LAWRENCE P. ZATKOFF, District Judge.
This matter is before the Court on Defendants' Motion to Dismiss for Improper Venue [dkt. 12] and Defendant-Gilbert Markham's Motion to Dismiss for Lack of Personal Jurisdiction [dkt. 13]. Plaintiff filed responses to both motions.
On September 6, 2014, TNR Industrial Doors, Inc. ("Plaintiff"), a Canadian corporation, commenced this patent infringement suit against PerforMax Group, LLC ("PerforMax"), a Pennsylvania limited liability company with a principal place of business in Pennsylvania, Allmark Door Company, LLC ("Allmark"), a New Jersey limited liability company with a principal place of business in Pennsylvania, and Gilbert Markham (Markham), a Pennsylvania resident. Markham is a founder and the managing partner of both PerforMax and Allmark.
Plaintiff manufactures and sells roll-up rubber doors suitable for industrial use. The doors, which are characterized by a flexible rubber construction, are complimented by side edge guide rails and locking mechanisms designed to release the door from the wall in the event of contact by vehicles or heavy machinery. Plaintiff claims that the doors are covered by U.S. Patent 7,516,770 ("Patent 770"). Plaintiff also claims to own additional proprietary and confidential information used to manufacture and sell the doors. Plaintiff further alleges that Markham was a dealer for the roll-up doors manufactured by Plaintiff, working in that capacity in the Philadelphia, Pennsylvania region for approximately three years. Plaintiff alleges that Markham sold more than 20 doors in his capacity as a dealer for Plaintiff, and that this arrangement provided Markham with access to the aforementioned proprietary information regarding the manufacturing and sales processes of the roll-up doors relating to Patent 770.
In Paragraphs 12, 13 and 14 of its First Amended Complaint, Plaintiff describes its relationship with Markham, Markham's relation to PerforMax and Allmark, and the specific factual allegations giving rise to Plaintiff's claims:
In its First Amended Complaint, Plaintiff alleges one count of patent infringement and one count of unfair competition. Plaintiff requests, among other things, that this Court find that Patent 770 was infringed, enjoin Defendants from further infringing Patent 770 and from further misappropriating Plaintiff's proprietary information and business opportunities, freeze all of Defendants' assets, and award treble damages resulting from Defendants' alleged wrongful acts.
Defendants claim that, as venue for patent infringement actions is governed by 28 U.S.C. §1400(b), this forum is not an appropriate venue because none of the Defendants reside in, or have regular and established places of business in, the Eastern District of Michigan. Therefore, Defendants seek dismissal pursuant to 28 U.S.C. §1406 or, in the alternative, the transfer of this matter to the Eastern District of Pennsylvania. According to Plaintiff, however, venue for patent infringement claims is governed by §1400(b) and 28 U.S.C. §1391, and venue is proper under those provisions in this District.
A plaintiff is free to pursue their patent infringement claim in any proper forum. It is well-settled that there may be more than one proper venue for an action. See First of Mich. Corp. v. Bramlet, 141 F.3d 260, 263 (6th Cir. 1998). "In cases with multiple defendants, venue must be proper with respect to all defendants." Domino's Pizza PMC v. Caribbean Rhino, 453 F.Supp.2d 998, 1005 (E.D. Mich. 2006). "Once an objection to venue has been raised, Plaintiff bears the burden of establishing that venue is proper." Id. at 1006 (internal citation omitted).
28 U.S.C. §1400(b), which supplies the venue rule in patent infringement actions, provides that
Therefore, venue is proper:
Although Defendants correctly argue that §1400(b) provides the venue rule in patent infringement actions, Plaintiff insists that §1400(b) is supplemented by §1391(c). The term "resides" is provided in §1400(b) as a basis for establishing venue, but the term is not defined by the statute. 28 U.S.C. §1391(c), however, defines the term "residency" for "all venue purposes," and provides in pertinent part:
only in the judicial district in which it maintains its principal place of business. §1391(c)(1)-(2) (emphasis added). Therefore, Plaintiff is correct that the definition of "residency" in §1391(c) supplements §1400(b). See VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1578-80, (Fed. Cir. 1990) (ruling that §1391(c) redefined the meaning of the term "resides" in §1400(b)).
