apartment on three occasions. Brody Dep. at 18-19, 402. When asked about his activities in New York after a night he may have stayed at the Tura apartment, however, Brody responded that he could not recall the purpose of his trip. Brody Dep. at 403. Because plaintiffs have adduced no evidence linking Brody's stays at the Tura apartment to any business discussion or activity, Brody's use of the apartment is insufficient to provide a basis for venue.
Perhaps the strongest evidence indicating that Brody committed acts of infringement in the Eastern District is Daly's testimony that Brody participated in two to six discussions regarding the Beta patents, and that a majority of these discussions took place at the Tura facility in this district. Daly, however, could recall only that Brody participated in these conferences either in person or by telephone. Tr. 1234-1235. When questioned about the subject matter of these discussions, Daly stated only that he was "brought up-to-date on the status of the case and the fact that there were some patents." Tr. 1233:25 - 1234:3. Daly was not asked whether any decisions regarding the Beta patents were made during these discussions, or whether Brody said or did anything during these discussions which may have induced Tura's infringement of the patents.
Inducement to infringe occurs when one actively and knowingly aids or abets another's infringement. See Water Technologies Corp. v. Calco, Ltd., 850 F.2d 660, 668 (Fed. Cir.) cert. denied, 488 U.S. 968, 102 L. Ed. 2d 534, 109 S. Ct. 498 (1988); Symbol Technologies, Inc. v. Metrologic Instruments, Inc., 771 F. Supp. 1390, 1404 (D.N.J. 1991). While planning or directing infringing acts committed in a district may suffice to render venue there proper, see Kierulff Assoc. v. Luria Bros. & Co., Inc., 240 F. Supp. 640 (S.D.N.Y. 1965), Brody's mere participation in discussions about the status of this case or the existence of the Beta patents does not constitute active inducement to infringe. Without more specific evidence regarding the subject matter of the discussions in which Brody took part and Brody's contribution to those discussions, this Court cannot conclude that Brody aided or abetted Tura's infringement of the Beta patents during the conversations described by Daly.
When considered in its totality, the evidence relied upon by plaintiffs simply does not support an inference that Brody's inducing conduct must have taken place while Brody was in the Eastern District of New York. As noted above, Daly testified merely that Brody was present either by telephone or in person in this district for a "majority" of the two to six discussions regarding the Beta patents in which he participated. Moreover, Brody does not make frequent business trips to New York. In his affidavit, Brody states that he spends no more than ten days per year in New York, including the time he devotes to performing activities for Tura and for all other business and social purposes. Brody Aff., P 4. Similarly, at his deposition, Brody testified that he devotes less than 100 hours per year to business on behalf of Tura and that he makes between six and seven business trips per year to New York. Brody Dep. at 14-15. Given how infrequently Brody travels to New York, there is no reason to infer that he must have, or even that he probably, committed acts of inducement while he was in this district.
For these reasons, plaintiffs have failed to establish that Brody committed any acts of infringement in this district. Accordingly, the question of whether Brody has a regular and established place of business in this district need not be reached.
As an alternative basis for venue, plaintiffs argue that Tura's residence and its infringing activities in the Eastern District of New York should be imputed to Brody because Brody's dominance of Tura renders him its alter ego. See Pl.'s Mem. of Law in Opp'n Mot. to Dismiss at 15-20; Letter from Edgar Haug to the Court dated 12/16/94 at 7; Letter from Edgar Haug to the Court dated 1/16/95 at n.1. Under limited circumstances, it may be appropriate to pierce the corporate veil to establish venue in a patent action. See Variable-Parameter Fixture Dev. Corp. v. Morpheus Lights Inc., 832 F. Supp. 643, 28 U.S.P.Q.2D (BNA) 1239 (S.D.N.Y. 1993) (citing Minnesota Mining & Manufacturing Co. v. Eco Chem, Inc., 757 F.2d 1256, 1265 (Fed. Cir. 1985)); Kinetic Instruments, Inc. v. Lares, 802 F. Supp. 976, 987 (S.D.N.Y. 1992). New York courts, however, "are reluctant to disregard the corporate entity." William Wrigley Jr. Co. v. Waters, 890 F.2d 594, 600 (2d Cir. 1989). A court should pierce the corporate veil and find a corporation's principal to be its alter ego only upon a showing that the corporate form has been used to commit a fraud, or "when it can be demonstrated that . . . the corporation has been so dominated by an individual . . . and its separate identity so disregarded, that it primarily transacted the dominator's business rather than its own." Id. (citing Gartner v. Snyder, 607 F.2d 582, 586 (2d Cir. 1979)). Plaintiffs point to no evidence which demonstrates either that Brody used the corporate form to perpetrate a fraud, or that Tura's corporate identity was disregarded and that it was primarily transacting Brody's business rather than its own.
