Case 1:18-cv-12267-RA Document 80 Filed 10/02/19 Page 1 of 11
`USDC-SDNY
`DOCUMENT
`ELECTRO NI CALLY FILED
`DOC#:
`lu / z,, / 19
`DATE FILED:
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`NETSOC, LLC,
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`CHEGG INC.,
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`NETSOC, LLC,
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`LINK.EDIN CORP.,
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`NETSOC, LLC,
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`QUORA INC.,
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`NETSOC, LLC,
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`OATH INC.,
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`V.
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`V.
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`V.
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`V.
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`Plaintiff,
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`MEMORANDUM OPINION & ORDER
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`No. 18-CV-10262 (RA)
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`Defendant.
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`Plaintiff,
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`Defendant.
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`Plaintiff,
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`Defendant.
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`Plaintiff,
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`Defendant.
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`No. 18-CV-12215 (RA)
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`No. 18-CV-12250 (RA)
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`No. 18-CV-12267 (RA)
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`Case 1:18-cv-12267-RA Document 80 Filed 10/02/19 Page 2 of 11
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`RONNIE ABRAMS, United States District Judge:
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`PlaintiffNetsoc, LLC brings claims for patent infringement against Defendants Chegg Inc.,
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`Linkedln Corp., Quora Inc., and Oath Inc., in four separate sections that were consolidated through
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`claim construction on March 25, 2019. See 18-cv-10262 (RA), Dkt. 24. Defendant Quora moves
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`to dismiss the action as against it for improper venue, pursuant to Fed. R. Civ. P. 12(b)(3), or, in
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`the alternative to transfer venue, pursuant to 28 U.S.C. §§ 1404(a) or 1406(a). For the following
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`reasons, NetSoc's case against Quora will be transferred to the Northern District of California.
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`BACKGROUND
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`Unless otherwise noted, the facts in this section are drawn from NetSoc's First Amended
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`Complaint ("Compl.") and are accepted as true for the purposes of this motion. See Peerless
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`Network, Inc. v. Blitz Telecom Consulting, LLC, No. 17-CV-1725 (JPO), 2018 WL 1478047, at *2
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`(S.D.N. Y. Mar. 26, 2018). The Court also considers "evidence outside of the pleadings," including
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`affidavits, but the facts are nonetheless construed in the light most favorable to Plaintiff. Id.
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`I. Procedural History
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`NetSoc filed a Complaint against Quora on December 27, 2018, asserting that Quora's
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`website infringes U.S. Patent No. 9,978,107 (the '" 107 patent"), which NetSoc owns by
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`assignment. On March 25, 2019, when the case was consolidated with the three other above(cid:173)
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`captioned actions, Quora filed the instant motion as well as a motion to dismiss pursuant to Fed.
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`R. Civ. P. 12(b)(6).
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`On July 9, 2019, NetSoc filed an Amended Complaint against Quora asserting, in place of
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`the '107 patent, a related patent, U.S. Patent No. 9,218,591 (the "'591 patent"). NetSoc
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`subsequently agreed to withdraw its claims against Quora with respect to the '107 patent with
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`prejudice, rendering Quora's Rule 12(b)(6) motion moot. See Pl's July 23, 2019 Ltr. (Dkt. 56).
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`2
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`Case 1:18-cv-12267-RA Document 80 Filed 10/02/19 Page 3 of 11
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`Quora then requested that the Court still consider its pending motion to dismiss for improper venue,
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`as applied against the Amended Complaint, which the Court does so here. See Quora's July 26,
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`2019 Ltr. (Dk:t. 57); August 20, 2019 Joint Status Ltr. at 8 (Dk:t. 58).
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`II. The Parties
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`NetSoc is a Texas Limited Liability Company with its principle place of business in Harris
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`County, Texas. Compl., 1 (Dkt. 49). Quora is a domestic corporation organized under the laws
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`of Delaware. NetSoc alleges, on information and belief, that Quora's principle place of business
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`is in New York. Id. , 2. Quora, however, asserts that its principle place of business is in Mountain
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`View, California. Kolovson Deel. , 2 (Dkt. 19).
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`According to NetSoc, Quora sells products and performs services throughout New York
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`that infringe various claims of the • 591 patent, including through its operation of the website,
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`www.quora.com. Quora maintains by way of declaration that it does not own property in New
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`York City, nor does it hold itself out as doing business from any employee's residence in New
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`York City. Quora further attests that its primary operations are run out of its Mountain View
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`offices, in which the employees with knowledge of the engineering and functionality of its website
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`are located.
