iFLY Holdings LLC vs. INDOOR SKYDIVING GERMANY GMBH

Filing 68

MEMORANDUM ORDER. Signed by Magistrate Judge Roy S. Payne on 10/06/2015. (nkl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
IFLY HOLDINGS LLC,
Plaintiff,
v.
INDOOR SKYDIVING GERMANY
GMBH,
Defendant.

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Case No. 2:14-cv-01080-JRG-RSP

MEMORANDUM ORDER
Pending before the Court is Defendant Indoor Skydiving Germany GMBH’s (“ISG”)
Rule 12(b)(2) Motion to Dismiss for Lack of Personal Jurisdiction and, Alternatively, to Transfer
Venue Pursuant to 28 U.S.C. § 1404(a). (Doc. No. 21.) ISG contends that this case should be
transferred to the District of Arizona. Plaintiff iFLY Holdings LLC (“iFLY”) opposes transfer.
The Court has considered all the factors and weighed all the evidence and finds that transfer is
not warranted.
BACKGROUND
iFLY has its principal place of business in Austin, Texas. (Doc. No. 16 ¶ 1.) Since
iFLY’s founding in 1998, it has become the world leader in the vertical wind tunnel industry.
(Doc. No. 29, at 3.) iFLY has built vertical wind tunnels in thirty-six places around the world.
(Id.) Four of those wind tunnels are in Frisco, Austin, and Houston in Texas. 1 (Id.) ISG has its
principal place of business in Gladbeck, Germany (Doc. No. 16 ¶ 3) and has built vertical wind
tunnels in five places around the world (Doc. No. 16 ¶ 22; Doc. No. 21, at 6). None of ISG’s

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Frisco, Texas is in the Eastern District of Texas. Austin, Texas is in the Western District of
Texas. Houston, Texas is in the Southern District of Texas.
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wind tunnels are in the United States (Doc. No. 16 ¶ 22; Doc. No. 21, at 6), but generally, iFLY
and ISG compete in the vertical wind tunnel industry (Doc. No. 21, at 5).
iFLY has alleged that ISG infringes U.S. Patent No. RE43,028 (the “’028 patent”) by
offering to “sell one or more vertical wind tunnel amusement devices to Texas businesses
FliteShop Phoenix, LP, FliteShop PHX Genpar, LLC, and/or Armor Capital LLC and/or Texas
resident Max Reising (together “FliteShop”).” (Doc. No. 16 ¶¶ 30, 31.) iFLY contends that
because of this purported sale by ISG, FliteShop intends to build a “vertical wind tunnel
amusement device” in Phoenix, Arizona. (Doc. No. 16 ¶ 10.) FliteShop has four partners: Mr.
Reising, Jason Peters, Gary Schmit, and Andy Malchiodi. 2 (Doc. No. 21, at 2–5.) FliteShop and
Mr. Reising are residents of Texas. (Doc. No. 16 ¶¶ 7–9.)
APPLICABLE LAW
Section 1404(a) provides that “[f]or the convenience of parties and witnesses, in the
interest of justice, a district court may transfer any civil action to any other district or division
where it might have been brought.” 28 U.S.C. § 1404(a). The first step in a Court’s transfer
analysis is deciding “whether the judicial district to which transfer is sought would have been a
district in which the claim could have been filed.” In re Volkswagen AG, 371 F.3d 201, 203 (5th
Cir. 2004) (“Volkswagen I”).
If that threshold is met, the Court then analyzes public and private factors relating to the
convenience of parties and witnesses and the interests of particular venues in hearing the case.
See Humble Oil & Ref. Co. v. Bell Marine Serv., Inc., 321 F.2d 53, 56 (5th Cir. 1963); In re
Nintendo Co., Ltd., 589 F.3d 1194, 1198 (Fed. Cir. 2009); In re TS Tech USA Corp., 551 F.3d
1315, 1319 (Fed. Cir. 2009). The private factors are: 1) the relative ease of access to sources of

