Opinion
CIVIL ACTION NO. 03-CV-11471-GAO
March 2, 2004
MEMORANDUM AND ORDER
The plaintiff, Reebok International Ltd., brought this action seeking a declaratory judgment that it has not engaged in unfair trade practices and has not infringed trademark rights that are allegedly owned by the defendants, Dunkadelic, Inc. and Derrick Vaughan. The defendants have moved to dismiss the action, arguing that venue is improper, or alternatively to transfer the action, arguing that the United States District Court for the District of Maryland is a more convenient venue. For the reasons set forth below, the defendants' motion is denied in both respects.
I. Summary of facts
In late 2002, Reebok introduced a new line of basketball shoes and apparel bearing the name "Dunkadelic." Vaughan, owner of Dunkadelic, Inc., claims to own the rights to the "Dunkadelic" trademark.
On April 14, 2003, counsel for Vaughan sent Reebok a letter threatening litigation and demanding that it cease and desist from using the "Dunkadelic" mark. On April 22, counsel for Reebok responded and requested that Vaughan provide additional information to support his claimed trademark rights. On May 22, counsel for Vaughan sent Reebok a supplemental cease and desist letter, provided additional information, and again threatened litigation. On May 30, Reebok responded and again requested that Vaughan provide additional information to support his claim. Reebok stated that without such information it considered Vaughan's claim to be without merit and invited Vaughan to make a settlement proposal for what it called a claim with only "token nuisance value." On June 6, Vaughan sent a letter demanding $7.5 million plus a 10% royalty on all Reebok sales of Dunkadelic products. Vaughan requested that Reebok respond by June 13 or Vaughan would file suit. On June 13, Reebok made a counteroffer of $5,000.
Reebok's June 13 letter did not mention that on June 12 Reebok had filed this action in the Massachusetts Superior Court, seeking a declaratory judgment that Reebok was not infringing the defendants' trademark rights and had not engaged in unfair trade practices. On July 11, before being served with Reebok's complaint, the defendants filed a complaint against Reebok in the United States District Court for the District of Maryland alleging Lanham Act violations and state law claims. On July 15, Reebok served the Norfolk complaint on the defendants via certified mail.
On August 8, the defendants removed the Norfolk action to this Court. On November 5, the defendants moved to dismiss this action for improper venue or to transfer this action to the District of Maryland. The defendants finally served their Maryland complaint on November 7. Reebok has filed in the District of Maryland a motion to dismiss or transfer that action to this Court. On February 4, 2004, a hearing was held on the defendants' motion.
II. Discussion
A. Motion to dismiss
At the hearing, I expressed doubt as to the merits of the defendants' motion to dismiss for improper venue, and I now deny the motion.
Section 1391(b) of Title 28 of the United States Code provides, in relevant part, that venue is proper "only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, [or] (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated. . . ." Because the defendants reside in Maryland, venue is proper here only if "a substantial part of the events or omissions giving rise to the claim occurred" in Massachusetts.
In considering the defendants' motion to dismiss, it is only necessary to determine whether Massachusetts is a proper venue, notwithstanding that there may be other proper venues or indeed better venues. See Uffner v. La Reunion Francaise, 244 F.3d 38, 42 (1st Cir. 2001) (many circuits have recognized that "when the events underlying a claim have taken place in different places, venue may be proper in any number of districts"). To determine if Massachusetts is a proper venue, a court should look "not to a single `triggering event' prompting the action, but to the entire sequence of events underlying the claim." Id. The relevant events for determining venue "need not be a point of dispute between the parties"; venue may be proper where a single event in the forum "was one part of the historical predicate for the instant suit," even though that single event was "not related to the principal question for decision." Id. at 42-43.
