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Case 6:11-cv-00234-LED-JDL Document 198

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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS TYLER DIVISION INNOVATIVE AUTOMATION, LLC Plaintiff, v.

CIVIL ACTION NO. 6:11-CV-234

JURY TRIAL DEMANDED

AUDIO VIDEO AND VIDEO LABS, INC., et al., Defendants

REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE Before the Court is Defendant U.S. Digital Medias (U.S. Digital) Motion to Dismiss Pursuant to Rules 12(b)(2) and 12(b)(3) And, In The Alternative, Motion to Transfer Venue Pursuant to 28 U.S.C. 1406(a) (Doc. Nos. 52 & 98) (MOTION). Plaintiff Innovative

Automation (Innovative) filed a response (Doc. Nos. 69 & 113) (RESPONSE) to which U.S. Digital responded (Doc. Nos. 73 & 98) (REPLY). Counsel for both parties were heard at a December 7, 2011 hearing. On April 3, 2012, the Court ordered Innovative to conduct

jurisdictional discovery as it pertained to proper venue. Innovative filed a supplemental brief (Doc. No. 194) (SUPP. BRIEF) to which U.S. Digital responded (Doc. No. 197) (SUPP. RESPONSE). For the reasons set forth below, the Court RECOMMENDS that U.S. Digitals

Motion (Doc. No. 98) be DENIED. BACKGROUND On May 10, 2011 Innovative filed this action for infringement of U.S Patent No. 7,174,362 (the 362 patent) against fourteen geographically dispersed defendants including

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U.S. Digital. See (Doc. No. 1). 1 The 362 patent generally relates to a computer-implemented system and method for duplicating data. U.S. Digital is an Arizona Corporation with its
OF

principal place of business in Phoenix, Arizona. See (Doc. No. 95 10; DECLARATION ANTHONY CHRISTOPHER PIGNOTTI
IN

SUPPORT

OF

MOTION (Doc. No. 52-35) (FIRST PIGNOTTI

DECL.) at 2. In its original Motion, Innovative argued only that the Court has general jurisdiction over U.S. Digital. However, in its Supplemental Brief, Innovative argues that U.S. Digital is subject to specific jurisdiction because it performs CD and DVD duplication jobs for residents of Texas. SUPP. BRIEF at 2. U.S. Digital argues that it is not subject to jurisdiction in Texas because it is not registered to do business in Texas, has no contracts with entities in Texas, owns no property in Texas, and all of its 51 employees live and work in and around Maricopa County, Arizona. MOTION at 8 (citing FIRST PIGNOTTI DECL. at 2, 35-37. Further, U.S. Digital argues it operates websites at http://www.cdrom2go.com and http://www.usdigitalmedia.com which are a passive form of advertising for disc duplication services. Id. (citing FIRST PIGNOTTI DECL. at 39). U.S. Digital further argues that it has only minimal sales in Texas since the patent was assigned to Plaintiff. Id. at 8-9 (citing FIRST PIGNOTTI DECL. at 40-41). Lastly, U.S. Digital argues that because it is not subject to personal jurisdiction in Texas, this Court should either dismiss U.S. Digital or transfer it to the District of Arizona pursuant to 28 U.S.C 1406(a). Id. at 13-15. Innovative presents evidence that U.S. Digitals website, cdrom2go.com, includes targeted advertisements directed towards Dallas, Houston, and Austin. RESPONSE at 3-4 (citing
1

U.S. Digital filed a motion to dismiss for failure to state a claim and for improper venue based on the original complaint. (Doc. No. 52). Innovative subsequently filed an amended complaint on October 11, 2011. See (Doc. No. 95). In response to the amended complaint, U.S. Digital reurged its motion to dismiss for failure to state a claim and for improper venue based on the amended complaint. (Doc. No. 98). On February 29, 2012, the Court denied Doc. No. 52 as moot. (Doc. No. 187). Because the Response and the Reply incorporate by reference the response and reply from the previous motion, the Court cites to evidence presented in both, where applicable.