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Mr. Peters lives in Arizona. Mr. Schmit lives in Arizona. Mr. Malchiodi lives in California.
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proof; 2) the availability of compulsory process to secure the attendance of witnesses; 3) the cost
of attendance for willing witnesses; and 4) all other practical problems that make trial of a case
easy, expeditious, and inexpensive. Volkswagen I, 371 F.3d at 203; Nintendo, 589 F.3d at 1198;
TS Tech, 551 F.3d at 1319. The public factors are: 1) the administrative difficulties flowing from
court congestion; 2) the local interest in having localized interests decided at home; 3) the
familiarity of the forum with the law that will govern the case; and 4) the avoidance of
unnecessary problems of conflict of laws or in the application of foreign law. Volkswagen I, 371
F.3d at 203; Nintendo, 589 F.3d at 1198; TS Tech, 551 F.3d at 1319.
The plaintiff’s choice of venue is not a factor in this analysis. In re Volkswagen of Am.,
Inc., 545 F.3d 304, 314-15 (5th Cir. 2008) (“Volkswagen II”). Rather, the plaintiff’s choice of
venue contributes to the defendant’s burden of proving that the transferee venue is “clearly more
convenient” than the transferor venue. Volkswagen II, 545 F.3d at 315; Nintendo, 589 F.3d at
1200; TS Tech, 551 F.3d at 1319. Although the private and public factors apply to most transfer
cases, “they are not necessarily exhaustive or exclusive,” and no single factor is dispositive.
Volkswagen II, 545 F.3d at 314–15.
Timely motions to transfer venue should be “should [be given] a top priority in the
handling of [a case]” and “are to be decided based on ‘the situation which existed when suit was
instituted.’” In re Horseshoe Entm’t, 337 F.3d 429, 433 (5th Cir. 2003); In re EMC Corp., Doc.
No. 2013-M142, 2013 WL 324154 (Fed. Cir. Jan. 29, 2013) (quoting Hoffman v. Blaski, 363
U.S. 335, 443 (1960)).
A.

Proper Venue
Section 1391 provides: “For all venue purposes—a defendant not resident in the United

States may be sued in any judicial district.” 28 U.S.C. § 1391(c)(3). Because ISG is a resident of

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Germany, venue is proper in both the Eastern District of Texas and the District of Arizona. See
14D Charles Alan Wright et al., Federal Practice and Procedure § 3810 (4th ed. 2013) (“The
result of this amendment is that non-residents of the United States simply may not object to
venue.”). The Court in a Report and Recommendation found that ISG was subject to personal
jurisdiction in Texas. (Doc. No. 67.) The Court assumes without deciding that ISG is also subject
to personal jurisdiction in Arizona. 3
B.

Private Interest Factors
1.

Relative Ease of Access to Sources of Proof

“In patent infringement cases, the bulk of the relevant evidence usually comes from the
accused infringer. Consequently, the place where the defendant’s documents are kept weighs in
favor of transfer to that location.” In re Genentech, Inc., 566 F.3d 1338, 1345 (Fed. Cir. 2009)
(citation omitted).
ISG asserts that “[t]he ease of access to sources of proof strongly weighs in favor of
transferring this action to Arizona.” (Doc. No. 21, at 20.) The “[d]ocuments concerning the
design of the accused wind tunnel are located in Germany or in Arizona” (id. at 21) and the
“documents concerning the early stages of the [FliteShop wind tunnel] project likely reside in
[Mr.] Peters’s and [Mr.] Schmit’s files in Arizona” (id. at 20).
According to ISG, FliteShop has plans to build the wind tunnel in Phoenix, therefore, if
“documents required for the project will be prepared [it will be] with the assistance of
FliteShop’s architects and engineers, all of whom are located in or near Phoenix.” (Doc. No. 21,