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`Quora states that, on June 18, 2018, it hired a salesperson who worked remotely from his
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`home in New York when not at Quora's Mountain View headquarters, where he was trained. This
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`employee purportedly paid for his own living expenses.
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`After this action was commenced, Quora entered into an agreement with the real estate
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`company, WeWork, to have access to a shared work space in New York City. On January 15,
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`2019, Quora states that its advertising team hired three employees that primarily work out of that
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`work space when not in Mountain View.
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`Case 1:18-cv-12267-RA Document 80 Filed 10/02/19 Page 4 of 11
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`LEGAL STANDARD
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`In a patent infringement action, venue is exclusively governed by the patent venue statute,
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`28 U.S.C. § 1400(b), which is interpreted in accordance with Federal Circuit law. See TC
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`Heartland LLC v. Kraft Foods Grp. Brands LLC, 13 7 S. Ct. 1514, 1516 (2017); In re ZTE (USA)
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`Inc., 890 F.3d 1008, 1113 (Fed. Cir. 2018). "[U]pon motion by the Defendant challenging venue
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`in a patent case, the [p ]laintiff bears the burden of establishing proper venue." In re ZTA (USA)
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`Inc., 890 F.3d at 1010.
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`Pursuant to 28 U.S.C. § 1400(b), "[a]ny civil action for patent infringement may be brought
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`in the judicial district [i] where the defendant resides, or [ii] where the defendant has committed
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`acts of infringement and has a regular and established place of business." In applying the patent
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`venue statute, the Court is mindful that it "should not be liberally construed in favor of venue." In
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`re ZTE (USA) Inc., 890 F.3d at 1014; see also Peerless Network, Inc., 2018 WL 1478047, at *2
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`(recognizing that "patent venue is narrower than general venue").
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`DISCUSSION
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`The parties do not dispute that (1) a corporate defendant resides, for the purposes of
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`§ l 400(b ), in its State of incorporation, TC Heartland LLC, 13 7 S. Ct. at 1156; and (2) Quora is
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`incorporated in Delaware. Accordingly, venue in this district is not proper under the first prong
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`of § 1400(b). Quora also does not appear to contest, for purposes of this motion, Plaintiffs
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`allegations that Quora has infringed the '591 patent in this district. The principle issue to be
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`decided, then, is whether NetSoc has met its burden of demonstrating that Quora has a "regular
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`and established place of business" in this district. The Court concludes that NetSoc has not.
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`Case 1:18-cv-12267-RA Document 80 Filed 10/02/19 Page 5 of 11
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`I. Timing of Venue Analysis
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`As an initial matter, Quora is correct that venue is to be analyzed based on the facts existing
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`at the time this action was commenced. Although the cases Quora cites in support of this
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`proposition dealt with venue under the general venue statute, 28 U.S.C. § 1391, the Court will
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`apply the same principles with respect to the patent venue statute.
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`The Court has not identified any Federal Circuit decision addressing the point in time in
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`which venue is to be analyzed under § l 400(b ). But other courts have persuasively concluded that
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`venue under § 1400(b) should be analyzed, as under 28 U.S.C. § 1391, at the time the case is
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`brought. In Int 'l Techs. & Sys. Corp. v. Samsung Elecs. Co. Ltd., for example, the court rejected
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`the argument that venue became proper in the Central District of California under § l 400(b) upon
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`the defendant's merger there with another company, because the merger had occurred after the
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`complaint was filed. No. SA CV 17-1748-DOC (JDEx), 2018 WL 4963129, at *6 (C.D. Cal. June
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`22, 2018). The court reasoned that, because § 1400(b) refers to where a civil action "may be
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`brought," venue should be assessed based on the facts existing at the time the plaintiff commences
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`the action. This Court agrees. As another court has noted, "bringing" a civil action refers to the
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`act of filing a complaint, and analyzing venue at that time comports with the Federal Circuit's
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`reminder that venue determinations "must be closely tied to the language of the statue." In re Cray
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`Inc., 871 F.3d 1355, 1360 (Fed. Cir. 2017); Pers. Audio, LLC v. Google, Inc., 280 F. Supp. 3d 922,
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`930 (E.D. Tex. 2017). Whether Quora has a "regular and established place of business" in this
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`district will therefore be assessed as of December 12, 2018, when NetSoc brought its case against
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`Quora. 1
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`1 Quora also quotes from Keitt v. New York City, in which that court stated that "venue is determined based
