Clark v. Docusign, Inc.

• Court: District Court, District of Columbia
• Decided: November 10, 2022
• Docket: Civil Action No. 2021-1007
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

PAUL C. CLARK,

Plaintiff,

v. No. 21-cv-1007 (DLF)

DOCUSIGN, INC.,

Defendant.

MEMORANDUM OPINION

Before the Court is the defendant’s Renewed Motion to Dismiss for Improper Venue, Dkt.

27. Because venue is not proper in this District, the Court will grant the defendant’s motion in

part and transfer this case to the Northern District of California.

I. BACKGROUND

On April 12, 2021, Paul Clark brought this action against DocuSign, Inc. alleging willful

infringement by DocuSign of three of his patents related to electronic signatures. Compl., Dkt. 1;

Am. Compl. ¶¶ 1, 11–44, Dkt. 5. DocuSign is incorporated in Delaware and headquartered in San

Francisco, California. Am. Compl. ¶ 4. It maintains offices in California, Illinois, New York, and

Washington state, Lewis Decl. ¶ 3, Dkt. 6-2, but it does not have an office in the District of

Columbia, id.; Lewis Decl. ¶ 4, Dkt. 13-1.

DocuSign filed an initial motion to dismiss for improper venue, Dkt. 6, and the Court

granted Clark’s motion for venue discovery, Dkt. 8. Order, Dkt. 20. The Court permitted

discovery as to the number of DocuSign’s employees who work remotely, the type of business

conducted by DocuSign’s D.C.-based employees, and DocuSign’s recruitment of employees to work in D.C. Order at 3–4. Now before the Court is DocuSign’s Renewed Motion to Dismiss for

Improper Venue, Dkt. 27.

II. LEGAL STANDARDS

When a plaintiff brings suit in an improper venue, the district court “shall dismiss [the

case], or if it be in the interest of justice, transfer such case to any district or division in which it

could have been brought.” 28 U.S.C. § 1406(a); see also Fed. R. Civ. P. 12(b)(3). “In considering

a Rule 12(b)(3) motion, the Court accepts the plaintiff’s well-pled factual allegations regarding

venue as true, draws all reasonable inferences from those allegations in the plaintiff’s favor, and

resolves any factual conflicts in the plaintiff’s favor.” Tower Lab’ys, Ltd. v. Lush Cosmetics Ltd.,

285 F. Supp. 3d 321, 323 (D.D.C. 2018) (citation and internal quotation marks omitted). The

Court need not “accept the plaintiff’s legal conclusions as true,” and it “may consider material

outside of the pleadings.” Id.

In patent infringement cases, 28 U.S.C. § 1400(b) governs venue, see TC Heartland LLC

v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514, 1519 (2017), and Federal Circuit precedent is

controlling, see In re ZTE (USA) Inc., 890 F.3d 1008, 1012 (Fed. Cir. 2018). The plaintiff bears

the burden of establishing that venue is proper, id. at 1013, and § 1400(b) “is intended to be

restrictive of venue in patent cases compared with the broad general venue provision,” id. at 1014.

Patent venue must be proper at the time that the complaint was filed—here, in April 2021. In re

EMC Corp., 501 F. App’x 973, 976 (Fed. Cir. 2013).

2 III. ANALYSIS

A. Improper Venue

Under 28 U.S.C. § 1400(b), a plaintiff may bring civil patent infringement actions “in the

judicial district where the defendant resides, or where the defendant has committed acts of

infringement and has a regular and established place of business.” A defendant “resides” only in

its state of incorporation. See TC Heartland, 137 S. Ct. at 1521. DocuSign does not reside in the

District of Columbia because it is not incorporated in this district. Am. Compl. ¶ 4. Thus, for

venue to be proper in this district, DocuSign must “ha[ve] a regular and established place of

business” here. 28 U.S.C. § 1400(b); see TC Heartland, 137 S. Ct. at 1521.

