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RAH Color Technologies LLC v. Quad/Graphics, Inc.

United States District Court, N.D. Illinois, Eastern Division

January 16, 2018

RAH COLOR TECHNOLOGIES, LLC, Plaintiff,
v.
QUAD/GRAPHICS, INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          AMY J. ST. EVE, United States District Judge

         On June 30, 2017, Plaintiff RAH Color Technologies, Inc. (“RAH”) filed this patent infringement lawsuit against Defendant Quad/Graphics, Inc. (“Quad”). Subsequently, Quad filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(3), or, in the alternative, a motion to transfer venue to the United States District Court for the Eastern District of Wisconsin - located in Milwaukee, Wisconsin - pursuant to 28 U.S.C. § 1404(a). For the following reasons, the Court denies Quad's Rule 12(b)(3) motion to dismiss, but, in its discretion, grants Quad's motion to transfer venue to the Eastern District of Wisconsin pursuant to 28 U.S.C. § 1404(a). Last, the Court denies RAH's Motion for Leave to Amend the Complaint without prejudice to its renewal in the Eastern District of Wisconsin.

         BACKGROUND

         RAH is a limited liability company organized under the laws of the Commonwealth of Virginia maintaining an office in Alexandria Virginia. RAH owns numerous United States patents generally related to the field of color management and Dr. Richard A. Holub, the named inventor, manages RAH and is RAH's sole member. Quad is a Wisconsin corporation with its principal place of business in Sussex, Wisconsin, a northwest suburb of Milwaukee. RAH alleges that as part of its business, Quad uses printer hardware and software that utilize color measurement and management techniques that, alone or in combination, infringe various claims of the patents-in-suit.

         LEGAL STANDARDS

         I. Motion to Dismiss under Rule 12(b)(3)

         “[W]hile the substance of a venue challenge in a patent case will turn on § 1400(b), subject matter that is controlled by Federal Circuit law, the Federal Rules - as opposed to a patent-unique statute - provide the procedural vehicle for such a challenge.” Boston Sci. Corp. v. Cook Grp. Inc., ___ F.Supp.3d ___, No. CV 15-980-LPS-CJB, 2017 WL 3996110, at *4 (D. Del. Sept. 11, 2017). Therefore, the Court follows Seventh Circuit law as it pertains to the procedural requirements of Rule 12(b)(3). Id. (“venue motions are procedural - and therefore governed by the law of the regional circuit.”). “Under Rule 12(b)(3), which allows for dismissal for improper venue, the district court assumes the truth of the allegations in the plaintiff's complaint, unless contradicted by the defendant's affidavits.” Deb v. SIRVA, Inc., 832 F.3d 800, 809 (7th Cir. 2016). In other words, “[w]hen ruling on a motion to dismiss for improper venue, the district court is not ‘obligated to limit its consideration to the pleadings [or to] convert the motion to one for summary judgment' if the parties submit evidence outside the pleadings.” Faulkenberg v. CB Tax Franchise Sys., LP, 637 F.3d 801, 809-10 (7th Cir. 2011) (citation omitted). The plaintiff bears the burden of establishing proper venue in the context of a Rule 12(b)(3) motion, although the plaintiff's burden in defending a Rule 12(b)(3) motion is low because courts resolve factual conflicts in the plaintiff's favor. See Id. at 810; Johnson v. Creighton Univ., 114 F.Supp.3d 688, 696 (N.D. Ill. 2015); Allstate Life Ins. Co. v. Stanley W. Burns, Inc., 80 F.Supp.3d 870, 875 (N.D. Ill. 2015).

         II. Transfer Venue under 28 U.S.C. § 1404(a)

         “In 1948, Congress enacted the federal change of venue statute, codified at 28 U.S.C. § 1404, to allow a district court to transfer an action filed in a proper, though not necessarily convenient, venue to a more convenient district.” Research Automation, Inc. v. Schrader-Bridgeport Int'l Inc., 626 F.3d 973, 977 (7th Cir. 2010). Specifically, “[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.” 28 U.S.C. § 1404(a). Under § 1404(a), the moving party bears the burden of establishing that (1) venue is proper in the transferor district, (2) venue and jurisdiction would be proper in the transferee district, and (3) the transfer will serve the convenience of the parties and witnesses and is in the interest of justice. See Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219-20 (7th Cir. 1986). “The weighing of factors for and against transfer necessarily involves a large degree of subtlety and latitude, and, therefore, is committed to the sound discretion of the trial judge.” Id. at 219; see also DeKeyser v. Thyssenkrupp Waupaca, Inc., 860 F.3d 918, 923 (7th Cir. 2017). (“28 U.S.C. § 1404(a) gives a district court discretion to transfer a civil action to any other district or division where it might have been brought if the transfer is ‘for the convenience of parties and witnesses, [and] in the interest of justice.'”).

