Virgin Wireless, Inc. v. Virgin Enterprises Ltd.
| Decision Date | 26 April 2002 |
| Docket Number | No. Civ.A. 01-799-SLR.,Civ.A. 01-799-SLR. |
| Citation | 201 F.Supp.2d 294 |
| Parties | VIRGIN WIRELESS, INC. and SD Telecommunications, Inc., Plaintiffs, v. VIRGIN ENTERPRISES LIMITED, Virgin Group Limited, Virgin Mobile USA, LLC, Virgin Mobile USA, Inc., Sprint Spectrum Holding Company, L.P., Sprint Spectrum, L.P., Sprintcom, Inc., Phillieco L.P. and Sprint Communications Company L.P., Defendants. |
| Court | U.S. District Court — District of Delaware |
John W. Shaw, and Adam W. Poff, of Young Conaway Stargatt & Taylor, LLP, Wilmington, Delaware, for plaintiffs.
Mary B. Graham, of Morris, Nichols, Arsht & Tunnell, Wilmington, Delaware, for defendants.
On December 3, 2001, plaintiffs Virgin Wireless, Inc. and SD Telecommunications, Inc. filed this action against defendants Virgin Enterprises Limited, Virgin Group Limited, Virgin Mobile USA, LLC, Virgin Mobile USA, Inc., Sprint Spectrum Holding Company, L.P., Sprint Spectrum, L.P., Sprintcom, Inc., Phillieco L.P. and Sprint Communications Company L.P.1 (D.I.1) Plaintiffs are seeking a declaratory judgment that the use of their pending service marks does not infringe defendants' registered trademarks and service marks. Plaintiffs also allege that defendants have infringed plaintiffs' pending service marks by agreeing to form a joint venture to offer "pay-as-you-go wireless communication services and handsets" to United States markets using plaintiffs' pending service marks. (Id. at ¶ 25) Currently before the court is defendants' motion to dismiss or, in the alternative, to transfer the action to the Eastern District of New York.2 (D.I.29) For the following reasons, defendants' motion to dismiss the action as to Virgin Group Limited is granted, and the remaining action shall be transferred to the Eastern District of New York.3
Plaintiffs are New York corporations, having their principal places of business in New York, New York. (Id. at ¶ 3) Plaintiffs are the beneficial parties in interest of the following United States Patent and Trademark service mark applications for telecommunications services: VIRGIN WIRELESS, Serial No. 75/845508; VIRGIN COMMUNICATIONS, Serial No. 75/845509; VIRGIN NET, Serial No. 75/845510; and VIRGIN MOBILE, Serial No. 75/845511. (Id. at ¶ 11)
Defendant Virgin Enterprises Limited ("VEL") is a corporation organized and existing under the laws of England and Wales, having its principal place of business in London, England. (D.I. 33 at ¶ 2) VEL is the registrant of several trademarks containing the word VIRGIN, including U.S. Registration Nos. 1039574, 1469618, 1517801, 1591952, 1597386, 1851817 and 1852776. VEL's marks are collectively registered for sound and music recordings; printed sheet music, books and other printed matter; clothing, hats and accessories; advertising services; transportation services for goods and passengers; and other retail and entertainment related services. (D.I. 1 at ¶¶ 14-15) VEL acts solely as a repository of trademark rights and goodwill arising from the operations of trading companies that offer VIRGIN-branded goods and services ("Virgin Group companies"). (D.I. 55 at ¶ 2)
Defendant Virgin Group Limited ("VGL") is also a corporation organized and existing under the laws of England and Wales, having its principal place of business in London, England. (D.I. 1 at ¶ 5) VGL is an investment holding company with no tangible fixed assets. Its primary assets consist of shares in two other Virgin Group companies, one of which is incorporated in England and Wales, and the other of which is incorporated in Jersey. (D.I.46, Ex. 1) VGL and these Virgin Group companies have had no involvement in the formation or activities of Virgin Mobile USA, LLC. (Id.; D.I. 44, Ex. D)
Defendant Virgin Mobile USA, LLC ("Virgin Mobile USA") is a company organized and existing under the laws of the State of Delaware, having its principal place of business in San Francisco, California. (D.I. 1 at ¶ 6) Virgin Mobile USA is a joint venture owned by Sprint Ventures, Inc., a Kansas corporation and non-party to this litigation, and an indirect subsidiary of Virgin Group Investments Limited, a corporation organized and existing under the laws of the British Virgin Islands. (D.I. 33 at ¶ 5) To date, the activities of Virgin Mobile USA have been limited to capital-raising activities in New York City and other non-Delaware locations. Upon capitalization, the initial operations of Virgin Mobile USA will occur in the greater New York area and West Coast markets where VIRGIN MEGASTORE retail stores operate and VIRGIN airline flights arrive and depart daily. (D.I. 32 at ¶ 3)
