Innovative v. Audio Labs (ED Tex May 30, 2012)

1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

TYLER DIVISION

INNOVATIVE AUTOMATION, LLC §

§

Plaintiff, §

§ CIVIL ACTION NO. 6:11-CV-234 v. §

§

§ JURY TRIAL DEMANDED

AUDIO VIDEO AND VIDEO §

LABS, INC., et al., §

§

Defendants §

§

REPORT AND RECOMMENDATION

OF UNITED STATES MAGISTRATE JUDGE

Before the Court is Defendant U.S. Digital Media‟s (“U.S. Digital”) Motion to Dismiss

Pursuant to Rules 12(b)(2) and 12(b)(3) And, In The Alternative, Motion to Transfer Venue

Pursuant to 28 U.S.C. § 1406(a) (Doc. Nos. 52 & 98) (“MOTION”). Plaintiff Innovative

Automation (“Innovative”) filed a response (Doc. Nos. 69 & 113) (“RESPONSE”) to which U.S.

Digital responded (Doc. Nos. 73 & 98) (“REPLY”). Counsel for both parties were heard at a

December 7, 2011 hearing. On April 3, 2012, the Court ordered Innovative to conduct

jurisdictional discovery as it pertained to proper venue. Innovative filed a supplemental brief

(Doc. No. 194) (“SUPP. BRIEF”) to which U.S. Digital responded (Doc. No. 197) (“SUPP.

RESPONSE”). For the reasons set forth below, the Court RECOMMENDS that U.S. Digital‟s

Motion (Doc. No. 98) be DENIED.

BACKGROUND

On May 10, 2011 Innovative filed this action for infringement of U.S Patent No.

7,174,362 (“the „362 patent”) against fourteen geographically dispersed defendants including

Case 6:11-cv-00234-LED-JDL Document 198 Filed 05/30/12 Page 1 of 14 PageID #: 3824

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U.S. Digital. See (Doc. No. 1). 1

The „362 patent generally relates to a computer-implemented

system and method for duplicating data. U.S. Digital is an Arizona Corporation with its

principal place of business in Phoenix, Arizona. See (Doc. No. 95 ¶ 10; DECLARATION OF

ANTHONY CHRISTOPHER PIGNOTTI IN SUPPORT OF MOTION (Doc. No. 52-35) (“FIRST PIGNOTTI

DECL.”) at ¶ 2. In its original Motion, Innovative argued only that the Court has general

jurisdiction over U.S. Digital. However, in its Supplemental Brief, Innovative argues that U.S.

Digital is subject to specific jurisdiction because it performs CD and DVD duplication jobs for

residents of Texas. SUPP. BRIEF at 2.

U.S. Digital argues that it is not subject to jurisdiction in Texas because it is not

registered to do business in Texas, has no contracts with entities in Texas, owns no property in

Texas, and all of its 51 employees live and work in and around Maricopa County, Arizona.

MOTION at 8 (citing FIRST PIGNOTTI DECL. at ¶¶ 2, 35-37. Further, U.S. Digital argues it

operates websites at http://www.cdrom2go.com and http://www.usdigitalmedia.com which are a

“passive form of advertising for disc duplication services.” Id. (citing FIRST PIGNOTTI DECL. at ¶

39). U.S. Digital further argues that it has only minimal sales in Texas since the patent was

assigned to Plaintiff. Id. at 8-9 (citing FIRST PIGNOTTI DECL. at ¶¶ 40-41). Lastly, U.S. Digital

argues that because it is not subject to personal jurisdiction in Texas, this Court should either

dismiss U.S. Digital or transfer it to the District of Arizona pursuant to 28 U.S.C § 1406(a). Id.

at 13-15.

Innovative presents evidence that U.S. Digital‟s website, cdrom2go.com, includes

targeted advertisements directed towards Dallas, Houston, and Austin. RESPONSE at 3-4 (citing

1 U.S. Digital filed a motion to dismiss for failure to state a claim and for improper venue based on the original

complaint. (Doc. No. 52). Innovative subsequently filed an amended complaint on October 11, 2011. See (Doc.

