Tour Tech. Software, Inc. v. RTV, Inc.
Tour Tech. Software, Inc. v. RTV, Inc.
Opinion of the Court
*198Plaintiff Tour Technology Software, Inc. ("Tour Technology") commenced the above-captioned action on October 4, 2017, against Defendant RTV, Inc. ("RTV"), alleging infringement of United States Patent No. 6,754,400 (the "'400 Patent"), a system and technology for rendering an image that enables, inter alia , an individual on a computer in a remote location to explore a 360-degree virtual view of a setting as if the individual were at that setting. ( Compl., Docket Entry No. 1.) After a discussion about the appropriate venue at a pre-motion conference on February 13, 2018, Plaintiff filed an Amended Complaint on March 13, 2018, adding Defendants John Does I-X and Jane Does XI-XX, photographers and customers, respectively, of RTV, and allegedly residents of New York. (Minute Entry dated Feb. 13, 2018; Am. Compl., Docket Entry No. 18.)
Currently before the Court is RTV's motion to dismiss for improper venue pursuant to
I. Background
Plaintiff Tour Technology is a New York corporation, with operations in Huntington, New York. (Am. Compl. ¶ 1.) Defendant RTV is a Michigan corporation, based in Traverse City, Michigan.
Plaintiff owns the '400 Patent, entitled "System and Method for Creation, Processing and Visualization of Omni-Directional Images."
RTV presents, produces, and hosts 360-degree virtual tour content for clients. (Am. Compl. ¶ 32.) The clients are alleged to be individuals and businesses in New York and other states, "seeking to sell, rent, purchase, lease, and/or promote private residences, commercial real estate, hotels, sporting and recreation facilities, schools, event venues, country clubs, golf courses, upscale lodging facilities, restaurants, nightclubs, and healthcare facilities." (Id. ) On its website, RTV states that it "is a recognized leader in interactive 360 panoramic virtual tours, professional photography services, and virtual tour software." (RTV Recent Virtual Tours webpage, annexed to Am. Compl. as Ex. C, Docket Entry No. 18-3.) RTV's website also states that it is a "leading provider of virtual tour technology," and offers virtual tour software for real estate professionals and business entrepreneurs. (About Real Tour Vision webpage, annexed to Am. Compl. as Ex. D, Docket Entry No. 18-4.) Plaintiff alleges that this constitutes infringement of the '400 Patent. (Am. Compl. ¶ 33.)
In support of its claims, Plaintiff contends that Defendants use the patented technology to produce photographic images for virtual tours, host those images on the Internet, and/or use those images in sales and marketing activities. (Id. ¶ 35.) In particular, Plaintiff alleges that the virtual tour images that appear on the RTV website "indicate that the images are generated by the projection of a spherical image onto faces of a cube or a process equivalent thereto,
Plaintiff alleges that RTV has a "local presence" in the Eastern District of New York, and that the John Doe photographers are employee photographers of *200RTV. (Id. ¶¶ 37-41, 49-51.) Specifically, Plaintiff alleges that John Does "are photographers resident in this [d]istrict and/or working within this [d]istrict" and "employed by RTV in the business of creating images configured to be used in infringing the patent in suit and are practicing the invention which is the subject matter of the patent in suit." (Id. ¶ 3.) Plaintiff also contends that the John Doe Defendants use process steps in their photography for RTV that are covered under the claims of the '400 Patent, including "capturing images surrounding an origin point in at least two hemispheres surrounding the origin point," and "assembling the images in a digital format to create a complete spherical image surrounding the origin point." (Id. ¶ 47.)
In addition, Plaintiff alleges that Jane Does are customers of RTV and "are commercial enterprises practicing the invention in connection with their businesses located in and/or operating in this [d]istrict" and "include real estate agents advertising, using the technology of the invention, homes for sale and rent in this [d]istrict, and hotel and hospitality facilities located in this [d]istrict and advertising, using the technology of the invention, rooms available for occupancy by guest-customers." (Id. ¶ 4.)
