 3:16-cv-00047-GEC Document 49 Filed 07/12/17 Page 9 of 19 Pageid#: 671 5 thus, it has been available to every defendant since 1957.” But TC Heartland could not have “affirm[ed] the viability of Fourco” because it addressed statutory language that did not exist until three decades after Fourco was decided. TC Heartland may very well have restored the effect of Fourco, but it did so by interpreting a statutory scheme different from the one addressed in Fourco. Moreover, Microsoft notes that in Cobalt Boats Judge Morgan may very well have been misinformed by the parties before him. The court states, for example, that “[n]either Party cites any case that addresses how to apply the intervening law exception when a circuit court finds that Supreme Court precedent is no longer good law.” Cobalt Boats, 2017 WL 2556679, at *3. That was unfortunate, since both the DC Circuit and the Second Circuit faced this issue is similar contexts just last year. See Gilmore, 843 F.3d at 964; Waldman v. Palestine Liberation Org., 835 F.3d 317, 328 (2d Cir. 2016). Indeed, the decision in Waldman is particularly relevant because it addressed similar circumstances in the context of personal jurisdiction. In that case, eleven American families brought suit against the Palestinian Liberation Organization (“PLO”) under the Anti-Terrorism Act, 18 U.S.C. § 2333(a). The PLO argued that it was not subject to personal jurisdiction in the Southern District of New York. At the time, controlling Supreme Court precedent held that general jurisdiction over a foreign defendant was only proper if the defendant’s contacts with the forum were so constant and pervasive as to render it essentially “at home” in the forum. See Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011). Nevertheless, the district court found personal jurisdiction over the PLO based on the existence of a PLO Case 3:16-cv-00047-GEC Document 49 Filed 07/12/17 Page 10 of 19 Pageid#: 672 6 diplomatic branch office in the United States, relying on Second Circuit precedent permitting general jurisdiction over a corporation doing business in the forum through a local branch office. See Gucci Am., Inc. v. Weixing Li, 768 F.3d 122, 135 (2d Cir. 2014). After the district court’s ruling, but while the case was still pending, the Supreme Court narrowed the test for general jurisdiction in Daimler AG v. Bauman, 134 S. Ct. 746 (2014). The PLO moved for reconsideration of the personal jurisdiction issue following the Daimler decision, citing the “at home” test. The plaintiffs argued that the PLO waived this argument because the “at home” test existed after the 2011 decision in Goodyear Dunlop, i.e., prior to Daimler. The district court ultimately denied the PLO’s motion for reconsideration, but not on a waiver theory, a finding expressly affirmed by the Second Circuit. See Waldman, 835 F.3d at 328. As the DC Circuit explained, “the Second Circuit held that the PA and PLO ‘did not waive or forfeit their objection to personal jurisdiction’ because the objection was not ‘available’ before Daimler.” Gilmore, 843 F.3d at 965 (quoting Waldman, 835 F.3d at 328). Thus, in Waldman the Second Circuit held the defendant did not waive its jurisdictional argument when it relied on substantial Second Circuit precedent, even though it could have made that jurisdictional argument based on an earlier Supreme Court decision. There was, therefore, very recent, relevant authority that addresses the effect of a circuit court’s decision in a situation such as the one before the Court here, and Judge Morgan was apparently not provided it. See also United States v. Washington, 12 F.3d 1128, 1139 (D.C. Cir. 1994) (“Under the supervening- decision doctrine, we may consider issues not raised at trial where a supervening decision has changed the law in appellant's favor and the law was so well-settled at the time of trial that any Case 3:16-cv-00047-GEC Document 49 Filed 07/12/17 Page 11 of 19 Pageid#: 673 7 attempt to challenge it would have appeared pointless.”). Microsoft further notes that the defendant in Cobalt Boats appealed the district court’s decision to