`upon the parties and allegations at the time the operative complaint is filed, not subsequent events." 882 F. Supp. 2d
`412,459 n. 44 (S.D.N.Y. 2011) (emphasis added). Here, the operative complaint is NetSoc's Amended Complaint,
`filed on July 9, 2019. Under Keitt, then, the facts concerning Quora's January 15, 2019 rental ofa WeWork space in
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`Case 1:18-cv-12267-RA Document 80 Filed 10/02/19 Page 6 of 11
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`A. Regular and Established Place of Business
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`The following test set forth by the Federal Circuit in In re Cray, Inc., governs whether
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`venue is proper under the "regular and established place of business" prong of§ 1400(b): "(1)
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`there must be a physical place in the district; (2) it must be a regular and established place of
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`business; and (3) it must be the place of the defendant." 871 F.3d at 1360. To satisfy the "physical
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`place" requirement, there must be "a physical, geographical location in the district from which the
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`business of the defendant is carried out." Id. at 13 62. To be "regular and established," the place
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`of business must "operate[] in a steady, uniform, orderly, and methodical manner," and it must be
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`"settled certainly, or fixed permanently." Id. And for the place of business to be deemed that "of
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`the defendant" the defendant "must establish or ratify the place of business." Id at 1363. In other
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`words, the place of business cannot be "solely a place of the defendant's employee." Id.
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`To determine whether a defendant has established or ratified a place of business, courts
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`consider various factors such as: "(1) whether the defendant owns, leases, or otherwise exercises
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`control over the premises; (2) whether the defendant conditioned employment on an employee's
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`continued residence in the district; (3) whether the defendant stored inventory there to be sold or
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`distributed from that place; (4) whether the defendant made outward representations that the
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`physical location was its place of business; and (5) how the alleged place of business in the district
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`compares to other places of business of the defendant in other venues." Zaxcom, Inc. v.
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`Lectrosonics, Inc., No. 17-CV-3408 (NGG) (SJB), 2019 WL 418860, at *5 (E.D.N.Y. Feb. 1,
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`2019) (citing Cray, 871 F.3d at 1363-1364).
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`New York should be considered when detennining whether Quora has a regular and established place of business in
`this district. The majority offederal courts, however, have analyzed venue based on the time the action was brought(cid:173)
`i.e., the date the original, not the operative, complaint was filed. See, e.g., Bell v. Classic Auto Grp., Inc., No. 04 Civ.
`0693(PKC), 2005 WL 659196, at *5 (S.D.N.Y. Mar. 21, 2005); Greene v. Sha-Na-Na, 637 F. Supp. 591, 600 (D.
`Conn. 1996) (citing cases). Because that view is more consistent with the language of§ 1400(b)--and helps further
`the goal of preventing parties from manufacturing venue-the Court considers Quora's motion based on the facts
`existing at the time NetSoc commenced the action, and not when the Amended Complaint was filed.
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`Case 1:18-cv-12267-RA Document 80 Filed 10/02/19 Page 7 of 11
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`Here, NetSoc fails to meet its burden of establishing that the Cray requirements have been
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`satisfied. NetSoc contends that Quora has maintained a physical address in New York prior to this
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`action based on business records obtained online from the research company, LexisNexis. The
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`records attached to NetSoc's opposition, however, merely identify unnamed "Business
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`Registration Officers," that purportedly hold a position entitled "CONT A," located at a New York
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`address. But Quora claims that it has no offices at the address, and the remainder of the records
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`do not directly link the address, nor any other New York address, to Quora. Thus, even to the
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`extent the New York address could constitute a physical place of business, NetSoc has alleged no
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`facts to rebut Quora' s assertion that it does not conduct business there. The New York address,
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`therefore, does not establish venue. Similarly, the fact that Quora has a registered agent for service
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`of process located in New York "has no bearing" on whether Quora maintains a physical place in
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`the district upon which venue could be predicated. Symbology Innovations, LLC v. Lego Sys., Inc.,
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`282 F. Supp. 3d 916,930 (E.D. Va. 2017); see also Cray, 871 F.3d at 1362-63.
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`The Court further rejects NetSoc's suggestion that the home of the single Quora employee
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`who worked from there, at the time this suit was filed, constitutes a place of business belonging to
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`Quora. Netsoc does not allege any facts to rebut Quora's assertions that the employee paid for his
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`own living expenses or that it does not hold itself out as doing business from any employee's New
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`York residence. Nor does NetSoc allege any basis to infer that the employee's employment was
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`conditioned on him working in New York, or that he was selling Quora's products from his home.
