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InsideSales.Com Inc. v. Salesloft Inc.

United States District Court, D. Utah, Central Division

September 26, 2017

INSIDESALES.COM, INC., Plaintiff,
v.
SALESLOFT, INC., Defendant.

          MEMORANDUM DECISION AND ORDER

          DALE A. KIMBALL, UNITED STATES DISTRICT JUDGE

         This matter is before the court on Defendant SalesLoft's Rule 12(b)(3) Motion to Dismiss or Transfer for Improper Venue. On September 13, 2017, the court held a hearing on the motions. At the hearing, Plaintiff was represented by Paul B. Gaffney and Samuel C. Straight, and Defendant was represented by H. Dickson Burton. The court took the motion under advisement. After carefully considering the parties' memoranda and the law and facts relevant to the pending motion, the court issues the following Memorandum Decision and Order.

         BACKGROUND

         On August 4, 2016, InsideSales filed its Complaint for alleged patent infringement against SalesLoft. In the Complaint, InsideSales alleges that venue is proper in this district because SalesLoft was subject to personal jurisdiction in this district and has sold allegedly infringing products in this district. SalesLoft is a Delaware corporation with its principal place of business in Atlanta, Georgia. On December 1, 2016, SalesLoft filed two motions to dismiss based on unpatentability under 35 U.S.C. § 101 and failure to state a claim upon which relief can be granted.

         On December 14, 2016, the United States Supreme Court granted certiorari in TC Heartland LLC v. Kraft Foods Group Brands LLC, 821 F.3d 1338 (Fed. Cir.), cert. granted 137 S.Ct. 614 (2016), which raised the issue of proper venue in patent cases. On May 22, 2017, the Supreme Court issued its decision in TC Heartland, 137 S.Ct. 1514 (2017), reversing the Federal Circuit and explaining that venue in a patent case is proper only where a defendant is incorporated or where its regular and established place of business is located.

         At the time the Supreme Court decided TC Heartland, this court had SalesLoft's motions to dismiss under advisement. Three days after the TC Heartland decision, SalesLoft filed a notice of supplemental authority regarding a new case relating to unpatentability under 35 U.S.C. § 101. SalesLoft did not notify this court of the TC Heartland decision or seek to supplement its motions to dismiss to add a venue challenge. On June 13, 2017, this court denied SalesLoft's motions to dismiss.

         On June 27, 2017, SalesLoft filed the present motion to dismiss based on improper venue under TC Heartland. SalesLoft has not yet answered the Complaint.

         DISCUSSION

         SalesLoft's Motion to Dismiss

         SalesLoft moves to dismiss or transfer this action for improper venue based on the Supreme Court's recent decision in TC Heartland, 137 S.Ct. 1514 (2017). The patent venue statute, 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.” In TC Heartland, the Supreme Court concluded that “for purposes of § 1400(b) a domestic corporation ‘resides' only in its State of incorporation.” 137 S.Ct. at 1517.

         Under TC Heartland, the only proper venues in this case are the District of Delaware, where SalesLoft is incorporated, or the Northern District of Georgia, where SalesLoft has its principal place of business. InsideSales makes no allegations that SalesLoft has any facilities in the District of Utah, only that SalesLoft has allegedly sold infringing products in Utah. Accordingly, SalesLoft brought this motion to dismiss for improper venue under Rule 12(b)(3) of the Federal Rules of Civil Procedure.

         However, a Rule 12(b)(3) motion for improper venue is subject to waiver, and SalesLoft has already brought two prior motions to dismiss in this case. Under Rule 12(h) of the Federal Rules of Civil Procedure, “[a] party waives any defense listed in Rule 12(b)(2) -(5) by: (A) omitting it from a motion in the circumstances described in Rule 12(g)(2).” Fed.R.Civ.P. 12(h)(1). Rule 12(g)(2) provides that “a party that makes a motion under this rule must not make another motion under this rule raising a defense or objection that was available to the party but omitted from its earlier motion.” Id. 12(g)(2) (emphasis added).

         SalesLoft argues that it its Rule 12(b)(3) motion is timely because it was not available to it prior to the TC Heartland decision. SalesLoft filed its prior motions to dismiss on December 1, 2016. At that time, the Supreme Court had not granted certiorari in TC Heartland. InsideSales, however, argues that SalesLoft waived its venue challenge because SalesLoft could have advanced the same argument as was advanced in TC Heartland and SalesLoft should have notified this court of the TC Heartland decision prior to this court's ruling on SalesLoft's original motions to dismiss.

         Courts are divided as to whether the improper venue basis for SalesLoft's motion was available prior to the TC Heartland decision. “[A]n exception to the general rule of waiver . . . exists . . . when there has been an intervening change in the law recognizing an issue that was not previously available.” Holland v. Big River Minerals Corp., 181 F.3d 597, 605 (4th Cir. 1999). The parties, as well as courts around the country, dispute whether TC Heartland changed the law. The TC Heartland Court stated that it was not announcing a new standard but simply reaffirming the venue rule it had established sixty years prior. 137 S.Ct. at 1520. In reversing the Federal Circuit, the Supreme Court relied on its interpretation of the term “resides” in its decision in Fourco Glass Co. ...


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