Defendant Virgin Mobile USA, Inc. is a corporation organized and existing under the laws of the State of Delaware, having its principal place of business in San Francisco, California. (D.I. 1 at ¶ 6) Virgin Mobile USA, Inc. was formed to develop a business plan for marketing VIRGIN-branded wireless services and handsets from VIRGIN MEGASTORE retail stores and other locations in the United States. Virgin Mobile USA, Inc. is not licensed to use the VIRGIN mark in association with any goods or services and has no plans to do so. (D.I. 32 at ¶ 5)
Defendants Sprint Spectrum Holding Company, L.P., Sprint Spectrum, L.P., Sprintcom, Inc., Phillieco L.P. and Sprint Communications Company L.P. (collectively, the "Sprint companies") do not claim any ownership or interest in the word VIRGIN as a trade name, trademark or service mark in any jurisdiction. None of the Sprint companies plans to advertise or sell goods and services using the VIRGIN name in any jurisdiction. (D.I.31)
On October 4, 2001, VEL and Virgin Mobile USA entered into a trademark license agreement over some of VEL's registered marks. (D.I. 32 at ¶ 4) On October 5, 2001, a press release was posted on Virgin Mobile USA's website that announced the following:
Sprint and the Virgin Group today announced a joint venture to offer pay-as-you-go wireless communications services and handsets to the U.S. market under the Virgin Mobile brand using Sprint PCS' all-digital, all-PCS nationwide wireless network. The formation of Virgin Mobile USA through the joint venture creates a new national wireless service provider targeting the 15- to 30-year-old consumer market in the U.S. Virgin Mobile USA expects to launch its services in select markets and complete a nationwide rollout during the first half of 2002.
. . . . .
"Virgin's strategic venture with Sprint enables Virgin Mobile USA to be the first Mobile Virtual Network Operator (MVNO) in the U.S.," said Sir Richard Branson, chairman of the Virgin Group. "We are the fastest growing mobile phone business in the U.K., and we will leverage our strong brand recognition as well as our consumer-savvy marketing machine to satisfy the needs of a U.S. market that demands customization."
. . . . .
Virgin Mobile USA's products and services will include long distance and nationwide coverage in addition to Virgin Xtras, a distinctive set of features that will provide access to additional services tailored for the U.S. consumers' fast-paced, entertainment-focused, music-centric lifestyle. Virgin Mobile USA products and services are expected to be distributed nationally through premier retailers that focus on servicing the under-30 consumer market.
(D.I.44, Ex. A)
On January 16, 2002, VEL filed an action in the United States District Court for the Eastern District of New York (Virgin Enterprises Ltd. v. Nawab, No. 02-0311 (the "New York action")) against plaintiffs and other New York-based individuals and corporations, alleging registered service mark infringement and related torts arising from the operation of retail stores in New York under the trade name VIRGIN WIRELESS. VEL also claims that plaintiffs violated the RICO statute by procuring the service marks at issue and prosecuting this litigation. (D.I.23, Ex. A) Merits discovery in the New York action has been stayed pending this court's determination of the pending motions. (D.I. 50, Ex. 7 at ¶ 4)
When a non-resident defendant challenges personal jurisdiction, the burden is on the plaintiff to show that the defendant has purposefully directed its activities toward the residents of the forum state or otherwise "purposefully avail[ed] itself of the privilege of conducting activities within the forum State, thus invoking the benefits protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). A plaintiff may not rely on the pleadings alone in order to withstand a motion to dismiss for lack of personal jurisdiction. See Stranahan Gear Co., Inc. v. NL Indus., Inc., 800 F.2d 53, 58 (3d Cir.1986); Time Share Vacation Club v. Atlantic Resorts, Ltd., 735 F.2d 61, 66 n. 9 (3d Cir.1984). This being the case, the plaintiff must come forward with facts sufficient to establish by a preponderance of the evidence that the court can exercise personal jurisdiction over the defendant. See Carteret Sav. Bank, F.A. v. Shushan, 954 F.2d 141, 146 (3d Cir.1992).
In order for the court to assert personal jurisdiction over VGL, two requirements, one statutory and one constitutional, must be satisfied. First, a federal district court may assert personal jurisdiction over a nonresident of the state in which the court sits to the extent authorized by the law of that state. See Fed. R.Civ.P. 4(e)(1). Thus, the court must determine whether there is a statutory basis for exercising jurisdiction over VGL under the Delaware long-arm statute, 10 Del.C. § 3104(c). Second, the court must determine whether an assertion of jurisdiction over VGL comports with constitutional notions of due process.4 See Max Daetwyler Corp. v. R. Meyer, 762 F.2d 290, 293 (3d Cir.1985).
The Delaware long-arm statute provides that personal jurisdiction is proper over any nonresident who, in person or through an agent:
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