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Green Source Holdings, LLC v. Ingevity Corp.

United States District Court, W.D. Arkansas, El Dorado Division

May 6, 2019

GREEN SOURCE HOLDINGS, LLC PLAINTIFF
v.
INGEVITY CORPORATION, et al. DEFENDANTS

          ORDER

          Susan O. Hickey, Chief United States District Judge

         Before the Court is Defendants Ingevity Corporation; Ingevity Arkansas, LLC; and Ingevity South Carolina, LLC's Motion to Dismiss Plaintiff's First Amended Complaint. (ECF No. 33). Plaintiff Green Source Holdings, LLC filed a response. (ECF No. 38). Defendants filed a reply. (ECF No. 39). The Court finds that the matter is ripe for consideration.

         I. BACKGROUND

         This case involves allegations of patent infringement in violation of the United States patent laws, as codified in Title 35 of the United States Code. Plaintiff is a Texas-based research and development company that develops environmentally friendly methods of injecting natural chemicals into oil and gas formations to increase their production, as well as methods of putting these chemicals in pipelines to increase the flowability of chemicals through the pipes. Relevant to this case, Plaintiff owns nine certain patents, all of which are generally directed toward methods of utilizing a family of chemical compounds called “terpenes, ” derived from natural materials like pine trees, to extract, liquefy, and/or solubilize hydrocarbons such as coal, oil shale, tar sands, crude oil, and heavy crude oil.

         Defendant Ingevity Corporation (“Ingevity”) is a Delaware corporation, headquartered in South Carolina, and is the parent corporation of Defendants Ingevity Arkansas, LLC and Ingevity South Carolina, LLC, both of which are Delaware limited liability companies. Ingevity is a supplier of specialty chemicals and high performance activated carbon materials, whose products are used in a wide variety of applications in various industries. Defendant Ingevity Arkansas, LLC operates a plant in Crossett, Arkansas, that manufactures certain chemical products. Ingevity company internet servers are also housed at the Crossett plant.

         Plaintiff's amended complaint alleges that Defendants are infringing on its nine patents by making and selling EnvaSolv, a biodegradable solvent product that may be used in oilfield formations for enhanced oil and gas recovery and to increase flow ability by decreasing viscosity. Specifically, Plaintiff alleges that Defendants make, sell, and ship EnvaSolv at the Crossett plant and that Defendants have sold EnvaSolv to customers in Arkansas, including to the company Anchor USA, which is allegedly located in Fayetteville, Arkansas.

         On February 1, 2019, Defendants filed the instant motion, contending that this case should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(3) for improper venue, or alternatively, pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted. Plaintiff opposes the motion.

         II. DISCUSSION

         Defendants move for dismissal based on improper venue and for failure to state a claim upon which relief may be granted. The Court will first address Defendants' Rule 12(b)(3) arguments and, if necessary, the Court will then take up Defendants' Rule 12(b)(6) arguments.

         A. Venue

         Defendants argue that Plaintiff's allegations fail to establish that venue is proper in the Western District of Arkansas and, thus, the Court should dismiss this case. Plaintiff disagrees, contending that its allegations establish proper venue. Plaintiff alternatively argues that the Court should permit the parties to conduct venue discovery and, failing that, Plaintiff asks that the Court transfer this case to the District of South Carolina. The Court will first address the parties' arguments regarding whether venue is proper in the Western District of Arkansas. If necessary, the Court will then address Plaintiff's alternative arguments regarding venue discovery and transferring this case to another judicial district.

         1. Venue Allegations

         Venue is “the place where the power to adjudicate is to be exercised, the place where the suit may be or should be heard.” Farmers Elevator Mut. Ins. Co. v. Carl J. Austad & Sons, Inc., 343 F.2d 7, 11 (8th Cir. 1965). “Venue requirements exist for the benefit of defendants.” Richards v. Aramark Servs., Inc., 108 F.3d 925, 928 (8th Cir. 1997). “One of the central purposes of statutory venue is to ensure that a defendant is not haled into a remote district, having no real relationship to the dispute.” Id. (internal quotation marks and citations omitted).

         A party may move to dismiss an action that is not filed in the proper venue. Fed.R.Civ.P. 12(b)(3). When reviewing a motion to dismiss for improper venue under Federal Rule of Civil Procedure 12(b)(3), courts apply the same standard used for other motions to dismiss. Twin Lakes Sales, LLC v. Hunter's Specialties, Inc., 2005 WL 1593361, at *1 (D. Minn. July 6, 2005); see also Kranos IP Corp. v. Riddell, Inc., No. 2:17-CV-443-JRG, 2017 WL 3704762, at *2 (E.D. Tex. Aug. 28, 2017) (conducting venue analysis in a patent infringement case). In a patent context, when venue is challenged, the plaintiff bears the burden of demonstrating that venue is proper in the chosen judicial district. In re ZTE (USA) Inc., 890 F.3d 1008, 1013 (Fed. Cir. 2018). “With respect to the well-pleaded facts in a plaintiff's complaint, in the 12(b)(3) context, the majority of circuit courts . . . accept these facts as true . . . to the extent that such facts are uncontroverted by [the] defendant's affidavit.” Kranos, WL 3704762, at *2. If a defendant submits affidavits or other evidence contradicting specific venue allegations in a plaintiff's complaint, the court is no longer required to ...


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