Case 6:16-cv-00961-RWS-JDL Document 209 Filed 07/21/17 Page 1 of 6 PageID #: 17201 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS TYLER DIVISION REALTIME DATA, LLC, Plaintiff, CIVIL ACTION NO. 6:16-CV-00961 RWS-JDL v. JURY TRIAL DEMANDED RACKSPACE US, INC., NETAPP, INC., and SOLIDFIRE, INC., Defendants. REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE Before the Court is Defendants NetApp, Inc. and SolidFire, LLC s (collectively, NetApp ) Motion to Dismiss for Improper Venue, or in the alternative, Transfer to the Northern District of California. (Doc. No. 180.) Realtime Data LLC ( Realtime ) has filed a response (Doc. No. 195), NetApp has filed a reply (Doc. No. 202) and Realtime has filed a sur-reply (Doc. No. 205). Realtime filed this action for patent infringement against NetApp, Inc. and SolidFire, Inc. on June 29, 2016. (Doc. No. 1.) Realtime subsequently filed an Amended Complaint substituting SolidFire, LLC in place of SolidFire, Inc. (Doc. No. 33.) NetApp filed an Answer to the Amended Complaint on October 28, 2016. (Doc. No. 40.) In its Answer, NetApp stated that it admits that venue is authorized in this Judicial District under 28 U.S.C. 1391 and 1400(b), but denies that the Eastern District of Texas is a proper and convenient venue for the parties. (Id. at 12.) NetApp s Answer also included an affirmative defense of improper venue, stating [o]n information and believe, venue in this judicial district is improper. (Id. at 498.) 1
Case 6:16-cv-00961-RWS-JDL Document 209 Filed 07/21/17 Page 2 of 6 PageID #: 17202 On November 11, 2016, NetApp filed a Motion to Stay Litigation Pending Inter Partes Review (Doc. No. 51) and a Motion to Transfer Venue pursuant to 28 U.S.C. 1404(a) (Doc. No. 54). The Court ultimately denied both of these Motions. (Doc. Nos. 104, 105.) On March 14, 2017, NetApp filed objections to the Court s Order denying venue transfer (Doc. No. 110), which were ultimately overruled by the District Judge (Doc. No. 182). The Court meanwhile proceeded forward with this case through claim construction (Doc. No. 153, 183), numerous discovery disputes (brought by NetApp) (Doc. No. 144, 156, 176), and renewed motions to stay (Doc. Nos. 150, 151). On June 9, 2017, five days before the Court issued its Claim Construction Order, NetApp filed the currently-pending Motion to Dismiss for Improper Venue. (Doc. No. 180.) NetApp s Motion comes in the wake of TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514 (2017). In TC Heartland, the Supreme Court reaffirmed its holding in Fourco Glass Co. v. Transmirra Prod. Corp., 353 U.S. 222, 229 (1957) that 28 U.S.C. 1400(b) is the sole and exclusive provision controlling venue in patent infringement actions. TC Heartland, 137 S.Ct. at 1519. As a number of courts have since recognized, TC Heartland was not an intervening change in law. Aralez Pharm. Inc. v. Teva Pharm. USA, Inc., No. 2:17-cv-71-JRG-RSP, slip. op., at *5 n.2 (E.D. Tex. Jul. 17, 2017) (Report and Recommendation) (collecting cases); accord Koninklijke Philips N.V. v. ASUSTek Comp. Inc., No. 15-1125-GMS, slip. op., Doc. No. 215, at *10 (D. Del. Jul. 19, 2017); Reebok Int l, Ltd. v. TRB Acquisitions LLC, No. 3:16-cv-1618-SI, slip. op., Doc. No. 53, at *6 8 (D. Or. Jul. 14, 2017). Rather, TC Heartland merely affirmed the viability of Fourco. Elbit Sys. Land & C41 Ltd. v. Hughes Network Sys., LLC, No. 2:15-cv-37- RWS-RSP, 2017 WL 2651618, at *20 (E.D. Tex. June 20, 2017) report and recommendation adopted by Doc. No. 430 (June 30, 2017) (quoting Cobalt Boats, LLC v. Sea Ray Boats, Inc., No. 2
