Audi Ag and Volkswagon of America, Inc. v. D'Amato

• Decision Date: 19 October 2004
• Docket Number: No. 04-70665.,04-70665.
• Citation: 341 F.Supp.2d 734
• Parties: AUDI AG AND VOLKSWAGON OF AMERICA, INC., Plaintiffs, v. Bob D'AMATO d/b/a Quatro Enthusiasts, Defendant.
• Court: U.S. District Court — Eastern District of Michigan

341 F.Supp.2d 734

AUDI AG AND VOLKSWAGON OF AMERICA, INC., Plaintiffs, v. Bob D'AMATO d/b/a Quatro Enthusiasts, Defendant.

No. 04-70665.

United States District Court, E.D. Michigan, Southern Division.

October 19, 2004.

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Gregory D. Phillips, Scott Ryther, Cody W. Zumwalt, Howard, Phillips & Andersen, Salt Lake City, Utah, Edward C. Cutlip, Jr., Kerr, Russell and Weber, PLC, Detroit, MI, for Plaintiffs Audi AG and Volkswagen of America.

Damian G. Wasserbauer, Canton, Connecticut, Adam B. Strauss, Dykema, Gossett PLLC, Bloomfield Hills, MI, for Defendant Bob D'Amato d/b/a Quattro Enthusiasts.

OPINION AND ORDER (1) DENYING DEFENDANTS' MOTION TO DISMISS FOR PERSONAL JURISDICTION AND VENUE AND (2) GRANTING PLAINTIFFS' MOTION TO DISMISS "DEFAMATION" CLAIM

BORMAN, District Judge.

Presently before the Court is Defendant's Motion to Dismiss for

a. Lack of Personal Jurisdiction;

b. Improper Venue;

c. Or in the Alternative, Transfer Case for Improper Venue or For Convenience.

Also before the Court is Plaintiff's Motion to Dismiss Count VIII of Counterclaim for "Defamation." The Court heard oral argument on this matter on October 13, 2004.

I. PERSONAL JURISDICTION CLAIM

BACKGROUND:

In this action, Plaintiffs Audi AG and Volkswagon of America, Inc. ("Plaintiffs") brought suit against Bob D'Amato, an individual d/b/a as Quattro Enthusiasts ("Defendant") based on the alleged infringement of its trademark registrations. Specifically, the Complaint contains the following counts:

Count I — Trademark and Trade Dress Dilution under 15 U.S.C. § 1125(a);

Count II — Trademark Infringement under 15 U.S.C. § 1114;

Count III — False Designation of Origin or Sponsorship, False Advertising, and Trade Dress Infringement under 15 U.S.C. § 1125(a);

Count IV — Cyberpiracy

Count V — Common Law Trademark Infringement.

Plaintiff seeks a preliminary and permanent injunction, compensatory damages, treble damages, attorneys's fees and costs.

On May 5, 2004, Defendant filed its answer and also asserted the following Counterclaims:

Count I — Declaratory Judgment of Non-Violation of Trademark and Trade Dress Dilution under 15 U.S.C. § 1125(c);

Count II — Declaratory Judgment of Non-Violation of Trademark Infringement under 15 U.S.C. § 1114;

Count III — Declaratory Judgment of Non-Violation of False Designation of Origin or Sponsorship, False Advertising, and Trade Dress Infringement under 15 U.S.C. § 1125(a);

Count IV — Declaratory Judgment of Non-Violation of Cyberpiracy under 15 U.S.C. § 1125(a);

Count V — Declaratory Judgment of No Common Law or State Law Trademark Infringement;

Count VI — Declaratory Judgment of No Unfair Competition;

Count VII — Declaratory Judgment of No Unjust Enrichment;

Count VIII — Defamation;

Count IX — Quiet Title.

On August 10, 2004, Defendant filed the present motion to dismiss, arguing that this Court cannot exercise personal jurisdiction over them and that venue is improper. On September 1, 2004, Plaintiff filed its brief in opposition. On September 15, 2004, Defendants filed their Reply. The Court heard oral argument on this matter on October 13, 2004.

This controversy revolves around Bob D'Amato's website audisport.com. Defendant registered the domain name audisport.com. (Complaint, Exh. D). Plaintiffs claim that Defendant infringes and dilutes its world famous trademarks "AUDI", the "AUDI FOUR RING LOGO", and "QUATTRO" and the distinctive trade dress of Audi automobiles. (Complaint ¶¶ 1,9; see Exh. A for federal registrations). Defendant's website targets Audi enthusiasts. The website displays the four ring Audi logo. (See Complaint, Exh. B for website as it existed in December, 2003; see also Plaintiff's Brief, Exh. C for website as it existed in April 2003). The website offered to sell electronic services including email subscription and forwarding services, hosting services and advertising. (Complaint, Exh. B). Plaintiffs' claim the website falsely represented that it obtained a license from Plaintiffs by stating "While we are not an official part of Audi of America, we have a signed agreement allowing usage of Audi-owned tradenames." (Complaint ¶ 16; Exh. B). The website does include a disclaimer stating "this page is not associated with Audi AG or Audi USA in any way" (Complaint, Exh. B). Plaintiffs contend that the website has offered to sell various counterfeit goods. (Plaintiffs' Brief, pg. 5). Around April 2, 2003 the website offered to sell hats, shirts and cooler bags with the "audisport" logo. (Plaintiffs' Brief, Exh. C; see also Decl. of Cherry Exh. 1). For each good offered, a website visitor can view a product description, and click an "add to cart" button to purchase the product. (Id.). The visitor can then pay for the product via credit. (Id.).

