Franchised Automobile Dealerships Count As Regular And Established Places Of Business For Purposes Of Proper Patent Infringement Venue

In our continuing post-TC Heartland coverage, Judge Rodney Gilstrap of the Eastern District of Texas recently issued an interesting decision regarding the venue analysis for car companies selling into a particular jurisdiction. In Blitzsafe Texas v. BMW, Judge Gilstrap concluded that independently owned and operated BMW dealerships count as a regular and established place of business for purposes of establishing proper venue as to BMW of North America ("BMWNA"). (The court also concluded summarily that venue was proper as to BMWNA's foreign parent company.) BMWNA argued in the main that the four dealerships located within the district were not their regular and established places of business because the dealerships are franchised. BMWNA also argued that it is not permitted to "own or control" the dealerships within the District pursuant to the Texas Occupations Code.

The court rejected these arguments. In doing so, it pointed to the fact that BMWNA exercised control over the sales, marketing, and service of BMW automobiles within the District. The court also considered that BMWNA employees residing in Texas traveled to the four dealerships in the District to provide on-site technical training to service technicians and to educate sales representatives regarding new features of vehicles. The court also noted that BMWNA pays for and supervises new car warranty services on BMW products at the subject dealerships. Notably, the court emphasized the fact that the Certified Pre-Owned BMWs are "fully backed by BMW of North America, LLC." On this set of facts, the court concluded that BMWNA conducts regular business through the dealerships within the District for two reasons: first, it conducts its business of the exclusive distribution of new BMW automobiles to the consuming public in the district through the subject authorized dealers; and, second, it conducts...