In a trademark infringement case venue is proper in a jurisdiction where the infringement is alleged to have occurred. E.g., Woodke v. Dahm, 70 F.3d 983, 985 (8th Cir. 1995) (in trademark case the venue inquiry should "focus on relevant activities of the defendant [alleged infringer], not of the plaintiff); Pilates, Inc. v. Pilates Inst., Inc., 891 F. Supp. 175, 182 (S.D.N.Y. 1995) ("in trademark infringement claims, courts have held that venue may be proper in each jurisdiction where infringement is properly alleged to have occurred").
Here, venue is proper in Massachusetts because substantial events giving rise to this action, including the alleged infringement, occurred in Massachusetts. Reebok's senior counsel, Keith Wexelblatt, submitted an affidavit that states, "[t]he allegedly infringing activities by Reebok complained of by Defendants, namely Reebok's decision to use the Dunkadelic mark, the nature and extent of its use of that mark, and its revenues and profits derived therefrom, all occurred, or were directed from, Reebok's sole United States operations facility and headquarters in Canton, Massachusetts." Wexelblatt Aff. at ¶ 4. Reebok also asserted that "no one can dispute that Massachusetts-based Reebok advertises and sells its ATR Dunkadelic basketball shoes in substantial quantities in and from Massachusetts." Pl.'s Opp'n at 3-4. In fact, the defendants have presented no evidence to the contrary. The defendants, instead, stated in their memorandum in support of their motion to dismiss that "[t]he instant action arises out of Defendants' allegations of federal trademark infringement by Reebok through the national/international marketing and sales campaign of its ATR-Dunkadelic basketball shoe." Defs.' Mem. at 7. That statement suggests that the allegedly infringing activity occurred throughout the country and undermines the defendants' argument that venue is improper in Massachusetts.
B. Motion to transfer
The defendants alternatively argue that even if venue is proper in Massachusetts the case should be transferred to the United States District Court for the District of Maryland where their later-filed coercive action is currently pending. Section 1404(a) of Title 28 of the United States Code provides that "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought."
A defendant seeking transfer to a forum that it claims is more convenient has the burden of proving that transfer is warranted.Nowak v. Tak How Invs., Ltd., 94 F.3d 708. 719 (1st Cir. 1996). The factors the Court should consider include "the convenience of parties and witnesses, . . the availability of documents; the possibility of consolidation; and the order in which the district court obtained jurisdiction." Coady v. Ashcraft Gerel, 223 F.3d 1, 11 (1st Cir. 2000). "Where identical actions are proceeding concurrently in two federal courts, entailing duplicative litigation and a waste of judicial resources, the first filed action is generally preferred in a choice-of-venue decision." Cianbro Corp. v. Curran-Lavoie, Inc., 814 F.2d 7, 11 (1st Cir. 1987); see also Nowak, 94 F.3d at 719 ("We have emphasized that the doctrine of forum non conveniens is used to avoid `serious unfairness' and that plaintiff's choice of a forum will be disturbed only rarely.").
In fleshing out the factors to consider, the First Circuit has also quoted the following from the Supreme Court:
"[The plaintiff] should not be deprived of the presumed advantages of his home jurisdiction except upon a clear showing of facts which either (1) establish such oppressiveness and vexation to a defendant as to be out of all proportion to plaintiff's convenience, which may be shown to be slight or nonexistent, or (2) make trial in the chosen forum inappropriate because of considerations affecting the court's own administrative or legal problems."Nowak, 94 F.3d at 720 (quoting Koster v. Lumbermens Mut. Cas. Co., 330 U.S. 518, 524 (1947)).
Some courts in this District have found that "the preference for the first-filed action may be overcome where (1) there are special circumstances justifying a transfer or (2) convenience favors the later-filed action." Holmes Group, Inc. v. Hamilton Beach/Proctor Silex, Inc., 249 F. Supp.2d 12, 16 (D. Mass. 2002) (citingVeryfine Prods., Inc. v. Phlo Corp., 124 F. Supp.2d 16, 22-25 (D. Mass. 2000) and Kleinerman v. Luxtron Corp., 107 F. Supp.2d 122, 124 (D. Mass. 2000)). Special circumstances might arise "[w]here, for example, a plaintiff (1) misleads the defendant into foregoing litigation in order to negotiate a settlement and then files suit or (2) reacts to a defendant's notice of imminent filing by `literally sprinting to the courthouse the same day'. . . ." Holmes Group, 249 F. Supp.2d at 16 (citation omitted).
