Int'l Playthings LLC v. Toy Teck Ltd.
| Decision Date | 23 July 2013 |
| Docket Number | Civ. No. 2:11-6832 (KM) |
| Parties | INTERNATIONAL PLAYTHINGS LLC, et al., Plaintiffs, v. TOY TECK LTD, LLC, et al., Defendants. |
| Court | U.S. District Court — District of New Jersey |
FILED UNDER SEAL
This copyright infringement action arises from the allegation of the Plaintiffs, International Playthings LLC and Epoch Company, Ltd. (collectively, "International Playthings"), that their Calico Critters homes were used in an advertisement for Teacup Families, a competing line of toys. Defendants Toy Teck Ltd, LLC ("Toy Teck"), Toy Teck Corporation ("Toy Teck Corp."), Manley Toys, Ltd. ("Manley Toys"), and Toy Teck Limited (Hong Kong) ("Toy Teck (Hong Kong)"), and Mitchell August are alleged to produce that competing Teacup Families product line. Defendant Aquawood LLC ("Aquawood") helped to create the advertisement, which aired on television and was uploaded to youtube.com, where it could be viewed on the internet.
Before the Court are three pending motions. First, August has moved to dismiss the claims against him for lack of personal jurisdiction and for failure to state a claim. Second, Aquawood has moved to dismiss for lack of personal jurisdiction. Third, Manley Toys and Toy Teck (Hong Kong) have moved to vacate the default judgment entered against them.
The allegations of the First Amended Complaint do not establish personal jurisdiction over August. I will, however, administratively terminate August's motion to dismiss, subject to renewal after limited jurisdictional discovery. Aquawood's motion to dismiss is also terminated subject to renewal after limited jurisdictional discovery. Finally, I will vacate the default entered against Manley Toys and Toy Teck (Hong Kong).
A. Facts
According to the First Amended Complaint ("FAC [Docket No. 42]),1 International Playthings created a line of collectible plastic toys called Calico Critters. (FAC ¶ 1). In addition to the Critters themselves, the line included accessories, such as homes, playground sets, furniture, and the like. (Id. ¶ 20). One of the houses is called the Cozy Cottage, a two-story, cottage style house with tan clapboard siding, an orange colored, shingled, gable-shaped roof, and a light tan chimney. (Id. ¶¶ 26). International Playthings has copyrighted the items in and related to the Calico Critters line, including the Cozy Cottage. (Id. ¶ 19). The Calico Critters line can be found nationwide; distribution channels include major retailers, such as Toys "R" Us, smaller independent toy stores, catalogs, e-commerce sites, and bookstores. (Id. ¶ 23). International Playthings advertises by such means as in-store events and displays, television, and the internet. (Id. ¶ 24).
Sometime in 2011, Manley, Toy Teck, Aquawood, and August2 created the Teacup Families line of plastic figures to compete with Calico Critters. (Id. ¶ 28). Teacup Families toys are distributed and advertised in a manner similar to that of Calico Critters. (Id. ¶¶ 30-31).
The Teacup Families line of products was not as extensive as Calico Critters - its accessories were limited to one house, a car/van, and a limited amount of playground equipment. (Id. ¶ 33). Unlike Calico Critters, the Teacup Family line did not include accessories that would permit children to create a neighborhood for the dolls. (Id. ¶ 34). Nevertheless, a Teacup Families advertisement displayed Teacup Families dolls in a neighborhood. (Id. ¶ 39). That neighborhood was composed, not entirely of Teacup Families products, but of Calico Critters houses and accessories (albeit not identified as such). (Id.). Specifically, the advertisement contained at least three Cozy Cottages thathad been altered - for example, by painting them a different color - to disguise their origin to some degree. (Id. ¶ 40). This advertisement, it is alleged, falsely depicted the Teacup Families product line and wrongly implied that consumers could purchase Cozy Cottages accessories from Manley and Toy Teck when, in fact, they were an exclusive product of International Playthings.3 (Id.).
International Playthings alleges that Manley, Toy Teck, Aquawood, and August intentionally used the Cozy Cottages in their advertisements to deceive and "confuse consumers, damage International Playthings' reputation and goodwill, and undermine sales of Calico Critters products." (Id. ¶ 46). From International Playthings' perspective, these actions give rise to a number of causes of action: unfair competition, false advertising and false designation of origin under the Lanham Act, see 11 U.S.C. § 1125(a)(1); federal copyright infringement, see 11 U.S.C. § 501(a); common law unfair competition; unfair competition under the New Jersey Fair Trade Act, N.J. Stat. Ann. § 56:4-1, et seq.; and unjust enrichment.
