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Intellectual Ventures II LLC v. Fedex Corp.

United States District Court, E.D. Texas, Marshall Division

November 22, 2017

INTELLECTUAL VENTURES II LLC, Plaintiff,
v.
FEDEX CORPORATION, FEDERAL EXPRESS CORPORATION, FEDEX GROUND PACKAGE SYSTEM, INC., FEDEX FREIGHT, INC., FEDEX CUSTOM CRITICAL, INC., FEDEX OFFICE AND PRINT SERVICES, INC., GENCO DISTRIBUTION SYSTEM, INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          RODNEY GILSTRAP UNITED STATES DISTRICT JUDGE.

         According to the FedEx Defendants' advertising, they are “everywhere” you need them to be. However, in their Motion to Dismiss (Dkt. No. 84) (“the Motion”) Defendants argue that they are everywhere but this District, at least with respect to venue. The Court disagrees. Accordingly, and for the reasons set forth herein, Defendants' Motion is DENIED.

         I. Background

         This case relates to allegations of patent infringement by Plaintiff Intellectual Ventures II LLC (“Intellectual Ventures” or “Plaintiff”) against FedEx Corporation (“FedEx Corp.”), Federal Express Corporation (“FedEx Express”), FedEx Ground Package System, Inc. (“FedEx Ground”), FedEx Freight, Inc. (“FedEx Freight”), FedEx Custom Critical, Inc. (“FedEx Custom Critical”), FedEx Office and Print Services, Inc. (“FedEx Office”), and GENCO Distribution System, Inc. (now known as “FedEx Supply Chain”) (collectively “Defendants”). (Dkt. No. 1.)

         Plaintiff alleges that Defendants infringe five different patents: U.S. Patent Nos. 6, 633, 900 (“the '900 Patent”); 6, 909, 356 (“the '356 Patent”); 7, 199, 715 (“the '715 Patent”); 8, 494, 581 (“the '581 Patent”); and 9, 047, 586 (“the '586 Patent”) (collectively “the Asserted Patents”). These patents generally relate to shipping and transportation technology.

         A. The Defendants

         FedEx Corp. is a Delaware corporation with its principal place of business in Memphis, Tennessee. (Dkt. No. 84 at 3.) It operates as a holding company for a variety of wholly-owned subsidiaries, including the other defendants in this case, to which the parent FedEx Corp. provides “general financial, legal, and business guidance . . . in the logistics, freight, and package transportation, and print and copying fields.” (Dkt. No. 32 ¶ 2.) These subsidiaries are organized into several business segments that all operate under the “FedEx” brand, including FedEx Services, FedEx Express, FedEx Ground, and FedEx Freight. (Dkt. No. 86-30.) However, each defendant in this case, including those organized in the same business segment, are separately incorporated. (Dkt. No. 84 at 3.)

         FedEx Office is a Texas corporation with its principal place of business in Plano, Texas. (Dkt. No. 84 at 4.) It exists as part of the FedEx Services business segment. (Dkt. No. 86-30.) Plaintiff alleges that FedEx Office operates at least 17 locations in this District and that FedEx Office engages in infringing activity from these locations. (See, e.g., Dkt. No. 85 at 6 (“FedEx Office uses the Accused Instrumentalities in the District at those stores . . . .”).)

         FedEx Express is a Delaware corporation with its principal place of business in Memphis, Tennessee. (Dkt. No. 84 at 3.) It exists as part of its own FedEx Express business segment. (Dkt. No. 86-30.) Plaintiff alleges that FedEx Express provides infringing services in this District, including from FedEx Office Print and Ship Centers. (Dkt. No. 85 at 5.)

         FedEx Ground is a Delaware corporation with its principal place of business in Moon Township, Pennsylvania. (Dkt. No. 84 at 3.) It exists as part of its own FedEx Ground business segment. (Dkt. No. 86-30.) Plaintiff alleges, inter alia, that FedEx Ground infringes the Asserted Patents through the use of instrumentalities, such as the MC9500, which FedEx Ground uses as part of services carried out in this District, including as part of services it offers from physical locations in this District. (Dkt. No. 85 at 6.)