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`Moreover, it is not even clear whether the home of this employee is located in this judicial district
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`as opposed to one in, say, Brooklyn or Queens. NetSoc has thus failed to demonstrate that the
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`employee's home constitutes Quora's place of business, as Cray requires. See Cray, 871 F.3d at
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`1365 (finding an employee's home office was not the defendant's place of business because the
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`Case 1:18-cv-12267-RA Document 80 Filed 10/02/19 Page 8 of 11
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`defendant did not appear to "own[], lease[], or rent[] any portion" of the home, the employee's
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`employment was not conditioned on his continued residence in the district, and plaintiff pointed
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`to no evidence that defendant held out the employee's home as its business); Zaxcom, Inc. v.
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`Lectrosonics, Inc., No. 17-CV-3408 (NGG) (SJB), 2019 WL 418860, at *5-6 (E.D.N.Y. Feb. 1,
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`2019) (same, even where some of the defendant's inventory was stored in the employee's home).
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`Finally, NetSoc's reference in the Complaint to Quora's website cannot constitute a basis
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`for finding venue. Cray made clear that the physical place requirement must not "be read to refer
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`merely to a virtual space or to electronic communications from one person to another." 871 F.3d
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`at 1362. NetSoc has, accordingly, failed to establish that venue is proper in this district.
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`II.
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`Venue-Related Discovery
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`In opposing Quora's motion, NetSoc requests that it be permitted to conduct venue
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`discovery. That request is denied.
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`The parties do not address which circuit's law applies when considering a request for venue
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`discovery. The Court, however, has not been able to identify any Federal Circuit case, nor any
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`Second Circuit case, that articulates a standard for venue-related discovery. Other district courts
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`have, by comparison, applied regional circuit law concerning venue discovery in patent cases (to
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`the extent any exists) and failing that, the regional circuit's law on jurisdictional discovery. See,
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`e.g., Novartis Pharms. Corp. v. Accord Healthcare Inc., No. 18-1043-LPS, 2019 WL 2502535, at
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`*3-5 (D. Del. June 17, 2019). Following that approach here, the Court will apply Second Circuit
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`law concerning jurisdictional discovery to Net Soc' s request for venue discovery. 2
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`2 The Federal Circuit has also suggested that regional circuit law applies when determining whether a plaintiff
`has "made a sufficient threshold showing to merit jurisdictional discovery." Commissariat A L 'Energie Atomique v.
`Chi Mei Optoelectronics Corp., 395 F.3d 1315, 1323 (Fed. Cir. 2005) (citing Third Circuit law in support of its finding
`that plaintiff had made a sufficient showing to warrant jurisdictional discovery, while noting that Federal Circuit law
`governs "the relevance" of such a request); see also Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012,
`1023 n.2 (Fed. Cir. 2009) ( applying regional circuit law as to whether the district court erred in denying jurisdictional
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`Case 1:18-cv-12267-RA Document 80 Filed 10/02/19 Page 9 of 11
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`Although "[t]he standard for awarding jurisdictional discovery is low," Universal Trading
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`& Inv. Co. v. Credit Suisse (Guernsey) Ltd, 560 F. App'x 52, 55-56 (2d Cir. 2014), a court may
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`deny such discovery where a plaintiff"do[es] not establish a prima facie case that the district court
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`has jurisdiction over the defendant." Chirag v. MT Marida Marguerite Schiffahrts, 604 F. App'x
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`16, 18-19 (2d Cir. 2015). "A prima facie case requires non-conclusory fact-specific allegations or
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`evidence showing that activity that constitutes the basis of jurisdiction has taken place." Id.
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`Although a court may still permit jurisdictional discovery where a plaintiff has not made a prima
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`facie showing of jurisdiction, it need "not draw 'argumentative inferences' in favor of a plaintiff
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`who has failed to allege even bare facts" establishing that jurisdiction is proper. Smit v. lsiklar
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`Holding A.S., 354 F. Supp. 2d 260, 263--64 (S.D.N.Y. 2005) (citing Robinson v. Overseas Military
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`Sales Corp., 21 F.3d 502,507 (2d Cir.1994).
