Seven Networks, LLC v. Google LLC
This text of 315 F. Supp. 3d 933 (Seven Networks, LLC v. Google LLC) is published on Counsel Stack Legal Research, covering District Court, E.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
RODNEY GILSTRAP, UNITED STATES DISTRICT JUDGE
Before the Court is Google LLC's ("Google") Second Renewed Motion to Dismiss or, in the Alternative, Transfer under
I. PROCEDURAL BACKGROUND
SEVEN Networks, LLC, ("SEVEN") filed suit against Google on May 17, 2017, alleging, inter alia , patent infringement. (Dkt. No. 1). On August 8, 2017, Google filed a Motion to Dismiss under Rule 12(b)(3). (Dkt. No. 25). In response, SEVEN filed the Amended Complaint that is the subject of the present motion. (Dkt. No. 34). On September 12, 2017, Google filed a Renewed Motion to Dismiss ("Second Motion to Dismiss"), again under Rule 12(b)(3). In response, along with its opposition to the Second Motion to Dismiss, SEVEN filed a Contingent Motion for Leave to Conduct Venue Discovery. (Dkt. No. 77).
On December 22, 2017, the Court entered a Venue Discovery Order, which directed the parties to conduct discovery on Google's venue motions by February 22, 2018, and directed Google to refile its venue motions no later than two weeks after the close of venue discovery. (Dkt. No. 107). The Court then granted the Parties'
*938motion to extend venue discovery to March 1, 2018. (Dkt. No. 115). Following the close of venue discovery, Google filed the instant Motion and a related Motion to Transfer Venue to the Northern District of California. (Dkt. Nos. 125, 126). The Court held a hearing on the instant Motion on June 1, 2018. (Dkt. No. 186).
II. APPLICABLE LAW
In today's post- TC Heartland world, venue law in patent cases continues its development. See generally In re Cray Inc. ,
Venue in patent infringement actions is defined by
Any civil action for patent infringement may be brought 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.
The Federal Circuits' first, and most general, guidance on how a district court should approach this venue statute was provided by In re Cray,
In deciding whether a defendant has a regular and established place of business in a district, no precise rule has been laid down and each case depends on its own facts. The "requirements" listed above and discussed below inform whether there exist the necessary elements, but do not supplant the statutory language. We stress that the analysis must be closely tied to the language of the statute.
Beyond this admonition, the Federal Circuit provided additional guidance on what it believed to be the major requirements of the statutory language; these lodestars guide district courts in their application of the statute to case specific facts. Specifically, the Federal Circuit held that " § 1400(b) requires that 'a defendant has' a 'place of business' that is 'regular' and 'established.' All of these requirements must be present."
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RODNEY GILSTRAP, UNITED STATES DISTRICT JUDGE
Before the Court is Google LLC's ("Google") Second Renewed Motion to Dismiss or, in the Alternative, Transfer under
I. PROCEDURAL BACKGROUND
SEVEN Networks, LLC, ("SEVEN") filed suit against Google on May 17, 2017, alleging, inter alia , patent infringement. (Dkt. No. 1). On August 8, 2017, Google filed a Motion to Dismiss under Rule 12(b)(3). (Dkt. No. 25). In response, SEVEN filed the Amended Complaint that is the subject of the present motion. (Dkt. No. 34). On September 12, 2017, Google filed a Renewed Motion to Dismiss ("Second Motion to Dismiss"), again under Rule 12(b)(3). In response, along with its opposition to the Second Motion to Dismiss, SEVEN filed a Contingent Motion for Leave to Conduct Venue Discovery. (Dkt. No. 77).
On December 22, 2017, the Court entered a Venue Discovery Order, which directed the parties to conduct discovery on Google's venue motions by February 22, 2018, and directed Google to refile its venue motions no later than two weeks after the close of venue discovery. (Dkt. No. 107). The Court then granted the Parties'
*938motion to extend venue discovery to March 1, 2018. (Dkt. No. 115). Following the close of venue discovery, Google filed the instant Motion and a related Motion to Transfer Venue to the Northern District of California. (Dkt. Nos. 125, 126). The Court held a hearing on the instant Motion on June 1, 2018. (Dkt. No. 186).
II. APPLICABLE LAW
In today's post- TC Heartland world, venue law in patent cases continues its development. See generally In re Cray Inc. ,
Venue in patent infringement actions is defined by
Any civil action for patent infringement may be brought 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.