Case 6:16-cv-00961-RWS-JDL Document 209 Filed 07/21/17 Page 3 of 6 PageID #: 17203 2:15-cv-21, 2017 WL 2556679, at *3 (E.D. Va. June 7, 2017), mandamus writ denied, No. 2017-125, 2017 WL 2577399 (Fed. Cir. June 9, 2017)). While the Federal Circuit s decision in VE Holding and application of 1391 on which Defendants relied was inconsistent with Fourco, the Federal Circuit cannot overturn Supreme Court precedent. Tinnus Enterprises, LLC v. Telebrands Corp., No. 6:15-cv-551-RC-JDL, slip. op., Doc. No. 316, at *3 (E.D. Tex. Jul. 5, 2017) (Report and Recommendation); Thurston Motor Lines, Inc. v. Jordan K. Rand, Ltd., 460 U.S. 533, 535 (1983); The Chamberlain Grp., Inc. v. Techtronic Indus. Co., Ltd., No. 16 C 6097, slip. op., Doc. No. 407, at *3 (N.D. Ill. June 28, 2017) (quoting TC Heartland, 137 S.Ct. at 1517) ( [T]he Supreme Court in TC Heartland pulled no punches in reminding litigants that Congress has not amended 1400(b) since this Court construed it in Fourco. ). 1 Improper venue is a waivable defense. See Leroy v. Great W. United Corp., 443 U.S. 173, 180 (1979); Hoffman v. Blaski, 363 U.S. 335, 343 (1960); Albino v. Baca, 747 F.3d 1162, 1170 (9th Cir. 2014); see also 28 U.S.C. 1406(b) ( Nothing in th[e venue] 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. ). Indeed, a party s litigation conduct may constitute waiver, particularly where that party repeatedly seeks affirmative relief from the Court or otherwise demonstrates by its actions that it consents to litigate in a particular forum. See, e.g., Yeldell v. Tutt, 913 F.2d 533, 539 (8th Cir. 1990); Bel-Ray Co. Chemrite (Pty) Ltd., 181 F.3d 435, 443 (3d Cir. 1999); Tinnus Enterprises, No. 6:15-cv-551-RC-JDL, Doc. No. 316, at *6 7; 1 NetApp relies on a dissenting opinion from a Federal Circuit mandamus denial and a solitary opinion from the Western District of Washington to support its argument that TC Heartland is an intervening change in law. (Doc. No. 202, at 3 4 (citing In re Sea Ray Boats, No. 2017-124, 2017 WL 2577399, at *1 (Fed. Cir. June 9, 2017) (J. Newman, dissenting) Westech Aerosol Corp. v. 3M Co., No. C17-5067-RBL, 2017 WL 2671297, at *2 (W.D. Wash. June 21, 2017)).) The Court finds these sources unpersuasive in the face of numerous district court opinions reaching the opposite conclusion. See supra. 3
Case 6:16-cv-00961-RWS-JDL Document 209 Filed 07/21/17 Page 4 of 6 PageID #: 17204 Infogation Corp. v. HTC Corp., No. 16-cv-01902-H-JLB, 2017 WL 2869717, at *3 (S.D. Cal. July 5, 2017). NetApp s continuous and consistent conduct in this action constitutes such a waiver. See, e.g., Koninklijke Philips N.V. v. ASUSTek Comp. Inc., No. 15-1125-GMS, slip. op., Doc. No. 215, at *10 (D. Del. Jul. 19, 2017) (Defendants challenged venue, but later withdrew their challenge and ultimately waived a defense of improper venue by engaging in active litigation effort as the case proceeded through motions for judgment on the pleadings, a scheduling conference, and a Markman hearing); Amax, Inc. v. ACCO Brands Corp., No. CV 16-10695, 2017 WL 2818986, at *3 (D. Mass. June 29, 2017) (Defendant waived improper venue defense despite objecting to venue in answer and filing a motion to transfer pursuant to 28 U.S.C. 1404(a) in part because defendant attended a scheduling conference and filed an early motion for summary judgment); ilife Techs., Inc. v. Nintendo of Am., Inc., No. 3:13-cv-4987, 2017 WL 2778006, at *5 (N.D. Tex. June 27, 2017) (finding that defendant waived improper venue defense by admitting venue was proper in its answer and filing a Motion to Transfer Venue pursuant to 1404(a), but failing to bring a timely motion under Rule 12(b)(3) and 1400(b)). NetApp has done more than merely defend against Realtime s claims of patent infringement. Rather, NetApp has filed numerous discovery motions, challenged Realtime s patent claims based on alleged indefiniteness in their Markman briefing, and otherwise submitted to venue in this district. See Koninklijke Philips, No. 15-1125-GMS, Doc. No. 215, at *10. NetApp argues that it has diligently attempted to transfer venue or stay litigation in this District since this case was filed. (Doc. No. 180, at 3.) As an initial matter, NetApp presents no authority for its assertion that seeking a stay pending inter partes review by an administrative agency is relevant to a determination of whether venue is proper. Further, between asserting an 4