Beginning with PerforMax and Allmark, the Court must determine whether either "resides" in this District, thereby satisfying the first clause of §1400(b). Because Allmark and PerforMax are business entities, the question of "residency" under §1391(c)(2) requires this Court to determine whether each entity is subject to this Court's personal jurisdiction with respect to the civil action in question.
Neither Allmark nor PerforMax contest this Court's exercise of personal jurisdiction in the instant matter. Indeed, Markham was the only defendant that sought dismissal on the basis of lack of personal jurisdiction. "[A]n objection to personal jurisdiction is waived where a defendant does not challenge the court's personal jurisdiction over him within his first responsive pleading of the plaintiff's action." Lantz v. Private Satellite Television, Inc., 865 F.Supp. 407, 409 (E.D. Mich. 1994). In light of Allmark and PerforMax's acquiescence to this Court's exercise of personal jurisdiction, venue is proper in this district under §§1391(c)(2) and 1400(b) as to each.
Plaintiff has not satisfied the venue requirements of §1400(b) as to Markham. As stated above, the first clause of §1400(b) provides that venue is proper where the defendant resides. 28 U.S.C. §1391(c)(1), which supplements §1400(b), provides that a natural person "shall be deemed to reside in the judicial district in which that person is domiciled." Markham is domiciled in the Commonwealth of Pennsylvania. Thus, Markham does not reside in this District, and consequently this District is not a proper venue under the first clause of §1400(b).
The second clause of §1400(b) provides that venue is proper where the defendant has committed acts of infringement and has a regular and established place of business. Although Plaintiff goes to great ends to allege that Markham committed acts of infringement in this District, it utterly fails to allege that Markham has a "regular and established place of business" herein. Thus, this Court concludes that Plaintiff has also failed to demonstrate that this District is a proper venue for Markham under the second clause of §1400(b).
Plaintiff also suggests that this Court may impute its finding that venue is proper for Allmark and PerforMax to Markham by piercing the corporate veil. "Piercing the corporate veil is appropriate in order to establish venue under the patent venue statutes." See Minn. Mining & Mfg. Co. v. Eco. Chem. Inc., 757 F.2d 1256, 1265 (Fed. Cir. 1985). Plaintiff must then establish that Markham's relationship with Allmark and PerforMax justifies piercing the corporate veil. But Plaintiff's Response fails to provide legal authority for this Court to apply in determining whether to disregard the corporate entity.
Plaintiff's reliance on Minnesota Mining for the proposition that this Court may pierce the corporate veil to establish venue is misplaced. The Plaintiffs in Minnesota Mining established that the co-Defendants were alter egos of the Defendant before piercing the veil to establish personal jurisdiction and venue. See Minn. Min. & Mfg., Co., 757 F.2d at 1261 ("The [District Court] concluded that [co-Defendants] were transferees or alter egos of [Defendant] and accordingly the court had subject matter and in personem jurisdiction over them."). Plaintiff skipped that step in the instant matter. Instead, Plaintiff's pleadings merely imply that Markham controls the entities, but otherwise lack any meaningful legal analysis pertaining to piercing the corporate veil and utilizing the "alter ego" theory for venue purposes. Consequently, this Court is unable to complete the proper analysis required to pierce the corporate veil. Accordingly, the Court concludes that Plaintiff has failed to demonstrate that venue is proper in this District as to Markham.