the Federal Circuit on a mandamus petition. And while the Federal Circuit denied the petition without addressing the merits on the ground that the defendant had not shown entitlement to the “exceptional” remedy of mandamus, Judge Newman wrote in dissent that “[w]hen a court is confronted with a change in the law, the judicial role is to comply with the change. There is little doubt that the Court's decision in TC Heartland . . . was a change in the law of venue . . . .” In re Sea Ray Boats, No. 2:15-cv-00021, 2017 WL 2577399, at *1 (June 9, 2017) (Newman, C.J., dissenting) (emphasis added) (citation omitted). Thus, at least one judge on the Federal Circuit agrees with the Second Circuit’s analysis in Waldman. The court in Cobalt Boats apparently had the benefit of neither the analysis of the Second Circuit nor the views of Judge Newman. Plaintiff also cites Elbit Systems Land & C4I Ltd. v. Hughes Network Systems, LLC, No. 2:15-CV-00037, 2017 WL 2651618 (E.D. Tex. June 20, 2017), but that case also rests on the implicit, but erroneous, notion that TC Heartland addressed the same issue as Fourco. There, in a 45-page ruling addressing a myriad of pretrial issues, the court briefly ruled on the venue motion. But it did not engage in any meaningful analysis, instead asserting that the abrogation of VE Holding did not represent a change in the law because “[w]hile the Federal Circuit’s decision in VE Holding was inconsistent with Fourco, the Federal Circuit cannot overturn Supreme Court precedent.” Id. at *20. Of course, the Federal Circuit in VE Holding did not purport to overrule the Supreme Court and its analysis was not “inconsistent” with Fourco, since it was addressing Case 3:16-cv-00047-GEC Document 49 Filed 07/12/17 Page 12 of 19 Pageid#: 674 8 new statutory language not before the Court in Fourco. As with the decision in Cobalt Boats, the reasoning in Elbit misses the issue. The reasoning of the final case cited by Plaintiff, iLife Technologies, Inc. v Nintendo of America, Inc., No. 3:13-cv-04987, 2017 WL 2778006 (N.D. Tex. June 27, 2017), is even further afield. In that case, the court concluded that “except where congressional abrogation of a Supreme Court decision is express, ‘only [the Supreme] Court may overrule one of its precedents’. . . .” Id. at *7. For that conclusion the court could cite only a single per curiam opinion of the Supreme Court that did not involve an intervening change to the relevant statutory scheme or authoritative decision by a circuit court. See Thurston Motor Lines, Inc. v. Jordan K. Rand, Ltd., 460 U.S. 533, 533 (1983). Rather, in Thurston the Ninth Circuit decided not to follow a previous decision of the Supreme Court, distinguishing it from the facts before it on grounds the Supreme Court quickly and somewhat curtly dismissed in its per curiam opinion. See id. at 533-34 (“Other federal courts have had no difficulty in following the clear import of Rice.”). The Supreme Court’s statement in dicta that “only this Court may overrule one of its precedents” was explicitly made in response to the Ninth Circuit’s expressed doubt that the underlying Supreme Court precedent was “still good law,” even though neither Congress nor the Supreme Court has even arguably modified it. See id. at 535 (“Perhaps unsure of its distinction of Rice, the Court of Appeals went on to ‘doubt that Rice is still good law.’ Needless to say, only this Court may overrule one of its precedents.”) Obviously, the statement that “only this Court may overrule one of its precedents,” cannot be taken literally, since Congress most certainly can and has overruled the Supreme Court Case 3:16-cv-00047-GEC Document 49 Filed 07/12/17 Page 13 of 19 Pageid#: 675 9 numerous times. See, e.g., Rotec Indus., Inc. v. Mitsubishi Corp., 215 F.3d 1246, 1260 (Fed. Cir. 2000) (finding that Congress’s enactment of 35 U.S.C. § 271(f) overruled the Supreme Court’s decision in Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972)); In re Donaldson Co., 16 F.3d 1189, 1193–94 (Fed. Cir. 1994) (finding that Congress’s enactment of a provision in 35 U.S.C. § 112 overruled the Supreme