The Federal Circuits' first, and most general, guidance on how a district court should approach this venue statute was provided by In re Cray,
In deciding whether a defendant has a regular and established place of business in a district, no precise rule has been laid down and each case depends on its own facts. The "requirements" listed above and discussed below inform whether there exist the necessary elements, but do not supplant the statutory language. We stress that the analysis must be closely tied to the language of the statute.
Beyond this admonition, the Federal Circuit provided additional guidance on what it believed to be the major requirements of the statutory language; these lodestars guide district courts in their application of the statute to case specific facts. Specifically, the Federal Circuit held that " § 1400(b) requires that 'a defendant has' a 'place of business' that is 'regular' and 'established.' All of these requirements must be present."
As to the requirement that there is a "physical place in the district," the Federal Circuit noted that a "place" is defined as "a building or a part of a building set apart for any purpose or quarters of any kind from which business is conducted."
*940Turning to the requirement that the place "must be a regular and established place of business," the Federal Circuit has instructed that the place of business must be "regular," by, for example, operating in a "steady, uniform, orderly, and methodical manner." In re Cray ,
The third requirement is that "the regular and established place of business must be the place of the defendant." In re Cray ,
The Federal Circuit elaborated on this specific requirement recently in In re ZTE.
"[A]s a matter of Federal Circuit law [ ], upon motion by the Defendant challenging venue in a patent case, the Plaintiff bears the burden of establishing proper venue."
Having summarized the law of venue as it currently exists, the Court turns now to the specific facts of this case and the application of that law thereto.
III. DISCUSSION
As discussed above, venue lies only "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."
It is undisputed that when this action was filed,7 Google was incorporated in Delaware and therefore "resided" in Delaware, not in Texas. (Dkt. No. 125 at 3 (citing Dkt. No. 1 at ¶ 2) ); see generally Dkt. No. 141); see also TC Heartland LLC v. Kraft Foods Group Brands LLC , --- U.S. ----,
In order for proper venue in this action to lie in this District, Google must have committed acts of infringement and have a regular and established place of business in this District. Google avers that SEVEN cannot demonstrate that it has committed acts of infringement "in this district for at least some of the asserted patents." (Dkt. No. 125 at 17). Google also avers that SEVEN cannot demonstrate that it has a regular and established place of business within this District. (Id. at 7).
A. Acts of Infringement8 *942"The acts of infringement referred to in the patent venue statute are those acts defined by the statute dealing with infringement." 60 Am. Jur. 2d Patents § 747 ; see, e.g. , Alco Standard Corp. v. Tennessee Valley Auth. ,
Google first appears to argue that direct infringement of a method claim by Google alone and entirely within this District is required to meet the requirement that it has allegedly committed an act of infringement under the venue statute. (Dkt. No. 125 at 18-19).11 It is important to note that Google does not dispute that SEVEN alleges that Google practices at least one step of the allegedly infringing method, irrespective of whether that practiced method is infringing. (See generally
However, this exact argument has been previously rejected by the courts. "Contrary to Plaintiff's argument, not all of the alleged infringing activity needs to have occurred within [the District] so long as some act of infringement took place there." Blackbird Techs. ,
*944The facts here comport with those of Blackbird,
Google also argues that merely alleging acts of infringement occurred in the District is insufficient under § 1400(b). Under Google's view, "the acts of infringement alleged in SEVEN's Complaint [must be] tied to or related to Google's purported regular and established place of business in this District," as "required" by
As this Court explained in Part II, courts applying the venue statute must hew closely to it. This duty constrains courts, forbidding minimizing or reading out requirements laid out by the statute; it similarly constrains courts from inserting or inventing requirements not present within the statute. Bates v. United States ,
While some courts have previously held that there must be some "reasonable or significant relationship between the accused item and any regular and established place of business of the accused in the judicial district," Scaramucci v. FMC Corp. ,
Nothing in the language of Section 1400(b) justifies the conclusion that a defendant's place of business in the district must have some connection with the accused device. The statute requires only that the defendant have committed acts of infringement in the district and have a regular and established place of business there; there is no requirement that the two factors be related.
