Under § 1400(b), venue would be proper for Dr. Keith Bennett
in the Western District of Arkansas as the district where either
“the defendant resides” or “the defendant has committed acts of
infringement and has a regular and established place of business.”
Venue in the Northern District of Illinois would not be proper with
respect to Dr. Bennett under either prong of this test. Dr. Keith
Bennett resides in Hot Springs, Arkansas. The interactions between
Cytomedix and the defendants that gave rise to the alleged patent
infringements took place in Arkansas. Cytomedix makes no
allegation of any connection with Illinois on the part of Dr. Keith
Bennett other than the bankruptcy proceedings. Even though the
corporate defendants are subject to personal jurisdiction in
Illinois, and therefore also subject to venue, venue cannot be
proper for all defendants in the Northern District of Illinois.

Cytomedix argues, citing General Electric Co. v. Marvel Rare
Metals Co., 287 U.S. 430 (1932), that defendants cannot use section
1400(b) to object to venue in this district because Cytomedix’s
patent claims were raised by way of counterclaims to defendants’
claims in bankruptcy court. In General Electric, New York
plaintiffs sued Ohio defendants for patent infringement in the
Northern District of Ohio. Defendants counterclaimed, raising
patent infringement claims of their own. Plaintiffs argued that
the patent venue statute barred the counterclaims because

defendants failed to allege that plaintiffs resided in Ohio or that



“absurd” and “intolerable judicial inefficiency” for a court to
sever a patent infringement claim and transfer it to the proper
district while at the same time retaining claims for which venue
was proper when those claims involved largely the same issues,
documentation, witnesses, and evidentiary matters as the
infringement claim); Network Sys. Corp. v. Masstor Sys. Corp., 612
F. Supp. 438, 440-41 (D. Minn. 1984) (adopting the reasoning and
holding of Lighting Systems); Ball Corp. v. Weirton Steel Corp.,
No. 86 C 5425, 1986 WL 13761, at *4 (N.D. Ill. Nov. 28, 1986)
(Kocoras, J.) (“Because the patent infringement claim against
Weirton must be transferred, judicial economy would be served by
transferring the [other] counts against Weirton as well.”) (citing
Lighting Systems) .
III.

The only remaining counts of the complaint are counts V and
VI, which state objections to the claims filed by defendants in the
bankruptcy proceedings. As allowance or disallowance of claims
against a debtor are “core proceedings” under 28 U.S.C.
§ 157(b) (2) (B), and the transfer of counts I-IV obviates the need
for withdrawal under 28 U.S.C. § 157(d), I refer these counts back
to the bankruptcy court for resolution.

IV.
Defendants’ motion to dismiss is DeniED. Defendants’ motion to

transfer, however, is GRANTED with respect to counts I-IV of



whole, not a Fourteenth Amendment inquiry into minimum contacts
with the forum state. Id. at 1244. Defendants here, all residents
of or located in Arkansas, have sufficient minimum contacts with
the United States such that exercising personal jurisdiction over
them is constitutional. See id.
II.

Defendants also argue that venue is improper in this court,
and move for transfer to the Western District of Arkansas. A
corporate defendant in a patent infringement case is subject to
venue anywhere it is subject to personal jurisdiction. 28 U.S.C.
§ 1391(c); 28 U.S.C. § 1400(b); VE Holding Corp. v. Johnson Gas
Appliance Co., 917 F.2d 1574, 1584 (Fed. Cir. 1990) (stating that
the two venue statutes should be read together for corporate
parties); Braden Shielding Systems v. Shielding Dynamics of Texas,
g12 F. Supp. 819, 821 (N.D. Ill. 1992) (Aspen, J.). However, an
individual defendant in a patent infringement case is only subject
to venue “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); VE Holding Corp., 917
F.2d at 1580 fn. 17 (noting that individual defendants are still
subject to the venue test of § 1400(b)); Braden, 812 F. Supp. at
822 fn. 3. As Cytomedix has named both individual and corporate
defendants in its lawsuit, both statutes must be satisfied with

respect to venue.