No. 95). In response to the amended complaint, U.S. Digital reurged its motion to dismiss for failure to state a claim

and for improper venue based on the amended complaint. (Doc. No. 98). On February 29, 2012, the Court denied

Doc. No. 52 as moot. (Doc. No. 187). Because the Response and the Reply incorporate by reference the response

and reply from the previous motion, the Court cites to evidence presented in both, where applicable.


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Exs. 1-3, 7 to DECLARATION OF TODD KENNEDY (Doc. No. 69-1) (“KENNEDY DECL.”) (Doc. Nos.

69-2, 69-3, 69-4, & 69-8). In addition to the targeted advertisements, Innovative argues that

cdrom2go.com is highly interactive and that U.S. Digital has significant sales to residents of

Texas. RESPONSE at 5. U.S. Digital counters that cdrom2go.com‟s pages directed to Texas

residents are three pages deep in the hierarchy of the webpage and are 3 of 26 similar pages

targeting various other forums. REPLY at 2-5.

LEGAL STANDARD

In a patent case, personal jurisdiction intimately relates to patent law and Federal Circuit

law governs. Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d 1194, 1201 (Fed. Cir. 2003).

Determining whether personal jurisdiction over a nonresident is proper requires a two part

inquiry: (1) whether a forum state‟s long-arm statute permits service of process, and (2) whether

the assertion of jurisdiction would be inconsistent with due process. Electronics For Imaging,

Inc. v. Coyle, 340 F.3d 1344, 1249 (Fed. Cir. 2003). Because “[t]he Texas long-arm statute

reaches „as far as the federal constitutional requirements of due process will allow,‟” the sole

inquiry is whether the exercise of personal jurisdiction comports with federal constitutional due

process requirements. Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 806 (Tex.

2002) (quoting Guardian Royal Exch. Assurance, Ltd v. English China Clays, P.L.C., 815

S.W.2d 223, 226 (Tex. 1991)); Centre One v. Vonage Holding Corp., No. 6:08-cv-467, 2009 WL

2461003, at *1-2 (E.D. Tex. Aug. 10, 1998). Due process requires an out-of-state defendant to

have minimum contacts with the forum such that maintaining the suit does not offend traditional

notions of fair play and substantial justice. Int’l Shoe Co. v. Washington, 326 U.S. 310, 316

(1945); Akro Corp. v. Luker, 45 F.3d 1541, 1544-45 (Fed. Cir. 1995) (applying International

Shoe).


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The minimum contacts requirement may be met by showing either “general” or

“specific” jurisdiction over a defendant. “To be subject to general jurisdiction, a defendant

business entity must maintain „continuous and systematic general business contacts‟ with the

forum, even when the cause of action has no relation to those contacts.‟” Synthes (U.S.A.) v.

G.M. Dos Reis Jr. Ind. Com de Equip. Medico, 563 F.3d 1285, 1297 (Fed. Cir. 2009) (quoting

Helicopteros Nacionales de Columbia v. Hall, 466 U.S. 408, 416 (1984)). “Neither the United

States Supreme Court nor [the Federal Circuit] has outlined a specific test to follow when

analyzing whether a defendant‟s activities within a [forum] are „continuous and systematic.‟”

LSI Indus. Inc. v. Hubbel Lighting, Inc., 232 F.3d 1369, 1375 (Fed. Cir. 2000).

The Court may also exercise specific jurisdiction over a defendant if “(1) the defendant

purposefully directs activities at residents of the forum, (2) the claim arises out of or relates to

the defendant‟s activities with the forum, and (3) assertion of personal jurisdiction is reasonable

and fair.” Synthes (U.S.A.), 563 F.3d at 1297 (citations omitted). “Under this test, a court may

properly assert specific jurisdiction, even if the contacts are isolated and sporadic, so long as the

cause of action arises out of or relates to those contacts.” Id. (citing Silent Drive, Inc. v. Strong

Indus., Inc., 326 F.3d 1194, 1200 (Fed. Cir. 2000); see also Centre One, 2009 WL 2461003, at

*2. Once these conditions are satisfied, the court must then determine whether the assertion of

jurisdiction would “comport with fair play and substantial justice.” Campbell Pet Co. v. Miale,