Am. Can Co. v. Crown Cork & Seal Co. ,
While not controlling, the Fifth Circuit addressed this issue in Gaddis v. Calgon Corp. ,
This Court therefore rejects Google's proposition that the special patent venue statute requires that alleged acts of infringement by the Defendant pled to meet the requirements of § 1400(b) must be "tied to or related to" the regular and established place of business of the Defendant, which is separately required by § 1400(b). The Court finds that SEVEN has adequately pled acts of infringement within this District as to the claims related to the three objected-to patents-in-suit sufficient to meet the requirements of
*947B. Regular and Established Place of Business
This Court now turns to the issue of whether Google has a regular and established place of business within this District within the meaning of the patent venue statute,
i. Background19
Google is in the business of delivering information, including digital content such as movies, music, apps, and advertising. Google is a multinational technology company in the business of storing, organizing, and distributing data. More precisely, "Google is an information company." Its vision is "to provide access to the world's information in one click," and its mission is "to organize the world's information and make it universally accessible and useful." Making information available to people wherever they are and as quickly as possible is critical to Google's business. As Google's CEO, Sundar Pichai, explains, "We want to make sure that no matter who you are or where you are or how advanced the device you are using-Google works for you." To meet this goal, Google developed a content-delivery network that it calls the Edge Network.
Google delivers information through its Edge Network. Google provides web-based services, such as YouTube and Google Play, to users throughout the *948world. These services are in high demand. Google reports that Google Play reaches more than 1 billion Android users and that YouTube serves over 1.5 billion users per month. Studies show that YouTube alone is responsible for approximately 20% of all internet traffic. Delivering that much data requires lots of bandwidth, and when the data is being transmitted to large numbers of geographically diverse users it must traverse multiple network paths at different times. It also costs money. The larger the data and the farther it has to travel, the greater the cost.
Google addresses these challenges with its Edge Network, which has three elements: Core Data Centers, Edge Points of Presence, and Edge Nodes. The Core Data Centers (there are eight in the United States) are used for computation and backend storage. Edge Points of Presence are the middle tier of the Edge Network and connect the Data Centers to the internet. Edge Nodes are the layer of the network closest to users. Popular content, including YouTube videos, video advertising, music, mobile apps, and other digital content from the Google Play store, is cached on the Edge Nodes, which Google refers to as Google Global Cache (GGC).
Google Global Cache is recognized as "one of Google's most important pieces of infrastructure," and Google uses it to conduct the business of providing access to the world's information. GGC servers in the Edge Nodes function as local data warehouses, much like a shoe manufacturer might have warehouses around the country.[20 ] Instead of requiring people to obtain information from distant Core Data Centers, which would introduce delay, Google stores information in the local GGC servers to provide quick access to the data.
"Caching and localization are vital for [Google's] optimization of network resources." Because "hosting all content everywhere is inefficient, it makes sense to cache popular content and serve it locally." Doing so brings delivery costs down for Google, network operators, and internet service providers. Storing content locally also allows it to be delivered more quickly, which improves user experience: "Serving content from the edge of the network closer to the user improves performance [and] user happiness." To achieve these benefits, Google has placed Edge Nodes throughout the United States, including in this District. Google describes these nodes as the "workhorse[s] of video delivery."
Just like brick-and-mortar stores, Google's GGC servers independently determine what content to cache based on local requests.[21 ] The GGC servers in Google's Edge Nodes include software that Google refers to as "Ustreamer (actually μstreamer, i.e. micro-streamer)." Ustreamer is "responsible for serving video content from YouTube and other Google services, along with other large content such as Google Play applications and Chrome downloads." It operates on a content-delivery platform "at the edge of Google's network" called "bandaid"; it "does not run in the core (except for some internal testing purposes), unlike the majority of the Google services, such as search or gmail."
Using ustreamer and bandaid, a GGC server "handles requests directly from its clients, predominantly YouTube's video *949players." When such a request is received, if the content is stored in the node's local cache, "the node will serve [it] ... to the end user, improving the user experience and saving bandwidth." If cache-eligible content is not already stored on the node, and the content is cache-eligible, "the node will retrieve it from Google, serve it to the user, and store it for future requests."
Ustreamer is largely "autonomous," "in the sense that almost all decisions related to serving a particular request are made locally, without coordinating with other servers." Like a brick-and-mortar store sells directly to customers from inventory and stocks that inventory based on local customer demand, ustreamer in each GGC node decides-independently from other nodes in Google's Edge Network- whether to serve requested content, whether to cache content, and whether to send requests to other servers.[22 ]
Google's GGC servers are housed in spaces in the District leased by Google.[23 ] Google's GGC servers are housed in spaces leased[24 ] by Google from Internet Service Providers (ISPs) whose networks "have substantial traffic to Google and are interested in saving [bandwidth]." Hosting Google servers allows ISPs to save both bandwidth and costs, as they "do not incur the expense of carrying ... traffic across their peering and/or transit links."
