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Judge Oetken “Shelves” Case For Lack of Venue

On March 26, 2018, United States District Court Judge J. Paul Oetken granted a motion to transfer venue in Peerless Network, Inc. v. Blitz Telecom Consulting.  The focus of the opinion was on whether venue was proper in the Southern District of New York based on a “device the size of a breadbox and the shelf on which it [sat].”

A suit for patent infringement may be brought either in “the judicial district where the defendant resides,” or “where the defendant has committed acts of infringement and has a regular and established place of business.”  Following TC Heartland, as Judge Oetken noted, the “regular and established place of business” prong has made somewhat of a comeback.  The three-part test for determining whether venue is proper under this prong requires that: (i) 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. 

This three-part test was on full display in Peerless.  Both individual defendants resided in Florida and neither of the corporate defendants had offices, employees, a mailing address, or a telephone listing in the state of New York.  Instead, the “full extent of Defendants’ physical presence in the Southern District of New York [was] a shelf containing a piece of [a Defendant]’s telecommunications equipment.”  On those facts, Judge Oetken found that a shelf was not a regular and established place of business.  Indeed, to meet this criterion, the defendant must actually engage in business there, with a focus on the activities of employees: employees should be able to accept orders, make business decisions, solicit clients from that place, etc.  “In other words, whatever ‘engaging in business’ is, a ‘place of business’ is the location where some person performs that verb[,]” and “whatever a ‘place of business’ is, it is not a shelf.”

Judge Oetken transferred the case to the United States District Court for the Middle District of Florida, where certain related cases were pending.

The case is Peerless Network, Inc. v. Blitz Telecom Consulting, LLC, No. 17-CV-1725 (S.D.N.Y. Mar. 26, 2018).