This week the Central District of California granted defendant's motion to dismiss for improper venue in Prolacta Bioscience, Inc. v. Ni-Q, LLC et al., 2-17-cv-04071 (C.D. Cal. Aug. 7, 2017) (Order, Judge S. James Otero, Dkt. 32). Prolacta filed its patent infringement complaint on May 31, 2017, after the Supreme Court issued its TC Heartland decision, and the court found it did not sufficiently plead that Ni-Q had committed “acts of infringement” and had a “regular and established place of business” to show venue was appropriate under the second prong of 28 U.S.C. § 1400(b).
The patent asserted by Prolacta is directed to testing breast milk to establish or confirm the identity of the donor for breast milk banking purposes. Ni-Q responded by moving to dismiss the case for improper venue. The court held that Prolacta failed to meet its burden of demonstrating that Ni-Q committed “acts of infringement” within the Central District of California. For example, Prolacta did not identify any infringing activity, and Ni-Q presented evidence that it is not licensed to sell or offer for sale breast milk in the State of California. The court also rejected Prolacta’s attempt to admit a declaration from one of its attorneys that averred administrators at hospitals within the district said they had been solicited by Ni-Q as inadmissible hearsay.
Significantly, in addition, the court held that Prolacta failed to demonstrate that Ni-Q has a “regular and established place of business” within the district. Prolacta argued that Ni-Q has a “permanent and continuous presence” because its CEO has a private residence in the district. However, Prolacta provided no admissible evidence suggesting that the CEO worked out of his home or participated in any sales activity within the district. The court therefore held that venue was not proper and granted Ni-Q’s motion to dismiss.
As more and more patent infringement complaints rely on the second prong of 28 U.S.C. § 1400(b) to establish venue, the courts will increasingly have to deal with pleading sufficiency issues related to “acts of infringement” and “regular and established place of business.” We will continue to monitor these issues and all other related TC Heartland venue issues.