they infringed defendants’ patent and had a regular place of
business there. The Court rejected plaintiffs’ argument, noting
that the patent venue statute gave alleged infringers a privilege
with respect to the places in which patent suits could be brought
against them, but the privilege could be waived. By suing
defendants for infringement in Ohio, plaintiffs had waived their
right to be free from infringement counterclaims asserted against
them in that forum. Id. at 204 (“The setting up of a counterclaim
against one already in the court of his own choosing is very
different, in respect to venue, from hailing [sic] him into that
court. [The patent venue statute] applies only to the latter, and
we find no warrant for a construction that would make it include
the former.”).

Here, however, we do not have a situation where Bennett haled
Cytomedix into court in this district. Cytomedix initiated the
bankruptcy proceedings here. While defendants did bring claims
against Cytomedix in the bankruptcy court, it was ultimately
Cytomedix, not Bennett, who chose this forum. Bennett’s filing of
creditor claims against Cytomedix in the bankruptcy court did not
waive their privilege not to be sued for patent infringement
outside the venue provided for in section 1400(b). As Cytomedix
has failed to allege that Dr. Keith Bennett, the individual
defendant, is either a resident of Illinois or committed acts of

infringement and has a regular place of business here, venue in



plaintiffs’ complaint, which are hereby TRANSFERRED to the Western
District of Arkansas. Counts V and VI are REFERRED to the

bankruptcy court for resolution.

one 2 Berklee

Elaine E. Bucklo
United States District Judge

Dated: September 30, 2003



Minut® Order Form (06/07)

9

United States District Court, Northern District of Illinois

Name of Assigned Judge
or Magistrate Judge

Elaine E. Bucklo

Sitting Judge if Other
than Assigned Judge

CASE NUMBER 02 C 7459 DATE 9/30/2003
CASE Cytomedix, Inc, vs. Bennett, et al.
TITLE
[In the following box (a) indicate the party filing the motion, ¢.g.. plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.}
DOCKET ENTRY:
qd) Qa Filed motion of [ use listing in “Motion” box above.]
(2) oa Brief in support of motion due
(3) a Answer brief to motion due. . Reply to answer brief due.
(4) oa Ruling/Hearing on set for at
(5) Oo Status hearing[held/continued to] [set for/re-set for] on set for at
(6) Oo Pretrial conference{held/continued to] [set for/re-set for] on set for at :
Mm a ‘Trial[set for/re-set for] on at
(8) Q [Bench/Jury trial] [Hearing] held/continued to at
(9) im) This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) CLocal Rule 41.1 CIFRCP41(a)(1) Ci FRCP41(a)(2).
ao =m [Other docket entry] | Defendants’ motion to dismiss or transfer or in the alternative to compel ':
(10-1 & 3) is denied in part and granted in part. The motion to dismiss is denied. Counts I- IV are
transferred to the United States District Court for the Western District of Arkansas, Hot Springs Division,
and counts V and VI are referred to the United States Bankruptcy Court for the Northern District of
Illinois, Eastern Division. Any pending motion in this case is terminated as moot. Enter Memorandum
Opinion and Order.
al) gf {For further detail see order attached to the original minute order.]

No notices required, advised in open court
5

No notices required. umber of notices

Notices mailed by judge’s staff

SEP 30 2003

Notified counsel by telephone. £3.

Docketing to mail notices.

Mail AO 450 form.

Copy to judge/magistrate judge.

Pye nee 9730/2003
a dA O8 das cd
date mailed notice
courtroom
MPS deputy’s Shee Mey
initials aay
Date/time Fectived in
contval Clerk's Office ovailing doputy initiate



this district is improper under section 1440(b). 28 U.S.C. §
1406(a) permits me, in the interest of justice, to transfer claims
lacking proper venue to any district in which they could have
originally been brought. As Dr. Keith Bennett resides and has his
principal place of business in Hot Springs, Arkansas, and acts of
infringement are alleged to have occurred there, the patent claims
could have properly been brought against him in the Western
District of Arkansas under § 1400(b). Venue is also proper under
§ 1391(c) with respect to the corporate defendants.* Accordingly,
plaintiff’s patent claims, counts II and III of its complaint, are
transferred to that district pursuant to § 1406(a).

