Westech Aerosol Corporation v. 3m Company
927 F.3d 1378
Fed. Cir.2019Background
- Westech sued 3M and Northstar in the Western District of Washington for infringement of U.S. Patent No. 7,705,056.
- 3M moved to dismiss for failure to state a claim; after Westech amended, 3M amended its motion to add improper-venue arguments following the Supreme Court's decision in TC Heartland.
- Westech conceded its original complaint lacked venue facts and sought leave to amend; the district court allowed amendment with a Rule 11 warning.
- Westech’s second amended complaint recited § 1400(b) and asserted venue "on information and belief" (sales reps, distributors, sales) but pleaded no specific facts showing a physical "regular and established place of business."
- After this court’s In re Cray decision clarified § 1400(b) requires a physical place in the district, the district court dismissed for improper venue; Westech appealed.
- 3M sought appellate sanctions for a frivolous appeal; the Federal Circuit affirmed dismissal but denied sanctions (though found the appeal frivolous as argued).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Westech adequately pleaded venue under 28 U.S.C. § 1400(b) | Parroting § 1400(b) and alleging on information and belief that 3M has sales reps/distributors and sales in the district suffices at pleading stage | Westech failed to plead specific facts showing a physical, "regular and established place of business" in the district | Plaintiff failed to plead facts; dismissal for improper venue affirmed |
| Burden of proof for venue allegations | (argued on appeal) pleading standards sufficient; initially unclear who bears burden | Plaintiff must plead facts establishing venue (court in ZTE placed burden on plaintiff) | Plaintiff bears burden to allege specific facts; conclusory recitation insufficient |
| Relevance of sales presence alone to establish § 1400(b) venue | Sales activity and sales representatives in district are adequate indicia of venue | Sales presence alone does not establish a "regular and established place of business" | Sales presence alone is insufficient under Cray; physical place required |
| Whether the appeal warranted Rule 38 sanctions | Appeal was frivolous because dismissal was plainly correct | Appeal lacked merit and disregarded controlling authority, but procedural posture justified relief from sanctions | Appeal not frivolous as filed (denied sanctions) but frivolous as argued; sanctions denied due to unique procedural history |
Key Cases Cited
- TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (Sup. Ct. 2017) (holding corporate "residence" for patent venue is state of incorporation)
- In re Cray Inc., 871 F.3d 1355 (Fed. Cir. 2017) (patent venue requires a defendant to have a physical place in the district that is a regular and established place of business)
- In re ZTE (USA) Inc., 890 F.3d 1008 (Fed. Cir. 2018) (plaintiff bears burden to establish proper venue under § 1400(b))
- McZeal v. Sprint Nextel Corp., 501 F.3d 1354 (Fed. Cir. 2007) (conclusory legal allegations are insufficient to survive a motion to dismiss)