542 F.3d 879, 885 (Fed. Cir. 2008).

To survive a motion to dismiss in the absence of an evidentiary hearing, a plaintiff need

only make a prima facie showing of jurisdiction. Deprenyl Animal Health, Inc. v. Univ. of

Toronto Innovations Found., 297 F.3d 1343, 1347 (Fed. Cir. 2002); see also Brown v. Flowers

Indus., Inc., 688 F.2d 328, 332 (5th Cir. 1982) (citing Marine Midland Bank, N.A. v. Miller, 664


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F.2d 899, 904 (2d Cir. 1981)); cf. Pieczenik v. Dyax Corp., 265 F.3d 1329, 1334 (Fed. Cir. 2001)

(applying a “preponderance of the evidence” standard where the “parties conducted discovery

related to the jurisdictional issues and advised the district court that no evidentiary hearing was

necessary with respect to the issue of personal jurisdiction because the jurisdictional facts were

undisputed”). Moreover, “„[w]hen a motion to dismiss for lack of jurisdiction is decided on the

basis of affidavits and other written materials, the plaintiff need only make a prima facie

showing,‟ and that „[I]f the parties present conflicting affidavits, all factual disputes are resolved

in the plaintiff‟s favor . . . .‟” Deprenyl Animal Health, Inc., 297 F.3d at 1347 (quoting Behagen

v. Amateur Basketball Ass’n of the United States, 744 F.2d 731, 733 (10th Cir. 1984)); id. (noting

that Federal Circuit law accords with Behagen).

DISCUSSION

I. Personal Jurisdiction

A. U.S. Digital Purposefully Directs its Activities at Residents of Texas

Where a defendant does not have a physical presence in the forum, courts look to a

number of factors to determine whether the defendant purposefully directs activities at residents

of the forum state. Courts look to the nature of the defendant‟s website, if applicable, and

whether the defendant “perform[s] additional acts to purposefully avail themselves of the forum

state, such as advertising, conducting business transactions with residents of the forum state, and

soliciting funds from residents in the forum state . . . .” Autobytel, Inc. v. Insweb Corp., No.

2:07-CV-524, 2009 WL 901482, at *2 (E.D. Tex. Mar. 31, 2009). As will be shown below,

U.S. Digital purposefully directs its activities at Texas residents by offering services through an

interactive website, cdrom2go.com, by specifically targeting Texas residents, and by conducting

a substantial number of business transactions with Texas residents.


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i. U.S. Digital’s Website

U.S. Digital sells CD, DVD, and Blu-ray disc duplication systems and offers disc

duplication services through its website cdrom2go.com. See, e.g., PIGNOTTI DECL. at ¶ 39. The

Federal Circuit has not provided clear guidelines to determine whether sufficient minimum

contacts are established via a website. AdvanceMe, Inc. v. Rapidpay LLC, 450 F. Supp. 2d 669,

673 (E.D. Tex. 2006) (citing Litmer v. PDQUSA.com, 326 F. Supp. 2d 952 (N.D. Ind. 2004)).

When determining whether sufficient minimum contacts are established via a website, many

courts, including those in the Eastern District of Texas, have utilized the criteria set forth in

Zippo Manufacturing Co. v. Zippo Dot Com, Inc. 952 F. Supp. 1119 (W.D. Pa. 1997). Using the

sliding-scale test set forth in Zippo, a passive website that merely posts information is not

sufficient to establish personal jurisdiction. 952 F. Supp. at 1124; AdvanceMe, 450 F. Supp. 2d

at 673 (citing Revell v. Lidov, 317 F.3d 467, 470 (5th Cir. 2002)). At the other end of the

spectrum, minimum contacts with the forum are likely sufficient if a website has repeated online

contacts with the forum state. AdvanceMe, 450 F. Supp. 2d at 673 (citing Revell v. Lidov, 317

F.3d 467, 470 (5th Cir. 2002)). The types of websites that fall within these two poles have

“some interactive elements and allow for bilateral information exchange.” Id. To determine

whether these intermediate websites have sufficient minimum contacts with the forum, courts

must analyze the “interactivity and nature of the forum contacts.” Id. I

The cdrom2go.com website includes a high degree of interactivity.

