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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

HAMMOND DIVISION

Automated Products 

International, LLC, 

 

Plaintiff, 

 

v. Case No. 3:13-CV-396 

 

Norco Industries, Inc., 

 

 Defendant. 

OPINION AND ORDER 

 Defendant Norco Industries, Inc. (“Norco”) sued Plaintiff Automated Products 

International, LLC, (“API”) in 2012, alleging that API infringed on Norco’s design patents. The 

API product in question was protected by U.S. Patent No. 7,134,711 (“‘711 Patent”). The parties 

jointly dismissed Norco’s claim with prejudice and API’s claim without prejudice. A few months 

later, API sued Norco in this Court. Norco moved to dismiss API’s complaint, arguing that API 

should have initially brought this suit as a compulsory counterclaim in compliance with Federal 

Rule of Civil Procedure 13(a). The Court disagrees and denies Norco’s Motion to Dismiss. 

A. Background and facts 

 Norco originally sued API on June 25, 2012, claiming that the roof bow displayed on 

API’s website infringed on three of Norco’s U.S. design patents (D650,723, D657,719, and 

D661,622). (Compl. ¶¶ 10, 13, 16 Norco Indus., Inc. v. Automated Prods. Int’l, LLC, No. 3:12-

cv-00345 (N.D. Ind. June 25, 2012), ECF No. 1.) On August 9, 2012, API answered Norco’s 

complaint and sought a declaratory judgment that Norco’s patents were invalid. (Def.’s Answer 

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6–8, No. 3:12-cv-00345, (N.D. Ind. Aug. 25, 2012), ECF No. 7.) At no point during the original 

lawsuit did API seek a declaratory judgment that any of its patents were noninfringing. 

Thereafter, discovery ensued, and on March 27, 2013, Norco and API filed a stipulation of 

dismissal, which was granted the following day. (Stipulation of Dismissal 1, No. 3:12-cv-00345, 

(N.D. Ind. Mar. 27, 2013), ECF No. 31.) In pertinent part, the parties stipulated that “API’s 

counterclaims are dismissed without prejudice and that Norco’s complaint is dismissed with 

prejudice, each party to bear its own costs and attorneys’ fees.” (Id.) 

 A month and a half later, on May 10, 2013, API commenced the present action against 

Norco, contending Norco infringed on API’s utility patent, the ‘711 Patent. (Compl. 2, May 10, 

2013, ECF No. 1.) API contends that Norco’s “making, using, selling, and/or offering to sell” the 

vehicle roof rafters falls within the scope of the ‘711 Patent. (Id. ¶ 8.) Norco filed this Motion to 

Dismiss contending that API should have brought this claim as a compulsory counterclaim in the 

prior lawsuit and that API’s failure to do so bars its present action for infringement of the ‘711 

Patent. (Def.’s Mot. to Dismiss 1.) 

B. Legal standard 

 The primary purpose behind Rule 13(a) is judicial economy and avoiding multiple 

actions by determining in a single lawsuit any disputes that arise from common facts. In re Price, 

42 F.3d 1068, 1073 (7th Cir. 1994). According to Rule 13, counterclaims are mandatory when a 

claim exists at the time of the pleading, it arises out of the same transaction or occurrence as the 

original claim, and the counterclaim does not require a party over whom the court has no 

jurisdiction: 

A pleading shall state as a counterclaim any claim which at the time of serving of 

the pleading, the pleader has against any opposing party, if it arises out of the 

transaction or occurrence that is the subject matter of the opposing party’s claim 

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and does not require for its adjudication the presence of third parties of whom the 

court cannot acquire jurisdiction. 

Fed. R. Civ. P. 13(a). The Seventh Circuit adopts the “logical relationship test” in discerning 

whether two claims arise from the “same transaction or occurrence” pursuant to Rule 13(a). See 

Burlington N. R.R. v. Strong, 907 F.2d 707, 711 (7th Cir. 1990). The phrase “transaction or 

occurrence” should be liberally construed “‘in order to further the general policies of the federal 

rules and carry out the philosophy of Rule 13(a).’” In re Price, 42 F.3d at 1073 (quoting 

Warshawsky & Co. v. Arcata Nat’l Corp., 552 F.2d 1257, 1261 (7th Cir. 1977). Having reviewed 

the parties briefs and all relevant submissions, the Court finds that API may proceed with this 

law suit. 