Court’s decision in Halliburton Oil Well Cementing Co. v. Walker, 329 U.S. 1 (1946)). The notion that the lower courts may not hold that an Act of Congress has overruled a prior Supreme Court decision (subject of course to review by the Supreme Court) was not even remotely addressed in Thurston. In contrast to these cases, the Western District of Washington squarely addressed the distinction between the modified statutory scheme at issue in TC Heartland and the previous scheme addressed in Fourco. See Westech Aerosol Corp. v. 3M Co., No. C17-5067-RBL, 2017 WL 2671297 (W.D. Wash. June 21, 2017). As that court explained, when one considers that VE Holding addressed new statutory language and that in TC Heartland the Supreme Court opined on the meaning of that language for the first time, it is apparent that the law has changed: After Congress amended § 1391, however, the Federal Circuit concluded in VE Holdings [sic] that § 1391 “clearly applies to § 1400(b), and thus redefines the meaning of the term ‘resides.’” . . . The Supreme Court denied certiorari, allowing the Federal Circuit’s decision to stand, and district courts have since had to follow it—until now. TC Heartland changed the venue landscape. For the first time in 27 years, a defendant may argue credibly that venue is improper in a judicial district where it is subject to a court’s personal jurisdiction but where it is not incorporated and has no regular and established place of business. Defendants could not have reasonably anticipated this sea change, and so did not waive the defense of improper venue by omitting it from their initial pleading and motions. Id. at *2 (citations omitted). Case 3:16-cv-00047-GEC Document 49 Filed 07/12/17 Page 14 of 19 Pageid#: 676 10 In sum, Microsoft did not waive its venue objection because where, as here, strong precedent foreclosed any reasonable argument that the objection could prevail in this Court, the legal basis for the objection was not available. The law properly does not require litigants to assert every argument that could conceivably be later adopted by the Supreme Court or to file motions the court is obligated by controlling precedent to deny, simply to avoid a later finding of waiver. Nor does, or can, Plaintiff point to any prejudice resulting from Microsoft’s assertion of its venue objection now, since to assert it earlier would have been futile and Plaintiff was on notice of the objection from Microsoft’s inclusion of the objection in its Answer. Microsoft’s objection is therefore not waived, and the Court should dismiss or transfer this case for the reasons set forth in Microsoft’s opening memorandum. See Curtis Publ’g. Co. v. Butts, 388 U.S. 130, 143-44 (1967) (intervening law exception to waiver rule applies when there was “strong precedent" prior to the change in law such that the failure to raise the issue was not unreasonable and the opposing party was not prejudiced by the failure to raise the issue sooner); Holland v. Big River Minerals Corp., 181 F.3d 597, 605-06 (4th Cir. 1999) (same). B. Transfer Is Also Proper Under 28 U.S.C. § 1406 Plaintiff does not address the fact that Microsoft also brought the motion as one to transfer venue in the interests of justice pursuant to 28 U.S.C. § 1406. That statute 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.” This language provides a basis to transfer cases that is independent of Rule 12. Indeed, for that reason, district courts have transferred cases Case 3:16-cv-00047-GEC Document 49 Filed 07/12/17 Page 15 of 19 Pageid#: 677 11 under Section 1406 even where the defendant arguably waived the defense of improper venue under Rule 12. See, e.g., Thomas v. Exxon Mobil Oil Corp., No. 2:06-cv-144, 2007 WL 489225, at *6 (N.D. Ind. Feb. 8, 2007) (“Even if this Court assumes arguendo that Plaintiff waived any objection to venue . . . the Court need not address Defendant’s waiver argument here because, based on Title VII's exclusive venue provision, the Court finds that it is appropriate and in the interests of justice to transfer this case sua sponte pursuant to 28 U.S.C. § 1406(a) . . . .”); see