Case 6:16-cv-00961-RWS-JDL Document 209 Filed 07/21/17 Page 5 of 6 PageID #: 17205 affirmative defense of improper venue in its Answer almost nine months ago and filing the currently pending Motion, NetApp did not once bring a challenge for improper venue under 1400(b). 2 Indeed, given the inconsistencies in NetApp s Answer (admitting venue is authorized, but denying venue is proper and filing an affirmative defense of improper venue), it is unclear whether NetApp even preserved a defense of improper venue at the time it filed its Answer. Cf. Elbit, 2017 WL 2651618, at *20 (finding that defendants waived venue challenge where their answer did not dispute venue but reserved the right to later contest it if TC Heartland changed the law.). Given NetApp s ongoing conduct and active participation in litigation in this District, however, it is unnecessary to resolve this issue. For the same reason, allowing an amendment to NetApp s Answer at this time with respect to venue would be both futile and prejudicial. See Fed.R.Civ.P. 12(h). NetApp also alternatively re-asserts its Motion to Transfer Venue to the Northern District of California. (Doc. No. 180, at 6 (citing Doc. No. 54 (NetApp s Motion to Transfer Venue).) NetApp s Motion cites no new facts or arguments to support this request. It is also unclear if NetApp makes this request under 1404(a) or 1406(a). In its reply brief, NetApp asserts that its request is supported by new authority TC Heartland and Realtime does not dispute that venue is not longer proper in this District. (Doc. No. 202, at 2.) It thus appears that NetApp s request is being brought under 1406(a). Because NetApp has waived its objection to venue, however, the Court need not address their request pursuant to 1406(a). See 1406(b) ( Nothing in this chapter shall impair the jurisdiction of a district court of any matter involving a 2 NetApp filed a Motion to Reconsider and Objections with respect to the Court s Order denying severance and transfer on March 14, 2017, months after the Supreme Court granted certiorari in TC Heartland. Despite this, NetApp again made no reference to 1400(b) or improper venue in that filing. 5
Case 6:16-cv-00961-RWS-JDL Document 209 Filed 07/21/17 Page 6 of 6 PageID #: 17206 party who does not interpose timely and sufficient objection to venue. ); Elbit Sys. Land & C41 Ltd., 2017 WL 2651618, at *21 (citing In re Vitamins Antitrust Litig., 263 F. Supp. 2d 67, 68 n.1 (D.D.C. 2003)). If NetApp alternatively intends that this request is brought pursuant to 1404(a), it fails for the same reasons previously explained in the Court s Order denying NetApp s Motion to Transfer Venue. (See Doc. No. 110, order overruling objections, Doc. No. 182.) Accordingly, the Court RECOMMENDS that NetApp s Motion to Dismiss for Improper Venue, or in the alternative, Transfer to the Northern District of California (Doc. No. 180) be DENIED. Within fourteen (14) days after receipt of the magistrate judge s report, any party may serve and file written objections to the findings and recommendations contained in this Report. A Party s failure to file written objections to the findings, conclusions and recommendations contained in this Report within fourteen (14) days after being served with a copy shall bar that party from de novo review by the district judge of those findings, conclusion, and recommendations and, except on grounds of plain error, from appellate review of unobjected-to factual findings and legal conclusions accepted and adopted by the district court. Fed. R. Civ. P. 72(b)(2); see Douglass v. United States Auto Ass n, 79 F.3d 1415, 1430 (5th Cir. 1996) (en banc). So ORDERED and SIGNED this 21st day of July, 2017. 6