Today Chief Judge Connolly addressed a motion to dismiss a combined trade dress, federal unfair competition, copyright infringement, and design patent infringement action.
The parties apparently agreed that the defendant in the action did not meet the TC Heartland venue test for the patent portion of the action:
Argento is a New York corporation with its principal place of business in New York. . . . It is undisputed that Argento does not own, rent, or maintain any offices, physical property, addresses, or bank accounts in Delaware and does not employ any Delaware-based employees, agents, or representatives. It is also undisputed that venue of Globefill's patent claim against Argento does not lie …
We didn't post about this Judge Connolly opinion when it came out back in October, but on revisiting it, I thought it was worth noting.
In deciding a transfer motion, Judge Connolly suggested in a footnote that, for Delaware LLCs, venue may not be proper in Delaware unless the individual members of the LLC are citizens of Delaware (which often may not be the case):
It's not clear to me that a Delaware LLC "resides" in Delaware for purposes of § 1400(b). Although residency is not synonymous with citizenship, the terms are related; and an LLC's citizenship for purposes of deciding whether diversity jurisdiction exists "is determined by the citizenship of each of its members," Zambelli Fireworks Mfg. Co., Inc. v. Wood, 592 F.3d 412,418 (3d Cir. 2010). In this case, I am unable to determine Den-Mat's state of citizenship because it has not expressly identified the persons and/or corporations who are its members.
The Court held that the analysis proceeds up the chain of ownership to include everyone with an interest in the LLC—so it sounds like simply being a subsidiary of a Delaware corporation may not be sufficient:
Den-Mat certified in its Rule 7.1 disclosure statement that its "parent company" is an LLC. . . . It seems likely to me that the parent LLC is Den-Mat's sole member, but I can't be sure of that. In any event, Den-Mat did not identify the members of its parent LLC, and to determine the citizenship of an LLC, courts proceed up the chain of ownership until they determine the identity and citizenship of every individual and corporation with a direct or indirect interest in the LLC . . . .
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