ARX Fit, LLC v. Outstrip Equipment, LLC
1:18-cv-00848
W.D. Tex.Jul 12, 2019Background
- Outstrip Equipment, LLC (Indiana LLC) makes adaptive-resistance exercise machines; ARX Fit, LLC (Austin) makes competing machines. Crazy Train, LLC (Texas LLC, headquartered in Wisconsin) owns two patents invented by Randy Rindfleisch.
- ARX sued Rindfleisch, Huskins, Outstrip, and Crazy Train seeking declaratory relief on non-infringement of patents and asserting copyright and tort claims; ARX’s suit is pending in the Western District of Texas.
- Crazy Train filed a counterclaim against ARX for patent infringement and a crossclaim against Outstrip alleging infringement of the same patents.
- Outstrip moved to dismiss Crazy Train’s crossclaim for lack of personal jurisdiction and improper venue under Rule 12(b)(3). Outstrip does not contest jurisdiction for ARX’s claims.
- The court examined whether Crazy Train’s claim was a proper Rule 13(g) crossclaim (allowing ancillary jurisdiction) and, if not, whether venue for the patent claim is proper under 28 U.S.C. § 1400(b).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Crazy Train’s claim is a proper crossclaim under Fed. R. Civ. P. 13(g) | The claim arises from the same transaction because both claims involve Outstrip’s sale of Solus machines | The claim is a separate licensing/patent dispute unrelated to ARX’s claims | Not a proper Rule 13(g) crossclaim—the lone common fact (sale) is insufficient to show the same aggregate operative facts |
| Whether the court has personal jurisdiction over Outstrip for Crazy Train’s claim | Crossclaim status confers ancillary jurisdiction | No independent basis for jurisdiction; Outstrip lacks contacts in Texas | Court found no independent jurisdiction because crossclaim not proper; did not rest case on personal-jurisdiction analysis |
| Whether venue is proper under 28 U.S.C. § 1400(b) (patent venue) | Venue is proper because Outstrip sold an allegedly infringing machine in Austin | Outstrip is Indiana-incorporated and has no established place of business in this district | Venue improper: Outstrip resides in Indiana and Crazy Train failed to show a regular and established place of business in the Western District of Texas |
| Remedy for improper venue | Crossclaim should remain as part of the case | Move to dismiss the crossclaim without prejudice | Grant dismissal without prejudice under Rule 12(b)(3); preliminary-injunction motion denied as moot |
Key Cases Cited
- Revere Copper & Brass Inc. v. Aetna Cas. & Sur. Co., 426 F.2d 709 (5th Cir.) (ancillary jurisdiction over properly asserted crossclaims)
- National Liability & Fire Insurance Co. v. R & R Marine, Inc., 756 F.3d 825 (5th Cir.) (logical-relationship test for related claims)
- TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017) (Section 1400(b) is the exclusive venue statute for patent infringement and defendant ‘‘resides’’ where incorporated)
- In re Cray Inc., 871 F.3d 1355 (Fed. Cir.) (requirements for a "regular and established place of business" under § 1400(b))
- In re ZTE (USA) Inc., 890 F.3d 1008 (Fed. Cir.) (plaintiff bears the burden to establish proper patent venue)