The Court finds that Plaintiff has not met its burden of showing that venue is proper in this District under §1400(b). Although Plaintiff demonstrated that venue is proper as to Allmark and PerforMax, it has failed to demonstrate that venue is proper as to Markham, and venue must be proper with respect to all Defendants. Domino's Pizza PMC, 453 F.Supp.2d at 1005. 28 U.S.C. §1406 authorizes the Court to remedy defects of venue:
§1406(a). Having determined that this District is not a proper venue for Markham, the Court has three options:
See Overland v. Taylor, 79 F.Supp.2d 809, 813 (E.D. Mich. 2000); see also Cottman Transmission Systems, Inc. v. Martino, 36 F.3d 291, 296 (3rd Cir. 1994). The decision of whether to dismiss a case or transfer it to a district where venue is proper lies within the court's discretion. First of Michigan Corp., 141 F.3d. at 262 (6th Cir. 1998). Generally, the "interest of justice" requires courts to transfer cases to the appropriate judicial district, rather than to dismiss them. Goldlawr, Inc. v. Heiman, 369 U.S. 463, 466 (1962) ("Congress, by the enactment of §1406(a), recognized that `the interest of justice' may require that the complaint not be dismissed but rather that it be transferred in order that the plaintiff not be penalized by. . . `time consuming and justice-defeating technicalities.'"). Indeed, §1406(a) "does not refer to "`wrong' venue, but rather to venue laid in a `wrong division or district,'" and therefore the Sixth Circuit has recognized "that a district is `wrong' within the meaning of §1406 whenever there exists an `obstacle to an expeditious and orderly adjudication on the merits.'" Taylor v. Love, 415 F.2d 1118, 1120 (6th Cir. 1969).
Severing the claims in this case would not be proper. "When the conduct of a co-defendant as to whom venue is proper is central to the issues raised by the plaintiff against those subject to transfer, the grant of a severance would not ordinarily be consistent with the sound exercise of discretion." See Cottman, 36 F.3d at 296. See also IA Inc., v. Thermacell Tech., Inc., 983 F.Supp. 697, 703 (E.D. Mich. 1997). Plaintiff's two-count complaint alleges (I) patent infringement and (II) unfair competition. As for Count I, Plaintiff alleges that Defendants combined to violate subsections (a) and (b) of 35 U.S.C. §271. 35 U.S.C. §271(a) provides that "whoever without authority makes, uses, offers to sell, or sells any patented invention . . . infringes the patent." 35 U.S.C. §271(b), on the other hand, provides that "[w]hoever actively induces infringement of a patent shall be liable as an infringer." Specific to §271(b), Plaintiff claims that Markham induced infringement by Allmark and PerforMax. Consequently, Plaintiff's inducement claim under §271(b) is dependent upon Markham being a party to the suit, and thus cannot be maintained without him. Similarly, the unfair competition claim in Count II is also focused on Markham, making it equally untenable without Markham's presence in the suit. Given the intertwined relationship of the Defendants and its relevance to Plaintiff's claims, transferring the entire case to a proper venue would further the goal of deciding the case on its merits rather than on procedural grounds. See Goldlawr, 369 U.S. at 466-67.
The Court finds that, in the interest of justice, the matter should be transferred to the Eastern District of Pennsylvania. In Milliken v. Meyer, the United States Supreme Court recognized that a state has jurisdiction over those domiciled within its borders. 311 U.S. 457, 463-64 (1940) ("The state which accords him privileges and affords protection to him and his property by virtue of his domicile may also exact reciprocal duties. . . . One such incidence of domicile is amenability to suit within the state."). Federal Rule of Civil Procedure 4(k)(1)(A) states that personal jurisdiction exists over any properly-served defendant "who could be subjected to the jurisdiction of a court of general jurisdiction in the state in which the district court is located." Fed. R. Civ. P. 4(k)(1)(A).