When an ISP agrees to host a GGC server, the parties enter into a Global Cache Service Agreement, under which Google provides hardware and software- including GGC servers and software-to be housed in the host's facilities; technical support; service management of the hardware and software; and content distribution services, including content caching and video streaming. In exchange, the host provides, among other things, a physical building, rack space where Google's computer hardware is mounted, power, and network interfaces. "All ownership rights, title, and intellectual property rights in and to the Equipment [i.e., the hardware and software provided by Google] ... remain in Google and/or its licensors."
Google GGC servers located in this District cache Google's products and deliver them to residents of this District. Google does not dispute the following.
1. Multiple ISPs hosted GGC servers in the Eastern District of Texas for at least the five months leading up to the filing of the lawsuit (and they continue to do so).
2. Suddenlink Communications, for example, is an ISP that hosts six GGC servers in Tyler, Texas.
3. CableOne is an ISP that hosts three GGC servers in Sherman, Texas, and three GGC servers Texarkana, Texas.
*9504. Google caches content on its GGC servers located in the Eastern District of Texas.
5. Google's GGC servers located in the Eastern District of Texas cache content that includes, among other things: (i) video advertising; (ii) apps; and (iii) digital content from the Google Play store.
6. Google's GGC servers located in the Eastern District of Texas deliver cached content referenced in number 5, above, to users in the Eastern District of Texas.
7. Google generates revenue (i) by delivering video advertising, (ii) from apps, and (iii) from digital content in the Google Play store.
8. Google treats its GGC servers in the Eastern District of Texas the same as it treats all of its other GGC servers in the United States.
The photographs below show Google's GGC servers hosted by Suddenlink and the building where they are located at 322 North Glenwood Boulevard, Tyler, Texas 75702.
ii. Physical Place
Google argues that "GGC servers are not 'physical places of business.' " (Dkt. No. 125 at 9). "A server is a piece of hardware or equipment, not a place. SEVEN itself has described the servers as 'physical objects housed at physical locations' (Dkt. [No.] 76 at 14), which is exactly right. The servers are objects; the locations where they are stored are the places." (Id. ) "Contrary to SEVEN's allegation that 'a physical, geographical location' can be broader than a building or quarter (Opp. 12), all three 'locations' identified in Cray were buildings or quarters: employees' home offices, distribution centers, and a building occupied by the secretarial service." (Dkt. No. 148 at 2). "Even people (employees) are physical objects that enclose space, which alone cannot establish venue. SEVEN's definition directly contradicts Section 1400(b) and Cray , both of which require a 'place' to establish venue, not objects or physical things." (Id. )
Google relies on a sister court's ruling from this District considering these GGC servers to support its contention. "The GGC servers are not 'places' under the meaning of the statute and therefore cannot establish a regular and established place of business in this [D]istrict." Personal Audio, LLC v. Google, Inc. ,
With respect to its sister court, this Court disagrees with that conclusion. A revisiting of the ultimate decision of Personal Audio on this issue is not only possible but compelled by the facts of this case. Additionally, in this Court's opinion, neither the statute nor the Federal Circuit's guidance in In re Cray permit the result reached by that court.25
Specifically, the Court recalls the conclusion it noted supra n.3.
*951Section 1400(b) of Title 28, United States Code lays proper venue where "the defendant ... has a regular and established place of business." As the Federal Circuit instructed in In re Cray , "[t]he statute [ ] cannot be read to refer merely to a virtual space or to electronic communications from one person to another."
Of course, it would run counter to the statutory requirements to find proper venue in a district where there was no physical presence of a given defendant. A defendant who does not establish or permit a physical presence within a district of its own volition may not be brought into a district pursuant to the venue statute by the acts of another. To hold otherwise contravenes the language of the statute, requiring the defendant to "[have] a regular and established place of business" within the district.
Here, however, there is more than "merely" "a virtual space or [ ] electronic communications from one person to another."
