Reed Elsevier, Inc., v. Innovator Corp.

• Decision Date: 10 March 2000
• Docket Number: No. C-3-99-141.,C-3-99-141.
• Citation: 105 F.Supp.2d 816
• Parties: REED ELSEVIER, INC., et al., Plaintiffs, v. INNOVATOR CORPORATION, et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

105 F.Supp.2d 816

REED ELSEVIER, INC., et al., Plaintiffs, v.INNOVATOR CORPORATION, et al., Defendants.

No. C-3-99-141.

United States District Court, S.D. Ohio, Western Division.

March 10, 2000.

Charles J. Faruki, Dayton, OH, J. Paul Williamson, Washington, DC, Katherine C. Spelman, San Francisco, CA, for Plaintiffs.

Thomas W. Flynn, Michael W. Krumholtz, Dayton, OH, Rochelle D. Alpert, San Francisco, CA, for Defendants.

DECISION AND ENTRY OVERRULING MOTIONS TO TRANSFER VENUE(DOC. # 29,30) FILED BY DEFENDANTINNOVATOR CORPORATION

RICE, Chief Judge.

This litigation stems from the Plaintiffs' allegation that the Defendants have violated state and federal law by "hijack[ing] and usurp[ing]Plaintiffs' famous trademarks[.]"(First Amended Complaint, Doc. #9 at ¶ 3).In their ten-count Complaint, PlaintiffsReed Elsevier, Inc., and Reed Elsevier Properties, Inc., allege that they own the exclusive right to three trademarks, "LEXIS,""NEXIS" and "LEXIS-NEXIS."(Id.at ¶ 1).These trademarks identify the Plaintiffs' computerized legal and business information research services.Their Complaint names three Defendants, Innovator Corporation("Innovator"), AltaVista Company("AltaVista") and DoubleClick, Inc.("DoubleClick").Innovator provides computerized information retrieval services in direct competition with the Plaintiffs.(Id.at ¶ 11).DoubleClick assists clients with the placement of advertising on Internet web sites and search engines.(Id.at ¶ 13).AltaVista operates a search engine which consumers use to locate web sites on the Internet.(Id.at ¶ 12).According to the Plaintiffs, individuals find web sites through "key word" searching.Seconds after a user enters a particular word or phrase, the AltaVista search engine furnishes a list of sites containing that word or phrase.(Id.at ¶ 17).The Plaintiffs use the LEXIS, NEXIS and LEXIS-NEXIS trademarks as key words to direct Internet users to their products.(Id.).

The present litigation concerns the Plaintiffs' assertion that Innovator, DoubleClick and AltaVista have improperly utilized the LEXIS, NEXIS and LEXIS-NEXIS trademarks.In particular, the Plaintiffs contend that "with the active participation of DoubleClick and AltaVista, [Innovator] bought Plaintiffs' famous marks and tradename as keywords so that whenever a user of the AltaVista search engine types in the marks LEXIS or NEXIS or LEXIS-NEXIS, AltaVista returns a screen positioning a[n][Innovator] banner prominently ahead of, and many times larger than, the information provided regarding Plaintiffs and their marks."(Id.at ¶ 35).After discovering this practice, the Plaintiffs filed their Complaint, seeking relief under the Lanham Act, the Ohio Revised Code and common law.Thereafter, the Plaintiffs entered into settlement agreements with AltaVista and DoubleClick, dismissing all claims against them, with prejudice.(Doc. # 45-46).As a result, Innovator is the only remaining Defendant in this litigation.Pending before the Court are two Motions to Transfer Venue(Doc. # 29, 30) filed by Innovator.¹

I.Analysis of Innovator's Motions to Transfer Venue(Doc. # 29, 30)

Innovator contends that the Court should transfer this action to the United States District Court for the Western District of Washington, pursuant to 28 U.S.C. § 1404(a).Innovator's primary argument is two-fold.First, it contends that a settlement agreement, over which the District Court in Washington has retained jurisdiction, required the Plaintiffs to file this action in that venue and to provide advance notice before doing so.Second, it notes that it has commenced litigation in the Western District of Washington, alleging a breach of the settlement agreement, based upon the Plaintiff's filing of the present suit here, without providing advance notice.In addition to stressing these two related points, Innovator engages in a cursory review of several other factors which are relevant to the Court's § 1404(a) analysis.²

In response, the Plaintiffs insist that the present action does not violate the settlement agreement reached in the Western District of Washington.In a related argument, they insist that the Washington court did not retain jurisdiction over the causes of action raised in their Complaint.Finally, the Plaintiffs recite various factors which are pertinent to a § 1404(a) analysis and insist that those factors do not favor a transfer of venue.³