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Exs. 1-3, 7 to DECLARATION OF TODD KENNEDY (Doc. No. 69-1) (KENNEDY DECL.) (Doc. Nos. 69-2, 69-3, 69-4, & 69-8). In addition to the targeted advertisements, Innovative argues that cdrom2go.com is highly interactive and that U.S. Digital has significant sales to residents of Texas. RESPONSE at 5. U.S. Digital counters that cdrom2go.coms pages directed to Texas residents are three pages deep in the hierarchy of the webpage and are 3 of 26 similar pages targeting various other forums. REPLY at 2-5. LEGAL STANDARD In a patent case, personal jurisdiction intimately relates to patent law and Federal Circuit law governs. Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d 1194, 1201 (Fed. Cir. 2003). Determining whether personal jurisdiction over a nonresident is proper requires a two part inquiry: (1) whether a forum states long-arm statute permits service of process, and (2) whether the assertion of jurisdiction would be inconsistent with due process. Electronics For Imaging, Inc. v. Coyle, 340 F.3d 1344, 1249 (Fed. Cir. 2003). Because [t]he Texas long-arm statute reaches as far as the federal constitutional requirements of due process will allow, the sole inquiry is whether the exercise of personal jurisdiction comports with federal constitutional due process requirements. Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 806 (Tex. 2002) (quoting Guardian Royal Exch. Assurance, Ltd v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex. 1991)); Centre One v. Vonage Holding Corp., No. 6:08-cv-467, 2009 WL 2461003, at *1-2 (E.D. Tex. Aug. 10, 1998). Due process requires an out-of-state defendant to have minimum contacts with the forum such that maintaining the suit does not offend traditional notions of fair play and substantial justice. Intl Shoe Co. v. Washington, 326 U.S. 310, 316 (1945); Akro Corp. v. Luker, 45 F.3d 1541, 1544-45 (Fed. Cir. 1995) (applying International Shoe).

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The minimum contacts requirement may be met by showing either general or specific jurisdiction over a defendant. To be subject to general jurisdiction, a defendant business entity must maintain continuous and systematic general business contacts with the forum, even when the cause of action has no relation to those contacts. Synthes (U.S.A.) v. G.M. Dos Reis Jr. Ind. Com de Equip. Medico, 563 F.3d 1285, 1297 (Fed. Cir. 2009) (quoting Helicopteros Nacionales de Columbia v. Hall, 466 U.S. 408, 416 (1984)). Neither the United States Supreme Court nor [the Federal Circuit] has outlined a specific test to follow when analyzing whether a defendants activities within a [forum] are continuous and systematic. LSI Indus. Inc. v. Hubbel Lighting, Inc., 232 F.3d 1369, 1375 (Fed. Cir. 2000). The Court may also exercise specific jurisdiction over a defendant if (1) the defendant purposefully directs activities at residents of the forum, (2) the claim arises out of or relates to the defendants activities with the forum, and (3) assertion of personal jurisdiction is reasonable and fair. Synthes (U.S.A.), 563 F.3d at 1297 (citations omitted). Under this test, a court may properly assert specific jurisdiction, even if the contacts are isolated and sporadic, so long as the cause of action arises out of or relates to those contacts. Id. (citing Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d 1194, 1200 (Fed. Cir. 2000); see also Centre One, 2009 WL 2461003, at *2. Once these conditions are satisfied, the court must then determine whether the assertion of jurisdiction would comport with fair play and substantial justice. Campbell Pet Co. v. Miale, 542 F.3d 879, 885 (Fed. Cir. 2008). To survive a motion to dismiss in the absence of an evidentiary hearing, a plaintiff need only make a prima facie showing of jurisdiction. Deprenyl Animal Health, Inc. v. Univ. of Toronto Innovations Found., 297 F.3d 1343, 1347 (Fed. Cir. 2002); see also Brown v. Flowers Indus., Inc., 688 F.2d 328, 332 (5th Cir. 1982) (citing Marine Midland Bank, N.A. v. Miller, 664

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F.2d 899, 904 (2d Cir. 1981)); cf. Pieczenik v. Dyax Corp., 265 F.3d 1329, 1334 (Fed. Cir. 2001) (applying a preponderance of the evidence standard where the parties conducted discovery related to the jurisdictional issues and advised the district court that no evidentiary hearing was necessary with respect to the issue of personal jurisdiction because the jurisdictional facts were undisputed). Moreover, [w]hen a motion to dismiss for lack of jurisdiction is decided on the basis of affidavits and other written materials, the plaintiff need only make a prima facie showing, and that [I]f the parties present conflicting affidavits, all factual disputes are resolved in the plaintiffs favor . . . . Deprenyl Animal Health, Inc., 297 F.3d at 1347 (quoting Behagen v. Amateur Basketball Assn of the United States, 744 F.2d 731, 733 (10th Cir. 1984)); id. (noting that Federal Circuit law accords with Behagen). DISCUSSION I. Personal Jurisdiction A. U.S. Digital Purposefully Directs its Activities at Residents of Texas Where a defendant does not have a physical presence in the forum, courts look to a number of factors to determine whether the defendant purposefully directs activities at residents of the forum state. Courts look to the nature of the defendants website, if applicable, and whether the defendant perform[s] additional acts to purposefully avail themselves of the forum state, such as advertising, conducting business transactions with residents of the forum state, and soliciting funds from residents in the forum state . . . . Autobytel, Inc. v. Insweb Corp., No. 2:07-CV-524, 2009 WL 901482, at *2 (E.D. Tex. Mar. 31, 2009). As will be shown below,

