Westech v. 3M (Fed. Cir. 2019)
Westech sued 3M for patent infringement in W.D.Washington. On motion from 3M, the district court then dismissed the case for improper venue under 28 U.S.C. 1400(b). Under the statute, infringement cases can only be brought in a judicial district where the defendant either (1) resides (i.e., is incorporated) or (2) infringed the patent and has a regular and established place of business. Here, the focus is on 3M’s sales activities with vendors, distributors, and sales professionals — and whether those activities constitute a “regular and established place of business.” Two key precedential cases: In Cray, the Federal Circuit held that a “place of business” must be a “physical place in the district.” In ZTE, the Federal Circuit held that it is the plaintiff’s burden of establishing proper venue (burden of persuasion).
Westech’s amended complaint states:
3M has one or more regular and established places of business in this judicial district. Furthermore, on information and belief, Defendants maintain contractual relationships with distributors of the infringing products who are located in this judicial district, Defendants have sales representatives located in this judicial district, Defendants represent that they sell products in this judicial district, and Defendants earn substantial sales revenue from sales of the infringing products in this judicial district.
Sufficient for venue? The district court saw these allegations as insufficient and the Federal Circuit has affirmed on appeal. On point – The asserted facts do not lead to a conclusion that 3M has a physical place of business in the district, and the allegation that 3M has “regular and established places of business” is a legal conclusion not given any weight in the analysis. The court explains:
Simply stating that 3M has a regular and established place of business within the judicial district, without more, amounts to a mere legal conclusion that the court is not bound to accept as true. . . .
A presumption that facts pleaded in the complaint are true does not supplant a plaintiff’s burden to plead specific facts showing that the defendant has a regular and established place of business physically located in the judicial district.
Question of Law: The statements by the court here is a bit oblique, but it may be the first precedent expressly stating that whether the defendant “has a regular and established place of business” in the district is a question of law and not a question of fact. In Cray, the court indicated that the analysis will be based upon underlying facts: “In deciding whether a defendant has a regular and established place of business in a district . . . each case depends on its own facts.”