The Software IP Report
District Court Finds Amazon Lockers Qualify as a Regular and Established Place of Business
Introduction
Recently, in Rensselaer Polytechnic Institute et al v. Amazon.com, Inc., a district court weighed in on whether Amazon’s lockers constituted “a regular and established place of business” for the purposes of determining whether venue was proper. Amazon was sued for patent infringement in the Northern District of New York. In response, Amazon argued that venue was improper under 28 U.S.C. § 1400(b) because Amazon contended it had no regular/established place of business within the district.
In patent infringement cases, venue is proper in the district (1) “where the
defendant resides” or (2) “where the defendant has committed acts of infringement and has a regular and established place of business.” 28 U.S.C. § 1400(b).
This decision focuses on the second prong of § 1400(b) to determine whether Amazon has a regular and established place of business based on Amazon lockers located within the district. Using the three-part test established in In re Cray by the Federal Circuit, the court determined that the Amazon lockers established a regular and established place of business within the district. The three-part test sets forth that the place of business must be “(1) ‘a physical place in the district’ from which the defendant ‘actually engage[s] in business’; (2) ‘regular and established’; and (3) ‘the place of the defendant.’
Physical Place
Amazon argued that the lockers were not places of business under Cray’s first prong. More specifically, Amazon argued that the lockers are not a “physical place” – instead the lockers are merely pieces of equipment that are installed at “locations belonging to third parties.” The plaintiffs contended that the lockers are physical places because the lockers are at “established locations (with actual addresses)” and secured (with bolts) at the location for which Amazon pays rent and exercises control over the lockers.
In agreeing with the plaintiffs, the court held the lockers constitute a physical place within the meaning of Cray because, in part, the lockers are large multiple-locker units that are installed at fixed locations, Amazon pays rent for the space, and Amazon can exercise control over the various aspects of the lockers.
Place of Business
Amazon also argued that a place of business required “the presence of employees or agents of the company to carry out the business,” and, since no Amazon employees or agents conducted no business at the lockers, the lockers were not a place of business. In looking at cases cited by the plaintiff and Amazon, the court determined that the relevant question was whether Amazon has agents conducting its business at the lockers – not whether Amazon’s agents are present at all times at the lockers.
The court cited to facts showing Amazon uses third-party technicians to assemble and maintain the lockers at the locations. Furthermore, the court found that the third-party technicians serve as Amazon’s agents.
The court went on to establish that, while these technicians do not engage in Amazon’s business of package delivery, the technicians are integral to Amazon’s business operation through servicing and maintaining the lockers. Based on this conclusion, the court found that the technicians conduct business at the lockers.
Place of the Defendant
The court finally looked at whether the lockers were a place of business for Amazon. Amazon argued that the lockers are merely “objects
located at the places—the ‘buildings’ and ‘geographical locations’—of others.”
The court cited relevant factors for determining whether a place of business is Amazon’s, which include: whether [Amazon] owns or
leases the place, exercises control over it, and holds out the place as its own through advertisements or signage.
In supporting its decision that the locker’s constitute Amazon’s place of business, the court cited that Amazon owns the lockers, Amazon rents the space for the lockers, Amazon can access the lockers for installation, maintenance, and operation, Amazon can install signage at the location, and the lockers are branded with Amazon’s logo.
Conclusion
After finding Amazon’s lockers met the requirements to be “a regular and established place of business” within 28 U.S.C. § 1400(b), the court denied Amazon’s motion to transfer.