The law of the transferee forum applies when a case is transferred under §1406(a). Martin v. Stokes, 623 F.2d 469, 473 (6th Cir. 1980). Under Pennsylvania law, an individual domiciled in Pennsylvania is subject to the personal jurisdiction of that state. 42 Pa.C.S.A. §5301(a)(1)(ii). Markham concedes that he is "a citizen and domicile of the Commonwealth of Pennsylvania." Dkt. # 14, Ex. 1, p. # 1, ¶ 2. As for unincorporated business entities such as Allmark and PerforMax, Pennsylvania law provides that "[t]he carrying on of a continuous and systematic part of its general business within [the] Commonwealth" is sufficient to subject an entity to the personal jurisdiction of that state. 42 Pa.C.S.A. §5301(a)(3)(iii). Defendants concede that Allmark is headquartered in Pennsylvania. Dkt. # 14, Ex. 1, p. # 2, ¶ 8. An unincorporated entity formed under the laws of Pennsylvania is also subject to personal jurisdiction in that state. 42 Pa.C.S.A. §5301(a)(3)(i). Defendants concede that PerforMax is a Pennsylvania limited liability company. Dkt. # 14, Ex. 1, p. # 2, ¶ 9. Accordingly, the Eastern District of Pennsylvania has jurisdiction over all three Defendants.
Venue is also proper in the Eastern District of Pennsylvania as to each of the Defendants. Having established that Allmark and PerforMax are subject to personal jurisdiction in that forum, they are residents of that District under §1391(c)(2), and venue is therefore proper under §1400(b). Similarly, Markham concedes that he is domiciled in Pennsylvania, thus residing there for the purpose of §1391(c)(1) and making venue proper under §1400(b).
In addition to having personal jurisdiction and being a proper venue as to each Defendant, a transfer to the Eastern District of Pennsylvania is consistent with the interest of justice. Dismissal of the case or severing the claims against Markham would require that Plaintiff re-commence an action against Markham in a proper forum, creating duplicative litigation contrary to the interests of judicial economy. Moreover, Plaintiff neither disputes that venue would be proper in Pennsylvania, nor has it offered any reason for not transferring the case under §1406(a). Each Defendant and the facilities and materials used to make the allegedly infringed doors are found in Pennsylvania. Defendants sell the doors in Pennsylvania. Moreover, Y & S Candies, Inc.—an entity Plaintiff claims was sold infringed doors by Defendants—is found in Pennsylvania. Therefore, because the relevant activities and contacts appear predominantly in the Eastern District of Pennsylvania, the Court concludes that it is in the interest of justice that the matter be heard in that forum. See Flynn v. Greg Anthony Const. Co., Inc., 95 Fed.Appx. 726, 239 (6th Cir. 2003).
Accordingly, the entire action shall be transferred pursuant to §1406(a) to the United States District Court for the Eastern District of Pennsylvania. Because the Court has elected to transfer this case on the basis of improper venue, we need not address Defendant-Markham's Motion to Dismiss for Lack of Personal Jurisdiction.
Accordingly, and for the reasons set forth above, having considered Defendants' Motion to Dismiss for Improper Venue [dkt. 12], it is HEREBY ORDERED that the entire present action be TRANSFERRED to the United States District Court for the Eastern District of Pennsylvania pursuant to 28 U.S.C. §1406(a). Additionally, Defendant-Markham's Motion to Dismiss for Lack of Personal Jurisdiction [dkt. 13] is DENIED as moot.
IT IS SO ORDERED.
28 U.S.C. §1391(c) was subsequently amended by the Federal Courts Jurisdiction and Venue Clarification Act of 2011. Act of Dec. 7, 2011, Pub. L. No. 112-63, 125 Stat 758. As amended, the definition of "residency" provided in §1391(c) expressly applies "[f]or all venue purposes," including patent infringement actions under §1400(b). Thus, the scope of §1391(c) as amended is even broader than the previous version interpreted in VE Holding Corp., and this Court's conclusion that §1391(c) supplements §1400(b) is consistent with the holding in VE Holding Corp. as well as the plain language of §1391(c).
