Texas Patent Litigation Monthly Wrap-Up: April 2022

This post summarizes two recent Texas District Court opinions regarding venue under 28 U.S.C. § 1400 et seq.

Zilker Cloud Technologies, LLC v. RingCentral, Inc., No. 3:21-CV-2807 (NDTX Apr. 12, 2022) (Karen Gren Scholer).

Plaintiff Zilkr Cloud sued RingCentral in the Northern District of Texas ("NDTX") for the alleged infringement of four patents relating to IP-enabled telephony services.[1] RingCentral moved to dismiss on the grounds that venue was improper. The Court agreed, dismissing plaintiff's case without prejudice to be refiled in a proper venue.[2]

The Court began by observing that RingCentral was incorporated in Delaware and thus did not reside in Texas, leaving only the question of whether "whether Defendant 'has a regular and established place of business' in this District."[3] Plaintiff argued that RingCentral's presence in NDTX constituted a regular and established place of business "via (1) roughly two dozen remote employees of Defendant who reside in the Dallas area, (2) a data center housing Defendant's servers located in Dallas, and (3) tax records reflecting over $8 million of business personal property owned by Defendant in Dallas."[4]

The Court first disposed of the claim that remote employee presence alone in a district could constitute a place of business since there was no evidence that RingCentral conditioned employment on Dallas residence.[5] The Court then disagreed with plaintiff's contention that the presence of servers in the district at a third-party data center conferred venue.[6] In particular, the Court noted that the Federal Circuit had addressed this exact issue in In re Google, LLC, 949 F.3d 1338 (Fed. Cir. 2020).[7] Finally, the Court rejected plaintiff's argument that the presence of personal property in a judicial district was relevant to the venue analysis noting that "[p]laintiff cites no authority for the proposition that the location of some personal property in a District constitutes a regular and established place of business."[8]

Corrino Holdings LLC v. Expedia, Inc. and Trivago N.V., No. 6:20-CV-309 (WDTX Apr. 12, 2022) (Alan Albright).

Defendants were sued in the Waco Division of the Western District of Texas (WDTX) for allegedly infringing seven patents relating to "the search functionality on the Expedia.com, Orbitz.com, Travelocity.com, Hotels.com, Cheaptickets.com, HomeAway.com, and Vrbo.com mobile applications."[9] Defendants moved to transfer to the Austin Division on the grounds that it was clearly more convenient pursuant to 28 U.S.C. § 1404(a). The Court granted defendants' request.

The Court noted at the outset that whether the case could have been filed in the Austin Division was uncontested.[10] The Court then addressed the private and public interest factors. As to the private "access to sources of proof" and "cost of witness attendance and convenience" factors, the Court found that both favored transfer because defendants identified two Austin offices where key document custodians, technical employees, and computer servers resided.[11] As to the "local interests" public factor, the Court determined that, while both Divisions had some degree of local interest, the Austin Division's interests were "likely stronger because the physical offices are in that division, and the employees reside closer to the Austin courthouse than the Waco courthouse."[12] Notably, although the Court reasoned that "administrative difficulties flowing from court congestion" public factor likely favored the Waco Division, the Court declined to speculate because "the parties [did not cite] any statistics that compare the time-to-trial in each division" and determined the factor was neutral.[13] On balance, the factors favored transfer to the Austin Division of the WDTX.

[1] See 2022 U.S. Dist. LEXIS 68465.

[2] Id. at *20-21.

[3] Id. at 5.

[4] Id.

[5] Id. at 8-9.

[6] Id. at 13-16.

[7] Id. at 14.

[8] Id. at 18-19.

[9] 2022 U.S. Dist. LEXIS 67156 at *2.

[10] Id. at *5-6.

[11] Id. at *7, 10-12.

[12] Id. at 18-19.

[13] Id. at 15-16.