Isi Brands, Inc. v. Kcc Intern., Inc.

• Decision Date: 19 October 2006
• Docket Number: No. 03 CV 1605(ADS)(WDW).,03 CV 1605(ADS)(WDW).
• Citation: 458 F.Supp.2d 81
• Parties: ISI BRANDS, INC., Plaintiff, v. KCC INTERNATIONAL, INC., Defendant.
• Court: U.S. District Court — Eastern District of New York

458 F.Supp.2d 81

ISI BRANDS, INC., Plaintiff, v. KCC INTERNATIONAL, INC., Defendant.

No. 03 CV 1605(ADS)(WDW).

United States District Court, E.D. New York.

October 19, 2006.

Amster, Rothstein & Ebenstein, LLP, New York City (Chester P. Rothstein, Holly Pekowsky, of counsel), for Plaintiff.

Bush Graziano & Rice, PA, Tampa, FL (Dominick J. Graziano, of counsel), for Defendant.

MEMORANDUM OF DECISION AND ORDER

SPATT, District Judge.

ISI Brands, Inc. ("ISI" or the "Plaintiff), brings this action against KCC International, Inc. ("KCC" or the "Defendant"), seeking injunctive relief and monetary damages for alleged trademark infringement, false designation of origin, dilution, unfair competition and deceptive trade practices.

Pending before the Court is a motion to dismiss the amended complaint by the Defendant pursuant to Federal Rules of Civil Procedure 12(b)(2) and (3) ("Fed. R. Civ. P.") or, alternatively, to transfer venue to the Middle District of Florida pursuant to 28 U.S.C. § 1404(a). The Defendant also moves to dismiss the amended complaint pursuant to N.Y. Bus. Corp. Law Section 1312.

BACKGROUND

A motion to dismiss pursuant to Fed. R.Civ.P. 12(b)(2) is "inherently a matter requiring the resolution of factual issues outside of the pleadings." Yellow Page Solutions, Inc. v. Bell Atl. Yellow Pages Co., No. 00 Civ. 5563, 2001 WL 1468168, at *1 (S.D.N.Y. Nov.19, 2001). As a result, "all pertinent documentation submitted by the parties may be considered in deciding the motion." Id. The following facts, therefore, are drawn from the complaint, affidavits, and documentary exhibits submitted by the Plaintiff and the Defendant, and are construed in the light most favorable to the Plaintiff. Id. (citing CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir.1986)).

In April 2003, Twin Laboratories, Inc. ("Twin") commenced this action against the Defendant, alleging, among other things, trademark infringement and unfair competition as a result of the Defendant's alleged use of a "family of approximately thirty five registered `______ FUEL' marks" in connection with vitamins, minerals, dietary supplements, nutrition bars and drinks.

In September 2003, Twin filed for bankruptcy and the matter was stayed. In December 2003, Twin assigned its interests, including its trademarks, goodwill, applications, registrations and all causes of action for past or present infringement to ISI. In January 2006, the stay was lifted and ISI, substituted for Twin as the Plaintiff in this action.

The Plaintiff, ISI, a Michigan corporation, is an intellectual property holding company. As such, in December 2003, following the assignment of Twin's interests, ISI licensed the "FUEL" marks at issue to its parent company, IdeaSphere, Inc. ("IdeaSphere") and its sister company, Twinlab Corporation ("Twinlab"), a wholly owned subsidiary of IdeaSphere. Although the Plaintiffs principal place of business is Grand Rapids, Michigan, ISI's parent company, IdeaSphere and IdeaSphere's wholly owned subsidiary, Twinlab, were located in the Eastern District of New York until January 2006, and are presently located in the Southern District of New York.

The Defendant, a nutrition company, is incorporated in Florida, with its principal place of business in Florida. The Defendant sells nutrition bars and supplements bearing the name "Living Fuel" to customers through its internet website. The website and the Defendant's four employees are located in Florida. The website is interactive and permits consumers to place orders, check order status, view products and contact KCC through a telephone number and e-mail address provided on the website.

In its amended complaint, the Plaintiff alleges that the Defendant's use of the mark "Living Fuel" on its nutrition bars and supplements is improper. Specifically, the Plaintiff claims that the Defendant infringed on and diluted its trademark, in violation of the Lanham Act and New York State law.

The Defendant now moves to dismiss this action pursuant to Fed.R.Civ.P. 12(b)(2) and (3) for lack of personal jurisdiction and improper venue, or alternatively, to transfer venue to the Middle District of Florida. The Defendant also moves to dismiss the action alleging that N.Y. Bus. Law section 1312 precludes the Plaintiff, a foreign corporation, from maintaining an action in New York because it is not registered to do business in New York.

