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Camatic Proprietary Limited v. Irwin Seating Company

United States District Court, N.D. Texas, Dallas Division

May 31, 2017




         Before the Court is Defendant's Motion to Transfer Venue and Dismiss for Lack of Standing (ECF No. 37). For the reasons stated below, the Motion is GRANTED IN PART and DENIED IN PART.

         I. Factual & Procedural Background

         Plaintiff Camatic Proprietary Limited is an Australian company with its principal place of business in Australia. Plaintiff Camatic Seating Inc. is a Georgia corporation with its principal place of business in Farmers Branch, Texas, and is the wholly owned subsidiary of Camatic Proprietary (collectively, “Camatic”). Camatic Proprietary manufactures and installs seating systems for a range of uses, including professional sports events. Camatic Proprietary formed Camatic Seating after entering the U.S. market following the 1996 Summer Olympics. Defendant Irwin Seating Company is a family-owned company incorporated in Michigan with its principal place of business in Grand Rapids, Michigan.

         Irwin produces seating and furniture for various facilities, including stadiums and theaters. On July 11, 2006, United States Patent No. 7, 073, 858 (the “'858 Seating System Patent”) was issued to inventors David and Adam Fisher, the co-owners of Camatic Proprietary, who assigned the entire right, title, and interest in the '858 Seating System Patent to Camatic Proprietary. On March 21, 2016, Camatic Seating and Camatic Proprietary filed this suit against Irwin, alleging that Irwin infringed the '858 Seating System Patent.[1] On February 10, 2017, Irwin moved to dismiss Camatic Seating for lack of standing, because at the suit's inception it was not an exclusive licensee of the '858 Seating System Patent, and to transfer the rest of the case to the Western District of Michigan.[2] The Court will address the standing issue first.

         II. Analysis

         A. Camatic Seating's Standing

         A plaintiff in federal court must establish that, at the time of suit, it had standing under Article III of the Constitution. Paradise Creations, Inc. v. UV Sales, Inc., 315 F.3d 1304, 1308 (Fed. Cir. 2003). To demonstrate Article III standing, a plaintiff must prove: (1) injury in fact, or an invasion of a legally protected interest, (2) a causal connection between the injury and the conduct complained of, and (3) redressability by a favorable decision. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). To establish standing for patent infringement, a plaintiff “must demonstrate that it held enforceable title to the patent at the inception of the lawsuit.” Paradise Creations, 315 F.3d at 1309. Exclusive licensees “may possess sufficient interest in the patent to have standing to sue as a co-plaintiff with the patentee.” Rite-Hite Corp. v. Kelley Co., Inc. 56 F.3d 1538, 1552 (Fed. Cir. 1995) (en banc). To have standing as an exclusive licensee, a party “must have received, not only the right to practice the invention within a given territory, but also the patentee's express or implied promise that others shall be excluded from practicing the invention within that territory as well.” Id.

         On December 31, 2015, Camatic Seating was administratively dissolved by the State of Georgia. Under Georgia law, a corporation that has been administratively dissolved continues its corporate existence, but may not carry on any business except that necessary to wind up and liquidate its business and affairs.[3] On March 6, 2016, two weeks before Plaintiffs filed their Complaint, Camatic Proprietary and Camatic Seating executed an agreement granting to Camatic Seating an exclusive license of the rights to the '858 Seating System Patent. On April 8, 2016, the State of Georgia reinstated Camatic Seating.

         Irwin argues that under Georgia law, as a dissolved entity Camatic Seating could not execute an exclusive licensee agreement. As a result, Irwin argues that Camatic Seating did not have enforceable rights in the '858 Seating System Patent, either as a patentee or exclusive licensee, and that it therefore could not proceed as a plaintiff. Camatic Seating responds that it was inadvertently dissolved, due to a clerical error by the State of Georgia, and that the exclusive license is retroactively valid because of the reinstatement, which rendered the dissolution of Camatic Seating as if it had never occurred.[4]

