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Wordtech Systems Inc. v. Integrated Network Solutions, Corp.

United States District Court, E.D. California

July 1, 2014

WORDTECH SYSTEMS INC., Plaintiff,
v.
INTEGRATED NETWORK SOLUTIONS, CORP., et al., Defendants.

MEMORANDUM AND ORDER

TROY L. NUNLEY, District Judge.

This matter is before the Court on Defendant Hamid Assadian's ("Assadian") and Defendant Nasser Khatemi's ("Khatemi") motions to dismiss the First Amended Complaint filed by Plaintiff Wordtech Systems Inc. ("Plaintiff"). (Def. Assadian's Notice of Mot. & Mot. Dismiss, ECF No. 477; Def. Khatemi's Notice Mot. & Mot. Dismiss, ECF No. 479.) For the reasons set forth below, both Assadian's and Khatemi's motions are DENIED.[1]

I. BACKGROUND

A. Procedural Posture

This case arises out of Plaintiff's claims that Integrated Network Solutions Corporation ("INSC") and INSC employees Assadian and Khatemi infringed on three of Plaintiff's patents related to compact disc duplication systems. Plaintiff filed its original complaint for patent infringement in the Eastern District of California on September 22, 2004, against INSC, Assadian, and Khatmi. (Compl., ECF No. 1.) Plaintiff alleged that INSC was a Nevada corporation and Assadian and Khatemi were individual corporate employees residing in the Central District of California. In response, Defendants filed a motion to dismiss the complaint for improper venue. (Defs.' Mot. Dismiss Compl., ECF No. 11.) This Court, through the Honorable Judge England, [2] found that the patent infringement venue statute, 28 U.S.C. § 1400(b), exclusively governed venue in this action. (Mem. & Order, ECF No. 21 at 2.) The Court dismissed the original complaint finding Plaintiff failed to allege sufficient facts regarding venue, specifically, Defendants' relationship to the Eastern District of California. Consequently, the complaint was dismissed with leave to amend. (ECF No. 21.)

On January 28, 2005, Plaintiff filed its First Amended Complaint. (First Am. Compl., ECF No. 22.) Plaintiff again named original defendants INSC, Assadian, and Khatemi but also added new defendants including San Juan Unified School District ("San Juan").[3] Plaintiff alleged that San Juan resided in the Eastern District of California. (ECF No. 22 at ¶ 10.) Original defendants Assadian, Khatemi, and INSC answered the First Amended Complaint and objected to venue in the Eastern District of California as improper. (Answer First Am. Compl., ECF No. 25 at ¶ 15 ("These individual Defendants do not reside in the Eastern District and INSC's principal place of business is outside the Eastern District. None of these Defendants has sufficient contacts with the Eastern District to warrant either jurisdiction or venue in the Eastern District.").)

It does not appear that any of the Defendants contested venue again until the instant motion. Defendants did not file any additional motions to dismiss for improper venue nor did they raise venue as a contested issue during pretrial conferences. ( See Final Pretrial Order, ECF No. 157 at 1:20-22; 9:18-25 (stating that venue is not contested and that failure to raise an issue that could be resolved in a pretrial order may waive the right to pursue that issue later).) Defendants did not object to the Final Pretrial Order.

After the Court issued the Final Pretrial Order, but before trial on December 6, 2007, the parties stipulated to dismiss Defendant San Juan. (Stipulation of Dismissal, ECF No. 187.) On November 3, 2008, jury trial commenced against remaining Defendants INSC, Khatemi, and Assadian. (ECF Nos. 228-31, 233-35.) The jury ultimately found Defendants infringed Plaintiff's patents and awarded damages. (ECF No. 244.) Defendants filed a motion for judgment as a matter of law and a motion for new trial. (Mot. for Judgment, ECF No. 270; Mot. for New Trial, ECF No. 271.) Both motions were denied; neither motion addressed venue. (ECF Nos. 270, 271; Order, ECF No. 285.)

Defendants appealed challenging, among other things, the liability verdicts against Khatemi and Assadian as individuals, as well as the damages awarded against all Defendants. The Federal Circuit reversed in part and remanded. See Wordtech Sys., Inc. v. Integrated Network Solutions, Inc., 609 F.3d 1308, 1310 (Fed Cir. 2010). There is no indication that either Khatemi or Assadian ever raised a venue challenge on appeal.

On remand, this Court ordered a new trial on the issues of individual liability for contributory infringement and inducement of infringement with respect to Assadian and Khatemi and on damages awarded against all Defendants. (Order, ECF No. 448.)[4] On December 6, 2013, and December 16, 2013, respectively, Assadian and Khatemi each filed a motion to dismiss for improper venue or in the alternative to transfer venue for the convenience of parties and witnesses. (ECF Nos. 477, 479.)

Although Khatemi and Assadian had been represented by counsel through trial and for some of the post-trial motions, this Court approved both the withdrawal of Khatemi's counsel on February 3, 2010 (Mem. & Order, ECF No. 371) and Assadian's counsel on March 8, 2011 (Mem. & Order, ECF No. 421). Assadian and Khatemi filed the instant motions as pro se litigants. (ECF Nos. 477, 479.)

II. LEGAL STANDARD

Rule 12(b)(3) allows a defendant to bring a motion to dismiss on the basis of improper venue. In evaluating a motion to dismiss made pursuant to Rule 12(b)(3) "the pleadings need not be accepted as true, and the court may consider facts outside of the pleadings." Murphy v. Schneider Nat'l, Inc., 362 F.3d 1133, 1137 (9th Cir. 2004) (internal citations omitted). When a defendant files a motion challenging venue as improper, the plaintiff bears the burden of showing that its chosen venue is proper. Piedmont Label Co. v. ...


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