II. Discussion
a. Standard of review
A plaintiff bears the burden of establishing that venue is proper once venue is challenged. In re ZTE (USA) Inc. ,
The Court considers the Amended Complaint, and the declarations and exhibits attached to the Amended Complaint and in support of the parties' memoranda. See, e.g. , *201TradeComet.com LLC ,
b. Plaintiff has not made a prima facie showing that venue is proper for RTV
In patent infringement actions, venue is exclusively governed by
For the reasons explained below, the Court finds that Plaintiff cannot satisfy either prong under section 1400(b) - RTV neither resides in, nor has a regular and established place of business in the Eastern District of New York.
i. Lack of residence
Venue is proper under the first prong of section 1400(b) in a judicial district where the defendant resides.
According to RTV's founder, "RTV is a Michigan corporation with its place of business at 400 E Eighth Street, Suite 2, Traverse City, Michigan 49686." (Jason LaVanture Decl. ("LaVanture Decl.") ¶ 2, Docket Entry No. 21-2.) Plaintiff does not dispute that RTV does not reside in this [d]istrict. (Am. Compl. ¶ 2 ("On information and belief, [RTV] is a Michigan business corporation.").) Plaintiff therefore cannot satisfy the residency prong of section 1400(b). Thus, Plaintiff cannot assert venue in this district under this provision of the venue statute.
ii. Plaintiff has not sufficiently alleged that RTV engaged in acts of infringement and has a regular and established place of business in this district
Although RTV does not reside in the Eastern District of New York, venue may nevertheless be proper under the second prong of section 1400(b) if Plaintiff makes a showing that RTV has committed acts of infringement and has a regular and established place of business in this district.
1. Acts of infringement
To satisfy this prong, a plaintiff must make a prima facie showing that the alleged acts of infringement occurred in the district. See W. View Research, LLC v. BMW of N. Am., LLC , No. 16-CV-2590,
With regard to RTV's general conduct, Plaintiff alleges, inter alia , that: "RTV is in the business of presenting, producing, and/or hosting 360° virtual tour content for its clients"; it "offers for sale [in the Eastern District of New York] an array of virtual tour software which uses spherical projection technology"; it provides "training to photographers located in the [d]istrict"; has a local presence via "specialized equipment located in th[e Eastern] District [of New York] and used to practice the invention" by the photographers RTV contracts with; "RTV ... implements the production of photography using its local employee-photographers"; and the images taken by the photographers that RTV contracts with to do work are "processed in a manner consistent with the practice of the invention" at times via "equipment ... [that is] shipped into this [d]istrict by Defendant RTV."
Based on these allegations, the Court finds that Plaintiff has made a prima facie showing of acts of infringement in the Eastern District of New York. See Zaxcom ,
2. Regular and established place of business
There are three requirements relevant to a determination of whether a defendant *203has a regular and established place of business in a judicial district: "(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 Cray Inc. ,
Prior to the Supreme Court's recent decision in TC Heartland , in 1990, the Federal Circuit determined that a 1988 amendment to the general venue statute incorporated the provisions of the patent venue statute into the general venue statute. See VE Holding Corp. v. Johnson Gas Appliance Co. ,
A. There is a physical place in the Eastern District of New York
Plaintiff argues that RTV has "stated that it is a local virtual tour company operating from various towns in" this district, and that the "locations used by" the John Doe photographers "are the Defendant's place of business" in the district. (Pl. Opp'n 18; see also Am. Compl. ¶ 37 ("local presence of Defendant RTV includes employee-photographers (the John Doe Defendants)").) In addition, Plaintiff argues that "RTV acknowledges that it deals directly with customers" in the district and "implements the production of photography by photographers present" in the district. (Pl. Opp'n 6.) Plaintiff also alleges that RTV admits that "the photographers have 'office space' " in the district, (id. at 7), as well as "specialized equipment" that is "used to practice the invention by the John Doe Defendants as Employee Photographers of Defendant RTV," (Am. Compl. ¶ 39). Plaintiff contends that RTV ships the equipment to the district. (Id. )
*204RTV argues that the Court should dismiss the Amended Complaint, at least as to RTV, because:
it has no physical place of business in New York ... [and] does not rent or own any property in New York. It has no full or part time employees, sales representatives or other agents who live or work in New York and does not send any of its employees, representatives, or agents to New York. It is not registered to do business in New York, has no registered agent of service in New York, no New York phone number, and no New York bank account.
