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CAO Lighting, Inc. v. Light Efficient Design

United States District Court, D. Idaho

October 11, 2017

CAO LIGHTING, INC., Plaintiff,
v.
LIGHT EFFICIENT DESIGN and ELECTRICAL WHOLESALE SUPPLY CO., INC., Defendants.

          MEMORANDUM DECISION AND ORDER

          Honorable David C. Nye United States District Judge.

         I. INTRODUCTION

         Plaintiff CAO Lighting, Inc. (“CAO”) claims that Defendant Light Efficient Design[1] is infringing on one of its patents by “making, using, selling, and/or offering to sell LED retrofit lighting devices.” Dkt. 1, ¶ 25. CAO also claims that Defendant Electric Wholesale Supply Company, Inc. (“EWS”) is infringing on one of its patents by distributing Light Efficient Design's infringing products. Id. ¶¶ 17, 25. Defendants now ask this Court to sever the claims against each Defendant, transfer the claim against Light Efficient design to the Northern District of Illinois, and stay the claim against EWS in this District until the suit against Light Efficient Design is complete. For the reasons set forth below, the Court GRANTS the Motion.

         II. BACKGROUND

         CAO is a Utah corporation. Light Efficient Design is a limited liability company that is organized under the laws of the State of Illinois and has its principal place of business in Cary, Illinois. EWS is incorporated in Idaho and has its principal place of business in Idaho Falls, Idaho. EWS distributes, among other things, Light Efficient Design's products in Idaho.

         The United States Patent and Trademark office issued Patent 6, 465, 961 (“the ‘961 Patent”) to CAO on October 15, 2002. On October 28, 2016, CAO filed this lawsuit in the District of Idaho, asserting one claim of patent infringement against Defendants. In its Complaint, CAO included screenshots of products (lightbulbs) that Defendants have displayed or offered for sale on their respective websites and that CAO claims are infringing on the ‘961 Patent. CAO seeks both an injunction against Defendants and compensatory damages.

         Defendants filed an Answer to the Complaint on December 9, 2016. Dkt. 9. On January 19, 2017, Judge B. Lynn Winmill filed a case management order setting the discovery deadline for October 16, 2017, and the dispositive motion deadline for March 19, 2018. Dkt. 21. The discovery deadline was contingent upon the Court holding a Markman hearing in August of 2017 and issuing a Markman order by September 14, 2017. Dkts. 19-21. However, on July 14, 2017, Defendants filed the instant Motion to Sever, Stay, and Transfer. Dkt. 28. Due to extensions of time this Court granted in the briefing schedule, this Motion became ripe on September 15, 2017. Moreover, on August 2, 2017, Judge Winmill transferred this case to the undersigned. Accordingly, in the interest of justice, the Court vacated all case management deadlines and rescheduled the Markman hearing for November 9, 2017. However, this hearing will not be necessary in light of the Court's decision in the instant motion.

         III. ANALYSIS

         Defendants argue that the Court must transfer the claims against Light Efficient Design because the District of Idaho is the improper venue as to that Defendant. In response, CAO asserts that (1) venue is proper and (2) regardless of whether venue is proper, Defendants waived any challenge to venue. This Court first addresses the merits of the request to transfer and then addresses whether Defendants waived their right to challenge venue.

         A. Whether Venue is Proper

         Pursuant to 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.” Venue in this case is governed by 28 U.S.C. § 1400(b), “the exclusive statutory provision controlling venue in patent infringement proceedings.” TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514, 1518 (2017) (citation omitted). The patent venue statute provides: “Any civil action for patent infringement may 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.A. § 1400(b). Thus, there are two different means of establishing proper venue under § 1400(b).

         The first means does not apply in this case. The Supreme Court recently clarified that “a domestic corporation ‘resides' only in its State of incorporation for purposes of the patent venue statute.” TC Heartland, 137 S.Ct. at 1517. It is undisputed that TADD, doing business as Light Efficient Design, is incorporated in Illinois. Therefore, TADD does not reside in Idaho for the purposes of the patent venue statute.

         The second method is not as obvious. Under this method, CAO has the burden of showing: (a) that Light Efficient Design “has a regular and established place of business” in Idaho; and (b) that Light Efficient Design “has committed acts of infringement” in Idaho. 28 U.S.C.A. § 1400(b). The parties do not dispute that CAO has alleged that Light Efficient Design has committed acts of infringement in Idaho. Therefore, the Court need only address whether Light Efficient Design has a regular and established place of business in Idaho.

         The Federal Circuit recently explained that “the 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., ___ F.3d ___, No. 2017-129, 2017 WL 4201535, at *5 (Fed. Cir. Sept. 21, 2017). Rather, this standard has three general requirements: “(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 4.

         First, there “must be a physical place in the district.” Id. at 5. “While the ‘place' need not be a ‘fixed physical presence in the sense of a formal office or store, ' there must still be a physical, geographical location in the district from which the business of the defendant is carried out.” Id. (internal citation omitted).

         Second, the place “must be a regular and established place of business.” Id. (emphasis added). “A business may be ‘regular, ' for example, if it operates in a ‘steady[, ] uniform[, ] orderly [, and] methodical' manner.” Id. (citation omitted). A business may be established if it is “settle[d] certainly, or fix[ed] permanently.” Id. at 6 (quoting Black's Law Dictionary (1st ed. 1891)). “[A] business can ...


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