Moreover, plaintiffs' reliance on Variable-Parameter Fixture Dev. Corp. and Kinetic Instruments, Inc. to support their assertion that Brody's dominance of Tura makes it his alter-ego is misplaced. In both cases, the courts held that "piercing the corporate veil" may be warranted as a matter of equity because the corporation in issue was controlled by an individual defendant who siphoned corporate funds to prevent plaintiffs from collecting any judgment they obtained against the corporation. See Variable-Parameter, 28 U.S.P.Q.2D (BNA) at 1240 (concluding that plaintiff established a prima facie case of alter ego by alleging that the corporate defendant's sole shareholder withdrew corporate funds which would have been available to satisfy a judgment after the litigation commenced); Kinetic Instruments, 802 F. Supp. at 986 (concluding that plaintiff established a prima facie case of alter ego by alleging that the dominant shareholder in the corporation advised plaintiff that he had taken steps to render the corporation unable to pay a judgment, and that piercing the corporate veil was therefore warranted to prevent fraud and injustice).
Plaintiffs here have failed to set forth any basis for piercing Tura's corporate veil. There has been no evidence that Brody has engaged in fraud, intermingled corporate and personal funds, undercapitalized the corporation, failed to maintain separate books and records or otherwise ignored corporate formalities, failed to pay dividends or permitted the corporation to engage in transactions while insolvent. See, William Wrigley Jr. Co. v. Waters, 890 F.2d at 600-01. Accordingly, Tura's residence and activities may not be imputed to Brody for the purposes of determining whether venue as to Brody is proper in this district.
Finally, plaintiffs argue that concerns for fairness and judicial economy warrant a finding that venue as to Brody is proper in this district. Although dismissal of this action against Brody may not be an efficient result, the Supreme Court has specifically held that Section 1400(b) must be strictly followed and not given a liberal construction guided by policy considerations. See Schnell v. Eckrich & Sons, 365 U.S. 260, 262-64, 81 S. Ct. 557, 5 L. Ed. 2d 546 (1961). If the requirements for venue under Section 1400(b) are not met, the Court is constrained to dismiss the action, even where the result is inefficient or unfair. See Tolliver v. Edison, No. G88-51CA1, 1988 U.S. Dist. LEXIS 17811 (W.D. Mich., June 24, 1988) (citing Schnell); Toombs v. Goss, 768 F. Supp. 62, 65 (W.D.N.Y. 1991)(stating that "[a] district court cannot dispense with the explicit patent venue requirements, even in cases involving multiple defendants or conspiring defendants.").
Because plaintiffs have failed to demonstrate facts which would support venue under Section 1400(b), Brody's motion to dismiss for lack of venue is granted.
XIII. Defendants' Antitrust Counterclaims
Defendants object to the entry of a final judgment in this action, asserting that they have brought counterclaims which remain unadjudicated. Defendants make this argument in a memorandum of law dated January 23, 1995, submitted to assert objections to a proposed form of final judgment which had previously been submitted to the Court by plaintiffs, and in a letter to the Court from David L. Harris, Esq., dated February 6, 1995.
The antitrust counterclaims which defendants assert are still pending were first raised in the form of proposed pleadings on the eve of trial. By motion dated November 18, 1994, defendant Tura sought leave to amend its amended-counterclaims to assert new antitrust allegations. As defendants now acknowledge, the Court never formally granted this motion. See Defendants' Memorandum of Law dated January 23, 1995 at p.5, n.1. Rather, defendants assert that Tura's motion to amend its amended counterclaims was implicitly granted by the Court in its Memorandum and Order dated November 21, 1994. It is clear, however, from the Memorandum and Order as well as the conferences with counsel shortly before and after it was issued that defendants' motion was granted only to the extent of allowing Tura to assert a claim pursuant to Walker Process Equip., Inc. v. Food Mach. and Chem. Corp., 382 U.S. 172, 86 S. Ct. 347, 15 L. Ed. 2d 247 (1965), and that such a claim does not survive the jury's findings that the suit patents are valid and were infringed. See Memorandum and Order at 74-76.
Moreover, defendants' representations to the Court at and about the time they moved to amend their amended counterclaims clearly indicate that defendants were not seeking leave to assert any claims which did not depend upon a finding that the patents in suit were either invalid or not infringed. During oral argument on the motions which are addressed in the Memorandum and Order, held just slightly more than one month prior to trial, the Court asked the parties to consider bifurcating the trial of the plaintiffs' patent claims from that of defendants' antitrust counterclaims. In suggesting that bifurcation could potentially save judicial resources, the Court stated that
clearly, if there's a finding of validity and infringement in the patent case your antitrust claims go down. You can't have an antitrust case . . . if the jury finds for the plaintiffs on validity and infringement.