Additionally, I find that because counts II and III must be
transferred to the Western District of Arkansas, and because counts
I and IV (the breach of contract and unfair competition counts)
involve substantially the same factual allegations, those counts
must also be transferred to Arkansas pursuant to 28 U.S.C. § 1404.3
See, e.g., Lighting Sys., Inc. v. Int’l Merch. Assocs., Inc., 464

F. Supp. 601, 606 (W.D. Pa. 1979) (holding that it would be

? Defendants do not contest personal jurisdiction in Arkansas,
as Dr. Keith Bennett resides in Arkansas, Bennett Medical is
incorporated in Arkansas and both corporations have their principal
places of business there.

2 Because count I, the breach of contract claim for which
defendants seek an order compelling arbitration, is being
transferred to the Western District of Arkansas, it is appropriate
for that court to decide whether to compel arbitration as sought by
defendants.


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

CYTOMEDIX, INC.,
Plaintiff,

v. No. 02 C 7459
KEITH G. BENNETT, an individual,
BENNETT MEDICAL, LLC, BENNETT
WOUND THERAPY CENTERS OF
ARKANSAS, LLC (d/b/a BENNETT
WOUND THERAPY CENTER AND BENNETT
WOUND THERAPY CLINIC) ,

Ww
we

Defendants.

MEMORANDUM OPINION AND ORDER

Plaintiff Cytomedix, Inc. (“Cytomedix”) initiated bankruptcy
proceedings in this district under Chapter 11. As part of those
proceedings, defendants Keith G. Bennett, Bennett Medical, and
Bennett Wound Therapy Centers of Arkansas (collectively “Bennett”)
filed claims as creditors of Cytomedix. Cytomedix objected to
those claims and filed counterclaims against Bennett. Pursuant to
Fed. R. Bankr. P. 3007, Cytomedix refiled its objections and
counterclaims as an adversary proceeding.’ Count I of its
complaint alleges breach of contract, counts II and III allege
patent infringement, count IV alleges unfair competition, and

counts V and VI object to Bennett’s claims as creditors. Bennett

1 Fed. R. Bankr. P. 3007 states: “If an objection to a claim
joined with a demand for relief of the kind specified in Rule 7001,
it becomes an adversary proceeding.”


moved to withdraw the reference pursuant to 28 U.S.C. § 157(d),

which I granted as unopposed. Bennett now files a motion to

dismiss, to transfer, or to compel arbitration. I deny the motion

to dismiss, transfer counts I-IV to the Western District of

Arkansas, and refer counts V and VI back to the bankruptcy court.
I.

Dr. Bennett resides in Arkansas. Bennett Medical is a limited
liability company organized under Arkansas law and whose principal
place of business is in Arkansas. Bennett Wound Therapy Centers
also maintains its principal place of business in Arkansas.
Cytomedix does not allege any connection between any defendant and
Illinois. Defendants argue that they do not have minimum contacts
with Illinois sufficient for me to exercise personal jurisdiction
over them.

Bankruptcy Rule 7004(d) provides for nationwide service of
process. Part VII of the bankruptcy rules (which includes Rule
7004) applies to all adversary proceedings, regardless of whether
they transpire in bankruptcy or district court. Diamond Mortgage
Corp. v. Sugar, 913 F.2d 1233, 1241 (7 Cir. 1990). When a
district court exercising subject matter jurisdiction under 28
U.S.C. § 1334 seeks to assert personal jurisdiction over a
defendant under the nationwide service provision of Rule 7004(d),
the relevant constitutional inquiry is a Fifth Amendment due

process inquiry into minimum contacts with the United States as a