On November 22, 2011, International Playthings filed its initial complaint, which, in addition to the claims described above, sought temporary restraints and a preliminary injunction against airing and posting online the allegedly offending advertisement. On December 15, 2011, District Judge Wigenton issued the requested preliminary injunction.
On May 18, 2012, International Playthings filed the First Amended Complaint. The Court has federal question jurisdiction over the federal copyright claims. See 15 U.S.C. § 1121, 28 U.S.C. §§ 1331, 1338(a). Supplemental jurisdiction exists over the state and common law claims because they are so related to the federal claims that they form part of the same case or controversy and derive from a common nucleus of operative fact. See 28 U.S.C. § 1367. Personal jurisdiction, as discussed below, is contested.
August has moved to dismiss the complaint based on this Court's lack of personal jurisdiction over him. At this point I find that International Playthings has not proffered the requisite prima facie showing that personal jurisdiction exists over August. There is reason to think, however, that it might be able to do so. In accordance with Third Circuit law, therefore, I will permit limited jurisdictional discovery.
Once a defendant files a motion to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2), the plaintiff bears the burden of establishing sufficient facts to show that jurisdiction exists. Marten v. Godwin, 499 F.3d 290, 295-96 (3d Cir. 2001). While a court must accept the plaintiffs allegations as true and construe disputed facts in favor of the plaintiff, Pinker v. Roche Holdings, Ltd., 292 F.3d 361, 368 (3d Cir. 2002), the court must still examine any evidence presented with regard to disputed factual allegations. See, e.g., Eurofins Pharma US Holdings v. BioAlliance Pharma SA, 623 F.3d 147, 155-56 (3d Cir. 2010) (); Patterson v. FBI, 893 F.2d 595, 603-04 (3d Cir. 1990) (quoting Time Share Vacation Club v. Atl. Resorts, Ltd., 735 F.2d 61, 66 n.9 (3d Cir. 1984)).
The plaintiff "need only establish a prima facie case of personal jurisdiction.* Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 97 (3d Cir. 2004). Nevertheless, a plaintiff may not "rely on the bare pleadings alone" in order to withstand a motion to dismiss for lack of personal jurisdiction; "[o]nce the motion is made, plaintiff must respond with actual proofs, not mere allegations." Patterson, 893 F.2d at 604 (internal citations omitted); Time Share Vacation Club, 735 F.2d at 66 n.9.
To assess whether it has personal jurisdiction over a defendant, a district court must undertake a two-step inquiry. IMO Indus., Inc. v. Kiekert, AG, 155F.3d 254, 259 (3d Cir. 1998). First, the court must analyze the relevant state's long-arm statute to see whether it permits the exercise of personal jurisdiction. Id.; Fed. R. Civ. P. 4(k). In other words, "[a] federal court sitting in New Jersey has jurisdiction over parties to the extent provided under New Jersey state law." Miller Yacht Sales, 384 F.3d at 96. "Second, the court must apply the principles of due process." WorldScape, Inc. v. Sails Capital Mgmt, Civ. 10-4207, 2011 WL 3444218 (D.N.J. Aug. 5, 2011) (citing IMO Indus., 155 F.3d at 259).
In New Jersey, the first step collapses into the second because "New Jersey's long-arm statute provides for jurisdiction coextensive with the due process requirements of the United States Constitution." Miller Yacht Sales, 384 F.3d at 96 (citing N.J. Ct. R. 4:4-4(c)). Accordingly, personal jurisdiction over a non-resident defendant is proper in this Court if the defendant has '"certain minimum contacts with [New Jersey] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.'" Provident Nat'l Bank v. Cal. Fed. Sav. & Loan Ass'n, 819 F.2d 434, 437 (3d Cir. 1987) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 316 (1945)).
There are two kinds of personal jurisdiction that allow a district court to hear a case involving a non-resident defendant: general and specific. See Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414-415 & n. 9 (1984). A court may exercise general jurisdiction when a defendant has "continuous and systematic contacts" with the forum state. Id. at 415 n. 9. The defendant's "contacts need not relate to the subject matter of the litigation," Ameripay, LLC v. Ameripay Payroll, Ltd., 334 F. Supp 2d 629, 633 (D.N.J. 2004), but must rise to "a Very high threshold of business activity.'" Id. at 633 (quoting Compagnie des Bauxites de Guinea v. Ins. Co....
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