The website also contains a link to Champion Audi, an Audi dealership in Pompano Beach, FL which states "need a new Audi" (Complaint, Exh. B). Defendant states that the website posts information about current Audi racing events in North America which is provided by Champion Audi. (Defendant's Motion to Dismiss, pg. 3, 8). Defendant claims he has never visited Michigan, and has no customers in Michigan. (Defendant's Motion pg. 11).

The Defendant moves to dismiss Plaintiff's complaint for lack of personal jurisdiction under Fed.R.Civ.P. 12(b)(2). Defendant claims his nominal, non-commercial, fair use activities regarding his website audisport.com fail to satisfy Michigan's long-arm statute and the Due Process clause. (Defendant's Motion pg. 2). Defendant further argues that Plaintiff's dealership encouraged him to develop his website in ways that Plaintiffs' now complain of in this lawsuit. (Id.)

Defendant argues that he has not transacted any business in Michigan. (Defendant's Brief pg. 3). Defendant states that no goods are offered on the website, and that a link to the website of Champion Audi, an Audi Dealership in Pompano Beach, FL is as close as it gets. (Id.). Defendant states that it has not contacted Plaintiffs or offered to sell the domain name to Audi. (Id.).

Defendant argues that Plaintiffs voluntarily cancelled its federal registration with its "AUDI SPORT" trademark. (Id. at 6). Defendant argues that Plaintiffs bring this action under its Trademarks "AUDI" the "four-rings" and "QUATTRO", and without a federal registration in "audisport" or "audi sport" as a matter of law, elements of dilution, distinctiveness or being a famous mark under Plaintiffs' Count I-III is not presumed. (Id. at 7). Thus, Defendant states "Plaintiffs may not be able to show injury to its primary Trademarks AUDI, the four rings, and QUATTRO because of its own voluntary actions." (Id.).

Defendant also states that "some agreement" exists between he and Audi through the Champion Audi Dealership. (Id.). Defendant also states that the only goods sold through the website are that of the Champion Audi Dealership in Pompano Beach, Florida. (Id.). Defendant states that the use and display of Audi Trademarks was requested by Champion Audi and benefitted Plaintiffs rather than causing injury. (Id.). Defendant states he has never entered Michigan physically. (Id. at 11).

Defendant also argues in his Reply that because Plaintiffs use color graphics in the statement of issues and larger font, it is a violation of L.R. 5.1(a) because it is not plainly typewritten" and "except for preprinted forms that are in general use, type size of all text and footnotes must be no smaller than 10 characters per inch (non-proportional) or 12 point (proportional)." (Defendant's Reply fn. 1).

Plaintiffs argue that Defendant's Motion to Dismiss for lack of personal jurisdiction must be denied for two reasons. First, because Defendant has an interactive website aimed and solicited at Michigan residents. (Defendant's Brief pg. 1). Second, Defendant has purposefully directed his infringement activities at Audi in Michigan, knowing that Audi would feel the injury here. (Id.). Plaintiffs state that Defendants use an Internet Domain name www.audisport.com that features Audi's registered "AUDI" trademark and Defendant displays Audi's registered design trademarks in Audi's stylized script and the Audi four ring logo. (Id.). Plaintiffs also claim that Defendant has advertised and sold a wide variety of infringing goods and services on his website. (Id.).

ANALYSIS

A. Standard

To avoid dismissal where there has been no evidentiary hearing, a plaintiff need only present a prima facie case for jurisdiction. Niemi v. NHK Spring Co., 276 F.Supp.2d 717 (E.D.Mich.2003) (citing Kerry Steel v. Paragon Industries, 106 F.3d 147, 148 (6th Cir.1997)). A court must consider all affidavits and pleadings in a light most favorable to plaintiffs, and does not weigh the controverting assertions of the party seeking dismissal. Id. (citing Dean v. Motel 6 Operating, L.P., 134 F.3d 1269, 1272 (6th Cir.1998)).

At this stage, where the Court has not held an evidentiary hearing, "in the face of a properly supported motion for dismissal, the [plaintiffs] may not stand on [its] pleadings but must, by affidavit or otherwise, set forth specific facts showing that the court has jurisdiction." Theunissen v. Matthews, 935 F.2d 1454, 1459 (6th Cir.1991).

Plaintiff invokes this court's subject matter jurisdiction under 28 U.S.C. §§ 1331 and 1338(a). Where a federal court's subject matter jurisdiction over a case stems from the existence of a federal question, personal jurisdiction over a defendant exists if the defendant is amenable to service of process under the [forum's] state's long-arm statute and if the exercise of personal jurisdiction would not deny the defendant due process. See Bird v. Parsons, 289 F.3d at 871 (6th Cir.2002) quoting Michigan Coalition of Radioactive Material Users, Inc. v. Griepentrog, 954 F.2d 1174, 1176 (6th Cir.1992).

With personal jurisdiction, Michigan's Long Arm Statute applies. It states:...