D. API was not required to bring the current claim as a compulsory counterclaim under 

Rule 13(a) 

 There are two questions in issue: whether the joint dismissal of the prior case precludes 

API’s instant law suit; and whether API was required to bring the current claim as a counterclaim 

to Norco’s original suit. 

 The answer to the first question is straightforward: issue preclusion does not apply to claims 

dismissed without prejudice and, in general, claims that have not been adjudicated by the Court 

in a previous action are not barred on jurisdictional grounds. 

 Federal Rule of Civil Procedure 41 governs the voluntary dismissal of actions. The effect of 

API’s claim being dismissed without prejudice is that API has the right to pursue its cause of 

action in a subsequent lawsuit. Thus, the Court finds that the stipulation of dismissal, as agreed 

to by both parties, does not prevent API from bringing this cause of action. 

 As explained below, the second question is also resolved in API’s favor. 

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1. API’s claim does not arise out of the same transaction or occurrence as Norco’s original 

claim 

 At the outset, the Court notes that there is no real dispute that API’s current claim existed 

at the time of Norco’s lawsuit. For example, API’s response to Interrogatory No. 8 in Norco’s 

lawsuit states that “API learned . . . sometime in 2010 that Norco claimed it had a patent on a 

rafter like that depicted in [a previous interrogatory].” (DE 15, Norco’s Ex. 4 at 15.) However, 

Norco cannot prevail in its motion to dismiss because it cannot show that API’s claim arose out 

of the same transaction or occurrence as Norco’s original claim.

The phrase “transaction or occurrence” is liberally construed to further the policies and 

philosophy of Rule 13(a). In re Price, 42 F.3d at 1073. There is no formalistic test to determine 

whether this element is satisfied. See Ross ex rel. Ross v. Bd. of Educ. of Twp. High Sch. Dist. 

211, 486 F.3d 279, 284 (7th Cir. 2007). Instead, the Court must “consider the totality of the 

claims, including the nature of the claims, the legal basis for recovery, the law involved, and the 

respective factual backgrounds.” Burlington Northern R.R., 907 F.2d at 711. 

 Norco agrees that “where the patents are generally related to the same technology, that is 

not enough by itself to make the counterclaim compulsory.” (Def.’s Reply in Supp. of its Mot. to 

Dismiss 6, ECF No. 17.) Thus mere reference to the ‘711 Patent in the prior complaint does not 

by itself mean that there is a logical relationship among the claims. Further, the fact that both 

lawsuits involve roof bows is not alone determinative that a logical relationship exists. See 

Burlington Northern R.R., 907 F.2d at 711. 

 Rather, the Court must consider the totality of the circumstances. And while the nature of 

both claims pertains to patent infringement concerning competing roof bow products, the law 

involved in pursuing these claims is distinct. Plaintiff’s ‘711 Patent (a utility patent), at issue in 

this lawsuit, requires the court to conduct an element-by-element comparison of the two 

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products. See Warner-Jenkinson Co., Inc. v. Hilton Davis Chem. Co., 520 U.S. 17, 29 (1997). On 

the other hand, Defendant’s prior lawsuit concerned the infringement of Defendant’s design

patents and would have required an entirely different legal assessment: whether the ordinary 

observer would find that the infringing product was the same as the patented design. See 

Egyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665, 672 (Fed. Cir. 2008). 

 If in the original lawsuit API had sought a declaratory judgment of noninfringement, then 

API would be precluded from bringing its current claim. See Polymer Indus. Prods. Co., 347 

F.3d 935 (Fed. Cir. 2003). But, API did not seek a declaration that the ‘711 Patent was 

noninfringing in Norco’s original lawsuit. Rather, API brought counterclaims arguing that 

Norco’s patents were invalid. Thus, the parties never put the ‘711 Patent into issue in the original 

action and API was not required to bring its present claim as a compulsory counterclaim. 

E. Conclusion 

The Court denies Norco’s Motion to Dismiss (DE 14). 

SO ORDERED on January 3, 2014. 

S/ Joseph S. Van Bokkelen 

JOSEPH S. VAN BOKKELEN 

UNITED STATES DISTRICT JUDGE

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