U.S. Digital argues that the website “provides only two methods for potential customers

worldwide to contact U.S. Digital in Arizona for a quote for its accused duplication services or

for more information—telephone or email.” REPLY at 2 (citing Ex. 11 to DECLARATION OF

CHRISTOPHER PIGNOTTI IN SUPPORT OF REPLY (Doc. No. 73-4) (“SECOND PIGNOTTI DECL.”)


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(Doc. No. 73-15)); se e also SUPP. RESPONSE at 2. U.S. Digital‟s representations are, at best,

disingenuous. Exhibit 11 to the Second Pignotti Declaration shows a screenshot from a

cdrom2go.com page “Disc Service Quote Request” where it instructs the user to complete an

online form including the users name, address, phone number, email address. Id. The user then

clicks the “Submit NOW” button, which presumably transfers the form to U.S. Digital. Id. The

website with the interactive form also has an icon labeled “Have Questions? Chat for Answers”

and includes a red button with the word “help” written on it. Id. This is far more than “passive

advertising” as argued by U.S. Digital.

In addition to the above mentioned form, cdrom2go.com also permits customers to locate

the products they would like to purchase and then click an “Add 2 Cart” button next to those

products. EX. 12 to KENNEDY DECL. (Doc. No. 69-13). Customers are then prompted to input

their zip code to calculate the shipping rate to their location before entering their shipping and

payment information to complete the transaction. EX. 13 to KENNEDY DECL. (Doc. No. 69-14).

Customers may also use the website‟s “my account” feature to review information regarding

U.S. Digital quotes for duplication services. EX. 11 to KENNEDY DECL. (Doc. No. 69-12).

Lastly, Customers may upload artwork that they would like to be printed on the duplicated

media. EX. 15 to KENNEDY DECL. Customers complete an interactive form on cdrom2go.com

before clicking the “Proceed to Upload” button, which enables them to upload artwork to U.S.

Digital. Id. Thus, the Court fninds that cdrom2go.com is a highly interactive website and

supports a finding that U.S. Digital purposefully directs its activities at residents of Texas.

ii. U.S. Digital’s Other Activities

In addition to being highly interactive, cdrom2go.com also specifically targets residents

of Houston, Dallas, and Austin. In its Motion, U.S. Digital includes sworn testimony from


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Christopher Pignotti, the President and CEO of U.S. Digital that cdrom2go.com does not target

residents of Texas. FIRST PIGNOTTI DECL. at ¶ 39. Specifically, Mr. Pignotti states “U.S. Digital

Media does not direct any advertising to Texas. Any advertising through U.S. Digital Media‟s

websites located at http://www.digitalmedia.com and http://www.cdrom2go.com are directed to

all worldwide users of the Internet.” Id. Innovative, however, includes screenshots of

cdrom2go.com showing targeted advertising directed towards Texas residents including residents

of Houston, Austin, and Dallas. RESPONSE at 3-4; EX. 1-3 to KENNEDY DECL. For example, the

website includes a bold header announcing “CD/DVD Duplication in Dallas, TX.” See Ex. 2. to

KENNEDY DECL. The website goes on to state “From big cities to big business, everything really

is bigger in Texas. Fortunately CDROM2GO is equipped to handle CD and DVD duplication

jobs of every size! Though our production facility is located in Phoenix, we offer express

shipping to Dallas.” Id.2 Thus, U.S. Digital‟s assertion that it does not target Texas residents is,

at best, disingenuous.

U.S. Digital argues that this should be given little weight because the sections of the

websites targeting Texas are simply three of 26 links at the bottom of the duplication services

page corresponding to major U.S. cities. REPLY at 2. However, U.S. Digital‟s advertisements

towards other U.S. cities does not discount the subpages of the cdrom2go.com website

specifically targeting users in Houston, Austin, and Dallas which are indicative of a clear intent

to target Texas residents.

2 U.S. Digital also has advertisements directed at residents of Houston and Austin. Ex. 1 to KENNEDY DECL. (“For

CD and DVD duplication that‟s out of this world, the “Space City” depends on the professional at CDROM2GO.

