Eastern District of Virginia Rules AWS Datacenter Does Not Establish Venue for Audible
On March 3, 2025, Judge Roderick C. Young of the U.S. District Court for the Eastern District of Virginia dismissed patent infringement claims against Audible, Inc. for improper venue in Audiopod IP, LLC v. Amazon.com, Inc. et al., No. 3:24-cv-00406. The court held that Audible's use of an Amazon Web Services (AWS) datacenter in Virginia did not establish a "regular and established place of business" under 28 U.S.C. § 1400(b), as the datacenter's activities were unrelated to Audible's core business. This ruling should benefit companies relying on cloud infrastructure by restricting where they can be sued for patent infringement.
Case Background
Audiopod IP, LLC sued Amazon.com, Inc., Amazon.com LLC, Amazon Web Services, Inc. (AWS), and Audible, Inc. on May 30, 2024, alleging infringement of five patents related to streaming media technology. The defendants moved to dismiss under Rule 12(b)(6) for patent ineligibility and Rule 12(b)(3) for improper venue against Audible. The cases were later consolidated.
Venue Dispute
Under 28 U.S.C. § 1400(b), patent infringement suits may be brought where (1) the defendant "resides" (its state of incorporation) or (2) where it "has committed acts of infringement and has a regular and established place of business." Audible, a Delaware corporation with its principal place of business in Newark, New Jersey, resides only in Delaware per TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 581 U.S. 258 (2017). While defendants conceded alleged infringement in Virginia, they disputed whether Audible had a place of business there.
Audiopod argued venue was proper in the Eastern District of Virginia based on:
- AWS Datacenter in Ashburn, Virginia: Audible
uses AWS servers in Ashburn, staffed by agents who "install,
host, store, operate, and maintain" its Northern
Virginia-based servers (Mem. Opp'n 28).
- Amazon's HQ2 in Arlington: Audible's interconnectedness with Amazon—including shared employees, joint promotions, and revenue reporting—imputes Amazon's HQ2 presence to Audible (Mem. Opp'n 29-31).
Court's Ruling
The court rejected both arguments:
- AWS Datacenter: Applying In re Google
LLC, 949 F.3d 1338 (Fed. Cir. 2020), the court assessed the
three-prong test from In re Cray Inc., 871 F.3d 1355 (Fed.
Cir. 2017): (1) a physical place in the district, (2) regular and
established business operations, and (3) the defendant's place
of business. The court agreed the AWS datacenter is a
"physical place." However, it ruled that the
datacenter's operations—server maintenance by AWS
agents—do not constitute Audible's "regular and
established place of business" because Audible's core
business is distributing audiobooks, not server management. Citing
In re Google, the court emphasized that venue requires the
physical place to perform the defendant's "substantive
business," and not merely support activities. Since AWS
agents' tasks are ancillary to Audible's audiobook
distribution, the datacenter did not satisfy § 1400(b).
- Amazon HQ2: Audiopod's alternative argument—that Amazon's HQ2 in Arlington imputes venue to Audible—failed under Fourth Circuit alter ego doctrine. The court applied factors from Vitol, S.A. v. Primerose Shipping Co. Ltd., 708 F.3d 527 (4th Cir. 2013), requiring evidence of "injustice or fundamental unfairness" and significant corporate overlap (e.g., undercapitalization, intermingling funds) to pierce the corporate veil. Audible's shared employees and revenue reporting with Amazon lacked the requisite "extraordinary circumstances" (Keffer v. H.K. Porter Co., 872 F.2d 60, 64 (4th Cir. 1989)), especially absent unfairness allegations. A sworn declaration confirmed no Audible employees work at HQ2, undisputed by Audiopod's evidence.
Rather than transfer to the District of New Jersey (Audible's principal place of business), the court dismissed claims against Audible without prejudice under 28 U.S.C. § 1406(a). Neither party established infringement in New Jersey, and the plaintiff opposed transfer as inconvenient, supporting dismissal to allow refiling in a proper venue.
Implications for Cloud-Based Defendants
- Datacenter Use Does Not Establish Venue
– For businesses using third-party cloud services (e.g., AWS,
Google Cloud), venue does not automatically attach based on server
locations unless datacenter activities align with their core
business. For AWS customers, this ruling limits exposure to patent
suits in datacenter districts like the Eastern District of
Virginia, reducing potential for forum shopping by
plaintiffs.
- Corporate Separateness Matters – Parent-subsidiary relationships (e.g., Amazon-Audible) won't impute venue absent extraordinary overlap and unfairness, protecting subsidiaries from venue based on parent presence (e.g., HQ2).
Conclusion
This ruling clarifies that AWS datacenters do not establish venue under § 1400(b) unless they support a defendant's core business operations. Cloud-reliant companies benefit from reduced venue risks but should ensure corporate separateness from affiliates to avoid imputed venue.
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