United States District Court, E.D. Virginia, Norfolk Division
MEMORANDUM OPINION AND ORDER
L. Wright Allen United States District Judge
patent infringement suit, two corporations hailing from
distant states find themselves litigating in the Eastern
District of Virginia. This sort of forum shopping in patent
litigation has proliferated over the past thirty years.
See Daniel Klerman & Greg Reilly, Forum
Selling, 89 S. Cal. L. Rev. 241, 247-48 (2016). This
practice has subjected defendants to litigation in distant
forums largely unrelated to the alleged infringement and has
given a few federal district courts, including the Eastern
District of Virginia, inordinate power over the interstate
market for innovation. See Id. at 249-50, 280-81.
recent decisions, TC Heartland, LLC v. Kraft Foods Group
Brands, LLC, 137 S.Ct. 1514 (2017) and In re Cray,
Inc., - F.3d -, 2017 WL 4201535 (Fed. Cir. Sept. 21,
2017), have clarified that the permissible venues for patent
litigation are narrower than has been allowed in recent
practice, however. In the wake of these decisions, venue for
this suit does not properly lie in the Eastern District of
Virginia, and the interests of justice require that this
action be transferred to the District of Connecticut pursuant
to 28 U.S.C. § 1406(a).
Symbology Innovations, LLC ("Symbology") filed this
suit against Defendant Lego Systems, Inc. ("Lego
Systems") alleging patent infringement and seeking
damages, attorneys' fees, costs, and further relief under
35 U.S.C. § 271. See Am. Compl. ¶ 1. A
PACER search revealed that Symbology has filed approximately
ninety such suits since 2015. Despite the volume of litigation,
a Westlaw search reveals that no reported or unreported
decisions have been issued in any of these cases.
owns four patents (Patent Numbers 7, 992, 773, 8, 424, 752,
8, 651, 369, and 8, 936, 190), each titled "System and
Method for Presenting Information about an Object on a
Portable Electronic Device." See Am. Compl.
¶¶ 10-11, 15-16, 20-21, 25-26. The patents relate
to quick response codes ("QR codes"). See
code is an encoded image used to link printed material to
digitally stored information. See 2 Harry M. Philo,
Jr., Lawyers Desk Reference § 9:33 (10th ed.). It
functions as an elaborate bar code that "consists of
black modules arranged in a square pattern on a white
background." Id.; see also Figure 1. (Image
access information stored in the QR code, a consumer must
have a QR code reader application ("app") installed
on the consumer's smart phone. See Styer v. Prof I
Med. Mgmt., Inc., 114 F.Supp.3d 234, 236 (M.D. Pa.
2015). When presented with a QR code, the consumer opens the
app, which activates the smartphone's camera to scan the
QR code. See James E. Cabral et al., Using
Technology to Enhance Access to Justice, 26 Harv. J.L.
& Tech. 241, 273- 74 (2012). The app then processes the
QR code, decodes its message, and uses the encoded URL to
access the online content sought by the consumer. Id
Symbology's infringement claims concern a method for
reading QR codes encoded with URLs. See Am. Compl.
¶¶ 14, 19, 24, 29. The patents purport to cover
particular methods for using a digital device to capture and
process a QR code and using the decoded URL to access the
associated website. See id.
Lego Systems' Business and Contacts with the
Systems is a Danish company incorporated in Delaware and
headquartered in Enfield, Connecticut. Am. Compl. ¶ 3.
Lego Systems creates and sells the popular Lego brand
construction toys. See 1st Quaglia Decl. ¶ 3
(ECF No. 31-1); see also Nielson Decl. ¶ 3 (ECF
No. 31-2). Lego toys are manufactured exclusively outside of
the Commonwealth of Virginia. See 1st Quaglia Decl.
¶ 3. Lego Systems designs advertisements and packaging
for its American products at its headquarters in Billund,
Denmark and in Enfield, Connecticut. See Am. Comp.
¶ 37; see also 1st Quaglia Decl. ¶ 4.
Lego Systems' product packaging features QR codes.
See, e.g., Am. Compl. ¶¶ 30, 52. Lego
Systems does not make, generate, or otherwise create QR
codes, nor does it make or offer for sale any software that
detects and processes QR codes. 1st Quaglia Decl.