         Camatic's argument is undermined by the Federal Circuit's holding in Paradise Creations. In Paradise Creations, a Florida statute provided that “a corporation administratively dissolved continues its corporate existence but may not carry on any business except that necessary to wind up and liquidate its business and affairs.” 315 F.3d at 1308. In Paradise Creations, the State of Florida dissolved the plaintiff in August 1996, but in 1997, the plaintiff purported to enter into an exclusive licensing agreement. Id. at 1306. Based on that license, in 2000, the plaintiff filed a patent infringement suit. The plaintiff was reinstated in 2001. Under Florida law, the reinstatement “relates back to and takes effect as to the effective date of the administrative dissolution and the corporation resumes carrying on its business as if the administrative dissolution had never occurred.” Id. at 1307. The Georgia law at issue here is virtually identical. The plaintiff in Paradise made the same “relates back” argument as Camatic Seating does here, but the Federal Circuit held that the Florida statute could not retroactively confer standing in federal court because the plaintiff “held no enforceable rights whatsoever in the patent at the time it filed suit, and therefore lacked a cognizable injury necessary to assert standing under Article III of the Constitution.” Id. at 1310. The Court finds these facts essentially indistinguishable from those in Paradise Creations.[5] Camatic Seating was thus not an exclusive licensee as a result of the March 6 agreement, and therefore it did not have standing pursuant to that document.

         Camatic Seating alternatively argues it has Article III standing as an implied exclusive licensee. It contends Camatic Proprietary gave it the exclusive right to practice the invention within the United States and made an implied promise that others would be excluded from practicing the invention within the territory. See Rite-Hite, 56 F.3d at 1552. Plaintiffs cite the following as evidence of an implied exclusive license: Camatic Proprietary is a family-owned business run by brothers David and Adam Fisher, and Camatic Seating is its wholly owned United States subsidiary.[6] Camatic Proprietary's business strategy is for Camatic Seating to operate in the United States seating market, as the sole company with permission to sell the subject matter of the '858 Seating System Patent in the United States.[7] Since 2007, Camatic Seating has made seating sales to various American stadiums based on the '858 Seating System Patent. No others have done so. Irwin does not contest this evidence.

         Based on this uncontested evidence, the Court finds Camatic Seating had an exclusive right to use the '858 Seating System Patent in the United States pursuant to an implied promise by Camatic Proprietary that nobody else could practice the invention within the United States. Therefore, Camatic Seating is an exclusive licensee and has Article III standing to bring this suit as a co-plaintiff with the patentee, Camatic Proprietary.

         B. Motion to Transfer Venue

         Under 28 U.S.C. § 1404(a), a district court may transfer a civil action to any other district or division where it might have been brought.[8] District courts are to adjudicate motions for transfer on an individualized, case-by-case basis. Paragon Indus., L.P. v. Denver Glass Mach., Inc., 07-CV-2183-M, 2008 WL 3890495, at *1 (N.D. Tex. Aug. 22, 2008) (Lynn, J.). Although the Federal Circuit establishes patent law precedent, regional circuit law controls with respect to motions to transfer, even in patent cases. See In re LinkAMedia Devices Corp., 662 F.3d 1221 (Fed. Cir. 2011).

         In the Fifth Circuit, a district court is to grant transfer if the party seeking a change of venue has demonstrated that the transferee venue “is clearly more convenient” than the plaintiff's chosen venue. In re Volkswagen of Am., Inc., 545 F.3d 304, 311 (Volkswagen II ) (5th Cir. 2008) (en banc). The Court is to consider a number of private and public interest factors when analyzing a motion to transfer venue. The private interest factors include: (1) the relative ease of access to sources of proof; (2) the availability of compulsory process to secure the attendance of witnesses; (3) the cost of attendance for willing witnesses; and (4) all other practical problems that make trial of a case easy, expeditious, and inexpensive. In re Volkswagen AG, 371 F.3d 201, 203 (Volkswagen I ) (5th Cir. 2004). The public interest factors include: (1) the administrative difficulties flowing from court congestion; (2) the local interest in having localized interests decided at home; (3) the familiarity of the forum with the law that will govern the case; and (4) the avoidance of unnecessary problems regarding conflicts of law or the application of foreign law. Id. A plaintiff's choice of venue is not a distinct factor in the analysis, but “when the transferee venue is not clearly more convenient than the venue chosen by the plaintiff, the plaintiff's choice should be respected.” Volkswagen II, 545 F.3d at 311. The parties do not dispute that the lawsuit could have been filed in the Western District of Michigan. Thus, the Court must determine whether, in the interests of justice, the private and public interest factors support a transfer to the Western District of Michigan.

         Private Interest Factors

         i. Relative Ease of Access to Sources of Proof

         In patent cases, “the bulk of the relevant evidence usually comes from the accused infringer. Consequently, the place where the defendant's documents are kept weighs in favor of transfer to that location.” In re Genentech, Inc., 566 F.3d 1338 (Fed. Cir. 2009). The preferred forum is “the center of gravity of the accused activity, ” including the accused product's “testing, research, and production as well as the place where the marketing and sales decisions occurred.” Raz Imports, Inc. v. Luminara Worldwide, LLC, No. 3:15-CV-02223-M, 2015 WL 6692107, ...

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