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Generally, ISG contends that it is subject to personal jurisdiction in Arizona because it is “the
only place where the allegedly infringing product can be argued to have been offered for sale.”
(Doc. No. 21, at 19.) iFLY responds that none of ISG’s authority supports that finding. iFLY
asserts that all of ISG’s authority relates to the presumption against extraterritoriality in 35
U.S.C. § 271(a). (Doc. No. 29, at 16–17.)
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at 21.) The proposed wind tunnel is large, so if built, “[t]he accused infringing device . . . cannot
be physically inspected by an Eastern District [of Texas] jury at trial. [But it] can [] be made
available for inspection by a Phoenix jury.” (Id. at 20.) ISG finally contends that FliteShop will
build the wind tunnel according to the requirements of the “State of Arizona and/or the Salt
River Maricopa-Pima Indian Community.” (Id. at 21.)
iFLY responds that this case should be tried in the Eastern District of Texas because
“[t]he bulk of iFLY’s witnesses and documents are in Texas.” (Doc. No. 29, at 18.) iFLY asserts
that it has “potentially relevant documents in [] its corporate offices in Austin and its companyowned facilities,” including those in this District. (Id.) Finally, iFLY asserts that “[o]ther third
party witnesses and their corresponding documents are located outside of both Texas and
Arizona . . . [with] [i]nventor Bill Kitchen . . . in Florida [and], inventor Michael Palmer . . . in
Virginia.” (Id. at 20.)
The Court finds that this factor weighs against transfer. iFLY has documents in Austin,
Frisco, and Houston. (Doc. No. 29, at 3; Doc. No. 29-4, at 7.) ISG has no documents in the
United States. (Doc. No. 21-4 ¶ 3.) “All of ISG’s research and development takes places in
Germany” and “ISG makes . . . wind tunnels for use in indoor skydiving simulators in Europe
and Asia.” (Doc. No. 21-4 ¶ 3.)
The third-party documents are in Texas, Arizona, California, Florida and Virginia. Mr.
Reising keeps documents in Southlake, Texas, that relate to “the planning, financing, and
development of [the FliteShop wind tunnel] project.” 4 (Doc. No. 21, at 8; Doc. No. 29-3, at 3.)
Mr. Peters and Mr. Schmit keep documents in Phoenix, Arizona, that relate to the “genesis and
founding of FliteShop,” potential damages, and marketing. (Doc. No. 29-3, at 3; Doc. No. 21, at
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Southlake, Texas is in the Northern District of Texas. (Doc. No. 29, at 21.)
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7–8.) Likewise, several architects, engineers, and members of the Salt River Pima-Maricopa
Indian Community in Arizona may keep documents that relate to the FliteShop wind tunnel
project. 5 (Doc. No. 21, at 22; Doc. No. 29-3, at 3–4.) Mr. Malchiodi keeps documents relating to
the “genesis and founding of FliteShop” in Lake Elsinore, California. (Doc. No. 29-3, at 3; Doc.
No. 21, at 8.) Finally, the inventors Mr. Kitchen and Mr. Palmer keep documents relating the
invention of the ’028 patent in Orlando, Florida and Poquoson, Virginia respectively. (Doc. No.
29, at 20, 22.)
2.

Cost of Attendance for Willing Witnesses

The Court considers the convenience of the party and non-party witnesses, and the
convenience of non-party witnesses has the greater weight. See Genentech, 566 at 1343; Aquatic
Amusement Assoc., Ltd. v. Walt Disney World Co., 734 F. Supp. 54, 57 (N.D.N.Y. 1990); see
also 15 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 3851 (3d ed.
2012). The Court also considers “the relevance and materiality of the information the witness
may provide” but the Court but does not require the movant to identify “key witnesses” or show
“that the potential witness has more than relevant and material information . . . .” Genentech, 566
at 1343–44.
The Court finds that this factor weighs against transfer. iFLY has six witnesses located in
Texas (Doc. No. 29-4, at 4–5) and ISG has no witnesses located in the United States (Doc. No.
29-3, at 2). The convenience of the third-party witnesses does not change the Court’s analysis:

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The parties do not dispute that when this motion was filed FliteShop had not yet purchased a
vertical wind tunnel from ISG. The parties also do not dispute that when this motion was filed
FliteShop has not yet built a vertical wind tunnel in Phoenix. (Doc. No. 21, at 21 (“The accused
skydiving simulator, if built, will be operated by Arizona residents Peters and Schmit.”)); Doc.
No. 29, at 22); see Genentech, 566 at 1343–44 (“A district court should assess the relevance and
materiality of the information the witness may provide.”).
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Marshall is closer for the witnesses in Texas, Florida, and Virginia, while Phoenix is closer for
the witnesses in Arizona and California.
Mr. Reising lives in Southlake, Texas, and can testify as to the “construction, leas[ing],
and financing” of the vertical wind project tunnel in Phoenix. (Doc. No. 29-3, at 3.) The
inventors, Mr. Kitchen and Mr. Palmer live in Florida and Virginia respectively, and can testify
as to the invention claimed in the ’028 patent. (Doc. No. 29, at 4, 20.) Mr. Peters and Mr. Schmit
live in Phoenix, Arizona, and can testify as to the “genesis and founding of FliteShop,” potential
damages, and the marketing of the company. (Doc. No. 29-3, at 3.) Several architects, engineers,
and members of the Salt River Pima-Maricopa Indian Community live in Arizona and may be
able to testify about “the approval and construction of the Phoenix [wind tunnel] project.” (Doc.
No. 29-3, at 3–4.) Finally, Mr. Malchiodi lives in Lake Elsinore, California, and can testify as to
the same topics as Mr. Peters and Mr. Schmit. (Id. at 3.)
3.

Availability of Compulsory Process to Secure the Attendance of Witnesses

Federal Rule of Civil Procedure 45 provides that the Court may command a person to
attend trial in Marshall if that person “resides, is employed, or regularly transacts business in
person” in Texas and “would not incur substantial expense.” Fed. R. Civ. P. 45(c)(1)(B). The
Court also may command a person to attend a deposition “within 100 miles of where the person
resides, is employed, or regularly transacts business in person.” Fed. R. Civ. P. 45 (a)(2); see id.
(c)(1)(A), (d)(3)(a). Party witnesses do not normally require compulsory process, and the Court’s
analysis of this factor focuses on third-party witnesses that may require compulsory process to
attend trial.
ISG contends that this factor favors transfer because Mr. Peters, Mr. Schmit, members of
the Salt River Pima-Maricopa Indian Community, and some engineers and consultants are only

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subject to compulsory process in the District of Arizona. (Doc. No. 21, at 23.) iFLY contends
that this factor is neutral as to transfer because Mr. Reising is subject to compulsory process in
the Eastern District of Texas (Doc. No. 29, at 21) and neither the Eastern District of Texas nor
the District of Arizona has compulsory process over Mr. Malchiodi, Mr. Kitchens, and Mr.
Palmer (Doc. No. 29, at 22).
The Court finds that this factor is neutral as to transfer. Mr. Reising, Mr. Peters, Mr.
Schmit, Mr. Malchiodi, Mr. Kitchens, and Mr. Palmer are the witnesses who can offer the most
material testimony in this dispute. The Eastern District of Texas has subpoena power of Mr.
Reising, and the District of Arizona has subpoena power of Mr. Peters and Mr. Schmit. Neither
District has subpoena power of Mr. Malchiodi, Mr. Kitchens, and Mr. Palmer.
4.

