Judge Broderick Finds That TC Heartland Affected a "Sea Change" and Grants Motion to Dismiss For Improper Venue
On October 20, 2017, District Judge Vernon Broderick (S.D.N.Y.) granted Defendants' Watters Design, Inc.'s, Essense of Australia, Inc.'s, and David's Bridal, Inc.'s motions to dismiss under Federal Rule of Civil Procedure 12(b)(3) for improper venue.
Plaintiff alleges, inter alia, that three Defendants infringe U.S. Pat. Nos. D698,120 and D744,723. Defendants moved to supplement their existing motions to dismiss by adding an argument that venue is improper in light of the Supreme Court’s decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017), which held that for purposes of the patent venue statute, 28 U.S.C. § 1400(b), a domestic corporation "resides" only in its state of incorporation.
Plaintiff argued that under Federal Rule of Civil Procedure 12(h)(1), Defendants had waived the improper venue defense by not originally raising it in their motions to dismiss. The court noted that many district courts, on the one hand, have relied on the notion that TC Heartland did not change the law as it only affirmed a Supreme Court decision decided 60 years ago. The court, however, agreed with other district courts that held TC Heartland dramatically altered the patent venue landscape as it existed based on intervening Federal Circuit precedent.
The court further noted that in any event, Defendants had not filed an answer, the court had not rendered a decision on their motions to dismiss, and Defendants were merely supplementing their motions to dismiss by raising the improper venue argument, not filing another Rule 12 motion. The court ruled that Rule 12(h)(1) therefore does not apply, and that it is within the court's discretion to decide whether to permit Defendants to expand the grounds of their motions. Citing that there was no hearing scheduled on the motions, and the lack of an indication that Defendants' failure to make the venue argument earlier was intentional or in bad faith, the court permitted Defendants to supplement their motions to dismiss. Finding that venue was improper, the court granted Defendants' motions.
The case is Jenny Yoo Collection, Inc. v. Watters Design, Inc., No. 16-CV-2205 (VSB) (S.D.N.Y. Oct. 20, 2017) in the Southern District of New York.