Trackthings LLC v. Netgear, Inc.

Background

TrackThings LLC alleged that NETGEAR, Inc. infringed three patents involving mesh WiFi technology. NETGEAR moved under Federal Rule of Civil Procedure 12(b)(3) to dismiss for improper venue under the patent venue statute, 28 U.S.C. § 1400(b). Alternatively, NETGEAR asked the court to transfer the case to the Northern District of California.

For patent cases, § 1400(b) permits venue where the defendant resides or where it committed infringement and has a “regular and established place of business.” The court held that venue must be evaluated based on the facts existing when the complaint was filed. It also applied the three-part test requiring a physical place in the district, a regular and established business there, and a place that is the defendant’s own.

Venue Analysis

The court found that NETGEAR resided in Delaware for patent-venue purposes because it was incorporated there. It then considered TrackThings’s arguments based on NETGEAR’s New York contacts.

The former 625 Broadway office did not establish venue because NETGEAR ended its lease in May 2020, more than a year before TrackThings filed suit. The court found that outdated website references to a New York office did not overcome the evidence that NETGEAR had abandoned that office.

NETGEAR’s New York employees also did not establish venue. At the relevant time, NETGEAR had four employees living in New York State, but their homes were outside the Southern District of New York. The only NETGEAR worker in New York City was a short-term intern. NETGEAR did not own or lease the employees’ homes, store inventory there, or require employees to live in New York. The court concluded that this remote-work presence did not create a regular and established place of business.

The court separately considered NETGEAR’s arrangements with Showfields and b8ta. Both relationships had ended before TrackThings filed suit. The court further concluded that neither arrangement would have established venue even if it had continued. Showfields controlled the store space and hired and trained any shared brand host, while NETGEAR lacked sufficient control over that person. At b8ta, the retail staff were b8ta employees, and the agreement described b8ta as an independent reseller and disclaimed an agency relationship. NETGEAR’s ability to collaborate on displays, prices, marketing, and product training did not give it sufficient control over b8ta or its employees to create an agency relationship.

Because TrackThings did not make a preliminary showing that venue was proper or that venue discovery was likely to produce supporting evidence, the court denied TrackThings’s request for venue-related discovery.

Disposition and Transfer

The court determined that venue in the Southern District of New York was improper. It concluded that dismissal was not warranted because the court was not in a position to determine that TrackThings’s case was certain to fail on the merits. The court therefore considered transfer under 28 U.S.C. § 1406(a).

NETGEAR requested transfer to the Northern District of California, while TrackThings proposed the District of Delaware. The court selected Delaware because NETGEAR was incorporated there, venue was undisputedly proper there, Delaware was the closest proper jurisdiction to TrackThings’s New Jersey location, and transferring there would avoid the potential unfairness of dismissal. The court also considered the parties’ convenience, witness locations, and their differing financial resources.

Judge Katherine Polk Failla’s conclusion stated that NETGEAR’s motions to dismiss for improper venue and to transfer to the Northern District of California were denied. Because venue was improper in New York, the court transferred the case to the District of Delaware in the interest of justice. The opinion did not decide whether NETGEAR infringed TrackThings’s patents.