Texas Patent Litigation Monthly Wrap-Up — September 2021

This post summarizes some of the significant developments in the federal district courts of Texas for the month of September 2021.

Unicorn Energy GmbH v. Tesla, Inc., No. 2-20-cv-00338 (E.D. Tex.) (J., Gilstrap): Motion to Transfer Venue to N.D. Cal. under 28 U.S.C. § 1404

In Unicorn Energy, Defendant moved to transfer venue to the Northern District of California, arguing that the private and public interest factors[1] weighed in favor of transfer. Specifically, Defendant argued that all of its relevant documentation being in California, the cost of attendance of willing witnesses, and its being headquartered in California strongly favored transfer. Judge Gilstrap did not agree that these factors "strongly" favored transfer, but found that these factors "slightly" favored transfer, sufficient for the Court to grant Defendant's motion to transfer.

The Court explained that Defendant "has put forth evidence showing that many of its documents relevant to this case are in the Northern District." While agreeing with Plaintiff that many of these documents "will likely be electronically transferred in this case, it is clear" that this does not change the analysis of the relevant documentation factor. For the cost of attendance factor, the Court found that the "identification of [Defendant witnesses located in the Northern District and the absence of [Plaintiff] witnesses" slightly favors transfer. The Court also found that Defendant's headquarters in N.D. Cal. slightly favors transfer.

The Court found all other factors neutral or slightly weighing against transfer, and concluded that the "specific facts of this particular case" warranted a transfer.

STRATOSAUDIO, INC. v. Hyundai Motor America and Volkswagen Group of America, Inc., Nos. 6:20-CV-01125, 6:20-CV-01131 (W.D. Tex.) (J., Albright): Motions to Dismiss pursuant to 28 U.S.C. §§ 1400(b) and 1406(a)

In STRATOSAUDIO, Defendants moved to dismiss Plaintiff's suit for improper venue pursuant to 28 U.S.C. §§ 1400(b) and 1406(a). Judge Albright denied the motion, finding that both Defendants have a "regular and established place of business" in the Western District of Texas.

The Court explained that "a 'regular and established place of business' requires the regular, physical presence of an employee or other agent of the defendant conducting the defendant's business at the alleged 'place of business.'" In re Google LLC, 949 F.3d 1338, 1345 (Fed. Cir. 2020). The Court found that the "main dispute before the Court is whether Defendant[s]" have a regular and established place of business under "the third and fourth requirements" as established by In re Cray, 871 F.3d 1355 (Fed. Cir. 2017) and In re Google.

Under the third Cray requirement, a plaintiff must show that the place of business at issue is "the place of the defendant." In re Cray, 871 F.3d at 1360. The Court explained that there "is no bright-line rule for this inquiry," but the Federal Circuit has set forth a number of non-exhaustive "considerations to determine whether the defendant[s] ha[ve] ratified the place of business." See id. at 1363-64; In re ZTE (USA) Inc., 890 F.3d 1008, 1015—16 (Fed. Cir. 2018). The Court found that the Defendants' actions in the Western District "ratifies" the authorized dealerships as Defendants' "places of business." The Court explained that Defendants' "control over its dealerships," conditions on the "continued presence in this District," and a website listing representing to the public of "its authorized dealerships," result in a finding of the authorized dealerships as "place[s] of the defendant[s]" under the third Cray requirements.

Under the fourth In re Google requirement, the Court found that the dealership employees are "agents" of the Defendants and thus were "conducting [Defendants'] business in this District." The Court explained that each Defendant "exercises a broad scope of control over its authorized dealerships in this District through their agreements," and these agreements "clearly show that there is manifestation of consent by [Defendants] to the dealerships that the dealerships shall act on [Defendants'] behalf." The Court concluded that Defendants have a "regular and established place of business" in the Western District of Texas and venue is proper in this District under Section 1400(b)."

[1] The Fifth Circuit has established a non-exhaustive list of private and public interest factors. In re Volkswagen AG, 371 F.3d 201, 203 (5th Cir. 2004). The private factors include: (1) "the relative ease of access to sources of proof;" (2) "the availability of compulsory process to secure the attendance of witnesses;" (3) "the cost of attendance for willing witnesses;" and (4) "all other practical problems that make trial of a case easy, expeditious and inexpensive." Id. The public interest factors include: (1) "the administrative difficulties flowing from court congestion;" (2) "the local interest in having localized interests decided at home;" (3) "the familiarity of the forum with the law that will govern the case;" and (4) "the avoidance of unnecessary problems of conflict of laws." Id.