All Other Practical Problems that Make Trial of a Case Easy, Expeditious,
and Inexpensive

ISG contends that this factor favors transfer because “FliteShop’s efforts to design and
develop an indoor skydiving simulator, marketing efforts, and operational plans are all centered
in Phoenix.” (Doc. No. 21, at 26.) ISG further contends that this factor favors transfer because
“[e]ven if this Court were to conclude it has personal jurisdiction over ISG, it lacks jurisdiction
over the individual members of FliteShop Phoenix LP and the Salt River Pima-Maricopa Indian
Community, and will not have the required jurisdiction to enforce injunctive relief if ordered
after trial.” (Doc. No. 21, at 27.)
iFLY responds that ISG, not FliteShop, is the defendant in this suit, and iFLY asserts that
the “vertical wind tunnel that [ISG] offered for sale to FliteShop was researched and developed
in Germany.” (Doc. No. 29, at 24.) iFLY also notes that “enforcing an injunction against ISG
[will] not require ‘jurisdiction over the individual members of FliteShop Phoenix LP and the Salt
River Pima-Maricopa Indian Community.’” (Doc. No. 29, at 25.)
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The Court finds that this factor is neutral as to transfer. The Court’s ability to determine if
ISG has infringed the ’028 patent is not affected by FliteShop’s possible construction or
marketing activities in Arizona. The Court further finds that ISG’s concerns about the injunction
are moot because iFLY has only moved to enjoin ISG and ISG’s affiliates. iFLY has not moved
to enjoin any individual members of FliteShop Phoenix LP or the Salt River Pima-Maricopa
Indian Community. (Doc. No. 16, at 9.)
C.

Public Interest Factors
1.

Local Interest in Having Localized Interests Decided at Home

The Court finds that this factor weighs against transfer. iFLY is based in Texas and ISG
is based in Germany. Texas residents have a strong interest in deciding a patent infringement
dispute involving a patent owned by a Texas company. Furthermore, the Court agrees with iFLY
that whether the vertical wind tunnel in Phoenix will be built is speculative. The uncertain nature
of the wind tunnel project somewhat diminishes the interest that Arizona’s residents have in this
case.
2.

Administrative Difficulties Flowing From Court Congestion

The Court finds that this factor is neutral as to transfer because the Eastern District of
Texas and the District of Arizona have similar times to trial.
3.

Familiarity of the Forum With the Law that Will Govern the Case and
Avoidance of Unnecessary Problems of Conflict of Laws or in the
Application of Foreign Law

ISG contends that these factors favor transfer because ISG intends to assert counterclaims
under Arizona state law. (Doc. No. 21, at 28–29.) iFLY responds that Texas law would govern
the counterclaims because the facts giving rise to the counterclaims occurred in Texas. (Doc. No.
29, at 28.)

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The Court finds that these two factors are neutral as to transfer. First, on the day the
motion was filed, the only asserted claims were for patent infringement under federal law.
Federal law can be applied equally by either the Eastern District of Texas or the District of
Arizona. Second, ISG has not responded to iFLY’s arguments by showing why it can assert its
counterclaims under Arizona law. (See Doc. No. 30, at 15.)
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CONCLUSION
A motion to transfer venue should only be granted upon a showing that one venue is
“clearly more convenient” than another. Nintendo Co., 589 F.3d at 1197; Genentech, 566 F.3d at
1342. After weighing the evidence as a whole, the Court finds that the District of Arizona would
not be “clearly more convenient” for this case. Indoor Skydiving Germany GMBH’s Rule
12(b)(2) Motion to Dismiss for Lack of Personal Jurisdiction and, Alternatively, to Transfer
Venue Pursuant to 28 U.S.C. § 1404(a) (Doc. No. 21) is DENIED-IN-PART as to ISG’s Motion
to Transfer Venue Pursuant to 28 U.S.C. § 1404(a).
SIGNED this 3rd day of January, 2012.
SIGNED this 6th day of October, 2015.

____________________________________
ROY S. PAYNE
UNITED STATES MAGISTRATE JUDGE

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