(Def. Mem. 2-3; see also id. at 4.) RTV acknowledges that it "engage[s] various independent photographers for various projects," (id. at 7), but disputes that the photographers it contracts with are RTV employees,
In determining whether there is a physical place in the district, the Federal Circuit has explained that:
While the "place" need not be a "fixed physical presence in the sense of a formal office or store," Cordis ,769 F.2d at 737 , there must still be a physical, geographical location in the district from which the business of the defendant is carried out. In Cordis , for example, a defendant used its employees' homes to store its "literature, documents and products" and, in some instances, like distribution centers, storing inventory that the employees then directly took to its clients.769 F.2d at 735 . Defendant also engaged a secretarial service physically located in the district to perform certain tasks.Id.
In re Cray ,
Offices, including home offices, of employees and sales representatives, have been found to be sufficient under certain circumstances to satisfy the "place in the district" requirement. See, e.g., Zaxcom ,
*205RegenLab USA LLC v. Estar Techs. Ltd. ,
Plaintiff has made a prima facie showing of this factor. RTV's argument that it does not have a physical location in this district in part because it "does not rent or own any property in New York," (Def. Mem. 7), is not determinative. The Court in In re Cray explained that the "place" requirement is satisfied if there is a "physical, geographical location in the district from which the business of the defendant is carried out. " In re Cray ,
As set forth in the pleadings, exhibits, and affidavits, RTV's business is carried out from multiple physical places in the district. Part of RTV's business is carried out by providing professional photography services. (See LaVanture Decl. ¶ 8 ("One service provided by RTV is to help its customers obtain pictures of given locations for use in virtual tours.").) RTV's website specifies that it "maintain[s] a vast network" of "full-service providers." (Tour Software for Brokers & Agents webpage 2, annexed to Pl. Opp'n as Ex. D, Docket Entry No. 25-3.) When a customer signs up with RTV to utilize its virtual tour software, RTV connects a local virtual tour provider to the customer's account. (Id. ("[W]hen you sign up with RTV, a local professional virtual tour provider will be assigned to your account so you can order the stunning virtual tour productions as shown in our virtual tour gallery.").) Customers can order local virtual tours and professional photography services through RTV's website. (See, e.g. , Screenshot of main RTV webpage, annexed to Pl. Opp'n as Ex. E, Docket Entry No. 25-4.) Several of these virtual tour providers, which RTV describes as its "representatives," are located in this district. (See, e.g. , Bellmore NY Virtual Tour webpage, annexed to Pl. Opp'n as Ex. F, Docket Entry No. 25-5; Huntington NY Virtual Tour webpage, annexed to Pl. Opp'n as Ex. G, Docket Entry No. 25-6.) These local tour providers are carrying out RTV's business, and at least some of these tour providers appear to maintain a physical location in the district. RTV admits that it "pays for the photo services from the photographers it engages on a project-by-project basis." (LaVanture Decl. ¶ 15.)
In addition, and as noted above, offices of employees and sales representatives can satisfy the place requirement, contrary to RTV's argument that "the physical location at issue cannot be 'a place of the defendant's employee,' or a place of the defendant's independent contractor." (Def. Mem. 7 (first citing In re Cray ,
*206RTV cites Talsk Research to support its argument that "[t]he Federal Circuit's decision in [In re ] Cray leaves no room for Plaintiff to argue that the handful of non-employee, independent contractors present in this [d]istrict constitute a 'regular and established place of business' for Defendant within the meaning of § 1400(b)." Talsk Research ,
The Court finds that the use of photography providers that maintain locations within the Eastern District of New York and relied on by RTV to service its customers in the district sufficiently supports a finding that RTV carries out its business from a physical place in this district. See In re Cray ,
B. RTV has a regular and established place of business in the district
"A business may be 'regular[ ]' ... if it operates in a steady, uniform, orderly, and methodical manner. In other words, sporadic activity cannot create venue."