¶¶ 6-7. To generate, detect, and process QR codes,
consumers must use third-party software. Id. ¶
8. Symbology alleges that, by featuring QR codes on its
boxes, Lego Systems induces shoppers to infringe on its
patents. See Id. Symbology also alleges that Lego
Systems directly infringed on its patents by using an app
while internally testing the QR codes. See id.
headquartered in Denmark and Connecticut, Lego Systems has
several contacts with the Eastern District of Virginia. The
company derives revenue from products sold in this District,
holds promotional events here, is registered with the
Commonwealth as a foreign corporation, and has a registered
agent to accept service of process. See Supp. Resp.
at 4; see also Pl's Exh. 2 (ECF No. 21-2).
Symbology alleges that Lego Systems directly infringes and
induces consumers to infringe on its patents in this
District. See Am. Compl. ¶ 7.
Systems operates no retail stores in this District (or
anywhere else). See 1st Quaglia Decl. ¶ 10. A
subsidiary, Lego Brand Retail, Inc., operates Lego Store
locations in at least thirty states, including three stores
in Virginia. Id. Lego Systems and Lego Brand Retail
are separate entities with separate corporate officers,
records, finances, and assets. See Nielsen Decl.
¶ 4. They maintain separate general ledgers and prepare
their own distinct financial reports. See Id. ¶
5. The companies do not hold joint assets. See id.
January 3, 2017, Symbology filed five patent infringement
lawsuits in the Eastern District of Virginia. See
Civil Action Nos. 2:17-cv-l, 2:17-cv-2, 2:17-cv-84,
2:17-cv-85, 2:17-cv-86. Only the instant suit remains
pending. Originally filed in the Court's Richmond
Division, this case was transferred to the Norfolk Division
when the five suits were consolidated before the undersigned.
See Feb. 8, 2017 Transfer Order (ECF No. 5).
of filing a responsive pleading, Lego Systems moved to
dismiss this action, challenging the sufficiency of
Symbology's Complaint and, later, its Amended Complaint.
See Mot. Dismiss Compl. (ECF No. 16); see
also Mot. Dismiss Am. Compl. (ECF No. 25). Lego Systems
also moved for a transfer of venue to the District of
Connecticut under 28 U.S.C. § 1404(a), asserting the
inconvenience of this forum. See Transfer Mot. (ECF
advancing those motions, Lego Systems reserved its right to
challenge the propriety of venue in this District pending the
outcome of a patent-venue case in which the United States
Supreme Court had granted certiorari. Transfer Mem. at 4 n.6
(ECF No. 19) (citing TC Heartland, LLC v. Kraft Food
Brands Grp., LLC, 137 S.Ct. 614 (2016) (granting
cert.)). When reserving the issue, Lego Systems errantly
cited the inapplicable general venue statute (28 U.S.C.
§ 1391(c)) instead of the patent venue statute (28
U.S.C. § 1400(b)) or the provision governing improper
venue challenges (28 U.S.C. § 1406(a)). See Id.
However, the company also cited the Supreme Court's grant
of certiorari in TC Heartland, clarifying that Lego
Systems had intended to preserve the issue of improper venue
pending the outcome of TC Heartland v. Kraft Food Brands
Group, LLC. See id.
Lego Systems' Rule 12(b)(6) Motion to Dismiss and §
1404(a) Motion to Transfer remained pending, the Supreme
Court issued its decision in TC Heartland, LLC v. Kraft
Foods Group Brands, LLC, 137 S.Ct. 1514 (2017). The
Supreme Court underscored that its 1957 decision interpreting
the patent venue statute remains good law. See Id.
at 1517 (citing Fourco Glass Co. v. Transmirra Prods.
Corp., 353 U.S. 222 (1957)). The Court also expressly
reaffirmed Fourco's holding "that a
domestic corporation 'resides' only in its State of
incorporation for purposes of the patent venue statute."
Court then ordered supplemental briefing on the venue issues
presented by this case. See Supp. Br. Order at 1-3
(ECF No. 30). The parties were directed to advance all
transfer arguments in their new briefing. Id. at 1
n.l. The Court also invited Lego Systems to argue the
propriety of venue after the Supreme Court's decision in
TC Heartland. See Supp. Br. Order at 3. Lego Systems
briefed the issue in its Supplemental Memorandum.