Houston, we have a solution. Even though our production facility is located in Phoenix, we offer express shipping

to Houston.”); EX. 3. to KENNEDY DECL. (“When the Live Music Capital of the World speaks, CDROM2GO

listens! We feature a variety of complete CD and DVD duplication packages for musicians and audio professionals

alike. Even though our production facility is located in Phoenix, we offer express shipping to Austin”).


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Moreover, U.S. Digital has purposefully availed itself to Texas by conducting business

transactions with the residents of Texas and soliciting funds from Texas. See Autobyel, Inc.,

2009 WL 901482, at *2. U.S. Digital has performed 371 duplication jobs for Texas residents,

including 25 for residents of the Eastern District of Texas, totaling more than 100,000 duplicated

discs valued at over $150,000. See (Doc. No. 194-3).3 Furthermore, from January 1, 2007 to

July 31, 2011, U.S. Digital has sold $2,935,052.18 worth of goods and services to Texas entities,

representing 5.91% of U.S. Digital‟s total sales of approximately $49,627,196.12 SECOND

PIGNOTTI DECL. at ¶ 18.

In sum, the highly interactive website and substantial sales to Texas residents amount to

a prima facie showing that U.S. Digital has purposefully directed its allegedly infringing

activities to Texas residents. See, e.g., Autobytel, 2009 WL 901482, at *3 (finding defendant

purposefully directed its activities toward the forum state due to revenue generated from Texas

residents and availability of customer service number on defendant‟s “highly interactive,

transaction-oriented website”); Red Hat v. Bedrock Computer Techs., LLC, No. 6:09-CV-549,

2011 U.S. Dist. LEXIS 82997 (E.D. Tex. Mar. 2, 2011) (finding specific jurisdiction where

defendant made its website available to Texas residents and derived 6% of its revenue from

Texas customers).

B. Innovative’s Infringement Claim Relates to U.S. Digital’s Activities in Texas

The next inquiry asks whether Innovative‟s infringement claims against U.S. Digital arise

out of or relate to the activities U.S. Digital purposefully directed at residents of Texas.

Innovative accuses U.S. Digital of infringing the „362 patent by “using the claimed method of

3 U.S. Digital‟s arguments that this amounts to a small fraction of total U.S. sales is unavailing. See SUPP.

RESPONSE at 2. Although a small fraction of sales may be insufficient to show general jurisdiction, a plaintiff may

also show specific jurisdiction even if defendants‟ contacts are sporadic provided that the three prongs are met. See

Synthes (U.S.A.), 563 F.3d at 1297 (citing Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d 1194, 1200 (Fed. Cir.

2003) (“a court may properly assert specific jurisdiction, even if the contacts are isolated and sporadic, so long as the

cause of action arises out of or relates to those contacts”).


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duplicating digital data while performing U.S. Digital Media‟s digital duplication services such

as its CD, DVD, and Blu-Ray Disc duplication services.” (Doc. No. 95) at ¶ 29. As explained

above, U.S. Digital specifically targets residents of Austin, Dallas, and Houston for rapid disc

duplication services via the website cdrom2go.com. Moreover, U.S. Digital has completed a

substantial number of disc duplication projects for Texas residents, including residents of the

Eastern District of Texas. Thus, Innovative‟s infringement claims arise out U.S. Digital‟s

purposeful contacts with Texas.

U.S. Digital argues that the disc duplication projects cited by Innovative were not

performed in a manner that infringes the „362 patent and, as a result, its activities with Texas are

unrelated to Innovative‟s claim. SUPP. RESPONSE at 3-4. Specifically, U.S. Digital argues that it

did not use any devices named in Innovative‟s infringement contentions served under Local

Patent Rule 3-1. Id. First, the Federal Circuit has recognized “„the constitutional catch-phrase

[„arise out of or relate to‟] is disjunctive in nature,‟ indicating „added flexibility and signal[ling] a

relaxation of the applicable standard‟ from a pure „arise out of standard.‟” Akro Corp. v. Luker,

45 F.3d 1541, 1547 (Fed. Cir. 1995) (quoting Ticketmaster-New York, Inc. v. Alioto, 26 F.3d

201, 206 (1st Cir. 1994)) (alterations in original). Thus, Innovative‟s claims need not strictly

“arise out of” the identified duplication services, i.e., those performed for Texas residents, but

may merely “relate” to those services.