In this regard, the Court has considered the Beta Service Agreement: Google Global Cache (GGC) Service between Google and Suddenlink ("the Suddenlink Agreement") (Dkt. No. 141-23).28 It reveals that Google exacts far more control than may *952be suspected from a general lease arrangement. Google requires ISPs such as Suddenlink to provide "[r]ack space, power, network interfaces, and IP addresses, as specified in the following table [omitted], in consultation with Google";29 "[r]emote assistance and installation services described in SCHEDULE 'A' "; "[n]etwork access between the Equipment and Host network subscribers"; and "[r]emote high bandwidth access, sufficient for Google to download upgrade images of GGC to the Equipment, unless separate arrangements are agreed with Google." (Dkt. No. 141-23 at 1). The Suddenlink Agreement makes it clear that the ISP does not own the server(s); Google owns the servers. (Dkt. No. 141-23 at 2 (In the event of termination of the Agreement: "Host will remove, package and ship (shipping charges will be pre-paid directly by Google to the carrier, and Host will undertake such removal and packaging to be undertaken in a commercially reasonable manner) all Equipment back to Google within fifteen (15) calendar days of effective date of termination. If Host fails to do so, Google will have the right to: (a) charge Host and Host will pay the fair market value of the Equipment; or (b) recover and take possession of such Equipment , and for this purpose may enter any premises of Host where such equipment is located during normal working hours to remove Equipment. Host will promptly surrender the Equipment to Google in as good order and condition as originally delivered, reasonable wear and tear excepted.") (emphasis added) ). Google is not even required to replace faulty servers under the Suddenlink Agreement. (Dkt. No. 141-23 at 7 ("Google Services: Google will provide the following services in beta: ... 3. replace faulty Equipment (at Google's cost and sole discretion)") ). This Agreement is not a mere lease of digital space or computing power; it is the installation of Google's own servers in a physical space that becomes Google's. Following installation of the GGC server, the ISP is required to provide Google explicit details regarding Google's server's installation location. (Id. at 3 ("Contact & Location Details: As soon as practicable after the Effective Date, the parties will advise each other in writing (which may be sent electronically) of the following: ... (c) Equipment location (address/floor/rack)") ). Once installed, it is considered a permanent fixture. There is no dispute that the Suddenlink Agreement requires that, in order for an ISP to move a previously installed GGC from one location to a new location, it must secure Google's permission, which Google may not permit "at its sole discretion." (Dkt. No. 141-23 at 2 ("Change Notification: Host will provide Google no less than thirty (30) days' written notice of any proposed relocation of the Equipment or change of IP address. Host may propose relocation at any time. Google, at its sole discretion, may elect not to accept the proposed relocation but will reasonably consider any such relocation and discuss all reasonable options with Host.") (emphasis added) ). Google's ownership of the server and its contents is absolute, as is Google's control over the server's location once it is installed. (Dkt. No. 141-24 at 2 ("Restriction on Use of Equipment: All ownership rights, *953title, and intellectual property rights in and to the Equipment shall remain in Google and/or its licensors. THE EQUIPMENT OR ANY PORTION THEREOF MAY NOT BE USED, COPIED, TRANSFERRED, REVERSE-ENGINEERED, OR MODIFIED EXCEPT AS EXPRESSLY PERMITTED BY THIS AGREEMENT. Host must not, without the prior written consent of Google (which may be withheld in its sole discretion), access, use, or dispose of the Equipment, in whole or in part.") (emphasis added) ).
This is not a partnership, wherein an ISP may independently act on Google's behalf in administering the GGC. To the contrary, the Suddenlink Agreement expressly disclaims any such relationship. (Dkt. No. 141-24 at 2 ("No Partnership, No Exclusivity: The parties are independent contractors, and this Agreement does not create an agency, partnership or joint venture. This Agreement is not intended to, nor does it create, any agency, partnership, joint venture or other profit-sharing arrangement, nor does it create an exclusive relationship between the parties. This Agreement places no restrictions of any type on either party's ability to freely compete or to enter into agreements with other entities or individuals.") ). Indeed, Google's total control over the GGC server's physical presence within the ISP may be best illustrated by the Suddenlink Agreement's requirement that tasks such as the "physical switching of a toggle switch;" "power cycling equipment (turning power on and/or off);" and "tightening screws , cable ties, or securing cabling to mechanical connections, plug;" may be performed "only with specific and direct step-by-step instructions from Google." (Dkt. No. 141-23 at 6) (emphasis added).