To establish venue under this prong, a plaintiff must show that: “(1) there [is] a physical

place in the district; (2) it [is] a regular and established place of business; and (3) it [is] the place

of the defendant.” In re Cray Inc., 871 F.3d 1355, 1360 (Fed. Cir. 2017). Venue is improper in

the District of Columbia because Clark has not established that Docusign has a physical place of

business in the District, that any physical place is a regular and established place of business, or

that any such place is the place of DocuSign.

1. Physical place of business

First, a plaintiff must establish that there is a physical place of business in the district,

namely “a physical, geographical location in the district from which the business of the defendant

is carried out.” Cray, 871 F.3d at 1362. The place “need not be a fixed physical presence in the

sense of a formal office or store,” but neither a “virtual space” nor “electronic communications

from one person to another” suffice. Id. (citation and internal quotation marks omitted). DocuSign

does not maintain offices, co-working space, or any physical systems in the District. Lewis Decl.

¶¶ 4–5, Dkt. 13-1. And the home offices of DocuSign’s nine to twenty employees who lived in

the District in 2021, see Pl.’s Opp. at 5, Dkt. 32, do not satisfy the “physical place” requirement.

3 Although home offices may in certain circumstances constitute a physical place of business, such

as when a defendant’s business model is built on employees who all work from home, see, e.g.,

RegenLab USA LLC v. Estar Techs. Ltd., 335 F. Supp. 3d 526, 549 (S.D.N.Y. 2018), this is not

such a case. In 2021, only 28% of DocuSign’s employees were designated to work remotely, see

Ex. 8 (Discovery Responses) at 14, Dkt. 26-13. Of those, at most 20—1.2%—resided in the

District. Id. Further, the DocuSign employees residing in the District did not store any materials

to sell and distribute on behalf of DocuSign, nor did they perform any “live demonstrations,

evaluations, trainings, and/or presentations” from their homes. Lewis Decl. ¶ 6. Given that

DocuSign’s business model does not rely heavily on remote-designated employees, the fact that a

handful of DocuSign’s employees worked remotely from the District in 2021 is, standing alone,

insufficient to convert the employees’ homes into physical places of business. See Rosco, Inc. v.

Safety Vision LLC, No. 19-cv-8933, 2020 WL 5603794, at *3 (S.D.N.Y. Sept. 18, 2020)

(distinguishing RegenLab and finding employee home did not constitute physical place of business

because the only employees in the district were “remote sales associates or installation

technicians”); C.R. Bard, Inc. v. Smiths Med. ASD, Inc., No. 12-cv-36, 20202 WL 6710425, at *8,

*12 (D. Utah Nov. 16, 2020) (finding no physical place of business because the defendant’s

“business model does not contemplate all employees working from home, and for those who do,

. . . does not treat their home offices as places of business”). Clark therefore has not established

that DocuSign has a physical place of business in the District.

2. Regular and established place of business

Even if the homes of DocuSign’s employees could constitute a physical place in the District

of Columbia, they would not be regular and established places of business. A regular and

established place of business “must for a meaningful time period be stable, established.” Cray,

871 F.3d at 1363. “In other words, sporadic activity cannot create venue.” Id. at 1362. Further,

4 “if an employee can move his or her home out of the district at his or her own instigation, without

the approval of the defendant, that would cut against the employee’s home being considered a

place of business of the defendant.” Id. at 1363.

Under this test, Clark has not established that the employees conduct regular and

established business from their homes in the District. That DocuSign is registered to do business

in the District and “provid[es] computer system design services in the District,” see Pl.’s Opp. at

7–8, is irrelevant. It is the place of business that must be regular and established in the District,

not merely some unrelated business presence in the District. See IngenioShare, LLC v. Epic

Games, Inc., No. 21-cv-663, 2022 WL 827808, at *3 (W.D. Tex. Mar. 18, 2022) (“Focus on the

place is directly tied to the [patent venue] statute and cannot be sidestepped.”); cf. RegenLab, 335

