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Timestamp: 2019-04-22 04:06:07+00:00

Document:
FindACase | Anza Technology, Inc. v. Mushkin, Inc.
Anza Technology, Inc. v. Mushkin, Inc.
MUSHKIN, INC., a Colorado Corporation, d/b/a ENHANCED NETWORK SYSTEMS, INC.; and AVANT TECHNOLOGY, INC., a Nevada corporation, d/b/a MUSHKIN ENHANCED MFG, Defendants.
WILLIAM B. SHUBB UNITED STATES DISTRICT JUDGE.
Plaintiff Anza Technology, Inc. (“Anza”) brought this patent infringement action against Mushkin, Inc. (“Mushkin”) and Avant Technology, Inc. (“Avant”) based on defendants' alleged use of certain tools and techniques in the manufacture of integrated circuit chips. Mushkin moves for dismissal for improper venue under Federal Rule of Civil Procedure 12(b)(3) (“Rule 12(b)(3)”); dismissal for improper joinder under Federal Rule of Civil Procedure 21 (“Rule 21”); or severance and transfer under Rule 21, 28 U.S.C. § 1404(a), or 28 U.S.C. § 1406(a). (Docket No. 29.) Avant moves for dismissal under Federal Rule of Civil Procedure 12(b)(6) (“Rule 12(b)(6)”); dismissal for improper venue under Rule 12(b)(3); or transfer under 28 U.S.C. § 1404(a) or 28 U.S.C. § 1406(a). The court held oral argument on the motions on December 18, 2018.
Under 28 U.S.C. § 1406(a), if a case is filed in an improper venue, the district 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 brought.” On a motion for improper venue under Rule 12(b)(3), the court need not accept the pleadings as true and may consider supplemental written materials and facts outside the pleadings in deciding the motion. Munns v. Clinton, 822 F.Supp.2d 1048, 1079 (E.D. Cal. 2011) (England, J.) (citing, inter alia, Murphy v. Schneider Nat'l, Inc., 362 F.3d 1133, 1137 (9th Cir. 2004)). The decision to dismiss for improper venue or to transfer venue to a proper court is a matter within the sound discretion of the district court. Munns, 822 F.Supp.2d at 1079 (citing Cook v. Fox, 537 F.2d 370, 371 (9th Cir. 1976)).
Venue in patent cases is governed by 28 U.S.C. § 1400(b), rather than the more permissive general venue statute, 28 U.S.C. § 1391. TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514, 1518-19 (2017). Under § 1400(b), patent infringement actions may only be brought in (1) “the judicial district where the defendant resides” or (2) “where the defendant has committed acts of infringement and has a regular and established place of business.” 28 U.S.C. § 1400(b).
For purposes of § 1400(b), “a domestic corporation ‘resides' only in its State of incorporation.” TC Heartland, 137 S.Ct. at 1517. “[T]he regular and established place of business standard requires more than the minimum contacts necessary for establishing personal jurisdiction or for satisfying the doing business standard of the general venue provision.” In re Cray Inc., 871 F.3d 1355, 1361 (Fed. Cir. 2017). This standard requires that “(1) there must be a physical place in the district; (2) it must be a regular and established place of business; and (3) it must be the place of the defendant.” Id. at 1361.
Here, there is no dispute that both Mushkin, a Colorado corporation, and Avant, a Nevada corporation with its principal place of business in Texas, reside outside the Eastern District of California, and therefore venue does not lie under the first prong of § 1400(b). (See 1st Am. Compl. ¶¶ 7, 9.) Nor is there any claim by plaintiff that either Mushkin and Avant have a regular and established place of business in the Eastern District of California, and defendants' evidence shows that they do not. (See Mushkin Mot. Dismiss Stathakis Decl. ¶ 11 (Docket No. 29-2) (stating that Mushkin has no physical place of business, warehouse, inventory, employees or sales representatives, or continual presence in the Eastern District of California); Mushkin Peddecord Decl. ¶ 9 (Docket No. 29-3) (stating that Avant has no physical place of business, warehouse, inventory, employees or sales representatives, or continual presence in California or Colorado).) Most importantly, plaintiff conceded at oral argument that venue was not proper in the Eastern District of California, and the court agrees.
Having determined that venue does not lie in the Eastern District of California, the court must determine whether the appropriate remedy is dismissal or transfer. The parties agree that the court may sever the case and transfer plaintiff's claims against Mushkin to the District of Colorado, where Mushkin resides and has a regular and established place of business, and transfer the claims against Avant to the Western District of Texas, where Avant is headquartered. However, defendants prefer that the case be dismissed, while plaintiff prefers that the entire case should be transferred to the Western District of Texas.
It was not apparent that venue was improper in the Eastern District of California at the time this action was filed, before the Supreme Court's decision in TC Heartland. Accordingly, because all parties agree that plaintiff's claims may be brought separately in the District of Colorado and the Western District of Texas, and dismissal may reduce any potential recovery by plaintiff due to statute of limitations issues, the court does not find that maintaining this suit after TC Heartland warrants dismissal under Rule 1406(a).
Instead, the court will sever and transfer plaintiff's claims against Mushkin to the District of Colorado, and the claims against Avant to the Western District of Texas. Transfer under § 1406(a) is only permitted “to any district or division in which it could have been brought” and plaintiff has not shown that the case could have been brought against both defendants in the Western District of Texas. See, e.g., Wordtech Sys. Inc. v. Integrated Network Sols., Corp., No. 2:04-cv-01971-TLN, 2014 WL 2987662, at *4 (E.D. Cal. July 1, 2014) (citation omitted) (“When there are multiple parties and/or multiple claims in an action, the plaintiff must establish that venue is proper as to each defendant and as to each claim.”).

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