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`Applying that standard in the context of the venue discovery sought in this case, NetSoc
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`has failed to allege fact-specific allegations or evidence that could support a finding that venue is
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`proper over Quora. NetSoc also fails to make any showing that the discovery it seeks is "likely to
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`uncover additional facts" that could support a finding that the home of the single sales employee
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`constituted a place of business of Quora, or that it was "regular and established." Cf Smit v.
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`lsiklar Holding A.S., 354 F. Supp. at 263-64 (noting, in the context of jurisdictional discovery,
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`that "[t]he pleadings must indicate ... that limited discovery is likely to uncover additional facts
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`supporting jurisdiction").
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`Indeed, NetSoc does not allege any basis to infer that Quora may have stored inventory at
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`the employee's home; that Quora conditioned his residence in New York; that it prevented him
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`from leaving New York on his own volition; or that it required him to work from his home in New
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`discovery where the plaintiff"provided ... no reasons for its request or particular areas to which discovery would be
`directed").
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`Case 1:18-cv-12267-RA Document 80 Filed 10/02/19 Page 10 of 11
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`York. NetSoc also does not point to any marketing or advertising suggesting that Quora held out
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`the employee's home as part of its business, or that the employee actually engaged in business
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`from his home. Instead, NetSoc submits a list of factors that the Federal Circuit has considered in
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`various cases as relevant to analyzing venue, and summarily asserts that it should therefore be
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`entitled to discovery to determine whether those factors are present here. But NetSoc cannot be
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`entitled to venue discovery based on pure speculation. Even in a case where a plaintiff has set
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`forth facts demonstrating that a single at-home sales employee has conducted sales in the district(cid:173)
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`which NetSoc has not-a court has still denied venue discovery under the Third Circuit's
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`seemingly more liberal standard. See Novartis Pharms. Corp., 2019 WL 2502535, at *3 (rejecting
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`the plaintiffs contention that venue under § 1400(b) may tum out to be proper "based on the
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`existence of a single ... employee" of defendant who lived and worked in the district, and denying
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`venue discovery under the Third Circuit's standard which permits jurisdictional discovery "unless
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`a plaintiffs claim is clearly frivolous"). To permit NetSoc to obtain such venue discovery in this
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`case would effectively authorize it to engage in "an unfounded fishing expedition." RSM Prod.
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`Corp. v. Fridman, 643 F. Supp. 2d 382, 402 (S.D.N.Y. 2009) (denying jurisdictional discovery
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`based on plaintiffs "expectation"
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`that
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`it would uncover additional
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`facts supporting
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`jurisdiction), ajf'd, 387 Fed. App'x 72 (2d Cir. 2010). NetSoc's request for venue discovery is,
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`therefore, denied.
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`III.
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`Transfer
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`Pursuant to 28 U.S.C. §1406(a), where, as here, venue is improper, the court must decide
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`whether to dismiss the action, or, if it is in the interest of justice, to transfer the action to a venue
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`"in which it could have been brought." This decision "lies within the sound discretion of the district
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`court." Blakely v. Lew, 607 Fed. App'x 15, 18 (2d Cir. 2015). Dismissal, as opposed to transfer, is
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`Case 1:18-cv-12267-RA Document 80 Filed 10/02/19 Page 11 of 11
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`advisable when the case is a "sure loser." Gonzalez v. Hasty, 65 l F.3d 318, 324 (2d Cir. 2011 ).
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`While the Court is skeptical about Plaintiff's likelihood of success-particularly in light of the
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`decision from the Northern District of Texas invalidating the related' 107 patent, see NetSoc, LLC
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`v. Match Grp., LLC, No. 3:18-CV-01809-N, 2019 WL 3304704 (N.D. Tex. July 22, 2019}-the
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`Court is not now in a position to conclude that Plaintiff's infringement claim is "clearly doomed,"
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`such that dismissal is warranted. Daniel v. Am. Bd. of Emergency Bd., 428 F.3d 408,436 (2d Cir.
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`2005). As the parties do not dispute that this case could have been brought in the Northern District
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`of California, and NetSoc has not established that it would be prejudiced by a transfer there,
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`Quora's request that the case be transferred to that district is GRANTED.
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`CONCLUSION
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`For the foregoing reasons, Quora's motion to transfer NetSoc's case against it, pursuant
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`to 28 U.S.C. § 1406, is GRANTED. The Clerk of Court is directed to transfer Case No. 18-CV-
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`12250 to the Northern District of California, and to remove that case from this consolidated
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`action.
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`SO ORDERED.
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`Dated:
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`October 2, 2019
`New York, New York
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`1e Abrams
`United States District Judge
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`11
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