Broadway National Bank v. Plano Encryption Technologies, LLC

173 F. Supp. 3d 469, 2016 U.S. Dist. LEXIS 40051, 2016 WL 1259568
CourtDistrict Court, W.D. Texas
DecidedMarch 28, 2016
DocketCase No. A-15-CA-1056-SS
StatusPublished
Cited by12 cases

This text of 173 F. Supp. 3d 469 (Broadway National Bank v. Plano Encryption Technologies, LLC) is published on Counsel Stack Legal Research, covering District Court, W.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Broadway National Bank v. Plano Encryption Technologies, LLC, 173 F. Supp. 3d 469, 2016 U.S. Dist. LEXIS 40051, 2016 WL 1259568 (W.D. Tex. 2016).

Opinion

ORDER

SAM SPARKS, UNITED STATES DISTRICT JUDGE

BE IT REMEMBERED on the 28th day of March 2016, the Court held a hearing in the above-styled cause, and the parties appeared by and through counsel. Before the Court is Defendant Plano Encryption Technologies, LLC’s Motion to Dismiss Plaintiffs Original Complaint [#10]; Plaintiff Broadway' National Bank d/b/a'Broadway Bank’s ■ Response [#13] thereto; Defendant’s Reply [#14] in support; Plaintiffs Opposed Motion for Leave to File Sur-Reply [#16]; and Defendant’s Response [#18] thereto1. Having re[472]*472viewed the documents, the relevant law, and the file as a whole, the Court now enters the following opinion and orders.

Background

Defendant Plano Enciyption Technologies, LLC (PET) is a patent licensing company which owns a portfolio of United States patents related to secure data transmission and storage technology. PET’s sole business is to enforce its intellectual property; PET does not make or sell any products or services. See Mot. Dismiss [#10-1] Ex. A (Liddle Decl.) ¶ 5; Compl. [#1] ¶ 8.

On July 10, 2015, PET’s CEO and Corporate Counsel, Bradley D. Liddle, sent a letter to the CEO and Vice Chairman of Plaintiff Broadway National Bank d/b/a Broadway Bank claiming it had a “good faith basis” to believe Broadway Bank’s mobile banking applications and online banking features were infringing claims on three of its patents. See Compl. [#l-5] Ex. D (the Liddle Letter) at 1. Specifically, Liddle accused Broadway Bank’s “Apple mobile apps” of infringing on'U.S. Patent No. 5,991,399 (the ’399 patent) and U.S. Patent No. 6,974,550 (the ’550 patent), and Broadway Bank’s “online banking features” of infringing on U.S. Patent No. 6,587,858 (the ’858 patent) (collectively, the Patents-in-Issue). Id. To “allow Broadway to continue its use of these technologies,” Liddle proposed “a nonexclusive, license to its Patent Portfolio for an amount that would be a fraction of a reasonable royalty calculation it would otherwise be entitled to as damages .for patent infringement.” Id. at 2. While Liddle stated PET’s intention was to “open a meaningful dialogue toward a mutually beneficial business resolution,” he also alluded to the threat of litigation, citing PET’s active enforcement of its patent rights in a recently filed lawsuit against Citizens National Bank. Id. at 1 (citing Plano Encryption Techs., LLC v. Citizens Nat’l Bank, Civ. No. 2:15-cv-1168 (E.D.Tex filed June 29, 2015)).

This is apparently not' the only action PET has taken against banks related to the enforcement of the Patents-in-Issue. Since sending the Liddle Letter, PET filed three additional complaints in the Eastern District of Texas for infringement of ’399 patent and the ’550 patent. See Plano Encryption Techs., LLC v. Am. Bank of Tex., No. 2:15-cv-1273-JRG (E.D.Tex., filed July 15, 2015); Plano Encryption Techs., LLC v. Citizens Nat’l Bank, No. 2:15-cv-1168-JRG (E.D.Tex., filed June 29, 2015); Plano Encryption Techs., LLC v. Independent Bank, No. 2:15-cv-1382-JRG (E.D.Tex., filed July 31, 2015); Plano Encryption Techs., LLC v. Guar. Bank & Trust, N.A., No. 2:15-cv-1480-JRG (E.D.Tex., filed Sept. 3, 2015). These lawsuits were consolidated with the Citizens Nat’l Bank action for pretrial purposes on October 28, 2015. See Consolidation Order [#17], Plano Encryption Techs., LLC v. Am. Bank of Tex. et al., No. 2:15-cv-1273-JRG (E.D.Tex., Oct. 29, 2015).

