Black & Decker (U.S.) Inc. v. Pro-Tech Power Inc.
| Decision Date | 16 November 1998 |
| Docket Number | Civil No. 98-124-A.,Civil No. 97-1123-A. |
| Citation | 26 F.Supp.2d 834 |
| Court | U.S. District Court — Eastern District of Virginia |
| Parties | BLACK & DECKER (U.S.) INC., and The Black & Decker Corporation, Plaintiffs, v. PRO-TECH POWER INCORPORATED, P & F Brother Industrial Corporation, Nu-Way Machinery Corporation, Paul Chang, and Freddie Chang, Defendants. BLACK & DECKER (U.S.) INC., The Black & Decker Corporation, and Black & Decker Inc., Plaintiffs, v. PRO-TECH POWER INCORPORATED, P & F Brother Industrial Corporation, and Nu-Way Machinery Corporation, Defendants. |
Raymond P. Niro, John C. Janka, Raymond P. Niro, Jr., Christopher J. Lee, Sally Wiggins, Niro, Scavone, Haller and Niro, McLean, Virginia, Amy Sanborn Owen, Miles & Stockbridge, McLean, Virginia, for plaintiffs.
Robert B. Breisblatt, Jerold B. Schnayer, Kara E.F. Cenar, Leonard Friedman, Thomas L. Gemmell, Welsh and Katz, Ltd., Chicago, Illinois, Kimberly Newman, Hunton & Williams, Washington, DC, for defendants.
The Plaintiffs, Black & Decker (U.S.) Inc., The Black & Decker Corporation, and Black & Decker Inc. ("Black & Decker"), brought these consolidated actions alleging that the Defendants, Pro-Tech Power Incorporated ("Pro-Tech"), P & F Brother Industrial Corp. ("P & F"), Nu-Way Machinery Corp. ("Nu-Way"), Paul Chang, and Freddie Chang, committed unfair competition and false designation of origin, trade dress infringement, trademark infringement, trademark dilution, design patent infringement, copyright infringement, and false advertising in the market for professional power tools. The Court conducted a bench trial of this matter from August 25 through September 1, 1998, and now makes the following findings of fact and conclusions of law.
Black & Decker (U.S.) Inc. is a Maryland corporation that designs and manufactures the "DeWalt" line of professional power tools. The Black & Decker Corporation is a Maryland company that owns trademark rights in the DeWalt line. Black & Decker Inc. is a Delaware company that owns or otherwise enjoys standing to sue for the infringement of United States Design Patent No. 346,173 ("the '173 patent").
Pro-Tech Power Incorporated is a California corporation that markets and distributes the "Pro-Tech" line of professional power tools. P & F Brother Industrial Corporation and Nu-Way Machinery Corporation are Taiwanese companies that manufacture some of the products in the Pro-Tech line. Paul and Freddie Chang are individual defendants who allegedly own or control the corporate defendants in this case, but who successfully moved for a Directed Verdict in their favor at trial. (Tr. at 1293 - 97.)
The Amended Complaints in these consolidated actions allege a variety of causes of action under state and federal law:
Count 1 contends that the Defendants manufacture and distribute Pro-Tech power tools that mimic the appearance of DeWalt power tools in a way that imposes unfair competition and suggests a false designation of origin in violation of the Lanham Act. Count 2 alleges that this conduct infringes on Black & Decker's trade dress under the Lanham Act, and Count 3 alleges that this conduct constitutes common law trademark infringement and creates unfair competition under state law. Count 4 alleges state and federal trademark dilution.
Civil Action No. 97-1123-A contains three additional causes of action. Count 5 contends that Pro-Tech's CS7212 12" compound mitre saw infringes on a patent that Black & Decker owns. See United States Design Patent No. 346,173. Count 6 alleges that the instruction manual for the Pro-Tech CS7212 infringes on a copyright that Black & Decker owns. See United States Copyright Registration No. TX4-508-466. Count 7 alleges that by representing that the Pro-Tech CS7212 had 100% ball bearing construction and a 4,000 RPM motor, the Defendants committed false advertising in violation of the Lanham Act.
The Defendants deny each of these claims and argue that the doctrine of estoppel by laches precludes Black & Decker from pursuing its trademark and trade dress infringement claims. Pro-Tech also makes two counterclaims. Count 1 alleges that Black & Decker initiated this litigation solely to harm Pro-Tech's business and to damage its reputation in a way that constitutes unfair competition under state and federal law. Count 2 alleges that by representing DeWalt power tools as having been "Made in the U.S.A.," Black & Decker violated the false advertising provisions of the Lanham Act.
