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BMC Software, Inc. v. Cherwell Software, LLC

United States District Court for the Eastern District of Virginia, Alexandria Division

December 21, 2017, Decided; December 21, 2017, Filed

Case No. 1:17-cv-01074

Opinion

MEMORANDUM OPINION AND ORDER

This matter comes before the Court 611 Defendant's Motion to Dismiss or, in the Alternative, to Transfer Venue (Dkt. No. 38). Also before the Court is Plaintiff's Motion to Take Venue Discovery (Dkt. No. 50). For the following reasons and for good cause shown, Plaintiff's Motion is DENIED and Defendant's Motion is GRANTED in part and DENIED in part. The Court finds that venue in the Eastern District of Virginia is improper under 28 U.S.C. § 1400(b) and the case is forthwith TRANSFERRED to the District of Colorado, pursuant to 28 U.S.C. § 1406(a), for further proceedings.

Plaintiff BMC Software, Inc. (BMC) alleges that defendant Cherwell Software, LLC (Cherwell) infringes on several information technology service management patents. BMC previously filed infringement cases against Cherwell in the Eastern District of Texas and the Northern District of Texas. Dkt. No. 39 at [*2]  3-4. In the Eastern District of Texas case, BMC sought and received venue discovery pertaining to Cherwell's contacts with both that District and the Northern District of Texas. Id. After determining that venue was improper in both Districts and those actions were accordingly dismissed, BMC commenced the instant litigation. Id at 4.

BMC is incorporated in Delaware and has its principal place of business in Texas. Compl. ¶ 1. Cherwell is incorporated in Delaware and has its headquarters and principal place of business in Colorado. Dkt. No. 39 at 2. BMC alleges that venue is proper in this district because Cherwell has a regular and established place of business in Ashburn, Virginia. Specifically, BMC alleges that Cherwell maintains and operates servers that "run its business and perform the very activities that give rise to this lawsuit." Dkt. No. 43 at 1. For this proposition, BMC cites to Cherwell's customer literature, which identifies the Ashburn server as a hot site where customer data is replicated in real time. Id. Cherwell admits that it owns servers that operate out of Ashburn, Virginia (the Ashburn servers). Id. However, those servers are held within a single rack in a data center [*3]  owned by the Zayo Group, a third party. Dkt. No. 39 at 6. Cherwell employees physically interact with the servers only once or twice per year; most maintenance is done remotely. Id. Cherwell admits that the servers are a hot site, meaning that they actively backup all information off of Cherwell's primary servers, housed in Colorado. Id. In the event of a catastrophic failure of the servers in Colorado, the Ashburn servers ensure continuity of operations. Id. The Ashburn servers have never been used for this purpose. Id.

As noted, Cherwell is headquartered in Colorado and the primary servers are located in Colorado. Cherwell's allegedly infringing products were designed and developed in Colorado. The Colorado office approves all sales, issues invoices, and receives payment.

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2017 U.S. Dist. LEXIS 227722 *

BMC SOFTWARE, INC., Plaintiff, v. CHERWELL SOFTWARE, LLC, Defendant.

Subsequent History: Motion denied by BMC Software, Inc. v. Cherwell Software, LLC, 2018 U.S. Dist. LEXIS 233964 (N.D. Tex., July 20, 2018)

CORE TERMS

servers, venue, space, discovery, regular, prong, site, infringing, rented, established place of business, headquarters, rack, hot