Second, the proper focus of the jurisdictional analysis is on the complaint, not

Innovative‟s infringement contentions. U.S. Digital‟s interpretation would make personal

jurisdiction a moving target to be dictated by external factors irrespective of a defendants‟

contacts with the forum state. The Local Patent Rules are flexible by design and were not

intended as a method for defeating jurisdiction. See, e.g., P.R. 1-2 (“The Court may accelerate,


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extend, eliminate, or modify the obligations set forth in these Patent Rules based on the

complexity of the case or the number of patents, claims, products, or parties involved”). For

example, with regards to infringement contentions, the Local Rules permit a plaintiff to serve

amended infringement contentions without leave of Court within 30 days of the Court‟s Claim

Construction Ruling—which, in this case, is not scheduled until February 2013. See P.R. 3-

6(a)(1).

Thus, the Court finds U.S. Digital‟s disc duplication services offered for sale to and

performed for Texas residents—whether performed using a product identified in Innovative‟s

infringement contentions or not---relate to Innovative‟s infringement allegations. See (Doc. No.

95) at ¶ 29.

C. Fair Play and Substantial Justice

If the plaintiff successfully makes a prima facie showing of minimum contacts, the

burden shifts to the defendant to show “that traditional notions of fair play and substantial justice

would be violated by the exercise of jurisdiction.” See Campbell Pet Co., 542 F.3d at 885.

“When a defendant seeks to rely on the „fair play and substantial justice‟ factor to avoid the

exercise of jurisdiction by a court that otherwise would have personal jurisdiction over the

defendant, „he must present a compelling case that the presence of some other considerations

would render jurisdiction under reasonable.‟” Id. (quoting Burger King Corp. v. Rudzewicz, 471

U.S. 462, 477 (1985)). “The inquiry under this test includes a balancing of (1) the burden on the

defendant; (2) the interests of the forum state; (3) the plaintiff‟s interest in obtaining relief; (4)

the interstate judicial system‟s interest in obtaining the most efficient resolution of controversies;

and (5) the interest of the states in furthering their social policies.” Viam Corp. v. Iowa Export-


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Import Trading Co., 84 F.3d 424, 429 (Fed. Cir. 1996) (citing World Wide Volkswagen Corp. v.

Woodson, 444 U.S. 286 (1980)).

Applying these factors, the Court finds that U.S. Digital has not met its burden of

showing that exercising jurisdiction over it would offend traditional notions of fair play and

substantial justice. U.S. Digital argues that it would be unfairly burdened because U.S. Digital

employees do no travel to Texas to conduct U.S. Digital business. MOTION at 12-13. However,

as explained above, Innovative has made a prima facie showing that U.S. Digital has minimum

contacts with Texas because of its interactive website targeting Texas residence and its

substantial sales to Texas residents. Further, “„[b]ecause modern transportation and

communications have made it much less burdensome for a party sued to defend [itself]‟ outside

its home state, defending this suit in [the forum state] is not prohibitively burdensome.” Patent

Rights Protection Group, LLC v. Video Gaming Tech., 603 F.3d 1364, 1370 (Fed. Cir. 2010)

(quoting Burger King Corp., 471 U.S. at 474); ReedHycalog UK Ltd. v. United Diamond

Drilling Services, No. 6:07-cv-251, 2009 WL 2834274, at *7 (E.D. Tex. Aug, 31, 2009) (citing

World-Wide Volkswagen Corp., 444 U.S. at 294) (“[i]t is well recognized that modern

communication and transportation have made defending a law suit in a foreign tribunal less

burdensome”).