U.S. Digital purposefully directs its activities at Texas residents by offering services through an interactive website, cdrom2go.com, by specifically targeting Texas residents, and by conducting a substantial number of business transactions with Texas residents.

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i. U.S. Digitals Website U.S. Digital sells CD, DVD, and Blu-ray disc duplication systems and offers disc duplication services through its website cdrom2go.com. See, e.g., PIGNOTTI DECL. at 39. The Federal Circuit has not provided clear guidelines to determine whether sufficient minimum contacts are established via a website. AdvanceMe, Inc. v. Rapidpay LLC, 450 F. Supp. 2d 669, 673 (E.D. Tex. 2006) (citing Litmer v. PDQUSA.com, 326 F. Supp. 2d 952 (N.D. Ind. 2004)). When determining whether sufficient minimum contacts are established via a website, many courts, including those in the Eastern District of Texas, have utilized the criteria set forth in Zippo Manufacturing Co. v. Zippo Dot Com, Inc. 952 F. Supp. 1119 (W.D. Pa. 1997). Using the sliding-scale test set forth in Zippo, a passive website that merely posts information is not sufficient to establish personal jurisdiction. 952 F. Supp. at 1124; AdvanceMe, 450 F. Supp. 2d at 673 (citing Revell v. Lidov, 317 F.3d 467, 470 (5th Cir. 2002)). At the other end of the spectrum, minimum contacts with the forum are likely sufficient if a website has repeated online contacts with the forum state. AdvanceMe, 450 F. Supp. 2d at 673 (citing Revell v. Lidov, 317 F.3d 467, 470 (5th Cir. 2002)). The types of websites that fall within these two poles have some interactive elements and allow for bilateral information exchange. Id. To determine whether these intermediate websites have sufficient minimum contacts with the forum, courts must analyze the interactivity and nature of the forum contacts. Id. I The cdrom2go.com website includes a high degree of interactivity.

U.S. Digital argues that the website provides only two methods for potential customers worldwide to contact U.S. Digital in Arizona for a quote for its accused duplication services or for more informationtelephone or email. REPLY at 2 (citing Ex. 11 to DECLARATION CHRISTOPHER PIGNOTTI
IN OF

SUPPORT

OF

REPLY (Doc. No. 73-4) (SECOND PIGNOTTI DECL.)

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(Doc. No. 73-15)); se e also SUPP. RESPONSE at 2. U.S. Digitals representations are, at best, disingenuous. Exhibit 11 to the Second Pignotti Declaration shows a screenshot from a

cdrom2go.com page Disc Service Quote Request where it instructs the user to complete an online form including the users name, address, phone number, email address. Id. The user then clicks the Submit NOW button, which presumably transfers the form to U.S. Digital. Id. The website with the interactive form also has an icon labeled Have Questions? Chat for Answers and includes a red button with the word help written on it. Id. This is far more than passive advertising as argued by U.S. Digital. In addition to the above mentioned form, cdrom2go.com also permits customers to locate the products they would like to purchase and then click an Add 2 Cart button next to those products. EX. 12 to KENNEDY DECL. (Doc. No. 69-13). Customers are then prompted to input their zip code to calculate the shipping rate to their location before entering their shipping and payment information to complete the transaction. EX. 13 to KENNEDY DECL. (Doc. No. 69-14). Customers may also use the websites my account feature to review information regarding U.S. Digital quotes for duplication services. EX. 11 to KENNEDY DECL. (Doc. No. 69-12).