also Trujillo v. Williams, 465 F.3d 1210, 1222 (10th Cir. 2006) (“A court may sua sponte cure jurisdictional and venue defects by transferring a suit under the federal transfer statutes, 28 U.S.C. §§ 1406(a) and 1631, when it is in the interests of justice.”); Caldwell v. Palmetto State Sav. Bank of S.C., 811 F.2d 916, 919 (5th Cir. 1987) (“Under the transfer statute [28 U.S.C. §§ 1404 and 1406], a district court may transfer a case upon a motion or sua sponte.”).3 Thus, even if the Court were to conclude that Microsoft waived the right to assert a defense of improper venue based on Rule 12 that does not mean the Court should refuse to transfer the case. To the contrary, the statute is clear that “if it be in the interest of justice” the Court should transfer the case to a proper venue. As set forth in Microsoft’s opening memorandum, the equitable considerations that go into making a decision “in the interests of justice” are especially powerful here because Microsoft (i) expressly denied that venue was proper in its Answer, (ii) specifically cited improper venue as an affirmative defense, and then 3 For completeness, the second paragraph of Section 1406 says that “[n]othing in this chapter shall impair the jurisdiction of a district court of any matter involving a party who does not interpose timely and sufficient objection to the venue.” In this case, of course, Microsoft included a venue objection in its answer in addition to an affirmative defense of improper venue. Thus, the second paragraph of Section 1406 should not impact the conclusion that transfer is the proper, equitable result. Case 3:16-cv-00047-GEC Document 49 Filed 07/12/17 Page 16 of 19 Pageid#: 678 12 (iii) moved to dismiss or transfer venue in the interests of justice promptly after the Supreme Court decided TC Heartland. Plaintiff does not dispute this analysis. Indeed, the only mention of Section 1406 in its opposition is a sentence in its “Legal Standard” section asserting that “[o]nce the improper venue defense is waived, any defect in venue is cured, and the benefits of a 28 U.S.C. § 1406(a) transfer for lack of venue are no longer available,” citing Manley v. Engram, 755 F.2d 1463, 1468 (11th Cir. 1985). As demonstrated above, Microsoft’s objection to improper venue has not been waived, and Manley stands for no such proposition. Indeed, in Manley, it was the plaintiff who moved for transfer under Section 1406 and the Eleventh Circuit affirmed the district court’s grant of the motion, despite noting the general rule that a plaintiff waives any right to challenge venue. See id., 755 F.2d at 1468-71. Thus, the Court should also transfer this case to a proper venue “in the interest of justice.” III. CONCLUSION Microsoft respectfully requests that the Court dismiss the action, or in the alternative, transfer it to the Northern District of California pursuant to 28 U.S.C. § 1406. The Supreme Court’s opinion in TC Heartland makes clear that venue is not proper in the Western District of Virginia. Case 3:16-cv-00047-GEC Document 49 Filed 07/12/17 Page 17 of 19 Pageid#: 679 13 Respectfully submitted, Dated: July 12, 2017 s/ Joseph A. Micallef Joseph A. Micallef Admitted Pro Hac Vice Scott M. Border Virginia Bar No. 74697 Counsel for Defendant Microsoft Corp. Sidley Austin LLP 1501 K Street, N.W. Washington, DC 20005 Telephone: (202) 736-8000 Facsimile: (202) 736-8711 Email: jmicallef@sidley.com Email: sborder@sidley.com Case 3:16-cv-00047-GEC Document 49 Filed 07/12/17 Page 18 of 19 Pageid#: 680 14 CERTIFICATE OF SERVICE I hereby certify that on the 12th day of July 2017, I electronically filed the foregoing document with the clerk of the court for the U.S. District Court, Western District of Virginia, Charlottesville Division, using the electronic case filing system of the court. The electronic case filing system sent a “Notice of Electronic Filing” to the attorneys of record who have consented in writing to accept this Notice as service of this document by electronic means. s/ Joseph A. Micallef Joseph A. Micallef Case 3:16-cv-00047-GEC Document 49 Filed 07/12/17 Page 19 of 19 Pageid#: 681