Eyetalk365, LLC v. Zmodo Technology Corporation Limited
3:16-cv-00789
W.D.N.C.Oct 18, 2017Background
- Eyetalk365 sued Zmodo for patent infringement in W.D.N.C. on Nov. 14, 2016; Zmodo answered and moved to dismiss on the merits but did not challenge venue.
- After the Supreme Court decided TC Heartland (May 22, 2017), Zmodo moved to dismiss for improper venue under Rule 12(b)(3) and alternatively to transfer venue to Nevada.
- Zmodo argued TC Heartland changed controlling venue law for patent cases; Eyetalk365 argued Zmodo waived its venue defense by omitting it earlier and that the motion was untimely.
- The court evaluated waiver doctrine and the exception for intervening changes in law, applying Fourth Circuit precedent on reasonableness and prejudice (Holland).
- The court held TC Heartland was an intervening change that made a venue defense unavailable earlier; Zmodo’s delay in raising venue was reasonable and Plaintiff suffered minimal prejudice.
- Because Zmodo is not incorporated in North Carolina and has no regular place of business in this district, venue was improper under §1400(b); the court denied dismissal but granted transfer to the District of Nevada.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Waiver of venue defense | Zmodo waived venue defense by not raising it in its initial motion/answer | TC Heartland was an intervening change; defense unavailable earlier so no waiver | No waiver — TC Heartland was an intervening change and Zmodo reasonably delayed; minimal prejudice to plaintiff |
| Proper venue under patent law | Venue was proper here under pre-TC Heartland law (VE Holding) | After TC Heartland, venue proper only where defendant is incorporated or has a regular established place of business; Zmodo not in NC | Venue improper in W.D.N.C. under §1400(b) per TC Heartland |
| Remedy: dismissal vs transfer | If venue improper, dismiss or deny motion as untimely | Transfer to a district where venue is proper (Nevada) is in interest of justice | Denied dismissal; granted transfer to District of Nevada under 28 U.S.C. §1406(a) |
Key Cases Cited
- TC Heartland LLC v. Kraft Foods Group Brands, 137 S. Ct. 1514 (2017) (Supreme Court clarifying venue for patent cases is governed by §1400(b))
- Fourco Glass Co. v. Transmirra Prods. Corp., 353 U.S. 222 (1957) (corporate residence for patent venue is state of incorporation; §1400(b) is sole provision for patent venue)
- VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990) (held general venue statutes governed patent venue prior to TC Heartland)
- Holland v. Big River Minerals Corp., 181 F.3d 597 (4th Cir. 1999) (intervening-change exception to waiver; reasonableness and prejudice test)