Lastly, Customers may upload artwork that they would like to be printed on the duplicated media. EX. 15 to KENNEDY DECL. Customers complete an interactive form on cdrom2go.com before clicking the Proceed to Upload button, which enables them to upload artwork to U.S. Digital. Id. Thus, the Court fninds that cdrom2go.com is a highly interactive website and supports a finding that U.S. Digital purposefully directs its activities at residents of Texas. ii. U.S. Digitals Other Activities

In addition to being highly interactive, cdrom2go.com also specifically targets residents of Houston, Dallas, and Austin. In its Motion, U.S. Digital includes sworn testimony from

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Christopher Pignotti, the President and CEO of U.S. Digital that cdrom2go.com does not target residents of Texas. FIRST PIGNOTTI DECL. at 39. Specifically, Mr. Pignotti states U.S. Digital Media does not direct any advertising to Texas. Any advertising through U.S. Digital Medias websites located at http://www.digitalmedia.com and http://www.cdrom2go.com are directed to all worldwide users of the Internet. Id. Innovative, however, includes screenshots of

cdrom2go.com showing targeted advertising directed towards Texas residents including residents of Houston, Austin, and Dallas. RESPONSE at 3-4; EX. 1-3 to KENNEDY DECL. For example, the website includes a bold header announcing CD/DVD Duplication in Dallas, TX. See Ex. 2. to KENNEDY DECL. The website goes on to state From big cities to big business, everything really is bigger in Texas. Fortunately CDROM2GO is equipped to handle CD and DVD duplication jobs of every size! Though our production facility is located in Phoenix, we offer express shipping to Dallas. Id.2 Thus, U.S. Digitals assertion that it does not target Texas residents is, at best, disingenuous. U.S. Digital argues that this should be given little weight because the sections of the websites targeting Texas are simply three of 26 links at the bottom of the duplication services page corresponding to major U.S. cities. REPLY at 2. However, U.S. Digitals advertisements towards other U.S. cities does not discount the subpages of the cdrom2go.com website specifically targeting users in Houston, Austin, and Dallas which are indicative of a clear intent to target Texas residents.

U.S. Digital also has advertisements directed at residents of Houston and Austin. Ex. 1 to KENNEDY DECL. (For CD and DVD duplication thats out of this world, the Space City depends on the professional at CDROM2GO. Houston, we have a solution. Even though our production facility is located in Phoenix, we offer express shipping to Houston.); EX. 3. to KENNEDY DECL. (When the Live Music Capital of the World speaks, CDROM2GO listens! We feature a variety of complete CD and DVD duplication packages for musicians and audio professionals alike. Even though our production facility is located in Phoenix, we offer express shipping to Austin).

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Moreover, U.S. Digital has purposefully availed itself to Texas by conducting business transactions with the residents of Texas and soliciting funds from Texas. See Autobyel, Inc., 2009 WL 901482, at *2. U.S. Digital has performed 371 duplication jobs for Texas residents, including 25 for residents of the Eastern District of Texas, totaling more than 100,000 duplicated discs valued at over $150,000. See (Doc. No. 194-3).3 Furthermore, from January 1, 2007 to July 31, 2011, U.S. Digital has sold $2,935,052.18 worth of goods and services to Texas entities, representing 5.91% of U.S. Digitals total sales of approximately $49,627,196.12 PIGNOTTI DECL. at 18. In sum, the highly interactive website and substantial sales to Texas residents amount to a prima facie showing that U.S. Digital has purposefully directed its allegedly infringing activities to Texas residents. See, e.g., Autobytel, 2009 WL 901482, at *3 (finding defendant purposefully directed its activities toward the forum state due to revenue generated from Texas residents and availability of customer service number on defendants highly interactive, transaction-oriented website); Red Hat v. Bedrock Computer Techs., LLC, No. 6:09-CV-549, 2011 U.S. Dist. LEXIS 82997 (E.D. Tex. Mar. 2, 2011) (finding specific jurisdiction where defendant made its website available to Texas residents and derived 6% of its revenue from Texas customers). B. Innovatives Infringement Claim Relates to U.S. Digitals Activities in Texas The next inquiry asks whether Innovatives infringement claims against U.S. Digital arise out of or relate to the activities U.S. Digital purposefully directed at residents of Texas. Innovative accuses U.S. Digital of infringing the 362 patent by using the claimed method of
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SECOND

U.S. Digitals arguments that this amounts to a small fraction of total U.S. sales is unavailing. See SUPP. RESPONSE at 2. Although a small fraction of sales may be insufficient to show general jurisdiction, a plaintiff may also show specific jurisdiction even if defendants contacts are sporadic provided that the three prongs are met. See Synthes (U.S.A.), 563 F.3d at 1297 (citing Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d 1194, 1200 (Fed. Cir. 2003) (a court may properly assert specific jurisdiction, even if the contacts are isolated and sporadic, so long as the cause of action arises out of or relates to those contacts).