See Supp. Mem. at 6-11 (ECF No. 31). After the Court
granted Symbology additional time to revise its responsive
brief, the company filed an amended Supplemental Response,
addressing both the improper venue and the inconvenient venue
issues. See July 10, 2017 Min Order (ECF No. 33);
see also Supp. Resp. (ECF No. 34). Lego Systems
filed its Supplemental Reply. See Supp. Reply (ECF
issues are now fully developed and ripe for resolution by the
Court. At this juncture, Lego Systems challenges
venue in this District as either improper or inconvenient. If
venue is deemed improper, the company requests that the Court
dismiss this action or transfer it to the United States
District Court for the District of Connecticut. In the
alternative, if venue is deemed proper but inconvenient, Lego
Systems seeks a transfer. In response, Symbology argues that
venue is proper, that transfer is unnecessary, and that if
transfer is necessary, the appropriate transferee forum is
the United States District Court for the District of
patent infringement suits, the law of the United States Court
of Appeals for the Federal Circuit applies to matters unique
to patent law. Midwest Indus., Inc. v. Karavan Trailers,
Inc., 175 F.3d 1356, 1359 (Fed. Cir. 1999) (en banc).
However, when resolving procedural issues that are not unique
to patent law, United States Court of Appeals for the Fourth
Circuit law applies. See Beverly Hills Fan Co. v. Royal
Sovereign Corp., 21 F.3d 1558, 1564 (Fed. Cir. 1994).
generally applicable federal statutes permit district courts
to transfer a case to another venue. A district court can
transfer venue under 28 U.S.C § 1406(a), when the venue
is improper, or under 28 U.S.C. § 1404(a), when the
venue is proper but inconvenient.
Transfer Under S 1406(a) Based on Improper
Court considers Lego Systems' improper venue challenge as
a motion under Federal Rule of Civil Procedure 12(b)(3), the
proper mechanism for defendants seeking to raise an objection
to improper venue. See W.Va. Chamber of Commerce v.
Browner, 166 F.3d 336, 1998 WL 827315, at *4 n.6 (4th
Cir. 1998) (table).
evaluating the propriety of venue under Rule 12(b)(3), a
district court may examine facts outside the complaint to
determine whether its venue is proper. See 14D
Charles A. Wright et al., 14D Federal Practice and Procedure
§ 3826 & n.30 (3d ed.) (collecting cases). Although
a plaintiff need not plead venue, courts "consider to be
true any well-pleaded allegations of the complaint that bear
on venue, unless contradicted by defendant's affidavit
evidence." Id. & nn.3-4, 28-29 (collecting
cases). If the plaintiff presents countervailing affidavits,
the court can hold an evidentiary hearing to assess
credibility and make findings of fact. See id &
n.32; accord Hancock v. AT&T Co., 701 F.3d 1248,
1261 (10th Cir. 2012).
defendant challenges venue under Rule 12(b)(3) in the Fourth
Circuit, the plaintiff bears the burden of establishing that
venue is proper. See, e.g., Smithfield Packing Co. v.
V. Suarez & Co., 857 F.Supp.2d 581, 584 (E.D. Va.
2012); Colonna's Shipyard, Inc. v. City of Key
W., 735 F.Supp.2d 414, 416 (E.D. Va. 2010); Dunham
v. Hotelera Canco S.A. de C.V., 933 F.Supp. 543, 550
(E.D. Va. 1996). The weight of this burden varies with the
nature of the parties' dispute.
survive a motion to dismiss for improper venue when no
evidentiary hearing is held, plaintiff need only make a
prima facie showing of venue." Mitrano v.
Hawes, 377 F.3d 402, 405 (4th Cir. 2004). "In
assessing whether there has been a prima facie venue
showing, [courts] view the facts in the light most favorable
to the plaintiff." Aggarao v. MOL Ship
Mgmt. Co., 675 F.3d 355, 365-66 (4th Cir. 2012)
(citations omitted). The plaintiff faces a heightened burden
when an evidentiary hearing is held, and must prove venue by
a preponderance of the evidence. See Gulf Ins. Co. v.
Glasbrenner, 417 F.3d 353, 355 (2d Cir. 2005); see
also 14D Federal Practice and Procedure, supra,
§ 3826 & nn.32-33.
Transfer Under § 1404(a) Based on Inconvenient
§ 1404(a) "allows a court where venue is proper to
transfer a case to a more convenient forum." See
HollyAnne Corp. v. TFT, Inc., 199 F.3d 1304, 1307 (Fed.
Cir. 1999). A transfer under § 1406(a) is available when
there is a legal defect in the initially selected forum.