DISCUSSION

I. PERSONAL JURISDICTION

In a motion to dismiss for lack of personal jurisdiction pursuant to Fed. R.Civ.P. 12(b)(2), the plaintiff bears the burden of demonstrating that the Court has jurisdiction over the defendant. See Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 208 (2d Cir.2001); Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d Cir.1999)(citing Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir.1996)). Where, as here, the parties have not yet conducted discovery, the plaintiff may defeat such a motion by making a prima facie showing of jurisdiction by way of the complaint's allegations, affidavits, and other supporting evidence. Bank Brussels Lambert, 171 F.3d at 784; Kernan v. Kurz-Hastings, Inc., 175 F.3d 236, 240 (2d Cir.1999). Furthermore, materials presented by the plaintiff should be construed in the light most favorable to the plaintiff and all doubts resolved in its favor. See A. I. Trade Fin., Inc. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir.1993).

"In a federal question case where a defendant resides outside the forum state, a federal court applies the forum state's personal jurisdiction rules `if the federal statute does not specifically provide for national service of process.'" PDK Labs v. Friedlander, 103 F.3d 1105, 1108 (2d Cir. 1997) (citing Mareno v. Rowe, 910 F.2d 1043, 1046 (2d Cir.1990)). The Lanham Act does not provide for nationwide service of process; therefore, "this Court must look to New York's jurisdictional statutes to determine personal jurisdiction." Greenlight Capital, Inc. v. Green-Light (Switz.) S.A., No. 04 Civ. 3136, 2005 WL 13682, *2, 2005 U.S. Dist. LEXIS 2 (S.D.N.Y. Jan. 4, 2005) (citing Sunward Ekes., Inc. v. McDonald, 362 F.3d 17, 22 (2d Cir.2004)).

If jurisdiction is found to exist, the Court must determine whether such exercise of jurisdiction under state law satisfies the federal due process requirements of "fair play and substantial justice." Burger King Corp., v. Rudzewicz, 471 U.S. 462, 477, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (quoting Int'l Shoe Co. v. Wash, 326 U.S. 310, 320, 66 S.Ct. 154, 90 L.Ed. 95 (1945)); see also Bank Brussels Lambert, 171 F.3d at 784. "Traditionally, when an entity intentionally reaches beyond its boundaries to conduct business with foreign residents, the exercise of specific jurisdiction is proper." Burger King, 471 U.S. at 477, 105 S.Ct. 2174.

In the amended complaint, the Plaintiff alleges that the Defendant, through its internet website, sells products bearing the allegedly infringing mark, nationally. The Plaintiff claims that the Defendant is subject to jurisdiction under New York's long arm statute, CPLR Section 302. The Plaintiff generally alleges that the Defendant transacts and solicits business within New York State and derives substantial revenue from goods used or consumed in New York. The Plaintiff further claims that the Defendant's sale of products with the allegedly infringing mark constitutes a tortious act.

In its memorandum of law in opposition to the Defendant's motion, the Plaintiff argues that personal jurisdiction exists under the transacting business prong of CPLR section 302(a)(1) and also pursuant to section 302(a)(2). In particular, the Plaintiff claims that: (1) KCC sells products through its website to consumers nationally, including within New York; (2) KCC's website allows consumers to order products, obtain information about the products and receive delivery of the products anywhere in the United States; and (3) the website advises consumers that they can call a toll free number or e-mail KCC to inquire about orders. The Plaintiff claims that, in July 2003, Edward Keenan, then Director of Creative Services for Twin, visited KCC's website and ordered products for delivery to Setauket, New York. The Plaintiff also states that, in February 2006, a paralegal employed by its present counsel, similarly placed an internet order and received the products in Wantagh, New York.

A. As To Specific Jurisdiction

1. The Transaction of Business Prong of Section 302(a)(1)

Section 302(a)(1) confers jurisdiction over a non-domiciliary corporation that "transacts business within the state," if there is a "direct relationship between the cause of action and the in state conduct." Fort Knox Music, Inc. v. Baptiste, 203 F.3d 193, 196 (2d Cir.2000). In contrast to "doing business," "transacting business requires only a minimal quantity of activity, provided that it is of the right nature and quality." Agency Rent A Car Sys., Inc. v. Grand Rent A Car Corp., 98 F.3d 25, 29 (2d Cir.1996). A single transaction may suffice for personal jurisdiction under Section 302(a)(1), and physical presence by the defendant in the forum state during the activity is not necessary. Bank Brussels Lambert, 171 F.3d at 787. A finding of personal jurisdiction must be based upon the totality of the circumstances. Agency Rent A Car, 98 F.3d at 29.

"Although Section 302(a)(1) is typically invoked in breach of contract cases ... it applies as well to actions in tort when supported by a sufficient showing of facts." Sunward Elecs., Inc. v. McDonald, 362 F.3d 17, 24 (2d Cir.2004) (internal citations omitted). The Second Circuit has found that a Lanham Act claim "sounds in tort." Id. (citing PPX Enter., Inc. v. Audiofidelity, Inc., 746 F.2d 120, 124-25 (2d Cir.1984) (Section 43(a) of the Lanham Act "created a new statutory tort")).

In the instant case all of the activity allegedly engaged in by the Defendant occurred via the internet. A...