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duplicating digital data while performing U.S. Digital Medias digital duplication services such as its CD, DVD, and Blu-Ray Disc duplication services. (Doc. No. 95) at 29. As explained above, U.S. Digital specifically targets residents of Austin, Dallas, and Houston for rapid disc duplication services via the website cdrom2go.com. Moreover, U.S. Digital has completed a substantial number of disc duplication projects for Texas residents, including residents of the Eastern District of Texas. Thus, Innovatives infringement claims arise out U.S. Digitals

purposeful contacts with Texas. U.S. Digital argues that the disc duplication projects cited by Innovative were not performed in a manner that infringes the 362 patent and, as a result, its activities with Texas are unrelated to Innovatives claim. SUPP. RESPONSE at 3-4. Specifically, U.S. Digital argues that it did not use any devices named in Innovatives infringement contentions served under Local Patent Rule 3-1. Id. First, the Federal Circuit has recognized the constitutional catch-phrase [arise out of or relate to] is disjunctive in nature, indicating added flexibility and signal[ling] a relaxation of the applicable standard from a pure arise out of standard. Akro Corp. v. Luker, 45 F.3d 1541, 1547 (Fed. Cir. 1995) (quoting Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 206 (1st Cir. 1994)) (alterations in original). Thus, Innovatives claims need not strictly arise out of the identified duplication services, i.e., those performed for Texas residents, but may merely relate to those services. Second, the proper focus of the jurisdictional analysis is on the complaint, not Innovatives infringement contentions. U.S. Digitals interpretation would make personal

jurisdiction a moving target to be dictated by external factors irrespective of a defendants contacts with the forum state. The Local Patent Rules are flexible by design and were not intended as a method for defeating jurisdiction. See, e.g., P.R. 1-2 (The Court may accelerate,

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extend, eliminate, or modify the obligations set forth in these Patent Rules based on the complexity of the case or the number of patents, claims, products, or parties involved). For example, with regards to infringement contentions, the Local Rules permit a plaintiff to serve amended infringement contentions without leave of Court within 30 days of the Courts Claim Construction Rulingwhich, in this case, is not scheduled until February 2013. See P.R. 36(a)(1). Thus, the Court finds U.S. Digitals disc duplication services offered for sale to and performed for Texas residentswhether performed using a product identified in Innovatives infringement contentions or not---relate to Innovatives infringement allegations. See (Doc. No. 95) at 29. C. Fair Play and Substantial Justice If the plaintiff successfully makes a prima facie showing of minimum contacts, the burden shifts to the defendant to show that traditional notions of fair play and substantial justice would be violated by the exercise of jurisdiction. See Campbell Pet Co., 542 F.3d at 885. When a defendant seeks to rely on the fair play and substantial justice factor to avoid the exercise of jurisdiction by a court that otherwise would have personal jurisdiction over the defendant, he must present a compelling case that the presence of some other considerations would render jurisdiction under reasonable. Id. (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985)). The inquiry under this test includes a balancing of (1) the burden on the defendant; (2) the interests of the forum state; (3) the plaintiffs interest in obtaining relief; (4) the interstate judicial systems interest in obtaining the most efficient resolution of controversies; and (5) the interest of the states in furthering their social policies. Viam Corp. v. Iowa Export-

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Import Trading Co., 84 F.3d 424, 429 (Fed. Cir. 1996) (citing World Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980)). Applying these factors, the Court finds that U.S. Digital has not met its burden of showing that exercising jurisdiction over it would offend traditional notions of fair play and substantial justice. U.S. Digital argues that it would be unfairly burdened because U.S. Digital employees do no travel to Texas to conduct U.S. Digital business. MOTION at 12-13. However, as explained above, Innovative has made a prima facie showing that U.S. Digital has minimum contacts with Texas because of its interactive website targeting Texas residence and its substantial sales to Texas residents. Further, [b]ecause modern transportation and

