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INJEN TECHNOLOGY CO. v. ADVANCED ENGINE MANAGEMENT

April 29, 2003

INJEN TECHNOLOGY CO. LTD., A CALIFORNIA CORPORATION, PLAINTIFF, VS. ADVANCED ENGINE MANAGEMENT, INC., A CALIFORNIA CORPORATION, DEFENDANT.


The opinion of the court was delivered by: Rudi M. Brewster, Senior District Judge

ORDER DENYING DEFENDANT'S MOTION TO DISMISS FOR IMPROPER VENUE [4-1], GRANTING DEFENDANT'S MOTION TO TRANSFER FOR IMPROPER VENUE [4-2], AND GRANTING IN THE ALTERNATIVE DEFENDANT'S MOTION TO TRANSFER FOR CONVENIENCE [4-3]
I. Introduction

Defendant Advanced Engine Management, Inc. ("AEM") owns U.S. Patent No. 6,394,128 ("the `128 patent"). In November 2002, AEM sent a "cease and desist" letter to Plaintiff Injen Technology Co., Ltd. ("Injen"), stating that Injen's air safety valve infringes the `128 Patent. In December 2002, Injen filed this action seeking a declaratory judgment of noninfringement.

On January 15, 2003, AEM filed the instant motion to: (1) dismiss for improper venue pursuant to FRCP 12(b)(3); (2) transfer for improper venue pursuant to 28 U.S.C. § 1406 (a); or (3) transfer for convenience pursuant to 28 U.S.C. § 1404 (a). Injen contends that venue is proper because Defendant AEM "resides" in the Southern District of Caiifornia pursuant to 28 U.S.C. § 1391 (b)-(c).

II. Relevant Facts

Plaintiff Injen is headquartered in Pomona, CA. Defendant AEM is headquartered in Hawthorne, CA. Both cities are located in the Central District of California. AEM has neither offices nor employees in San Diego County. It does not sell its products directly to San Diego retail consumers. It does, however, sell its products to five automotive stores in San Diego. See Supplemental Decl. of Gregory Neuwirth at ¶ 4. These sales account for approximately 2% of AEM's total business. Id. at ¶ 5.

III. Discussion

A. The Venue Statute — 28 U.S.C. § 1391

Venue in a federal question case is governed by 28 U.S.C. § 1391 (b). Subsection (b) provides that venue is proper only in a judicial district: (1) where any defendant resides; (2) where a substantial part of the events or omissions giving rise to the claim occurred; or (3) where any defendant may be found, if there is no district in which the action may otherwise be brought. See 28 U.S.C. § 1391 (b)(1)-(3).

Subsection (c) of Section 1391 defines where a corporate defendant "resides" for purposes of the venue statute:

(c) For purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced. In a state which has more than one judicial district and in which a defendant that is a corporation is subject to personal jurisdiction at the time an action is commenced, such corporation shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it to personal jurisdiction of that district were a separate State, and, if there is no such district, the corporation shall be deemed to reside in the district within which it has the most significant contacts.
28 U.S.C. § 1391 (c) (emphasis added).

B. A Threshold Question: Which Circuit's Precedent Applies?

In cases concerning the patent laws, the district court applies the law of the Federal Circuit to patent issues and the law of the circuit in which it sits ("the regional circuit") to nonpatent issues. See, e.g., In re Cambridge Biotech Corp., 186 F.3d 1356, 1368 (Fed. Cir. 1999). Thus, as a general rule, procedural issues are governed by the law of the regional circuit. See Madey v. Duke University, 307 F.3d 1351, 1358 (Fed. Cir. 2002) ("On procedural issues, this Court follows the rule of the regional circuit, unless the issue is unique to patent law and therefore exclusively assigned to the Federal Circuit.").

Interpretation of the general venue statute, 28 U.S.C. § 1391, undoubtedly raises a procedural issue that is not unique to patent law. See, e.g., AutoEurope, LLC v. Connecticut Indem Co., 321 F.3d 60, 64 (1st Cir. 2003) (referring to venue as a procedural issue); Firstar Bank, N.A. v. Faul, 253 F.3d 982, 990 (7th Cir. 2001) (distinguishing between venue and jurisdiction); Raphael J Musicus, Inc. v. Safeway Stores, Inc., 743 F.2d 503, 506 n. 2 (7th Cir. 1984) (stating that venue is a procedural issue governed by federal statute). Thus, at first glance, it would appear that the precedent of the regional circuit controls the question now before the Court.

Nevertheless, there are factors that lead this Court to conclude that the law of the Federal Circuit should govern the inquiry whether a corporate defendant "resides" in a forum for purposes of 28 U.S.C. § 1391 (c). First, it is well established that, in cases concerning patent rights, the law of the Federal Circuit controls the district court's inquiry whether it has personal jurisdiction over a defendant. See Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1564-1565 (Fed. Cir. 1994); Hildebrand v. Steck Manufacturing Co., Inc., 279 F.3d 1351, 1354 (Fed. Cir. 2002) (applying Federal Circuit law to personal jurisdiction inquiries over patentees as declaratory judgment defendants). Subsection (c) of Section 1391 expressly incorporates the personal jurisdiction test as the standard for determining whether a defendant "resides" in a forum. Thus, whether resolving the issue of personal jurisdiction or the question of corporate residence for purposes of the venue statute, the district court employs the same framework: it examines minimum contacts." The only difference is the scope of the contacts to be examined. In the personal jurisdiction context, the court examines statewide contacts, while for purposes of venue, the court examines only those contacts pertaining to the ...


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