Technolines, Lp v. Gst Autoleather, Inc.

799 F. Supp. 2d 871, 2011 U.S. Dist. LEXIS 71032, 2011 WL 2647996
CourtDistrict Court, N.D. Illinois
DecidedJune 30, 2011
Docket11 C 965
StatusPublished
Cited by2 cases

This text of 799 F. Supp. 2d 871 (Technolines, Lp v. Gst Autoleather, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Technolines, Lp v. Gst Autoleather, Inc., 799 F. Supp. 2d 871, 2011 U.S. Dist. LEXIS 71032, 2011 WL 2647996 (N.D. Ill. 2011).

Opinion

MEMORANDUM OPINION

JOHN F. GRADY, District Judge.

Before the court is defendant GST Auto-Leather, Inc.’s (“GST”) motion to dismiss plaintiffs’ complaint or, in the alternative, transfer this case to the Eastern District of Michigan. For the reasons explained below, we grant GST’s motion and dismiss plaintiffs’ complaint without prejudice.

BACKGROUND

Plaintiff Echelon Laser Systems, LP (“Echelon”), a Delaware limited partnership, is a joint venture between plaintiff TeehnoLines, LP and Masonite Corporation. (Compl. ¶ 5.) TeehnoLines is a Delaware limited partnership with its principal place of business in Westlake, Ohio; Masonite is a Delaware corporation with its principal place of business in Tampa, Florida, and its “principal research and development facility” in West Chicago, Illinois. (Id.) TeehnoLines and Masonite formed Echelon “to find ways to further develop, promote, and commercialize” TeehnoLines’ laser-etching technology, (Coghlan Decl. ¶2.), which is used to etch “patterns and effects onto a wide range of materials, including fabrics and leather.” (Compl. at ¶ 6.) This technology is covered by four patents, which the USPTO issued to TechnoLines’ CEO, Darryl Costin. (Compl. ¶¶ 9, 30, 40, and 45.) Costin assigned the patents to TeehnoLines, and TeehnoLines has granted Echelon the right to sue for their infringement. (Id. at ¶¶ 30, 40, and 45.)

Defendant GST, a Delaware corporation with its principal place of business in Southfield, Michigan, “sells leather for use in automotive interiors for distribution throughout the United States, including this District.” (Id. at ¶ 7.) TeehnoLines and GST began working together in 2004, with the goal of selling leather etched with TeehnoLines’ technology to automotive companies. (Id. at ¶ 11.) The parties memorialized their relationship in a Mutual Non-Disclosure Agreement, dated July 5, 2005. (Id. at ¶ 13.) Among other things, this agreement required GST to use TechnoLines’ confidential and proprietary information solely in connection with the parties’ joint business relationship. (Id.) In mid-2009, GST sent TeehnoLines proposed images for a new Dodge Ram “Laramie Longhorn” truck interior. (Id. at ¶ 15.) TeehnoLines converted “these image files to an electronic format that could be used with a laser scribing system,” suggested modifications and improvements, and prepared “samples.” (Id. at ¶¶ 15-16.) TeehnoLines alleges “[o]n in *873 formation and belief’ that GST used these samples “to secure an order from Dodge for leather interiors containing the laser-scribed designs.” (Id. at ¶¶ 15-17.) TechnoLines charged GST a fee for its services that only “partially” covered its costs, expecting to eventually license its technology to GST to use GST’s own plant. (Id. at ¶ 18.)

To that end, the parties began to negotiate a licensing agreement in or around December 2009. (Id. at ¶¶ 19, 21; Coghlan Decl. ¶ 5.) On December 14, 2009, Cos-tin sent an email to a GST representative, which stated in pertinent part: “Per your request, please call Henry Coghlan, VP of R & D at Masonite, to initiate discussions regarding license agreements and royalties.” (Email from D. Costin to P. Chvatal, dated Dec. 14, 2009, attached as Ex. A to Pis.’ Resp.) At that time Coghlan was also the Vice President, Technology, for Echelon. (Coghlan Decl. ¶ 1.) Coghlan’s office, which also served as Echelon’s “principal office,” was located in West Chicago, Illinois. (Id. at ¶¶ 1-2.) As far as the complaint and the parties’ affidavits indicate, this is the first time that GST dealt with Echelon. GST and Echelon negotiated for several months by telephone and email. (Id. at ¶ 5-6; Compl. ¶ 21.) During that time Coghlan prepared, and submitted to GST, drafts of a Letter of Intent and a Non-Binding Term Sheet to serve as the basis for then; negotiations. (Coghlan Decl. ¶ 5; see also Letter of Intent and Non-Binding Term Sheet, attached to Coghlan Decl.) These documents, which the parties never executed, generally described the terms of a proposed agreement between Echelon and GST. (Id.) TeehnoLines was not a party to the proposed agreement, and it did not directly participate in the negotiations. (Compl. ¶ 21 (“Throughout these negotiations, Defendant communicated solely with Echelon representatives in West Chicago, Illinois.”).) But TeehnoLines did, in early May 2010, host “technical visits” during which it demonstrated the laser-etching technology for GST personnel. (Id. at ¶ 22.) Later that same month GST stopped discussing the Laramie Longhorn project with Echelon and Technolines, even as it continued to work with Techno-Lines on other projects. (Id. at ¶23.) TeehnoLines subsequently learned that Dodge was marketing a Laramie Longhorn truck “bearing the exact same laser-etched designs that TeehnoLines had developed for [GST], and which were the subject of the parties’ negotiations.” (Id. at ¶¶ 25-27.)

Plaintiffs have asserted claims for patent infringement (Counts LTV), trade-secret misappropriation (Count V), breach of the Mutual Non-Disclosure Agreement (Count VI), and unjust enrichment (Count VII). GST has moved to dismiss the complaint for improper venue, or in the alternative, transfer the case to the Eastern District of Michigan.

DISCUSSION

A. Legal Standard

28 U.S.C. § 1400(b) provides that “[a]ny 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 patent venue statute is exclusive. See Stonite Products Co. v. Melvin Lloyd Co., 315 U.S. 561, 565-66, 62 S.Ct. 780, 86 L.Ed. 1026 (1942). Even after more recent amendments, “[t]he Stonite rule remains in part, and to this day Section 1400(b) cannot be supplemented ... by the statute permitting a claim to be brought in any district in which a substantial part of the events or omissions giving rise to the claim occurred.” Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 3823 *874 (3d Ed.); (cf. Pis.’ Reply at 5-6) (arguing that they may establish venue under either the patent venue statute or the general venue statute, 28 U.S.C. § 1391.). However, the 1988 amendment to the general venue statute revised the definition of the term “resides” “[f|or purposes of venue under this chapter,” which includes § 1400. See 28 U.S.C. § 1391(c); VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574

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799 F. Supp. 2d 871, 2011 U.S. Dist. LEXIS 71032, 2011 WL 2647996, Counsel Stack Legal Research, https://law.counselstack.com/opinion/technolines-lp-v-gst-autoleather-inc-ilnd-2011.