This level of control in the physical world exemplifies how the physical presence of the GGC server within this District constitutes more than "merely" "a virtual space or [ ] electronic communications from one person to another." In re Cray ,
*954Accordingly, the Court finds that, in this case, the GGC server itself and the place of the GGC server, both independently and together, meet the statutory requirement of a "physical place."31 SEVEN has met its burden to demonstrate satisfaction of this statutory requirement.
iii. Regular and Established Place of Business
Google argues that "[e]ven if the GGC servers were 'places' ... SEVEN fails to provide a basis to conclude that these servers are 'places of businesses,' let alone regular and established places of business of Google." (Dkt. No. 125 at 10). The Court will address the "of Google" argument in Part III.B.iv., infra , but as to whether the GGC servers and the place where the servers are lawfully housed are "places of business" within the meaning of the statute, the Court reaches the opposite conclusion--they undoubtedly are.
Google's shotgun arguments point in many directions, each intended to persuade that the GGC servers are not places of business within the meaning of the statute: "[t]he GGC servers are standard machines manufactured by a third-party and used to cache static Google content"; "[s]ervers are pieces of equipment, like slot machines or vending machines, and do not rise to the level of being places of business"; "there would be little to no impact to the performance of Google's Edge Network or to Google users if there were no GGC servers in this District," as the "GGC servers in this District are 'a fraction of a fraction' of 1 percent of the total serving capacity of Google's peering and GGC server network." These arguments must be rejected.
In arguing that slot and vending machines are not places of business, Google cites HomeBingo Network, Inc. v. Chayevsky ,
First, the Court notes that HomeBingo relates to specifically named individual (natural person) defendants named in suit in conjunction with a corporate entity. HomeBingo ,
As to Magee , the Court first notes that the Fifth Circuit was not considering whether a vending machine was a regular and established place of business but, rather, a "sales establishment" under the ADA such that it constituted a place of "public accommodation" subject to Title III compliance.
Google's argument relating to the impact of the GGC servers in this District on its Edge Network or on Google users is similarly rejected. The statute does not require "substantial" business or "large" impact from the business being done at the place of business--in order to lay proper venue in a judicial district, the statute simply requires that a regular and established place of business be present. The Court refuses to read into the statute extra-statutory requirements at the behest of Defendants who have, through their own volition, secured and established multiple places of business within this District.
Google argues that it does not need the GGC servers in this District, and that their contribution to Google's business mission is so small as to be immaterial. However, even the Personal Audio court explicitly found that GGC servers may be found in "at least Tyler, Sherman, Plano, and Texarkana," that "[t]he GGC servers carry out a useful role in Google's business, in that they appear to more efficiently connect internet service customers, i.e., customers of Suddenlink or CableOne, to Google content," and that "Google evidently values the contribution of the GGC system." Personal Audio ,
Further, the Court has previously seen this "impact" argument in a similar context; it reveals how such a reading of the statute undermines the clear statutory scheme. See, e.g. , Word to Info, Inc. v. Apple Inc. , 2:17-cv-592-JRG, Apple's Motion to Dismiss for Improper Venue (Redacted Version), Dkt. No. 23 at 4-534 (arguing that "Apple's stores do not constitute a regular and established place of business for venue purposes because they account for only a trivial part of Apple's overall business.... Apple's two retail *957stores are not a substantial part of its ordinary business. Apple has approximately 270 retail stores in the United States. The two stores in this district account for less than 1% of Apple's total retail establishments .... Likewise, the two stores in this district account for only small part of Apple's sales. Because the two stores in the Eastern District represent such a small part of Apple's overall operations, if Apple closed those stores, its established business ... would not be appreciably or substantially affected."), at 5 ("Subjecting a company with 80,000 employees and 270 stores across the United States to venue in the Eastern District because of the presence of two retail outlets accounting for only [redacted] of Apple's revenues would allow the tail to wag the dog, especially when those stores do not represent the totality of Apple's business operations."). Examining the "effect" on a company's business which a particular place or places of business have is not in keeping with a strict statutory application. In fact, it undermines it. Reading a non-statutory requirement that the place of business for § 1400(b) requires the place of business to be a substantial part of a defendant's ordinary business or have a material effect on a business's provisioning of goods or services does violence to the language of the statute and is precisely the kind of statutory deviation the Federal Circuit cautioned against in In re Cray,
Google additionally argues that "the servers are also not 'regular and established' because under the agreements between Google and the ISPs, either party can terminate at any time and for any reason." (Dkt. No. 125 at 11 (citing the Suddenlink Agreement) ). The Court disagrees. A business which has a five-year agreement is certainly no less established with a month remaining on the lease than it is in the first year of the lease. A month-to-month agreement which has endured for years is clearly "regular and established." There is little question that Google intends the GGC servers to be a "[s]calable long term solution for edge content distribution," and it is undisputed that they have been such a solution in this District for years. (Dkt. No. 141-18 (Mike Axelrod, The Value of Content Distribution Networks and Google Global Cache) at 10; Dkt. No. 141 at 19). The fact that the Suddenlink Agreement may be terminated is not evidence that Google's presence in this District is somehow less than "regular and established." Few sophisticated transactional documents fail to have one or more escape clauses, but nothing about such provisions makes the commercial targets addressed less than established.