Additionally, multiple banks have filed declaratory judgment actions against PET in response to PET’s cease-and-desist letters. See Nat’l Bank d/b/a The Nat’l Bank of Central Tex. v. Plano Encryption Techs., LLC, 6:15-cv-249-WSS (W.D.Tex., filed August 28, 2015); Jack Henry & Assocs., Inc. et al. v. plano Encryption Techs., LLC, 3:15-cv-3645-N (N.D.Tex., filed Nov. 19, 2015); Fidelity Nat’l Info. Servs., Inc. v. Plano Encryption Techs., LLC etal, No. 1:14-cv-777-LPS-CJB (D.Del., filed Sept. 3, 2015).

On November 20, 2015, Broadway Bank filed the current declaratory judgment action, seeking a declaration of non-infringement with respect to the ’399 patent, the ’550 patent, and the ’858 patent. See Compl. [#1], On January 20, 2016, PET filed a motion to dismiss for lack of venue [473]*473pursuant to Rule 12(b)(3) or, in the alternative, asking the Court to decline to exercise jurisdiction on equitable grounds. See Mot. Dismiss- [#10], Broadway Bank responded and also moved for jurisdictional discovery. .The motions are now ripe for consideration.,

. Analysis

■ PET contends venue is improper in this Court because it does not have sufficient contacts with the Western District, and because a substantial part of the events giving rise to the claim occurred in Plano, not in Austin or San Antonio. Broadway Bank, naturally, disagrees. : Broadway Bank contends PÉT has waived the right to challenge venue by failing also to challenge personal jurisdiction under Rule 12(b)(2). Alternatively, Broadway argues PET has sufficient contacts with the Western District and the sole event giving rise to this action — receipt of the Liddle Letter — occurred in San Antonio^

1. Legal Standard — Venue

Under Rule 12(b)(3) of the Federal Rules of Civil Procedure, a party may move to dismiss an action on the basis of improper venue. Fed. R. Civ. P. 12(b)(3). Once challenged, the burden of sustaining venue lies with the plaintiff. See Langton v. Obey and Commc’n, L.L.C., 282 F.Supp.2d 504, 508 (E.D.Tex.2003).2 If, as here, there is no evidentiary hearing, a plaintiff may carry its burden by presenting facts that, taken as true, would establish -venue. Id. The court must accept as true all -allegations in 'the -complaint and resolve all conflicts in favor of the plaintiff. Id.; see also Braspetro Oil Servs., Co. v. Modec (USA), Inc., 240 Fed.Appx. 612, 615 (5th Cir.2007). Further, in deciding whether venue is proper, “the court is permitted to look at evidence beyond simply those facts alleged in the complaint and its proper attachments.” Ambraco, Inc. v. Bossclip B.V., 570 F.3d 233, 238 (5th Cir.2009).

As a general rule, a declaratory judgment alleging non-infringement is governed by the-general venue statute, 28 U.S.C. § 1391. See VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1583 (Fed.Cir.1990); see also Gro Master, Inc. v. Farmweld, Inc., 920 F.Supp.2d 974, 988-99 (N.D.Iowa 2013); United Sonics, Inc. v. Shock, 661 F.Supp. 681, 682 (W.D.Tex.1986). Pursuant to § 1391(b), venue is proper in:

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173 F. Supp. 3d 469, 2016 U.S. Dist. LEXIS 40051, 2016 WL 1259568, Counsel Stack Legal Research, https://law.counselstack.com/opinion/broadway-national-bank-v-plano-encryption-technologies-llc-txwd-2016.