         FedEx Supply Chain, formerly known as GENCO Distribution Systems, Inc., is a Pennsylvania corporation with its principal place of business in Pittsburgh, Pennsylvania. (Dkt. No. 84 at 4.) It operates as part of the FedEx Ground business segment. (Dkt. No. 86-30.) Plaintiff alleges that FedEx Supply Chain provides infringing services in this District through the use of, inter alia, RFID tags. (Dkt. No. 1 at ¶¶ 16, 61.)

         FedEx Freight is an Arkansas corporation with its principal place of business in Harrison, Arkansas. (Dkt. No. 84 at 3.) It exists as part of its own FedEx Freight business segment. (Dkt. No. 86-30.) Defendants admit that FedEx Freight operates several service centers throughout Texas, including at least six locations in this District. (Dkt. No. 32 at ¶ 16.) Plaintiff further alleges that FedEx Freight infringes the Asserted Patents at these service centers and in distributing freight in this District. (Dkt. No. 85 at 6.)

         FedEx Custom Critical is an Ohio corporation with its principal place of business in Uniontown, Ohio. (Dkt. No. 84 at 4.) It operates as part of the FedEx Freight business segment. (Dkt. No. 86-30.) Plaintiff alleges that FedEx Custom Critical provides infringing products and services from and in this District. (Dkt. No. 85 at 7.)

         B. Procedural History

         Plaintiff filed this case on August 31, 2016. (Dkt. No. 1.) Defendants filed their Answer on November 10, 2016. (Dkt. No. 32.) In that Answer, Defendants included a single sentence objecting to venue: “FedEx denies that venue is proper in this District under 28 U.S.C. § 1400(b). See In re TC Heartland LLC, 821 F.3d 1338 (Fed. Cir. 2016), petition for cert. filed, No. 16-341 (Sept. 15, 2016).” (Id.) Defendants did not file any other motion under Rule 12.

         On November 11, 2016, Defendant filed a Motion to Transfer under § 1404. (Dkt. No. 34.) A hearing was held on this motion on February 16, 2016. (Dkt. Nos. 56, 60). However, at the hearing Defendants never raised an objection to venue, never mentioned § 1406, and never discussed the petition in TC Heartland. (Dkt. No. 60.) Moreover, for the next several months, Defendants actively litigated this case. (Dkt. No. 86-1.) For example, Defendants agreed to the appointment of a mediator (id. at 2), served initial disclosures (id.), appeared before this Court multiple times (Dkt. Nos. 35, 36, 54), engaged in extensive discovery, including document and source code production (Dkt. No. 86-1 at 2-6), and filed a joint claim construction statement with the Court (id. at 6). During this same time, Defendants filed several petitions for Inter Partes Review (“IPR”) of the Asserted Patents. (Id. at 2.) Institution decisions on these petitions, granting in part and denying in part, were announced on July 25, 2017. (Id. at 6.)

         On July 27, 2017, after litigating this case for more than a year and more than two months after the Supreme Court decided TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514 (2017), Defendants filed the instant Motion asserting that venue in the Eastern District of Texas was improper and seeking dismissal or transfer under 28 U.S.C. § 1406. (Dkt. No. 84 at 2 (“Because venue is improper, 28 U.S.C. § 1406(a) mandates that the Court either dismiss the case, or transfer to where it could have been brought, if in the interests of justice.”).)

         II. Discussion

         A. Waiver

         “Venue relates to the locale in which a suit may properly be instituted, and not to the power of the court to hear the case or reach the parties.” Minnesota Min. & Mfg. Co. v. Eco Chem, Inc., 757 F.2d 1256, 1264 (Fed. Cir. 1985) (citing Neirbo Co. v. Bethlehem Corp., 308 U.S. 165, 167- 68 (1939)). For this reason, the venue requirement is regarded as a “privilege” afforded to defendants, a privilege that may be surrendered “by failure to assert [an objection] seasonably, by formal submission in a cause, or by submission through conduct.” Neirbo, 308 U.S. at 168. See also 28 U.S.C. § 1406(b) (“Nothing in ...


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