         ANALYSIS

         I. Rule 12(b)(3) Motion to Dismiss for Improper Venue

         The patent venue statute states 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.” 28 U.S.C. § 1400(b). In May 2017, the United States Supreme Court clarified that for purposes of the patent venue statute, a domestic corporation resides only in the state of its incorporation. TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514, 1520 (2017); see also In re Micron Tech., Inc., 875 F.3d 1091, 1094 (Fed. Cir. 2017). Here, it is undisputed that Defendant Quad resides in Wisconsin, and thus the Court turns to the second clause of § 1400(b) and relies upon Federal Circuit law governing § 1400(b). See In re Cray Inc., 871 F.3d 1355, 1360 (Fed. Cir. 2017).

         As highlighted above, under the Federal Rules of Civil Procedure and Seventh Circuit law, in the context of a Rule 12(b)(3) motion, the Court assumes the truth of the allegations in RAH's Complaint unless these allegations are contradicted by Quad's affidavits. See Deb, 832 F.3d at 809. In its Complaint, RAH alleges that Quad, “has committed acts of patent infringement within the State of Illinois and, more particularly, within the Northern District of Illinois.” (R. 1, Compl. ¶ 8.) In the present motion, Quad asserts that it did not commit any acts of infringement in the Northern District of Illinois presenting affidavits in support of its venue arguments. In doing so, Quad specifically explains that the asserted patent infringement claims depend on the use of third-party software, including Electronics For Imaging (“EFI”), Kodak, and Heidelberg.[1] In the declaration of Tim Sands, Quad's Vice President of Press Operations, Sands avers that Quad's Northern District of Illinois facilities include a creative agency in Chicago and a logistics services office in Bolingbrook, Illinois, a suburb of Chicago. (R. 26, Sands Decl. ¶ 10.) Sands further elucidates that the Heidelberg software at issue in this lawsuit includes Heidelberg Prinect Image Control, Heidelberg Prinect Press Center, and Heidelberg Prinect Color Toolbox software. (Id. ¶ 11.) He asserts that no Quad facilities in Illinois use the Heidelberg software, but that a Quad facility in Burlington, Wisconsin uses portions of the Heidelberg software. (Id. ¶¶ 12, 13.) Quad also presents the affidavit of George Forge, Quad's Executive Director of Digital Print, who avers that Quad's Illinois facilities do not use the EFI Fiery print server software, which includes EFI Command Workstation and EFI Color Profiler Suite. (R. 25, Forge Decl. ¶¶ 4, 5.) Forge maintains that to the best of his knowledge, and after reviewing Quad's business records, at least one Quad facility, located in New Berlin, Wisconsin, uses portions of the EFI software. (Id. ¶ 6.) Garrett Collins, a Technology Manager for Quad, avers that no Quad facilities in Illinois use the Kodak software at issue, which includes Kodak ColorFlow, Kodak InSite Prepress Portal, and Kodak Preps Imposition. (R. 23, Collins Decl. ¶¶ 4, 5.) Collins further states that to the best of his knowledge and based on his review of Quad's business records, at least one Quad facility in Burlington, Wisconsin uses portions of the Kodak software. (Id. ¶ 6.)

         In response to these averments, RAH maintains that Quad has committed acts of infringement in the Northern District of Illinois in relation to the EFI Fiery print server software. In particular, RAH points to Quad's response to an interrogatory that its Chicago office leases a Xerox C60 press, which runs EFI Fiery print server, EFI's Command Workstation, and EFI's Color Profiler Suite software. (R. 58, Ex. 2, Quad Interrog. Resp., at No. 3.) RAH further contends that based on Quad's printer service contracts, the Chicago office has leased as many as four different Xerox digital production presses and related software, including systems that use EFI software. Moreover, Quad's Rule 30(b)(6) deponent, David Bontumasi, testified that Quad's Chicago office has Xerox C60 and C75 presses, which use EFI software. (R. 58, Ex. 1, Bontumasi Dep., at 34.) Because the Court must resolve factual conflicts in RAH's favor at this procedural posture, see Johnson, 114 F.Supp.3d at 696, RAH has met its burden of establishing ...


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