F. Supp. 3d at 550 (finding New York regular and established place of business because the

defendant’s “employees have not merely worked out of New York offices by happenstance”). To

satisfy this test, Clark needs to establish that the DocuSign business conducted from the employees’

homes is stable and established in the District, or, in other words, that this business cannot freely

be moved in and out of the District. See Cray, 871 F.3d at 1365 (finding venue improper where

there was “no evidence that the employees’ location in the Eastern District of Texas was material

to [the defendant],” or that employees in the district served customers there). Clark has not done

so. The remote-designated DocuSign employees who work in the District are permitted to relocate

“[a]nywhere that [DocuSign is] set up to do payroll.” Ex. 5 at 14:23-15:1, Dkt. 26-10. Although

employees who wish to relocate also need to obtain the permission of their managers and be in

good performance standing, such restrictions are not specific to remote-designated employees or

to the employees who live in the District. See Ex. 8 at 2, Dkt. 31-10; IngenioShare, 2022 WL

827808, at *4 (the defendant’s restrictions on locations for remote employees did not create a

5 regular and established place of business in employees’ homes because “those restrictions are not

district specific”). Further, of the small number of DocuSign employees who do live in the District,

some have moved out of the District in recent years. Discovery Responses at 14 n.1 (noting that

at last four employees have moved out of the District); Ex. 9, Dkt. 26-14; Ex. 10, Dkt. 26-15

(showing that, in 2019, one of the three employees in the District moved away). DocuSign also

does not incentivize or condition employment on residence in the District. Indeed, of its 62 job

postings that have listed the “Washington D.C. area” as a preferred base, all of the positions that

have been filled were filled by employees outside the District. See Ex. 6, Dkt. 26-11; Ex. 7, Dkt.

26-12. Clark therefore has not established that the homes of DocuSign’s employees in the District

are regular and established places of business, as he has not shown that the work done by these

employees in their homes is “fixed permanently” to the District. Cray, 871 F.3d at 1363 (cleaned

up).

3. Place of the defendant

Finally, even if the Court were to consider the employees’ homes regular and established

physical places of business, they would not be places of DocuSign. Proper venues lies where there

is “a place of the defendant, not solely a place of the defendant’s employees”; “the defendant must

establish or ratify the place of business” as its own. Cray, 871 F.3d at 1363. Put another way,

“[t]he statute clearly requires that venue be laid where the defendant has a regular and established

place of business, not where the defendant’s employee owns a home in which he carries on some

of the work that he does for the defendant.” Id. at 1365 (cleaned up). Relevant factors include:

“whether the defendant owns or leases the place, or exercises other attributes of possession or

control over the place”; “whether the defendant conditioned employment on an employee’s

continued residence in the district or the storing of materials at a place in the district so that they

6 can be distributed or sold from that place”; and “the extent [marketing or advertisements] indicate

that the defendant itself holds out a place for its business.” Id. at 1363.

For many of the reasons already discussed above, these factors all weigh in favor of finding

that the employees’ homes in the District do not constitute a place of DocuSign. See Cray, 871

F.3d at 1365–66; GreatGigz Sols., LLC v. ZipRecruiter, Inc., No. 21-cv-172, 2022 WL 432558, at

*5 (W.D. Tex. Feb. 11, 2022) (no place of business in employees’ Austin homes despite

advertising about availability of remote positions in Austin because none of the “listings claim the

alleged place of business (the employees’ homes) is ZipRecruiter’s own place of business or that

these remote-employee[s] . . . must live in the Austin area”); Bausch Health Ir. Ltd. v. Mylan

Lab’ys Ltd., No. 21-10403, 2022 WL 683084, at *7 (D.N.J. Mar. 8, 2022) (finding no place of

business of defendant in employees’ homes based on similar factors); BillingNetwork Pat., Inc. v.

Modernizing Med., Inc., No. 17 C 5636, 2017 WL 5146008, at *3 (N.D. Ill. Nov. 6, 2017) (same).

Clark has not shown that DocuSign owns, leases, or otherwise controls the homes of its remote-

designated employees in the District. See Pl.’s Opp. at 10–12. As explained above, DocuSign

neither conditions employment on residence in the District nor adds District-specific conditions

on moving out of the District. Indeed, employees have moved out of the District in the past.