The facts support a finding that RTV's business is regular and established in this district. RTV's website states that it is "a recognized leader in interactive 360 panoramic virtual tours, professional photography services, and virtual tour software." (RTV Recent Virtual Tours webpage.) It "guarantees full coverage" in locations in this district. (See Bellmore NY Virtual Tour webpage; Huntington NY Virtual Tour webpage.) Because RTV guarantees full coverage in locations in this district, its contracts with photographers that reside in the district are not accidental, but by design to ensure that it can provide services to customers with regularity, and in an established manner. See RegenLab USA ,
C. The regular and established place is not the place of RTV
Plaintiff argues that "RTV has ratified the conceded office space ... as its own, by announcing the location, here in the [d]istrict, on its website, characterizing itself as a Glen Cove, New York virtual tour company." (Pl. Opp'n 17 (citations omitted); see also id. at 18 ("locations used by *207the Defendant photographers are [RTV's] place of business in this [d]istrict by ratification.").)
RTV argues that even if the photographers are RTV's employees, it is insufficient "to find venue because there is no physical place of RTV in this district." (Def. Reply Mem. in Supp. of Mot. to Dismiss ("Def. Reply") 1, Docket Entry No. 27.) RTV emphasizes that the "photographers are responsible for obtaining their own office facilities and applicable insurance" and that RTV "does not rent or own any property in New York" and "does not make payments to the photographers it engages for expenses 'including rent or mortgage payments and insurance.' " (Id. at 2 (citing LaVanture Decl. ¶¶ 4, 15).) RTV's founder states that "RTV maintains a network of independent contractor third party photography service providers around the country.... and acts as a conduit and referral service to a network of separate professional photographer service providers," and the photographers "each runs their own business wholly separate from RTV." (LaVanture Decl. ¶¶ 8-9.) RTV's founder also states that the photographers are "largely free" to provide photography services to others, and "RTV imposes no requirements on where photographers should live or maintain their business," and only requires that the photographers are "willing to go to take pictures" in certain locations. (Id. ¶¶ 17-18.) RTV further argues that its inventory "is stored only in RTV's facility in Michigan. Hardware is directly shipped from RTV's office in Michigan." (Id. ¶ 24.)
The third In re Cray requirement is that the regular and established place of business must be "a place of the defendant. " In re Cray ,
Relevant considerations include whether the defendant owns or leases the place, or exercises other attributes of possession or control over the place. One can also recognize that a small business might operate from a home; if that is a place of business of the defendant, that can be a place of business satisfying the requirement of the statute. Another consideration might be whether the defendant conditioned employment on an employee's continued residence in the district or the storing of materials at a place in the district so that they can be distributed or sold from that place. Marketing or advertisements also may be relevant, but only to the extent they indicate that the defendant itself holds out a place for its business.
As set forth supra , RTV targets customers in the district by holding itself out as servicing the district. RTV's website represents that it has "a representative" in various locations within the district, and provides RTV's main number for the purpose of securing a virtual tour with those representatives. (See, e.g. , Bellmore NY Virtual Tour webpage; Huntington NY Virtual Tour webpage.) These representations are relevant to this factor's inquiry, see In re Cray ,
Nevertheless, the Court finds that the virtual tour and photography service providers are stand-alone entities that operate separate from and not pursuant to the direction of RTV. The facts proffered by RTV weigh in favor of a finding that the offices or locations of the photographers are not the place of RTV. See, e.g., Zaxcom ,
While several of RTV's webpages arguably blur the lines between RTV and the virtual tour providers by stating that it has "representatives" in a desired location, other RTV webpages specify that the virtual tour companies, or photographers, that RTV contracts with and holds out as its "representatives," are locally owned operators that maintain some level of separation from RTV. (See, e.g. , RTV order form webpage 4, annexed to Pl. Opp'n as Ex. C, Docket Entry No. 25-2 ("Because our virtual tour providers are locally owned and operated, each offers services based on local demand and sets their own pricing."); RTV tour software webpage 2, annexed to Pl. Opp'n as Ex. D, Docket Entry No. 25-3 ("All RTV providers maintain their own local photography and virtual tour company and establish their pricing structures.").) Even on the webpages that Plaintiff cites most frequently, which webpages suggest that RTV has representatives in the Eastern District of New York, those webpages refer to the representatives as being part of a "virtual tour provider network" that RTV has "built up." (See, e.g. , Huntington NY Virtual Tour webpage.) These same pages also invite customers to click on a link to, "Learn About This Huntington NY Virtual Tour Company," (id. ), which, when considered with the other webpages specifying that such providers are locally owned, indicates a level of separation from RTV.
