On April 6, 2022, the Central District of California dismissed a patent infringement suit brought by a California company Laltitude, LLC against an Ohio company DreamBuilder Toy, LLC. The suit accused DreamBuilder of infringing two of Laltitude’s patents along with a state law claim for unfair competition.
LTL filed a motion to dismiss that the Central District is not the proper venue. The patent venue statute permits “[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). “[T]here are three general requirements to establishing that the defendant has a regular and established place of business: ‘(1) there must be a physical place in the district; (2) it must be a regular and established place of business; and (3) it must be the place of the defendant.’” In re Google, 949 F.3d 1338, 1343 (Fed. Cir. 2020) (quoting In re Cray, 871 F.3d 1355, 1360 (Fed. Cir. 2017)).
There was no dispute that DreamBuilder does not reside in the Central District. Rather, Laltitude argued that the venue requirements were satisfied because of DreamBuilder’s relationship with Amazon and Amazon’s fulfillment centers in the district, specifically DreamBuilder’s use of Fulfillment by Amazon to store and ship its products meant that DreamBuilder had a regular and established place of business in the district.
In rejecting Laltitude’s argument, the Court reiterated against a broad reading of the patent venue statute. The Court found that while leased shelf space or rack space can serve as a regular and established place of business, Laltitude’s argument that DreamBuilder “leased shelf spaces in Amazon’s warehouse” that it “effectively possesses or controls” failed to constitute a “physical place in the district.” The Court focused on Amazon’s standard contract, which provides that DreamBuilder “has no right to control, inspect, or possess the space.” (emphasis in original).
“This decision represents a win for patent defendants that use online marketplaces like Amazon and helps prevent abuse by plaintiffs improperly attempting to expand the reach of the patent venue statute,” said LTL’s lead partner, Heather Auyang, representing DreamBuilder. “This case should have never been filed in the Central District and will hopefully deter plaintiffs from making similar arguments.”
Please contact Heather Auyang (firstname.lastname@example.org) if you would like a copy of the decision. Senior Counsel Dat Nguyen assisted in DreamBuilder’s defense.