As a part of ensuring a proper application of the statutory language, it may be appropriate to consider similar types of places of business to demonstrate the appropriateness of this Court's finding. SEVEN argues that "GGC servers in the Edge Nodes function as local data warehouses, much like a shoe manufacturer might have warehouses around the country. Instead of requiring people to obtain information from distant Core Data Centers, which would introduce delay, Google stores information in the local GGC servers to provide quick access to the data." (Dkt. No. 141 at 4). "The only relevant difference between a warehouse that stores a company's tangible products and *958Google's GGC servers is the nature of the products being stored-physical merchandise versus digital content. Regardless of what the products may be, if the physical structure that stores them is 'a physical, geographical location in the district from which the business of the defendant is carried out,' that structure is a place of business under § 1400(b)." (Id. at 15 (citing In re Cray ,
There is no question that warehouses are properly considered places of business and have been so held, by both legislatures and courts.35 ,36 ,37 This recognition makes *960intuitive sense. The vast majority of business organizations require and utilize some form of storage or logistics. Of course, businesses may store items at other business's locations (like, for example, Fulfillment by Amazon38 ) wherein goods are stored by third parties at the third parties' discretion and with no control over the location, management, or daily supervision of the products in storage. Such an arrangement can scarcely be considered to render the physical location of the stored items a place of business as to the party whose goods are stored. However, were that same party to integrate the storage arrangement into its own logistical operations (similar to, for example, Amazon and its relationship with its own fulfillment centers), there can be little doubt that the storage warehouses are places of business, even if the public never interacts with the warehouse. See Smith v. Farbenfabriken of Elberfeld Co. ,
Here, the GGC servers are best characterized as local data warehouses, storing information in local districts to provide Google's users with quick access to the cached data, avoiding the delays associated with distant data retrieval from Google Data Centers. (Dkt. No. 141 at 4). This *961type of logistical positioning is commonplace for larger corporate interests, especially where prompt delivery is a core aspect of a business strategy.40 ,41 This is the case with Google.42 Holding that Google's business done at and through the GGC servers faithfully comports with the language of the statute; it is the logical result this Court has reached.43
In considering the language of the patent venue statute, some courts have held that § 1400(b)"requires some employee or agent of the defendant to be conducting business at the location in question."
*962Peerless Network, Inc. v. Blitz Telecom Consulting, LLC , No. 17-CV-1725 (JPO),
Any such addition or subtraction from the language of the statute is improper and contrary to the express prohibition as set forth in In re Cray. "[T]he requirement of venue is specific and unambiguous; it is not one of those vague principles which, in the interests of some overriding policy, is to be given a liberal construction." In re ZTE , 890 F.3d at 1014 (citing In re Cray ,
Recent legislation also reveals the impropriety of the imposition of an extra-statutory human-centric requirement. The Leahy-Smith America Invents Act, P.L. 112-29, ("the AIA") was enacted September 16, 2011. It is widely considered to be "a change at least as significant for this Nation's patent system as the formation of the Federal Circuit in 1982." Synopsys, Inc. v. Mentor Graphics Corp. ,
ATM EXEMPTION FOR VENUE PURPOSES.--In an action for infringement under Section 281 of title 35, United States Code, of a covered business method patent, an automated teller machine shall not be deemed to be a regular and established place of business for purposes of section 1400(b) of title 28, United States Code.