In intellectual property cases, the "fact that [plaintiff's] action is for declaratory relief does not bar the application of the first-filed presumption." GSI Lumonics, Inc. v. BioDiscovery, Inc., 112 F. Supp.2d 99, 105 (D. Mass. 2000) (denying motion to transfer copyright infringement case); see also Holmes Group, 249 F. Supp.2d at 16-18 (denying motion to transfer patent infringement case). Other courts have declined to follow the first-filed rule in such circumstances. See Kleinerman, 107 F. Supp.2d at 124-25 (refusing to transfer second-filed patent case to California because plaintiff in California action "pounce[d] preemptively" as negotiations reached an impasse); Davox Corp. v. Digital Sys. Int'l, 846 F. Supp. 144, 148 (D. Mass. 1993) (granting motion to transfer patent case;" [plaintiff] should not be permitted to take advantage of the fact that [defendant] responsibly deferred filing potentially protracted and expensive litigation and, indeed, was perhaps misled into believing it would not be prejudiced by doing so by [plaintiff's] responses to its letters").
It is evident from these cases that no single presumption or factor will always control, and instead, the result will depend on factual nuances. Here, the defendants have not overcome the presumption in favor of Reebok's first-filed action and its choice of forum.
First, Reebok's action in bringing this suit in Massachusetts was not vexatious or oppressive. Reebok filed the suit in its home state, not some remote forum with little or no connection to the parties or events.E.g., Holmes Group, 249 F. Supp.2d at 17 ("Where a plaintiff chooses his home forum, such a choice usually represents considerations of convenience rather than harassment of the defendant."). Reebok also did not race to the courthouse on the day that the defendants threatened litigation. Further, Reebok never promised to forego litigation, and its conduct during the exchange of letters does not appear to have been designed to lull the defendants into a false sense of security while Reebok prepared its declaratory judgment complaint.
Second, the defendants have not demonstrated that Maryland would be a more convenient forum. The availability of witnesses and documents is a neutral factor as between Massachusetts and Maryland because each party intends to rely on documents and witnesses in its home state. Therefore, transferring the action to Maryland would simply shift, rather than eliminate, the inconvenience. E.g., Holmes Group, 249 F. Supp.2d at 18 ("Transfer of venue is inappropriate, however, where its effect merely shifts the inconvenience from one party to another.").
Finally, the defendants argued that litigating in Massachusetts would impose an "overwhelming financial burden on Defendants" and that Reebok could easily absorb the cost of litigating in Maryland. In support of their argument, the defendants cite Kleinerman, 107 F. Supp.2d at 124-25, where Judge Gorton found that the first-filed presumption was rebutted by evidence that (1) the defendant had "pounce[d] preemptively" in filing its declaratory judgment action when it realized that negotiations had reached an impasse, and (2) the balance of conveniences favored the plaintiff because "[i]f the Court were to transfer this case to California, the costs of litigation may become prohibitive to Kleinerman, thereby denying him his right to pursue a judicial remedy."Id. At the hearing on the their motion, the defendants also cited Symbol Techs., Inc. v. Quantum Assocs., Inc., No. CIV. A. 01-10983-GAO, 2002 WL 225934 (D. Mass. Jan. 30, 2002), where I granted a motion to transfer based in part on consideration of the parties' financial resources. First, Symbol Techs, is easily distinguished because the outcome was influenced by facts not present here. Second, disparate financial resources is only one factor among many I may consider in resolving a motion to transfer. Here, that factor does not tip the balance in the defendants' favor.
III. Conclusion
The defendants' motion to dismiss for improper venue or alternatively to transfer to the United States District Court for the District of Maryland is DENIED.
It is SO ORDERED.