After reviewing the parties' respective arguments, the Court concludes that Innovator has not met its burden of establishing that a transfer should be granted.Section 1404(a) states: "For the convenience of the parties and witnesses, in the interest of justice, a district court may transfer a civil action to any other district or division where it might have been brought."When reviewing a motion to transfer under § 1404(a), "a district court should consider the private interests of the parties, including their convenience and the convenience of potential witnesses, as well as other public interest concerns, such as systemic integrity and fairness, which come under the rubric of `interests of justice.'"Moses v. Business Card Express, Inc.,929 F.2d 1131, 1137(6th Cir.1991), quotingStewart Org., Inc. v. Ricoh Corp.,487 U.S. 22, 30, 108 S.Ct. 2239, 101 L.Ed.2d 22(1988).District courts possess broad discretion to grant or deny a transfer under § 1404(a).Phelps v. McClellan,30 F.3d 658, 663(6th Cir.1994).

With the forgoing considerations in mind, the Court rejects Innovator's request to transfer this action to the Western District of Washington.As a threshold matter, the Court finds unpersuasive Innovator's two primary arguments regarding the existence of a settlement agreement and the pending litigation in Washington.The record reflects that Innovator previously filed a lawsuit against Reed Elsevier, Inc., in the Western District of Washington on February 13, 1996 alleging false advertising, unfair competition, copyright infringement and violations of state law.Reed Elsevier counter-claimed for false advertising.(Kovanen declaration, Doc. # 29 atExh. 1, ¶ 2).

Innovator and Reed Elsevier subsequently entered into a settlement agreement on June 3, 1998, resolving the Washington litigation.(Id.at ¶ 3).The agreement includes a reservation of jurisdiction which states:

13.Choice of Law.This Agreement shall be construed in accordance with the laws of the State of Washington.The U.S. District Court for the Western District of Washington will retain jurisdiction over any claims for breach of this agreement.

(Id.at ¶ 5).⁴Paragraph nine of the settlement agreement also provides a specific dispute resolution procedure "if either party believes that it has a claim that the other party has made false or misleading statements in advertising[.]"(Id.at ¶ 4).That procedure includes providing advance notice to the opposing party before commencing litigation.(Id.).

After entering into the foregoing agreement, the Plaintiffs commenced the present litigation, asserting claims against Innovator for trademark infringement, false designation of origin, trademark dilution, unjust enrichment, interference with business relations and conspiracy.(First Amended Complaint, Doc. # 9).Innovator argues that the Plaintiffs have filed the present lawsuit in violation of paragraph nine of the settlement agreement, which sets forth the specific dispute resolution procedure for claims of "false or misleading statements in advertising."(Doc. # 29at 6-7).Innovator also suggests that the Plaintiffs have violated paragraph thirteen by filing their lawsuit here when the Western District of Washington retained jurisdiction over "any claims for breach of this agreement."(Id. at 8)(suggesting that the Plaintiffs agreed to litigate their claims in Washington when they entered into the settlement agreement).

Upon review, the Court finds both of Innovator's arguments unconvincing.First, none of the causes of action contained in the Plaintiffs' first amended Complaint appear to be claims for "false or misleading statements in advertising."Courts interpreting the Lanham Act have distinguished trademark infringement and false designation of origin claims ("product infringement") from claims for false or deceptive representations in advertising ("false advertising").See, e.g., Resource Developers, Inc. v. Statue of Liberty-Ellis Island Foundation, Inc.,926 F.2d 134, 139(2nd Cir.1991);College Savings Bank v. Florida Prepaid Postsecondary Education Expense Bd.,948 F.Supp. 400, 426 n. 25(D.N.J.1996).

In the present case, the settlement agreement provides a specific dispute resolution procedure only for claims of "false or misleading statements in advertising."On its face, this language appears to encompass only "false advertising" claims.In reaching this conclusion, the Court recognizes that the phrase "false or misleading statements in advertising" is arguably somewhat broader than the phrase "false advertising."Thus, the former phrase might have been used in the settlement agreement specifically to bring trademark infringement and false designation of origin claims within its scope.On the other hand, the use of the phrase "false or misleading statements in advertising" might have been nothing more than an imprecise reference to "false advertising" claims.A review of the settlement agreement itself may or may not clarify this issue.Unfortunately, Innovator has failed to provide the Court with a copy of that document.Absent some basis for concluding otherwise, the Court interprets the language in paragraph nine, regarding claims for "false or misleading statements in advertising," as being synonymous with claims for "false advertising."Under that interpretation, the Plaintiffs' claims in the present case fall outside the scope of the dispute resolution procedure set forth in the Washington settlement agreement.Consequently, to the extent that...