communications have made it much less burdensome for a party sued to defend [itself] outside its home state, defending this suit in [the forum state] is not prohibitively burdensome. Patent Rights Protection Group, LLC v. Video Gaming Tech., 603 F.3d 1364, 1370 (Fed. Cir. 2010) (quoting Burger King Corp., 471 U.S. at 474); ReedHycalog UK Ltd. v. United Diamond Drilling Services, No. 6:07-cv-251, 2009 WL 2834274, at *7 (E.D. Tex. Aug, 31, 2009) (citing World-Wide Volkswagen Corp., 444 U.S. at 294) ([i]t is well recognized that modern communication and transportation have made defending a law suit in a foreign tribunal less burdensome). The State of Texas also has a significant interest in preventing patent infringement within its borders. Id. Texas also has an interest in furthering commerce and scientific development, especially within its technology sector, which is promoted by patent laws. Id. The Court concludes that this is not the rare case wherein plaintiffs interest and the states interest in adjudicating the dispute in the forum are so attenuated that they are clearly outweighed by the burden of subjecting the defendant to litigation within the forum. Id. (quoting Beverly Hills Fan

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Corp. v. Royal Sovereign Corp., 21 F.3d 1558, 1568 (Fed. Cir. 1994)); see also Akro, 45 F.3d at 1549. D. Improper Venue U.S. Digital also moves for dismissal based on improper venue. See MOTION at 12-14. Venue is proper in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business. 28 U.S.C. 1400(b). A corporate defendant like U.S. Digital reside[s] in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced. See 28 U.S.C. 1391(c); VE Holdings Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1584 (Fed. Cir. 1990). As a result, the venue analysis is similar to the personal jurisdiction analysis; however, the relevant contacts are limited to those in the Eastern District of Texas. See 28 U.S.C. 1391(c) (In a State which has more than one judicial district and in which a defendant that is a corporation is subject to personal jurisdiction at the time an action is commenced, such corporation shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate State); VE Holdings Corp., 917 F.2d 1583-84 (holding that the patent venue statute should be read consistently with Section 1391(c)); Avery Dennison Corp. v. Alien Technology Corp. 632 F. Supp. 2d 700, 712-13 (N.D. Ohio 2008) (finding that a plaintiff must show contacts with the district in which suit was filed). Lastly, [w]hen a defendant objects to venue, the burden shifts to the plaintiff to establish that the district he chose is a proper venue. If there is no evidentiary hearing, a plaintiff may carry its burden by presenting facts, taken as true that establish venue. Mass Engg, Inc. v. 9X Media, Inc., 2-09-CV-358, 2010 WL 2991018, at *1 (E.D. Tex. July 28, 2010) (citing ATEN Intern. Co. Ltd v. Emine Tech. Co., Ltd., 261 F.R.D. 112, 120 (E.D. Tex. 2009)).

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As discussed above, U.S. Digital operates a highly interactive website that targets residents of Texas and has performed disc duplication services identified in Innovatives complaint for at least some residents of the Eastern District of Texas. See Synthes (U.S.A.), 563 at 1297 (quoting Burger King, 471 U.S. at 475 n.18) (noting that a substantial connection with a forum arising out of a single act can support jurisdiction.). Moreover, in arguing that it resides in the District of Arizona, U.S. Digital appears to focus on its physical location in Arizona. See MOTION at 14 (There is no question that Defendant U.S. Digital Media resides and operates its small business in Phoenix, Arizona). However, for the purposes of Section 1400(b), a corporation resides in any district in which it is subject to personal jurisdiction. Thus, because U.S. Digital is subject to jurisdiction in the Eastern District of Texas, venue is proper and the Court RECOMMENDS that U.S. Digitals motion be DENIED. CONCLUSION For the reasons set forth above, the Court RECOMMENDS that U.S. Digitals Motion be DENIED. Within fourteen (14) days after receipt of the magistrate judges report, any party may serve and file written objections to the findings and recommendations contained in this report. A partys failure to file written objections to the findings, conclusions and

recommendations contained in this Report within fourteen days after being served with a copy shall bar that party from de novo review by the district judge of those findings, conclusions and . recommendations and, except on grounds of plain error, from appellate review of unobjected-to factual findings and legal conclusions accepted and adopted by the district court. Douglass v. United States Auto. Assn, 79 F.3d 11415. 1430 (5th Cir. 1996) (en banc). So ORDERED and SIGNED this 30th day of May, 2012.

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___________________________________ JOHN D. LOVE UNITED STATES MAGISTRATE JUDGE

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