Alexa: What is venue?
A recent decision from the Northern District of New York provides a detailed outline for analyzing venue in patent infringement cases, and may provide facts that companies with equipment installed in other districts should understand. The case arises from a patent infringement action filed by Rennselaer Polytechnical Institute and CF Dynamic Advances LLC alleging that Amazon.com’s virtual assistant, Alexa, infringes a U.S. Patent covering certain natural language processing technology inventions. Rensselaer Polytechnic Institute and CF Dynamic Advances LLC, v. Amazon.com, Inc., (Case No. 1:18-cv-00549 N.D.N.Y.). The court found that Amazon.com’s Lockers – a network of automated kiosks for picking-up and returning Amazon.com purchases that are installed in third-party owned or public areas – are a “regular and established place of business” under the venue statute.
The plaintiffs filed suit in their home district, the Northern District of New York. However, in view of TC Heartland, and because Amazon.com does not have any traditional offices in that district, Amazon.com argued that venue is improper under 28 U.S.C. § 1400(b) and moved to transfer the action to the Western District of Washington. The plaintiffs argued, among other things, that venue is proper in the Northern District of New York due to the presence of Amazon Lockers at three locations in the district.
Under 35 U.S.C. § 1400(b), venue is proper in the judicial district (1) where the defendant resides, or (2) where the defendant has committed acts of infringement and has a regular and established place of business. TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514, 1517 (2017). Because there was no dispute that Amazon.com does not “reside” in the district, the analysis focused on whether plaintiffs made a prima facie showing that Amazon.com has a “regular and established place of business” in the district. In a detailed analysis, the court summarized the current state of the law:
A “place of business” under 35 U.S.C. § 1400(b) must be:
(1) A physical place in the district from which the defendant actually engages in business;
(2) regular and established; and
(3) the place of the defendant.
In re Cray Inc., 871 F.3d 1335, 1360-64 (Fed. Cir. 2017). The court ruled that the Amazon.com Lockers are a “place of business,” and thus venue under 35 U.S.C. § 1400(b) is proper.
The court found several facts persuasive to its holding:
First, Amazon.com exerted control over the space by contracting with the owners of the properties on which Lockers were installed. Specifically, Amazon.com received a license or lease to occupy a certain space, and prohibited the property owners from moving or relocating the Lockers without Amazon.com’s permission. Amazon.com branded the Lockers with its logo. Further, in at least two instances, Amazon.com chose to have the Lockers physically bolted to the ground. In this way, Amazon.com, through the Lockers, occupies physical and permanent space in the district.
Second, Amazon.com’s agents maintain a significant presence in the district. Amazon.com contracted with third-parties to install and maintain the Lockers. Although third-party contractors provided the actual services, Amazon.com indicated publicly to prospective property owners that Amazon.com itself handles all installation, service, and maintenance. Further, Amazon.com developed procedures for installation, service, and maintenance of the Lockers, as well as a scheduling system, that the third-party contractors were required to use. Amazon.com gave internal Amazon credentials to some of the third-party contractors and added them to Amazon.com’s internal organization charts alongside employees. Thus, the court found that the third-party contractors performed their work on the Lockers on Amazon.com’s behalf.
Third, the Lockers’ purpose furthered Amazon.com’s primary business – delivering goods to buyers. In other words, installing, servicing, and using the Lockers is integral to Amazon.com’s package distribution business. The court concluded that this showed the Lockers are a place of Amazon.com’s business.
Companies with equipment that is physically located in other jurisdictions should pay careful attention to this case. The court distinguished the Amazon.com Lockers from leased equipment and vending machines, in part, due to the facts discussed above. However, any company that owns large installed equipment in other jurisdictions, where such equipment is for the company’s own use or benefit, and where the company maintains significant control over that equipment, may be vulnerable to 35 U.S.C. § 1400(b) venue in that jurisdiction.