Id. Conversely, a § 1404(a) transfer is
available only when the initial choice of forum is legally
sound but the location's impracticality warrants a
transfer to ensure the convenient and efficient resolution of
the dispute. See Martin v. Stokes, 623 F.2d 469,
473-74 (6th Cir. 1980).
seeking a convenience transfer under § 1404(a),
"[t]he movant bears the burden of showing that transfer
is proper." JTH Tax, Inc. v. Lee, 482 F.Supp.2d
731, 736 (E.D. Va. 2007). Whether to transfer a case under
§ 1404(a) is committed to the discretion of the district
court. See Stewart Org., Inc. v. Ricoh Corp., 487
U.S. 22, 29-30 (1988). "[U]nless the balance is strongly
in favor of the defendant, the plaintiffs choice of forum
should rarely be disturbed." Gulf Oil Corp. v.
Gilbert, 330 U.S. 501, 508 (1947). "Rarely,
however, is not never." In re Nat'l Presto
Indus., 347 F.3d 662, 664 (7th Cir. 2003) (Posner, J.).
III. ANALYSIS Lego Systems asks the Court to
determine whether the Eastern District of Virginia is the
proper venue for this suit. If venue does not lie, Lego
Systems requests that the Court either transfer or dismiss
this suit under § 1406(a). If venue lies here, the
company requests that the Court nevertheless transfer this
action to a more convenient forum under § 1404(a).
Because venue is improper, the Court will transfer this
action under § 1406(a), and does not reach the §
venue is a somewhat abstract concept, the Court begins with
the building blocks of the doctrine. "Venue rules are
concerned with the proper geographic location for litigation
of a civil action." Moore's Federal Practice §
110.01  (3d ed.). These rules "seek to channel
lawsuits to an appropriately convenient court, given the
matters raised and the parties involved in an action."
Id. (citing Leroy v. Great Western United
Corp., 443 U.S. 173, 185 (1979)). Because of this,
"[v]enue is a waivable personal privilege of
defendants." Cobalt Boats, LLC v. Sea Ray Boats,
Inc., - F.Supp.3d -, 2017 WL 2556679, at *2 (E.D. Va.
June 7, 2017) (citing Leroy v. Great W. United
Corp., 443 U.S. 173, 180 (1979)).
venue statutes govern the venue of all civil actions brought
in the federal district courts." Id. §
110.01 . The proper venue for any given federal lawsuit is
determined by the general venue statute, a special venue
statute, or the general venue statute supplemented by a
special venue statute. See Id. §
1101.01[a]-[b]. Intellectual property lawsuits are
exclusively governed by special venue rules, found in 28
U.S.C. § 1400. Id. § 110.39. Subsection
1400(b) governs venue in patent infringement suits.
Id. § 110.39.
Whether an Improper Venue Challenge Is Waived
Symbology fails to raise the issue, the Court begins by
considering whether Lego Systems waived the opportunity to
challenge improper venue. Generally, defendants must
challenge improper venue "either in a [Rule 12(b)(3)]
motion ... or as part of the responsive pleading, or they
waive that defense." Cobalt Boats, 2017 WL
2556679, at *2. This use-it-or-lose-it rule requires a
defendant to raise a venue defect in its first Rule 12(b)
motion. See Fed. R. Civ. P. 12(g)-(h); see
also 14D Federal Practice and Procedure, supra,
§ 3826 & n.21 (collecting cases). Lego Systems
initially moved to dismiss under Rule 12(b)(6) and filed a
Motion to Transfer pursuant to § 1404(a). See
Mot. Dismiss Am. Compl.; see also Mot. Transfer. At
that time Lego Systems did not explicitly lodge an improper
venue challenge under Rule 12(b)(3).
can be excused by, among other things, an intervening change
in the law. See Cobalt Boats, 2017 WL 2556679, at
*2. Although some courts consider the Supreme Court's
recent decision in TC Heartland to constitute such a
change,  this Court is not among them. See
Id. As noted above, in TC Heartland, the
Supreme Court reaffirmed the continued vitality of its 1957
holding in Fourco. See TC Heartland, 137 S.Ct. at
1517 (citing Fourco,353 U.S. 222). This abrogated
the Federal Circuit's 1990 decision in VE Holding
Corp. v. Johnson Gas Appliance Co., which had held that
Fourco was no longer good law. 917 F.2d 1574, 1584
(Fed. Cir. 1990). Because the ...