These webpages suggest that rather than maintaining a place in the Eastern District of New York from which it conducts its regular and established business, RTV instead maintains a large network of photography service providers that exist as entities outside the control of RTV, and suggests a level of separation formalized through a contractual agreement. See, e.g., AGIS Software Dev., LLC v. ZTE Corp. , No. 17-CV-0517,
Although RTV's actions and contacts within the district would likely be sufficient to satisfy the general venue statute, the Court is mindful that the patent venue statute is narrower. In re Cray ,
Plaintiff has therefore not met its burden to make a prima facie showing that venue is proper under section 1400(b) as to Defendant RTV.
c. Transfer is appropriate
Under
The Court transfers the claims against Defendant RTV to the Western District of Michigan, where RTV resides. Although dismissal rather than transfer is encouraged when a case is a "sure loser,"
*210Gonzalez v. Hasty ,
d. Venue as to the claims against John and Jane Does
RTV argues that according to its knowledge, the John and Jane Doe Defendants "have not ... been served or retained counsel and have not had an opportunity to address deficiencies in the complaint," but that "[n]evertheless, the claims against them in the Amended Complaint appear deficient." (Def. Mem. 18.) RTV appears to argue that Plaintiff has not sufficiently alleged claims against the John and Jane Doe Defendants - highlighting that it is unclear whether John and Jane Doe Defendants are alleged to be direct, induced, or contributory infringers. (Id. at 18-19.)
The Court declines to decide whether Plaintiff has failed to state claims against the John and Jane Doe Defendants as those individuals have not been identified or served. Plaintiff is ordered to inform the Court within thirty (30) days of this Memorandum and Order how it intends to proceed with respect to the John and Jane Doe Defendants.
In patent infringement actions, venue must be established individually as to each defendant named in the action. See, e.g., Magnacoustics, Inc. v. Resonance Tech. Co. , No. 97-1247,
Based on the allegations in the Amended Complaint, it does not appear that Plaintiff can establish venue in the Western District of Michigan for the John and Jane Doe Defendants. As discussed supra , Plaintiff alleges that the John Doe Defendants maintain residency in the Eastern District of New York. Similarly, the Jane Doe Defendants are alleged to be customers of RTV that reside in the Eastern District of New York. (See Am. Compl. ¶ 3.) In addition, Plaintiff does not allege any facts to suggest that the John or Jane Doe Defendants have a regular and established place of business in the Western District of Michigan. The Court therefore cannot transfer the action with respect to the John and Jane Doe Defendants, and can only transfer the action with respect to *211RTV.
Plaintiff must inform the Court within thirty (30) days of the date of this Memorandum and Order as to how it would like to proceed given the transfer of claims against RTV, i.e., whether Plaintiff intends to withdraw its claims against the remaining John and Jane Doe Defendants or to amend the Amended Complaint and proceed as to these Defendants.
III. Conclusion
For the foregoing reasons, the Court transfers the action with respect to Plaintiff's claims against RTV to the Western District of Michigan. The Court grants Plaintiff thirty (30) days from the date of this Memorandum and Order to inform the Court whether it wishes to proceed or withdraw its claims against John Does I-X and Jane Does XI-XX.
SO ORDERED.
