Competing Retailers Can Be Joined in Patent Suit When Tied to Common Supplier, Texas Judge Rules

SHERMAN, Texas (LN) — A federal judge in the Eastern District of Texas on Monday denied H-E-B's bid to sever and ship its piece of a patent-infringement case to San Antonio, ruling that the grocery chain's shared supply chain with Amazon, Walmart, Target, and other retailers made splitting the litigation more wasteful than keeping it whole.

Amide Beverage Company, LLC filed suit in November 2024 against 17 defendants — including Amazon.com, Walmart, Target, Kroger, Walgreens, Costco, PepsiCo, and 7-Eleven — alleging each infringed U.S. Patent No. 8,350,077 by selling Bang energy drink products containing Creatyl-L-Leucine and at least one low-molecular-weight organic or mineral acid. Amide acquired the patent on November 4, 2024, along with all rights to recover past damages, and filed suit two weeks later. Several defendants, including Albertsons Companies and CVS Health Corporation, have since been dismissed from the case.

H-E-B moved to sever Amide's claim against it and transfer the case to the Western District of Texas, San Antonio Division, where the chain is headquartered and operates 66 grocery stores and 15 facilities. H-E-B argued it was misjoined because it purchased Bang products directly from manufacturer Vital Pharmaceuticals, Inc. — not through PepsiCo, which distributed to most other defendants — and that it had no relationship with its co-defendants beyond Amide's allegation that they all infringed the same patent.

U.S. District Judge Sean D. Jordan rejected that framing. The court concluded that all defendants shared a common origin for the accused products — Vital's manufacturing and distribution network — which created the aggregate of operative facts required for joinder under 35 U.S.C. § 299. In the court's words, the alleged infringement stems from one manufacturer, one line of products, and one nationwide distribution network linking all of the defendants.

H-E-B also pressed a competitor carveout theory, arguing that direct competitors cannot be joined in a patent action absent concerted action. Jordan rejected that argument as well, concluding there is no blanket rule barring joinder of competing retailers and that the proposed carveout was inapplicable where defendants are linked by a common supplier.

On the transfer question, Jordan analyzed the Fifth Circuit's eight-factor Gulf Oil framework and concluded the scales tipped against H-E-B. While the cost-of-attendance factor weighed slightly in H-E-B's favor — its three key witnesses, including Business Development Manager Sylvia Everitt, all work in San Antonio, nearly 300 miles from the Plano courthouse — the fourth private-interest factor weighed heavily the other way. Jordan concluded that severing and transferring would force Amide to litigate the same patent claims in two courts simultaneously, invoking the Supreme Court's caution in Continental Grain Co. v. The FBL-585 that permitting two cases involving precisely the same issues to proceed simultaneously in different district courts produces the wastefulness of time, energy and money that Section 1404(a) was designed to prevent.

H-E-B's own concession reinforced that conclusion: the chain acknowledged in its briefing that coordination with the Eastern District might be appropriate for claim construction even if the case were transferred — an admission Jordan said underscored how intertwined the litigation remained.

The only substantive difference between H-E-B and a defendant like Walmart, Jordan observed, appeared to be the volume of accused products each sold.

H-E-B operates one corporate office and six grocery stores in the Sherman Division and, according to Everitt's declaration, sold no Bang energy drink products in that division before October 10, 2022 — the date H-E-B's alleged infringement period ended. The chain opened its first Sherman Division store in September 2022.