The State of Texas also has a significant interest in preventing patent infringement within

its borders. Id. Texas also has an interest in furthering commerce and scientific development,

especially within its technology sector, which is promoted by patent laws. Id. The Court

concludes that this is not the rare case wherein “plaintiff‟s interest and the state‟s interest in

adjudicating the dispute in the forum are so attenuated that they are clearly outweighed by the

burden of subjecting the defendant to litigation within the forum.” Id. (quoting Beverly Hills Fan


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Corp. v. Royal Sovereign Corp., 21 F.3d 1558, 1568 (Fed. Cir. 1994)); see also Akro, 45 F.3d at

1549.

D. Improper Venue

U.S. Digital also moves for dismissal based on improper venue. See MOTION at 12-14.

Venue is proper “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.” 28 U.S.C. §

1400(b). A corporate defendant like U.S. Digital “reside[s] in any judicial district in which it is

subject to personal jurisdiction at the time the action is commenced.” See 28 U.S.C. § 1391(c);

VE Holdings Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1584 (Fed. Cir. 1990). As a

result, the venue analysis is similar to the personal jurisdiction analysis; however, the relevant

contacts are limited to those in the Eastern District of Texas. See § 28 U.S.C. § 1391(c) (“In a

State which has more than one judicial district and in which a defendant that is a corporation is

subject to personal jurisdiction at the time an action is commenced, such corporation shall be

deemed to reside in any district in that State within which its contacts would be sufficient to

subject it to personal jurisdiction if that district were a separate State”); VE Holdings Corp., 917

F.2d 1583-84 (holding that the patent venue statute should be read consistently with Section

1391(c)); Avery Dennison Corp. v. Alien Technology Corp. 632 F. Supp. 2d 700, 712-13 (N.D.

Ohio 2008) (finding that a plaintiff must show contacts with the district in which suit was filed).

Lastly, “[w]hen a defendant objects to venue, the burden shifts to the plaintiff to establish that

the district he chose is a proper venue. If there is no evidentiary hearing, a plaintiff may carry its

burden by presenting facts, taken as true that establish venue.” Mass Eng’g, Inc. v. 9X Media,

Inc., 2-09-CV-358, 2010 WL 2991018, at *1 (E.D. Tex. July 28, 2010) (citing ATEN Intern. Co.

Ltd v. Emine Tech. Co., Ltd., 261 F.R.D. 112, 120 (E.D. Tex. 2009)).


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As discussed above, U.S. Digital operates a highly interactive website that targets

residents of Texas and has performed disc duplication services identified in Innovative‟s

complaint for at least some residents of the Eastern District of Texas. See Synthes (U.S.A.), 563

at 1297 (quoting Burger King, 471 U.S. at 475 n.18) (noting that “a „substantial connection‟ with

a forum arising out of a „single act can support jurisdiction.‟”). Moreover, in arguing that it

resides in the District of Arizona, U.S. Digital appears to focus on its physical location in

Arizona. See MOTION at 14 (“There is no question that Defendant U.S. Digital Media resides

and operates its small business in Phoenix, Arizona…”). However, for the purposes of Section

1400(b), a corporation resides in any district in which it is subject to personal jurisdiction. Thus,

because U.S. Digital is subject to jurisdiction in the Eastern District of Texas, venue is proper

and the Court RECOMMENDS that U.S. Digital‟s motion be DENIED.

CONCLUSION

For the reasons set forth above, the Court RECOMMENDS that U.S. Digital‟s Motion

be DENIED. Within fourteen (14) days after receipt of the magistrate judge‟s report, any party

may serve and file written objections to the findings and recommendations contained in this

report. A party‟s failure to file written objections to the findings, conclusions and

recommendations contained in this Report within fourteen days after being served with a copy

shall bar that party from de novo review by the district judge of those findings, conclusions and

recommendations and, except on grounds of plain error, from appellate review of unobjected-to

factual findings and legal conclusions accepted and adopted by the district court. Douglass v.

United States Auto. Ass’n, 79 F.3d 11415. 1430 (5th Cir. 1996) (en banc).

.

___________________________________ JOHN D. LOVE

UNITED STATES MAGISTRATE JUDGE

So ORDERED and SIGNED this 30th day of May, 2012.


Innovative v. Audio Labs (ED Tex May 30, 2012)

Documents

deprenyl animal

ve holdings

prima facie

offer express

offend traditional

file written

dvd duplication

innovatives