DocuSign employees in the District do not store materials in the District for distribution or sale.

Further, aside from job postings that list the D.C. area as a preferred location, Clark has not

identified any DocuSign advertising that shows that it has an office or place of business in the

District. See id. To the extent that the D.C. area preferred listings constitute relevant advertising,

those positions were not filled by employees located in the District.

7 Viewed as a whole, the record does not establish that the homes of DocuSign’s employees

in the District could be considered places of business of DocuSign. Clark has not established any

of the requirements for patent venue. Thus, venue in this District is improper. 1

B. Dismissal or Transfer

“The district court of a district in which is filed a case laying venue in the wrong division

or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or

division in which it could have been brought.” 28 U.S.C. § 1406(a). “The decision whether a

transfer or a dismissal is in the interest of justice . . . rests within the sound discretion of the district

court.” Naartex Consulting Corp. v. Watt, 722 F.2d 779, 789 (D.C. Cir. 1983). The “standard

remedy for improper venue is to transfer the case to the proper court rather than dismissing it—

thus preserving a [plaintiff’s] ability to obtain review.” Nat’l Wildlife Fed’n v. Browner, 237 F.3d

670, 674 (D.C. Cir. 2001). However, dismissal may be appropriate in circumstances where the

complaint contains “obvious substantive defects.” Fam v. Bank of Am. NA (USA), 236 F. Supp.

3d 397, 409–10 (D.D.C. 2017); see also Smith v. FBI, No. 19-cv-2765, 2020 WL 5411142, at *2

(D.D.C. Sept. 9, 2020).

Because DocuSign has not identified any serious substantive problems that would merit

dismissal, see Def.’s Reply at 12, Dkt. 35, the Court will transfer the case. “Courts may transfer a

case to any jurisdiction [that] would have personal jurisdiction over the defendants and in which

venue is proper.” Fam, 236 F. Supp. 3d at 410. Here, the Court may transfer the case either to the

District of Delaware, where DocuSign is incorporated, or to the Northern District of California,

1 Because the Court finds that DocuSign does not have a regular and established place of business in the District, it need not consider whether DocuSign has committed acts of infringement in the District.

8 where DocuSign is headquartered. In both districts, personal jurisdiction exists and patent venue

is proper. See Def.’s Reply at 12–13; Pl.’s Opp. at 14; TC Heartland, 137 S. Ct. at 1521.

In assessing venue, the Court is guided by the factors enumerated in 28 U.S.C. § 1404(a).

Melnattur v. U.S. Citizenship & Immigr. Servs., No. 20-cv-3013, 2021 WL 3722732, at *3 n.4

(D.D.C. Aug. 23, 2021) (suggesting that “the framework for assessing a transfer under § 1406(a)

is essentially identical to that under § 1404(a)”). These include “the plaintiff’s choice of forum,”

“the defendant’s choice of forum,” “where the claim arose,” “the convenience of the parties . . .

and the witnesses,” and “the ease of access to sources of proof.” Id. at *4. On balance, these

factors favor transferring this case to the Northern District of California. DocuSign is

headquartered in the Northern District of California, so most of the witnesses and sources of proof

are likely located there. Def.’s Reply at 13–14. Further, DocuSign does not have an office close

to Delaware. Id. Although Clark argues that he would be inconvenienced by the need to travel to

California, see Pl.’s Opp. at 14, he frequently travels to the Northern District of California to testify

as an expert witness, see Def.’s Reply at 14 & n.2 (listing cases in which Clark has testified there).

Clark and DocuSign are also already involved in related, pending litigation with each other in the

Northern District of California. Def.’s Notice of Supp. Authority at 1–2, Dkt. 36. Accordingly,

weighing the relevant factors, the Court will transfer this action to the Northern District of

California.

9 CONCLUSION

For the foregoing reasons, the Court will grant the defendant’s motion to transfer. Venue

is improper in this District, and the Court will transfer this action to the Northern District of

California. A separate order consistent with this decision accompanies this memorandum opinion.

________________________ DABNEY L. FRIEDRICH November 4, 2022 United States District Judge