Accordingly, Congress specifically withdrew automated teller machines ("ATMs") from those regular and established places of business which could be used to establish venue.46 A plain reading of this exception indicates that ATMs and similar devices would otherwise constitute regular and established places of business. See also Edward D. Manzo, America Invents Act: A Guide to Patent Litigation and Patent Procedure, Venue, America Invents Act § 17:12 (2017).47
"Courts assume that a legislature always has in mind previous statutes relating to the same subject when it enacts a new provision. In the absence of any express repeal or amendment, the new provision is presumed to accord with the legislative policy embodied in those prior statutes, and they all should be construed together." 2B Sutherland Statutory Construction § 51:2 (7th ed.) ; accord A. Scalia & B. Garner, READING LAW 252 (2012) ("Any word or phrase that comes before the Court for interpretation .... is part of an entire juris corpus. So, if possible, it should no more be interpreted to clash with the rest of that corpus than it should be interpreted to clash with other provisions of the same law."); Goodyear Atomic Corp. v. Miller ,
Automated Teller Machines are not operated, in person or remotely, by employees of the owning financial institution.49 Any reading of the statutory requirements of § 1400(b) that inserts an extra-statutory requirement of human-centric activity at the "regular and established place of business" necessarily renders this express exemption superfluous. A. Scalia & B. Garner, READING LAW 174 (2012) ("The surplusage canon holds that it is no more the court's function to revise by subtraction than by addition."). A "cardinal principle of statutory interpretation" is that no provision "shall be superfluous, void, or insignificant." TRW Inc. v. Andrews ,
Having so held, the Court finds that, for the reasons discussed above, the GGC servers and their several locations within this District constitute "regular and established place[s] of business" within the meaning of the special patent venue statute.
*965iv. Of the Defendant
The last of the three statutory requirements identified by the Federal Circuit in In re Cray is that the regular and established place of business be "of the defendant."
Google argues that "the rooms and buildings that house the GGC servers in this District ... are not Google's." (Dkt. No. 125). The Court recognizes that they may not, on their own, establish proper venue as to Google in this District. See Personal Audio ,
However, as discussed above, supra Part III.B.ii., the "place" of the "place of business" is not the room or building of the ISP but rather Google's server and the space wherein it is located. There is little doubt that both the server and the physical location in and at which it resides is under the exclusive control of Google. The rack space allotted for the GGC server is "provided" to Google. (Dkt. No. 141-23 at 6 ("Space: The Host shall provide Google rack space for the Equipment located at the Space within Host premises.") ). The precise location of that space, and thus the server, is reported to Google by the ISP. (Dkt. No. 141-23 at 3 ("Contact & Location Details: As soon as practicable after the Effective Date, the parties will advise each other in writing (which may be sent electronically) of the following: ... (c) Equipment location (address/floor/rack)") ). Further, as noted supra at 952-53, "Google's ownership of the server and its contents is absolute, as is its control over the server's location, once installed." (See Dkt. No. 141-23 at 6). Google's ownership of the server and control thereof has not been a focus of Google's objections to proper venue in this District. Supra at 953 n. 30.
Google itself has denoted that the GGC servers are places "of Google." As the Federal Circuit instructed in In re Cray , "a defendant's representations that it has a place of business in the district are relevant."
*966and that this content traffic "can come from multiple Google locations, including our data centers Edge PoPs, and Edge Nodes. " (Dkt. No. 197-1 at 1).51
The Court concludes that the GGC servers and their locations within the various ISPs within this District are "places of Google" sufficient to meet the statutory requirement of § 1400(b).
VI. CONCLUSION
In light of the foregoing, the Court finds and holds that:
1) SEVEN has adequately pleaded acts of infringement within this District sufficient to meet the requirements of28 U.S.C. § 1400 (b). Supra at 946.
2) SEVEN has met its burden of demonstrating that the GGC server and its location is a "physical place" within the meaning of § 1400(b). Supra at 953.
3) SEVEN has met its burden of demonstrating that the GGC server and its location is a "regular and established *967place of business" within the meaning of § 1400(b).52 Supra at 964-65.
4) SEVEN has met its burden of demonstrating that the GGC server and its location is a "place of the defendant" within the meaning of § 1400(b). Supra at 965-66.
Having so found, the Court holds that the statutory requirements of § 1400(b) are met in this case and that venue is proper as to Google within this District.53 Accordingly, the Court hereby DENIES Google LLC's Second Renewed Motion to Dismiss or, in the Alternative, Transfer under
It is further ORDERED that this ruling will remain PROVISIONALLY SEALED until the Parties file joint proposed redactions, with specific explanations for the necessity of such redactions, within seven (7) days of this order, after which a redacted version will be entered by the Court.
So ORDERED and SIGNED this 19th day of July, 2018.
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Cite This Page — Counsel Stack
315 F. Supp. 3d 933, Counsel Stack Legal Research, https://law.counselstack.com/opinion/seven-networks-llc-v-google-llc-txed-2018.