The Court generally assumes the truth of the factual allegations in the Amended Complaint for the purposes of this Memorandum and Order. See Zaxcom, Inc. v. Lectrosonics, Inc. , No. 17-CV-3408,
On September 17, 2013, the United States Patent and Trademark Office issued an Ex Parte Reexamination Certificate after receiving a Reexamination Request from the International Virtual Reality Photographers Association, alleging the unpatentability of the claims in the '400 Patent. (Am. Compl. ¶¶ 25, 27.) After reexamination of the '400 Patent, the majority of the claims were found to be patentable as amended, and new claims were "added and determined" to be patentable. (Id. ¶¶ 27-29; Ex Parte Reexamination Certificate 3, annexed to Am. Compl. as Ex. B, Docket Entry No. 18-2.) The Court's reference to the '400 Patent in this Memorandum and Order is to the '400 Patent as amended by the Ex Parte Reexamination Certificate.
Because the exhibits to the Amended Complaint are not consecutively paginated, the Court refers to the page numbers assigned by the Electronic Case Filing ("ECF") system.
As set forth in the '400 Patent, the invention is summarized as follows:
The creation, processing and visualization of omnidirectional images system of the present invention, gathers two plane complementary images, preferably captured with a digital camera endowed with a fish-eye lens having a 180 degree FOV open angle. The system reforms the hemi-spherical images associated with the planar images taken by the fisheye lens, using specific laws of projections, corrects the radial and geometrical distortions as well as the color and light distortions and assembles the images into a complete spherical image, which is projected on a cube. Viewing of these images creates an impression of turning around in all the directions and of rectilinear movement in virtual space. The impression created is very similar to the human eye perception of the tri-dimensional space, and it permits continuously or a successive visualization of some three-dimensional images including specific details that a user may want to examine closer.
('400 Patent 12.)
The '400 Patent covers "[a] method for digitally rendering omni-directional images comprising of the steps of: ... assembling ... images in a digital format to create a complete spherical image ... [and] projecting the spherical image onto faces of a ... cube." (Ex Parte Reexamination Certificate 2, Claim 1.)
Plaintiff further alleges that "Defendants are in the business of producing photographic images for virtual tours," and "Defendant RTV ... provides its clients with production, content, management, hosting and content distribution services," and "services many properties at any given time throughout New York." (Am. Compl. ¶ 35.)
Because TC Heartland returned the corporate residency standard back to what it had been prior to the Federal Circuit's 1990 decision, case law prior to the Federal Circuit's decision in 1990 is still largely relevant for the purposes of analyzing whether a defendant has a "regular and established place of business" in a district. The Court therefore looks to case law prior to 1990, and after TC Heartland , to assist in its assessment of whether RTV maintains a "regular and established place of business" in this district.
Plaintiff and RTV debate at length whether the John Doe Defendant photographers are employees or independent contractors. Because the nature of RTV's relationship with the John Doe photographers is not a significant factor in the Court's decision on venue, the Court declines to decide the issue. See, e.g., RegenLab USA LLC v. Estar Techs. Ltd. ,
Although Plaintiff names Jane Doe Defendants, the arguments made as to these Defendants are sparse, and the Court similarly finds that any facts proffered regarding these Defendants are too attenuated to support a finding that the third In re Cray requirement has been met.
The Court does not make any finding as to the merits of Plaintiff's claims, and in light of the Court's conclusion that venue is improper, has not reached Defendant RTV's request to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim of willful patent infringement. See, e.g., Peerless Network, Inc. v. Blitz Telecom Consulting, LLC , No. 17-CV-1725,
While the Court finds this outcome troubling and notes that under the general venue statute and in the interest of justice, the Court would transfer the action as to all Defendants to the Western District of Michigan, the Court is compelled by the patent venue statute, section 1400(b), to only transfer the action as to RTV, because venue requirements have not been met for the John and Jane Doe Defendants in the Western District of Michigan. See, e.g., Wet Sounds, Inc. v. PowerBass USA, Inc. , No. CV-H-17-3258,
Reference
- Full Case Name
- TOUR TECHNOLOGY SOFTWARE, INC. v. RTV, INC., John Does I-X, and Jane Does XI-XX
- Cited By
- 11 cases
- Status
- Published