The Court has subject matter jurisdiction over the federal questions in this case pursuant to 28 U.S.C. § 1331, 28 U.S.C. § 1338, and 15 U.S.C. § 1121(a), with supplemental jurisdiction over the state law claims pursuant to 28 U.S.C. § 1367. Venue is facially proper to the extent that at least one of the defendants sold some allegedly infringing power tools in the Eastern District of Virginia.1 See 28 U.S.C. § 1391(b).
Although Pro-Tech concedes that it is subject to the power of this Court, P & F and Nu-Way challenge personal jurisdiction on the grounds that they are Taiwanese manufacturers that never directly offered any products for sale in this state. Black & Decker made a prima facie case for the assertion of personal jurisdiction against them during pretrial proceedings, and now bears the ultimate burden of establishing by a preponderance of the evidence that both the Virginia Long-Arm Statute and the Due Process Clause of the United States Constitution would permit the exercise of jurisdiction. See Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 60 (4th Cir.1993) (citing Omni Capital Int'l v. Rudolf Wolff & Co., 484 U.S. 97, 102-03, 108 S.Ct. 404, 98 L.Ed.2d 415 (1987)).
Section 8.01-328.1(A)(4) of the Virginia Code authorizes personal jurisdiction over a defendant who causes tortious injury in this state by an act or omission that took place elsewhere, if the defendant "regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered" in Virginia. See Blue Ridge Bank v. Veribanc, Inc., 755 F.2d 371, 373 (4th Cir.1985).
As the Court observed during pretrial proceedings, P & F and Nu-Way regularly solicit business in this state insofar as each of them advertises their products on World Wide Web sites. The sites are accessible to any Virginia resident over the Internet, and they provide interested customers with the companies' e-mail addresses. Black & Decker established the existence of these Web sites prior to trial, and neither P & F nor Nu-Way rebutted their significance either then or thereafter, aside from making unsupported and conclusory allegations that the sites were unauthorized.2 Absent any meaningful evidence to substantiate those allegations, the Court finds that these Web sites constitute a means of advertising by which P & F and Nu-Way regularly solicit business from Virginia residents within the meaning of the Virginia Long-Arm Statute. See Telco Communications v. An Apple A Day, 977 F.Supp. 404, 407 (E.D.Va.1997).
In order for the exercise of personal jurisdiction to satisfy the Due Process Clause, P & F and Nu-Way must have had sufficient minimum contacts with this forum, such that haling them into court would not offend "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Stated differently, P & F and Nu-Way must have "purposefully avail[ed]" themselves of this district, see Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958), and the assertion of personal jurisdiction against them must be fair and reasonable under the circumstances, see World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980).
As the Fourth Circuit has made clear, "[t]he placement of a product into the stream of commerce ... is not an act ... [that is] purposefully directed toward the forum State." Lesnick v. Hollingsworth & Vose Co., 35 F.3d 939, 944 (4th Cir.1994) (quoting Asahi Metal Indus. Co. v. Superior Court of Calif., 480 U.S. 102, 112, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987) (plurality opinion)). Simple "awareness that the stream of commerce may or will sweep the product into the forum State" is not enough to render the exercise of personal jurisdiction constitutional. Lesnick, 35 F.3d at 945 (quoting Asahi, 480 U.S. at 112, 107 S.Ct. 1026). Against this background, the mere fact that P & F and Nu-Way manufacture power tools for Pro-Tech with knowledge that some of those tools will be sold in Virginia is insufficient to support the assertion of personal jurisdiction.
Black & Decker's case for jurisdiction therefore depends entirely on the argument that P & F and Nu-Way had such a close relationship with Pro-Tech as to render them subject to jurisdiction because of Pro-Tech's contacts with this state. Although Paul Chang is the President or Chairman of the Board of Directors for each of the three companies (Tr. at 1008 - 09), the weight of the evidence adduced at trial demonstrated that Pro-Tech, P & F, and Nu-Way are independent companies both in form and in fact—with separate management, bank accounts, corporate offices, and the like (Tr. at 837 - 39, 867 - 68, 1010). Under these circumstances, Black & Decker's attempt to base jurisdiction on an alter ego or instrumentality theory must fail.3
Moreover, even if the three companies were closely related, the exercise of personal jurisdiction would still offend due process because the connections among them dealt only with the general way in which P & F and Nu-Way — both of which are Taiwanese corporations — could supply power tools to Pro-Tech — which is a...
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